Wollongong Coal Limited T/A Wollongong Coal v Construction, Forestry, Maritime, Mining and Energy Union
[2020] FWCFB 3676
•24 SEPTEMBER 2020
| [2020] FWCFB 3676 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
Wollongong Coal Limited T/A Wollongong Coal
v
Construction, Forestry, Maritime, Mining and Energy Union
(C2020/2916)
DEPUTY PRESIDENT ASBURY | BRISBANE, 24 SEPTEMBER 2020 |
Appeal against decision [2020] FWC 1844 of Commissioner Riordan at Sydney on 7 April 2020 in matter number AG2018/2488.
1. Background
[1] Wollongong Coal Limited (Appellant) has lodged an appeal, for which permission to appeal is required, against a decision of Commissioner Riordan issued on 7 April 2020 1 (Decision) in which he dismissed the Appellant’s application to terminate the NRE No 1 Colliery Workplace Agreement 2011 (2011 Agreement) pursuant to s.225 of the Fair Work Act 2009 (Cth) (FW Act). The Appellant contends on various grounds that the Decision was contrary to the evidence and its weight and to the legislation that was applied by the Commissioner. The Appellant seeks that the Decision be quashed and that the Full Bench determine that the Application be granted.
[2] Section 225(a) of the Act provides that an employer covered by an enterprise agreement which has passed its nominal expiry date may apply to the Commission for termination of the Agreement. In respect of an application made under s.225, s. 226 provides:
“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.”
[3] The matter has some history which it is necessary to recount. The Agreement commenced operation on 17 November 2011 and has a nominal expiry date of 30 September 2015. The Agreement applies to Wollongong Coal Limited and its employees at the Russell Vale Colliery who are members or eligible to be members of the Construction, Forestry, Mining and Energy Union, as the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) was formerly known. No employees were engaged under the Agreement from 17 September 2015, as mining at Russell Vale ceased at or around that time and the Mine was placed under care and maintenance.
[4] On 7 June 2018 an application was made by Wollongong Coal under s.225 of the Act to terminate the Agreement. That application was dismissed by Senior Deputy President Hamberger in a Decision issued on 15 January 2019. 2 On 15 May 2019, a Full Bench of the Commission upheld an appeal by Wollongong Coal against the Decision of Senior Deputy President Hamberger, quashed that Decision and remitted the matter to Commissioner Riordan with a direction that he “first make endeavours to have the parties confer in relation to the application” (the First Appeal Decision).3
[5] In accordance with the direction in the First Appeal decision the parties conferred on a number of occasions in the period 24 May - 27 September 2019, including on occasion when directly convened by the Commissioner (Conferences); but ultimately, the parties accepted that an agreement would not be reached and that the Appellant’s application needed to be determined by the Commissioner.
[6] The Second Hearing of the matter resumed in November 2019 on the basis of an agreed statement of facts about the Conferences and relying upon the evidence already before the Commission as a result of the original proceedings. The Appellant led some additional evidence, officials of the CFMMEU and officers of the Appellant also gave further evidence in light of issues raised by the Commissioner, and following a further attempt to obtain an agreement between the parties, the hearing concluded in late January 2020.
[7] During the Second Hearing, the Appellant provided an Undertaking to the Commission as to the terms of employment it would apply in the event the 2011 Agreement was terminated. 4 The Appellant contended that the Undertaking provided overall for wage rates and conditions superior to the statutory safety net afforded by NES and the Black Coal Mining Industry Award 2010 (Award). Further, at the request of the Commissioner during the Second Hearing, the Appellant further considered its Undertaking and increased the minimum hourly rate commitment for the mineworkers and trainee mineworkers and provided for annual adjustments of these rates.5
[8] In the s.225 application, the Appellant contended, in effect, that the 2011 Agreement was no longer appropriate or relevant to the Russell Vale mine now owned by the Appellant. At the time of the Decision, the Russell Vale mine was in a care and maintenance state pending approval for a revised Underground Expansion Plan (UEP) submitted to the NSW Department of Planning and Environment. The UEP, which is apparently still under consideration, is premised on the utilisation of a “bord and pillar” mining operation, as opposed to the longwall method previously used at the mine. Further, at that time and as at the date of this appeal, there were no employees engaged by the Appellant at the Russell Vale mine who were covered by the 2011 Agreement.
[9] In the termination application, the Appellant contended before the Commissioner that it was constrained by the terms of the 2011 Agreement which “interfered” with its capacity to recommence mining in a flexible and productive manner that would support its goal of financial viability, particularly in the context of the proposed bord and pillar operation. It also contended that it was presently unable to negotiate a greenfields agreement under s.172(2)(b) and 2(c) of the FW Act, as the mine was already established and not a genuine new enterprise and that it could not negotiate with any employees under s.172(2)(a), as there were no employees engaged that would be covered by any proposed new enterprise agreement.
[10] The termination application was opposed on various bases by the CFMMEU, the Respondent in this appeal. The CFMMEU contended that it was not appropriate to terminate the agreement based upon propositions to the effect that the 2011 Agreement was not the real impediment to the reopening of the Russell Vale mine, the former employees had a strong and legitimate interest in maintaining the arrangements agreed in 2011, and the Commission should not accept any undertakings about how the Appellant would behave in the event of termination of the 2011 Agreement, given previous conduct.
[11] In brief terms, the Commissioner considered the various matters raised in s.226 of the FW Act and ultimately concluded that the public interest was “neutral”, 6 there was “no reason to interfere with the negotiated settlement from 2011”,7 and that the Appellant should employ a workforce under the 2011 Agreement, and begin bargaining.8
2. The Decision
[12] The Commissioner outlined the history to the matter, made some background findings including about the corporate history of the Appellant and a 2013 dispute between the parties in the context of the non-payment of wages by the company, and the conduct of the hearing, including that he had sourced relevant annual reports and invited additional evidence about certain matters from the Appellant. The Commissioner then considered the statutory context by reference to the provisions in ss.225, 226, and 227, the objects stated in ss.3 and 171 of the FW Act, and the Full Bench decisions in the in: Re Aurizon Operations Limited; Aurizon Operations Limited; Aurizon Network Pty Ltd; Australia Eastern Railroad Pty Ltd (Aurizon) 9; Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (Kellogg Brown);10 and Construction, Forestry, Maritime, Mining and Energy Union v AGL Loy Yang Pty Ltd t/a AGL Loy Yang (Loy Yang)11.
[13] The Commissioner outlined the evidence of each of the witnesses and made various findings. In terms of the public interest consideration in s.226(a) of the FW Act, the Commissioner stated that he took into account the Appellant’s position that the termination of the 2011 Agreement would provide employment and other local benefits, 12 the CFMMEU’s position that these benefits were speculative due to the fact that approval for the commencement of mining had not been given13 but that it did not cast any negative public interest considerations14 and found:
“[85] I agree with Mr Timbs’ [CFMMEU District Vice President] assessment that if the CFMMEU was to endorse a lower rate of pay in an enterprise agreement for Wollongong Coal, the other mining companies in the District would demand no less favourable treatment. Such an expectation is common in other competitive industries such as electrical contracting and construction where, from my experience, pattern bargaining by both industrial parties is the preferred outcome. This would result in lower wages being paid across the entire coal mining industry in the Illawarra at a time when most companies are enjoying profitable operations. I have taken this into account.
[86] For completeness, the final public interest consideration issue is that of climate change. The New Year bushfires on the South Coast were catastrophic, as they were in other locations around Australia. However, the issue of coal mining and its link to climate change is a matter for the Government, not the Commission. I note that the Applicant mines coking coal which is used in the steel making process and not thermal coal which is used to generate electricity. I have taken this into account.
[87] I am satisfied and find that the public interest is a neutral consideration in this matter. The termination of the Agreement does not guarantee that Russell Vale will be re-opened – that is reliant on a decision from the Department and a subsequent decision from the Board of Wollongong Coal.”
[14] The Commissioner’s consideration of s.226(b)(i) of the FW Act commenced with the following:
“Section 226(b) - Appropriate in all the circumstances
[88] Section 226(b) requires the Commission to take into account “all the circumstances” including the views of the employees, each employer and each employee organisation and the likely effect the termination will have on each of them.
Section 226(b)(i) – Views of Wollongong Coal
[89] The Applicant no longer wants to be covered by the Agreement and has provided detailed reasons for this position, which I have identified earlier. Put simply, the Applicant has submitted that the Agreement is too costly and restrictive. The Applicant further submitted that, even if approval to recommence mining is given by the Department, if the application to terminate the Agreement is not successful then it will recommend to its Board that Russell Vale not be reopened. I have taken this into account.
Section 226(b)(i) – Views of the employees
[90] There are no employees currently covered by the Agreement. I have taken this into account.
Section 226(b)(i) – Views of the CFMMEU
[91] The CFMMEU opposes the application. The detailed reasons for their opposition have been identified earlier in this decision. Put simply, the CFMMEU submitted that, based on the overwhelmingly poor financial situation the of Applicant, the termination of the Agreement will have little material difference to the financial position of the Applicant. I have taken this into account.”
[15] Under the heading “other issues”, the Commissioner’s findings included that he had taken into account:
• “The (Appellant) is moving from long wall mining to ‘bord and pillar’ mining and that this process is more labour intensive”; 15 and
• “The (Appellant) has previously failed to pay wages to its employees for a six-week period. In today’s industrial climate, I am confident that the Fair Work Ombudsman (FWO) would be pursuing the Applicant for some 750 breaches of the Agreement (150 employees not paid for 6 weeks.) Mr Sharma argued that this occurred when the current majority shareholder was only a minority shareholder. However, the FW Act does not abdicate noncompliance based on the relevant percentage of shareholdings. Even if it did, the now majority shareholder breached the Agreement and Trust Deed of the Superannuation Fund by not paying the employee’s superannuation entitlements for some thirteen months after the they took control of the Board. If faced with similar cashflow constraints in the future or the mine does not return to a viable operation, then it is foreseeable, based on the (Appellant’s) previous conduct, that the employees will not be paid their entitlements.” 16
[16] The Commissioner considered the circumstances of the former employees in the following terms:
“[95] Clause 18 of the Agreement contains a provision which has been identified as an “increase in hands” clause. Clause 18 states:
“When the Company decides to recruit employees, then ex NRE No 1 Colliery employees who were made redundant involuntarily shall be re-employed provided that:
• The personnel covered by this agreement are those people who were ex-full-time employees of NRE No 1 Colliery.
• The positions being recruited for are full time permanent.
• The applicants have the necessary skills and experience for the position.
• Applicants are capable of performing the inherent requirements of the job for which they apply. For this purpose, a medical examination will be required.”
[96] The unchallenged evidence of Mr Timbs is that the former CEO gave a commitment to the workforce that if the mine were to recommence operation then they would be re-employed. The employees at this meeting were not at a political rally where they might have been required to differentiate between a core or non-core promise. I have taken this into account.
[97] I am satisfied that I should take into account the views of any former employees due to Clause 18 of the Agreement. I have taken into account the unchallenged evidence of Mr Conkey. Mr Conkey wants to return to work at Russell Vale in accordance with the commitment given to him by the former CEO, as per clause 18 of the Agreement.
[98] If the Agreement is terminated then the rights of the ex-employees including Mr Conkey, in relation to the increase in hands provision of the Agreement will be extinguished. I have taken this into account.
[99] I am satisfied that the Agreement is a standard coal mining agreement for the South Coast of New South Wales. The rates of pay are marginally lower due to the age of the Agreement and the fact that a new agreement has not been negotiated since its nominal expiry date in 2015. The conditions of employment are very common. The “increase in hands” clause may be a “left over from a bygone era” but it is not unique. Stowe, a large electrical contractor in New South Wales has a similar clause:
“Any one employed under this agreement that is made redundant due to a down turn in labour demands when re-employed will return on the same category and level they previously received.” (my emphasis)”
[17] The Commissioner sought to distinguish the circumstances of this matter from those dealt with in Aurizon on the basis that bargaining could not occur given the absence of a “greenfields” operation and any existing employees who would be covered by any new agreement, and that unlike the employer in Aurizon, the Appellant was seeking to terminate an enterprise agreement that it had made. The Commissioner distinguished the form of undertaking proposed by the Appellant in the following terms:
“[110] Further, the Undertaking in Aurizon protected wage rates and the majority of conditions. The proposed Undertaking from the Applicant provides for lower wage rates than the Agreement and conditions of employment which are comparable to the Award and the NES. In my view, pragmatically, the proposed Undertaking is of little value. As Mr Sly stated, the Applicant will have to offer competitive wage rates to attract quality labour. In relation to conditions of employment, the Applicant is compulsorily required to comply with the Award and the NES. I have taken this into account.”
[18] As to s.226(b)(ii) of the FW Act, the Commissioner concluded as follows:
“Section 226(b)(ii) – Circumstances of and likely effect that termination would have on Wollongong Coal
[116] The cost of full-time labour will decrease by approximately $1.80 per hour. The Applicant will only have to provide conditions of employment in accordance of the Award and the NES. The cost of contract labour will be determined by the marketplace rather than by the Agreement. The result being lower labour costs and increased workplace flexibility. I have taken this into account.
Section 226(b)(ii) – Circumstances of and likely effect that termination would have on the employees
[117] I have taken into account that the Applicant currently has no employees.
Section 226(b)(ii) – Circumstances of and likely effect that termination would have on the CFMMEU
[118] The Respondent has argued that if the Agreement is terminated then it will set a dangerous precedent for wages and conditions in the Illawarra. I am prepared to accept that any future agreements negotiated by the Respondent may result in lower wages and conditions of employment then those which currently exist in other mines. I have taken this into account.”
[19] After referring to the central notion of fairness, the Commissioner ultimately concluded to reject the s.226 application in the following terms:
“[120] Real questions exist as to whether the Applicant is a “going concern.” The Applicant’s auditor has raised serious concerns. Mr Jakeman agreed that the ASIC guide for directors identified three areas where the Applicant was failing to meet the director checklist for insolvency. The only reason that the Applicant continues to trade is via the guarantee provided by JSPL and its wholly owned subsidiary. The Applicant currently has a deficiency of net assets of $1 billion. I agree with the Respondent that savings attributable to terminating the Agreement are of minimal magnitude compared to the amount of debt embedded in the Applicant’s annual accounts. It is a decision for the Applicant’s shareholders if they want to walk away from the hundreds of millions of dollars in tax losses and the opportunity to mine 241 million tonnes of high quality coking coal due to the provisions of an enterprise agreement that it negotiated in 2011.
[121] I am satisfied and find that the employees were given a commitment in 2015 by the Applicant that they would be re-employed if the Applicant were to resume mining at Russell Vale. It would not be fair to those employees who wish to resume their career at Wollongong Coal to extinguish this right when mining may recommence in the very near future.
[122] The most appropriate way forward in this circumstance is for the Applicant to move forward with its current Agreement. If it chooses to employ labour directly, then the Applicant has the ability to engage in bargaining for a new enterprise agreement. The Applicant will then have an opportunity to put its proposed agreement to its employed workforce and comply with the bargaining provisions of the Act. Alternatively, it can engage its workforce in an alternative manner in accordance with the agreed provisions of the Agreement.
[123] I agree with Mr Sharma and find that it would contrary to the Respondent’s commitment to be “safe, honest and fair in all their dealings,” if the margin between the staff and the Agreement covered employees was to change unilaterally. I find that Mr Jakeman is ill informed when he says that the staff have already suffered a market rate reduction.
[124] If the principle of ‘past behaviour is a guide to future performance’ is to be applied in this circumstance, then I do not accept that the Applicant is a good corporate citizen. JSPML has been the majority shareholder of the Applicant since September 2013, not the last 6 to 8 months. It was the minority shareholder when its entire workforce was not paid for six weeks. In the last few years, the Applicant has entered into a payment plan with the ATO and an Enforceable Undertaking with the NSW Regulator. The fact that these two ongoing payment plans are current, does not exonerate their past practice. To use the words of Mr Brotherson:
“But what you've had since 2015 is some issues with the Department of Planning & Environment that have been addressed. Any recalcitrant citizen, be it in any area of law, criminal or corporate, is allowed to address it's faults, rectify them, serve the time and move on. We say that's where the company is at. It's dealt with its issues with the ATO; it's got a plan in place there. That's in the evidence of Mr Sharma. It's got a plan in place with the Department of Planning & Environment.”
For the Applicant to be considered to have “served their time,” they must be able to show that they have satisfied and fulfilled their obligations to the ATO and Regulator. The enforceable undertaking continues until 2023. Mr Brotherson advised that the payment plan with the ATO is ongoing. In my view, this scenario compares with the “recalcitrant citizen” being on parole or day release - not having served their time or completely extinguished the penalties imposed for their inappropriate behaviour. The Applicant’s obligations are ongoing.
[125] Based on Mr Jakeman’s testimony, I am satisfied that the current Agreement will result in the Applicant making a profit in 26 of the next 30 years of operation. With the significant increase in mineable coal at Russell Vale, as reported in the 2019 accounts, the future of the Russell Vale mine appears highly profitable. With a forward profit projection and a substantial increase in the quantity of coal to be mined, I find that the cost of the current Agreement is of minimal effect and in line with the cost of production with other coal mines in the Illawarra region.
[126] In accordance with the objects of the Act, I can see no reason to interfere with the negotiated settlement from 2011 when the Applicant is on the cusp of gaining a new mining lease. The appropriate course of action is for the Applicant to employ its workforce in accordance with the provisions of the Agreement, undertake the necessary remediation work to make the mine ready for operation and commence bargaining with their employees while they wait for the approval to recommence mining from the Department. If the financial situation is as dire as suggested, then I am confident that an appropriate and pragmatic outcome can be achieved via these negotiations.”
3. The grounds of appeal
[20] The Appellant’s grounds of appeal were collected into six broad areas (some overlapping) as follows:
1. The Decision was contrary to the evidence and the weight of the evidence.
2. The Decision was contrary to law in that the Commissioner either misunderstood or misapplied the legislation under which he was operating.
s.226(a) - Public Interest
• The Commissioner failed to appreciate at [84] that, in disregarding speculative outcomes, he was required to consider the outcomes of terminating the 2011 Agreement which applied to no-one, rather than the likelihood of some new instrument coming to apply to other persons;
• The Commissioner misapplied the legislation in determining at [85] that pattern bargaining is a preferred outcome and ought be taken into account in considering the public interest; and
• The Commissioner appears at [86] to have either taken into account climate change, or the fact that the 2011 Agreement related to the mining of coal for steel making rather than electrical generation, in determining that the public interest is a neutral consideration, displaying a failure to appreciate the particular public interest outcomes to which the legislation is directed;
s.226(b) - Views of CFMMEU
• The Commissioner misunderstood the capacity in which the views of a registered organisation covered by an agreement are to be considered. Rather than having regard to their views as a representative of employees employed under the 2011 Agreement, the Commission considered their views on a much more wide ranging basis, in particular at [91] their views as to the financial position of Wollongong Coal and the impact upon that financial position of termination of the 2011 Agreement;
s.226(b) - Other Issues and conclusion
• The Commissioner appears at [92] to [127] to have adopted a view of the legislation that, notwithstanding the expressly confined discretion accorded to the Commission under the terms of the FW Act, he had a wide ranging discretion to consider “other issues” not identified by the legislation as bearing upon whether the Commission was required to terminate the 2011 Agreement, and generally demonstrated a pre-disposition against termination that is not consistent with the FW Act.
3. The Commissioner had regard to irrelevant matters in arriving at his decision.
• From [22] to [79] of the Decision the Commissioner recounts the “evidence” received in the proceedings. Much of this material is quite irrelevant to the task before the Commission. At [80] the Commissioner noted that he had taken account of all the evidence earlier referred to, even though no specific mention may be made of it in his express consideration. It is then difficult to know what reliance had been placed on the irrelevant material recounted.
s.226(a) - Public Interest
• Having determined that he should disregard speculative outcomes, at [84] the Commissioner took into account his speculated determination that terminating the 2011 Agreement may lead to a reduction in wages in coal mining in the Illawarra region;
• The Commissioner wrongly took into account at [85] his experience in the electrical contracting and construction industries where pattern bargaining by the industrial parties is the preferred outcome; and
• To the extent the Commissioner had regard at [86] to climate change or the market for product that may be mined at Russell Vale, he had regard to irrelevant matters.
s.226(b) - Views of the CFMMEU
• The views of the CFMMEU as to the financial position of Wollongong Coal and the impact upon that financial position of a decision to terminate the 2011 Agreement, which the Commission took into account at [91], were irrelevant to the matter before the Commission.
s.226(b) - Other Issues and conclusion
• Having identified under separate headings each of the matters the Commission was empowered to have regard to, the Commissioner then proceeded at [92] –[127] upon a wide ranging analysis on matters as diverse as the views of former employees, the Commissioner’s view of the interpretation to be placed upon the financial accounts of Wollongong Coal, the Commissioner’s view of the responsibility of company directors, the Commissioner’s previous experience in hearing matters involving Wollongong Coal, the Commissioner’s view of whether Wollongong Coal would comply with the law and likening its current position to the “recalcitrant citizen” on parole or day release, the propriety of particular provisions of the 2011 Agreement having regard to the Commissioner’s previous experience and an agreement existing in another industry. All these matters, being beyond the scope of the matters the Commission is required to consider under s226 of the FW Act, were quite irrelevant to the Commissioner’s task.
4. The Commissioner failed to have any or any sufficient regard to relevant matters in arriving at his decision.
s.226(a) - Public Interest
• Having at [81] identified the benefits which would flow from a resumption of production at Russell Vale, the Commissioner disregarded these benefits as speculative at [87], as termination of the 2011 Agreement does not guarantee that Russell Vale will re-open;
s.226(b) - Views of Wollongong Coal
• Having recorded at [89] that he had taken into account the views of Wollongong Coal, including that it viewed the 2011 Agreement as too costly and inefficient to recommence operations at Russell Vale, that any resumed mining at Russell Vale would involve the more labour intensive bord and pillar operation, that Wollongong Coal has no means available under the FW Act to vary the 2011 Agreement or make a new agreement, and that further discussions with the CFMMEU (including those convened by the Commissioner) to reach agreement on terms that would support the re-commencement of mining at Russell Vale were unsuccessful, the Commissioner nonetheless determined not to terminate the 2011 Agreement. In the context of a finding that the public interest considerations were neutral, and there being no other party directly affected by the operation of the 2011 Agreement, the Commissioner’s decision cannot be accepted as having relevantly taken into account the views of the employer.
5. The Commissioner mistook the facts from the evidence in the proceedings or made findings that were not available from the evidence in the proceedings. In particular, the Appellant contends that the following findings were unsound:
• At [94] that it would be “foreseeable” that employees would not be paid their entitlements if Wollongong Coal was again to face cashflow constraints;
• At [104] that based on his own undisclosed calculations there would be an annual cost saving of between $650,000 and $1,000,000 if the 2011 Agreement was terminated and that this saving would not be sufficient to “turn around” Wollongong Coal’s financial position, where there was no evidence to support any such finding;
• At [114] that Wollongong Coal had been “secretive” as to its financial affairs when that view was based on Wollongong Coal’s publicly available financial accounts as an ASX listed company;
• At [115] that interest paid by Wollongong Coal was based on an “inflated” interest charge of 5%;
• At [121] that a verbal statement about future re-employment to employees in September 2015, at the time of the then termination of their employment, was other than a reference to clause 18 of the 2011 Agreement, and subject to the operation of the FW Act; and
• At [125] that the 2011 Agreement will result in Wollongong Coal making a profit in 26 of the next 30 years, when its current application to resume mining is only for a 5-year period with no certainty beyond that.
6. The Commissioner failed to properly exercise the Commission’s jurisdiction under s226 of the FW Act because on the facts, the decision was unreasonable or plainly wrong.
[21] In submissions the Appellant raised an additional ground of appeal and contended that the Commissioner’s reasons (and approach) exhibit an actual bias or give rise to an apprehension of bias.
4. The submissions advanced in the appeal
4.1 The Appellant
[22] The Appellant’s case is fulsomely articulated in the detailed grounds of appeal set out above. In written and oral submissions, it contended that permission to appeal should be granted in both the public interest and on discretionary grounds and that the errors in the decision were such as to allow for appellate review in accordance with the principles in House v The King. 17
[23] In relation to appeal ground 2, the Appellant submitted that in approaching the requirements of the FW Act, and the matter before him, the Commissioner placed an emphasis throughout the Decision on a notion of “fairness,” as a priority for enterprise agreements and demonstrated a pre-disposition against their termination inconsistent with the FW Act and established authority, and not directed to his particular statutory task under s. 226. It was also submitted that contrary to the approach emphasised by the Commissioner, Aurizon makes clear that the Object of the FW Act is not required to be met exclusively or primarily by enterprise level collective bargaining, and nor is the termination of an enterprise agreement after its nominal expiry date inconsistent with the Objects in s171.
[24] Further, Aurizon confirms that s. 3 of the FW Act should be read as a whole, and that section 3(f) is not given a particular precedence over, nor does it override or qualify, any other parts of s. 3. It was submitted that the Commissioner’s notion of “fairness” diverted him from the position he expressed (at [112]) to applying a “punitive approach” that requires the Appellant to endure some further and on-going penalty for past issues by not granting its application. The Appellant has not at any point in the history of its application resiled from a prior history of certain non-compliance issues, but its evidence includes details of steps to re-position itself, in order to be a viable and compliant business. Indeed, the application for termination of the 2011 Agreement is related to those efforts and any consideration of fairness would favour the Appellant in any event.
[25] Relevantly, the concern in the First Appeal Decision was that there should be discussions about “employment conditions that would support the re-opening of Russell Vale”, not concern for the rest of the industry. It was however at [85] only speculation by the Commissioner that this would be the likely foreseeable result of terminating the 2011 Agreement, that applies to no employee, in circumstances where he did not (certainly at that point) even take the resumption of mining at Russell Vale as assured. The predisposition of the Commissioner against terminating an agreement after its nominal expiry date disclosed at [85] is directly at odds with Aurizon. Further, the notion of pattern bargaining is inconsistent with the concept in s. 3(f) of the FW Act of “achieving productivity and fairness through an emphasis on enterprise-level collective bargaining…” (emphasis added). This is relevant to the Commissioner’s errors in his consideration of both s. 226(a) and (b).
[26] The Appellant’s circumstances are markedly different to that of other Illawarra coal miners. Mr Colley’s evidence was admitted on the basis that it was accepted that the Appellant is not one of the companies he refers to as making “healthy profits”. There are also substantial public benefits in Russell Vale re-opening, but Mr Jakeman said he will not recommend re-opening to his board if the 2011 Agreement remains applicable.
[27] In his consideration of s. 226(a) the Commissioner should, in all the circumstances, have made a positive finding that termination of the 2011 Agreement was not contrary to the public interest, as opposed to finding it “a neutral consideration”. This would in turn have better informed the Commissioner in performing the task required by s. 226(b) of “taking into account all the circumstances”. It was submitted that the Commissioner misapplied the principles endorsed in Aurizon including by giving an apparent priority to having an enterprise agreement replaced with a further agreement, when such is not the policy of the FW Act.
[28] In relation to s. 226(b)(1) (but also relevant to s. 226(a)) of the FW Act), the Appellant submitted that the Commissioner also misunderstood the capacity in which the views of the Respondent, as a registered organisation covered by the 2011 Agreement, should be considered. Rather than having regard to the Respondent’s views as a representative of employees employed under the 2011 Agreement, of which there are none, the Commissioner considered the Respondent’s views on a much more wide-ranging basis, including in circumstances where he was not convinced that Russell Vale will resume mining. The Appellant also contended that there were inconsistent findings made by the Commissioner which make the decision unreliable, including:
• That there was “no guarantee” that Russell Vale will reopen, including because that is dependent on approval of a lease, and then in evaluating whether termination is appropriate in accordance with s. 226(b) finding at [125] that the Appellant “is on the cusp of gaining a new mining lease”;
• At [85] accepting the Respondent could not endorse lower rates of pay than at other Illawarra mines, and stating his own experience of pattern bargaining being the preference in mining and other competitive industries, but at [116] accepting any future negotiated agreement for Russell Vale may result in lower wages and conditions than at other mines; and
• At [120] saying “real questions exist as to whether the [Appellant] is a going concern”, and then questioning at [125] whether the Appellant’s financial position is as dire as claimed, and expressing satisfaction that “the future of Russell Vale mine appears highly profitable”.
[29] In relation to the what the Appellant submitted to be irrelevant matters raised in appeal ground 3, it pointed to the following aspects of the Decision:
• At [31] and [123] comparing the circumstances of staff employees not covered by the 2011 Agreement who have continued to be employed by the Appellant since 2015, with persons who are not yet employed but may in the future be engaged to perform work within the coverage of the 2011 Agreement, and finding at [123] it would be unfair to those future employees to suffer a reduction in “margin” to the staff employees;
• Having disregarded the likelihood of Russell Vale re-opening as speculative, at [84] making a speculative determination that terminating the 2011 Agreement which applies to no-one may lead to a reduction generally in wages in coal mining in the Illawarra region;
• In speculating that terminating the 2011 Agreement, which applies to no-one, may lead to a reduction generally in wages in coal mining in the Illawarra region, having no regard to the circumstances of the Appellant which mean it is in a vastly different position to others in the Illawarra region;
• At [85] referring to pattern bargaining in the electrical contracting and construction industries as the preferred outcome and at [86] to climate change and the type of coal that can be mined at Russell Vale;
• At [96] and [121] elevating the significance of a comment about clause 18 of the Agreement made by the former CEO to a commitment and stating at [99] that a large electrical contractor has a similar clause in its enterprise agreement (not previously identified to the parties);
• At [111] finding that “one employee, Mr Conkey wants his job back”, where Mr Conkey has been an ex-employee since September 2015, has had other employment, and otherwise describes many other former colleagues who “even if offered…would not accept a job back”.
• At [120] finding that the savings from terminating the 2011 Agreement are minimal to the overall debt of Appellant, and to the extent this took into account the view of the CFMMEU as recorded at [91]; and
• At [124] expressing a view about whether the Appellant would comply with the law, and fulfil obligations to the ATO and Department, and likening its current position to a “recalcitrant citizen” on parole or day release.
[30] As to the considerations that the Appellant contends that the Commissioner failed to take into account under appeal ground 4, it submits that the following were significant:
• The financial circumstances of the business and the consequences that would follow from the termination of the 2011 agreement including to facilitate the opening of the Russell Vale mine, which would not take place without that action;
• At [101] and [124] being dismissive of the Appellant’s efforts to become financially viable into the future, including by entering into and adhering to payment arrangements with the ATO and NSW Mining Regulator;
• At [125] the significant operating differences to other mines in the Illawarra proposed for further mining at Russell Vale, being a more labour intensive bord and pillar operation, and involving the sale of unwashed coal; and
• That the Appellant’s issues of concern with the 2011 Agreement were not limited to wage rates as relied on by the Commissioner at [116], but included the need for flexible operating arrangements reflective of more labour intensive mining.
[31] Further, the Appellant contended that having noted at [89] that he had taken into account the Appellant’s views, including that it viewed the 2011 Agreement as too costly and inefficient to recommence operations at Russell Vale, that any resumed mining at Russell Vale would involve the more labour intensive bord and pillar operation, that the Appellant has no means available under the FW Act to vary the 2011 Agreement or make a new agreement, and that further discussions with the Respondent to reach agreement on terms that would support the re-commencement of mining at Russell Vale were unsuccessful, the Commissioner nonetheless determined not to terminate the 2011 Agreement. In the context of a finding that the public interest considerations were neutral, and there being no other party directly affected by the operation of the 2011 Agreement, the Commissioner’s decision cannot be accepted as having relevantly taken into account the views of the employer.
[32] The Appellant also contended under appeal ground 5 that the Commissioner made factual errors including the following:
• Finding at [94] that it would be “foreseeable” that employees would not be paid their entitlements if the Appellant was again to face cashflow constraints;
• Finding at [104] that based on his own undisclosed calculations there would be an annual cost saving of between $650,000 and $1,000,000 if the 2011 Agreement was terminated, and that this saving would not be sufficient to “turn around” the Appellant’s financial position;
• Finding at [114] that the Appellant had been “secretive” as to its financial affairs where as an ASX listed company its financial accounts are publicly available, and when no issue of “secrecy” had been raised with or by any witness in the proceedings;
• Finding at [115] that interest paid by Wollongong Coal was based on an “inflated” interest charge of 5% and that Mr Jakeman had described this as a “tax minimisation scheme”, which he had not;
• Finding at [121] that the 2015 Comment was other than a reference to clause 18 of the 2011 Agreement, and subject to the operation of the FW Act; and
• Finding at [125] that the 2011 Agreement will result in the Appellant making a profit in 26 of the next 30 years, when its current application to resume mining is only for a 5 year period with no certainty beyond that, and Mr Jakeman’s position on re-opening.
[33] The Appellant further contended that the matters raised in appeal grounds 1, 3, 4 and 5 were significant errors and had the Commissioner not so erred, it should have been found that termination of the Agreement was not contrary to the public interest, and in respect to s. 226(b), that it was appropriate to terminate the 2011 Agreement.
[34] Finally, the Appellant submitted that the Commissioner failed to properly exercise the Commission’s jurisdiction under s. 226 of the FW Act because on the facts, the decision was unreasonable or plainly wrong. If the appeal were granted, the Appellant sought that this Full Bench redetermine and grant the application based upon all of the material already before the Commission.
[35] In relation to the further ground alleging bias raised in submissions in the appeal, the Appellant contended that the Commissioner’s reasons (and approach) exhibit an actual bias or give rise to an apprehension of bias. In this regard, reference was made to the unsuccessful conciliation conducted by the Commissioner involving the Appellant and the Respondent. It was submitted by the Appellant that this was not relevant in the determination of the application but appears to have featured significantly in the Commissioner’s decision and approach to the matter. This was said to resulted in the Commissioner not affording the Appellant procedural fairness and to have manifested injustice. It was further contended that the conduct of the proceedings and the questioning of the witnesses by the Commissioner was not consistent with an impartial mind, and that in the circumstances it would have been prudent for the Commissioner to exercise his judgement and discretion, and recuse himself after the conferences and allow another member to determine the application.
[36] The Appellant submitted that it follows that the Commissioner did not afford the Appellant procedural fairness and manifested injustice on the Appellant. The unsuccessful conciliation of dispute proceedings before the Commissioner in 2013 involving the Appellant and the Respondent, was not relevant and appears to have featured significantly in the Commissioner’s decision and approach to the matter. Further, the conduct of the proceedings and the questioning of the witnesses was not consistent with an impartial mind and. In the circumstances it would have been prudent for the Commissioner to exercise his judgement and discretion, and recuse himself, certainly after the conferences, and allow another member to determine the application.
[37] The Appellant sought to rely upon further evidence in the appeal in the form of an affidavit from Mr Chris Bell, Solicitor who had represented it during some of the earlier proceedings. The affidavit was said to concern the context for the further conciliation undertaken by the Commissioner and some evidence that may cast doubt about whether assurances were given to former employees.
[38] In reply submissions the Appellant observed that the relevant section of the FW Act is entitled “When the Commission must terminate an enterprise agreement” (emphasis added) and that on the Respondent’s analysis, the Commission could, having regard to the circumstance of the weather, determine, contrary to the statutory injunction, not to terminate an enterprise agreement.
4.2 The CFMMEU
[39] Relying upon the decision in CFMEU v Peabody, 18 the CFMMEU contended that the Appellant must demonstrate that the Commissioner acted upon the wrong principle, or mistook the facts, or took into account an irrelevant consideration or failed to take into account a relevant consideration, or determined a result which was unreasonable or manifestly unjust. Further, it submitted that there is no error in the Decision. The public interest is not enlivened nor should permission be granted on other grounds. Permission to appeal should be refused and the appeal dismissed.
[40] In respect of appeal ground 1, the CFMMEU contends that even if correct (which is denied) this would not amount to a House v The King error. That is, it is not enough to simply assert that the Decision was contrary to the evidence. Appellate intervention requires the specific identification of the Commissioner mistaking a fact/s. A complaint about the outcome of the weighing exercise required by s.226 of the FW Act, which was clearly undertaken by the Commissioner, or a compliant that more weight should have been given to certain factors, does not justify appellate intervention.
[41] Further, the CFMMEU contends that there was no necessity for the Commissioner to detail the precise weight to be given to the various considerations and no proper basis for appeal of the discretionary decision applies. 19
[42] As to appeal ground 2, the CFMMEU contends that the Appellant’s submission that the Commissioner either misunderstood or misapplied the law does not withstand scrutiny. In particular, it submitted that the Decision is conventional and keeps within the limits of s. 226 of the FW Act including:
• There is no proper suggestion that the Commissioner’s outline of the history of the matter or the background facts was mistaken;
• At [12] – [14] of the Decision, the Commissioner records the relevant statutory provisions and objects of the FW Act and of the relevant Part;
• At [17] – [19] of the Decision, the Commissioner records the approach taken to s.226 of the FW Act by Full Benches of the Commission. There is no doubt that the principles, which are extracted by the Commissioner in the Decision are the correct principles; and
• The factual findings were open to the Commissioner and for the most part are not disputed and the bulk of which were put before by the Commissioner by the Appellant or responsive to the case advanced by the Appellant.
[43] The CFMMEU further contends that at [81] – [87] of the Decision, the Commissioner addressed s. 226(a) of the FW Act. It is plain from those paragraphs, that in considering the public interest, the Commissioner applied the correct principle. That is, the Commissioner well understood that the public interest was a concept that was distinct from the interests of the parties and referred to matters that might affect the public as a whole. The Appellant is wrong to suggest that in considering the public interest that the Commissioner found that pattern bargaining was a preferred outcome. Rather, the Commissioner found that pattern bargaining occurs. Putting industrial naivety to one side, that is an entirely unremarkable finding. It is certainly a finding that is reasonably open to a member of a specialist industrial tribunal. The finding was made in response to the concerns expressed by Mr Timbs (CFMMEU witness) that termination of the Agreement would trigger a reduction of wages and conditions in the coal industry in the Illawarra.
[44] Further, it argued that an overall reduction in wages and conditions across an industry as significant as the coal industry in one region – which brings with it a reduction of income in that region for workers and their families, and their communities, and possibly less job security – is plainly a matter that is capable of attracting the public interest. In respect of [86] of the Decision, this is an irrelevant matter. The Commissioner briefly raised the subject before correctly finding that the subject was indeed an irrelevant matter. Accordingly, the issue raised did not materially affect the reasoning of the Commissioner and should be disregarded, as it formed no part of his concluded reasons.
[45] At [88] – [118] of the Decision, the Commissioner addressed s. 226(b) of the FW Act. In doing so, the Commissioner correctly applied the law – the Decision demonstrates that the Commissioner correctly considered the views of the employees; the employer; and each relevant employee organisation (s.226(b)(i)); and the circumstances and likely effect of termination on the employees; the employer; and each relevant employee organisation (s. 226(b)(ii)). The Appellant is wrong to suggest that s.226(b)(i) requires that consideration of the views of any relevant organisation be restricted to those views expressed as representatives of an employee covered by the relevant enterprise agreement. No such restriction is found in the plain and ordinary meaning of the words found in s.226(b)(i). The statutory provision (especially given s.226(b)) requiring the decision maker to take into account all the circumstances) extends to whatever view is expressed by a relevant employee organisation and at [119] – [127] of the Decision, the Commissioner engaged in the evaluative weighing exercise required by s.226 and essentially set out his reasons for dismissing the application.
[46] The CFMMEU submitted that s.226 of the FW Act vests discretion in the decision maker and requires an evaluative weighing exercise. It is unremarkable that a decision maker may be guided by general notions of fairness, reasonableness, proportionality etc in deciding where the overall balance is to be struck. In any event, the Appellant’s criticisms are overblown. At [13] & [119] of the Decision, the Commissioner did place emphasis on fairness. However, the reasoning of the Commissioner demonstrates that fairness was only taken into account when considering the increase in hands provision/commitment and the fact that termination of the Agreement would result in significant cuts to wages and conditions for any (future) employee covered by the Agreement, but staff employees have not suffered any reduction to their salaries. It is hardly a misapplication of the law for the Commissioner to have regarded either matter – the breaking of a promise by the Appellant to rehire & seeking massive cuts to wages and conditions of mineworkers but not staff – as unfair and matters to be weighed into coming to his overall decision.
[47] Section 226(b) required the Commissioner to take into account the matters specifically identified at s.226(b)(i) & (ii), as well as all of the circumstances. Contrary to what appears to be suggested by the Appellant, the discretion conferred on the Commissioner is not confined to the matters specifically identified at s.226(b)(i) & (ii). Accordingly, the Commissioner’s consideration of the “other issues not identified by the legislation” does not amount to a misapplication of the law.
[48] As to the Appellants’ contentions on bias, the CFMMEU submitted that the resolution of that issue was a two-step test. The first step requires identification of the factors or circumstances that are said to have led the Commissioner to make the Decision other than on the merits. The second step requires a logical connection between those factors or circumstances and the fear that the Commissioner might not properly resolve the matter on its merits.
[49] Noting that the Appellant relies significantly on the conduct of the hearing in this regard, the CFMMEU observed that, at no point during the hearing did Counsel for the Appellant make any disqualification application. In terms of the Commissioner requiring evidence from the Appellant on certain matters, these were within the remit provided to the Commissioner by s.590 of the FW Act and concerned issues that were plainly relevant to the proceedings. Further, with the exception of bushfires/climate change, all of those questions asked by the Commissioner went squarely to the key matters in contest between the parties – the increase in hands clause/commitment, financial position of the Appellant etc. The most obvious being the Appellant’s deplorable history of complying with its legal obligations including as to its failing to pay employees, the Australian Taxation Office and the New South Wales Resource Regulator. This was plainly relevant because of the undertaking offered by the Appellant and the Commissioner squarely and appropriately raised this issue with the Appellant.
[50] There is nothing in the questions asked by the Commissioner or the manner in which they were asked that is capable of grounding a finding that the Commissioner decided the matter on anything other than the merits. This includes that the Commissioner convene conferences as directed by the Full bench in the First Appeal and his comments at [124] of the Decision about the "recalcitrant citizen being on parole or day release’’ arose from that analogy used by its own witnesses.
[51] The CFMMEU rejected the notion that the Commissioner had regard to irrelevant matters as contended in appeal ground 3. In particular, it submitted that likewise, the interests of the former employees, such as Mr Conkey, cannot be dismissed as an irrelevant consideration. The former employees, especially those such as Mr Conkey who seek to return to work at the Mine (assuming the Appellant obtains the necessary approval to recommence mining with the lack of mining approval being the principal reason for the Mine being placed on care and maintenance and not being able to reopen) have a legitimate and genuine interest in the continued operation of the Agreement. That is because the Agreement contains an increase in hands clause which provides an opportunity for redundant mineworkers to be re-employed, but only where the Appellant decides to recruit employees (and subject to other criteria) 20. Furthermore, the unchallenged evidence given by Mr Timbs in both the hearing before Senior Deputy President Hamberger and before the Commissioner was that the Appellant had promised the employees as they were being advised that they were being made redundant, that if the Mine reopened (after getting the necessary approval) that they would be rehired.
[52] Appeal ground 4 seems to make the same point as Ground 1, that is, a complaint as to the weight/regard given by the Commissioner to particular matters. This is not a House v King error. The CFMMEU also contended that no error was evident from the matters raised in appeal ground 5. It submitted that the findings were reasonably open to the Commissioner on the evidence; were relevant to the matter; and had properly formed part of the discretionary decision made in the matter. This included:
• The finding at [104] of the Decision is accurate. As recorded at [102] of the Decision, the Appellant’s operating loss for the financial year ending March 2019 was a loss of - $379,230,000. Termination of the Agreement would not come close to bringing that massive loss to break even or even make a material difference to the financial performance of the Appellant. This is also consistent with the evidence of Mr Sharma; and
• The finding at [125] of the Decision as to the profitability of the Mine over the longer term is entirely consistent with the evidence of Mr Jakeman. The Commissioner well understood that the Appellant was seeking approval to recommence mining for 5 years, however, the facts demonstrate that the life of the Mine is not restricted to 5 years. Plainly, the facts demonstrated that subject to that initial 5 years approval being granted and mining recommences that the Appellant planned to continue mining for a further 25 years. Importantly, the Appellant was planning to be profitable from the 5th year.
[53] In relation to appeal ground 6, the CFMMEU contends that the Appellant has failed to explain how the Decision was unreasonable or plainly wrong. The Decision is not one of those rare cases where the second limb of House v King can be relied upon. That is, the Decision was not manifestly unjust, especially given the evidence of Mr Sharma set out above that termination of the Agreement will not make a material difference to the Appellant’s performance.
[54] The CFMMEU opposed the receipt by the Full Bench of further evidence as proposed by the Appellant.
5. Permission to appeal
[55] Section 604 of the FW Act provides as follows:
“604 Appeal of decisions
(1) A person who is aggrieved by a decision:
(a) made by the FWC (other than a decision of a Full Bench or an Expert Panel); or
(b) made under the Registered Organisations Act by:
(i) the General Manager (including a delegate of the General Manager); or
(ii) the Registered Organisations Commissioner (including a delegate of the Commissioner);
may appeal the decision, with the permission of the FWC.
(2) Without limiting when the FWC may grant permission, the FWC must grant permission if the FWC is satisfied that it is in the public interest to do so.
Note: Subsection (2) does not apply in relation to an application for an unfair dismissal (see section 400).
(3) A person may appeal the decision by applying to the FWC.”
[56] An appeal under s 604 of the FW Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker; see: Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ. There is no right to appeal and an appeal may only be made with the permission of the Commission. Subsection 604(2) requires the Commission to grant permission to appeal if satisfied that it is in the public interest to do so. Permission to appeal may otherwise be granted on discretionary grounds.
[57] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment; see: O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78 at [44]-[46]. The public interest is not satisfied simply by the identification of error, or a preference for a different result; see: GlaxoSmithKline Australia Pty Ltd v Makin[2010] FWAFB 5343 at [26]-[27], 197 IR 266 (‘GlaxoSmithKline’); Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth[2010] FWAFB 10089 at [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe (‘NSW Bar Association’); Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28]. In GlaxoSmithKline, a Full Bench of the Commission identified some of the considerations that may attract the public interest at [27]:
‘… the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters…’
[58] Other than the special case in s 604(2), the grounds for granting permission to appeal are not specified. Considerations which have traditionally been treated as justifying the grant of permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration and that substantial injustice may result if leave is refused; see also: CFMEU v AIRC (1998) 89 FCR 200 and Wan v AIRC (2001) 116 FCR 481.
[59] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error; see: Wan v AIRC (2001) 116 FCR 481 at [30]. However, that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.
[60] Further, in considering permission to appeal, and any appeal more generally, the Full Bench should read a decision as a whole and fairly. There is no requirement for a decision-maker to refer to every piece of evidence and every submission in a decision, provided that the decision-maker deals with those matters which are centrally relevant and sets out the reasoning which leads to the outcome which is determined. 21
[61] It is important to note that an application for permission to appeal is not a de facto or preliminary hearing of the appeal. In determining whether permission to appeal should be granted, it is unnecessary and inappropriate for the Full Bench to conduct a detailed examination of the grounds of appeal; see: Trustee for The MGTI Trust v Johnston [2016] FCAFC 140at [82]. However, it is necessary to engage with those grounds to consider whether they raise an arguable case of appealable error.
[62] We consider that permission to appeal should be granted in this matter on public interest and discretionary grounds. The appeal raises important and novel questions about the application of the statutory criteria in s.226 of the FW Act when an employer no longer employs employees covered by an enterprise agreement and is not at the time, able to vary the agreement or make a new one. Further, the appeal grounds raise arguable errors with respect to the Decision which warrant its review on appeal.
6. Consideration
[63] It is appropriate that we commence our consideration by reference to the terms of s.226 of the FW Act set out earlier in this decision. In broad terms s.226(a) of the FW Act requires that the Commission must be satisfied that the termination of the enterprise agreement is not contrary to the public interest. Under s.226(b), the Commission must consider and take into account the positions and circumstances of the parties, including the effect that the termination will have. This involves the Commission treating those considerations as a matter of significance in the decision-making process.22
[64] Where the Commission is satisfied that the termination of an enterprise agreement is not contrary to the public interest (s.226(a)), and having regard to the considerations provided in s.226(b) that the termination of the enterprise agreement is appropriate, it is obliged to terminate the agreement. The assessment of whether the termination is appropriate is to be made after taking account of all the circumstances, including the views of the employees, each employer and each employee organisation (if any) covered by the agreement; and the circumstances of those employees, employers and organisations, including the likely effect that the termination will have on each of them.
[65] Section 226 is placed within Part 2-4 of the FW Act, and these provisions are part of a scheme designed to enable bargaining for, making of, approving, varying and the termination of enterprise agreements. The objects of Part 2-4 are set out in s.171 in the following terms:
“171 Objects of this Part
The objects of this Part are:
(a) to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits; and
(b) to enable FWA to facilitate good faith bargaining and the making of enterprise agreements, including through:
(i) making bargaining orders; and
(ii) dealing with disputes where the bargaining representatives request assistance; and
(iii) ensuring that applications to FWA for approval of enterprise agreements are dealt with without delay.”
[66] The Object of the FW Act itself, and the means by which that object is to be achieved, is contained in s.3 which provides as follows:
“3 Object of this Act
The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:
(a) providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and
(b) ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and
(c) ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and
(d) assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and
(e) enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and
(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action; and
(g) acknowledging the special circumstances of small and medium-sized businesses.”
[67] After considering this context and other provisions of the FW Act, the Full Bench in Aurizon stated:
“[126] The legislative scheme therefore enables and facilitates good faith bargaining for an enterprise agreement. It also facilitates the making of enterprise agreements but does not mandate that result. Once an enterprise agreement is made and approved by the Commission, it seems clear that the legislative scheme does not intend that such agreements operate in perpetuity. Agreements have a finite nominal life. At the end of the nominal life of an agreement, bargaining parties may bargain for a new agreement utilising all of the tools available under the Act; or a person to whom an agreement applies may take steps to bring the agreement to an end in accordance with the provisions of the Act; or both may occur.”
[68] The Full Bench in Aurizon also noted and relied upon other aspects of the bargaining scheme of the FW Act, including good faith bargaining requirements and the Commission’s capacity to make bargaining orders, the capacity for employees to organise and engage in protected industrial action and an employer’s right to respond through employer response action; and the processes available under s.240.23
[69] In dealing with a ground of appeal which sought to challenge Aurizon on the basis that the pursuit of enterprise agreements as the means for productivity improvements was a priority in the scheme of the FW Act, the Full Court of the Federal Court observed as follows:
“[23] First, both s 3 and s 171 of the FW Act set out the objects of the provisions to which they refer (the FW Act as a whole and Pt 2-4 respectively). While the Commission would undoubtedly be required to exercise any otherwise unconfined discretion in a way that was not antagonistic to these objects, it must be remembered that the primary means by which the legislature sought to achieve them was to enact the detailed provisions of the FW Act itself. It will be the section, or group of sections, that applies directly that will most usefully indicate what it was the legislature was seeking to achieve in a particular situation. What the Full Court said about s 208 of the FW Act in Toyota Motor Corporation Australia Ltd v Marmara (2014) 222 FCR 152, 178-179 [86] was an instance of this approach.
[24] Secondly, the importance of enterprise agreements in the regulation of terms and conditions of employment under the FW Act cannot be gainsaid. Neither can the central role of collective bargaining in that arena. But we would agree with the Commission insofar as it observed that there is no indication in the FW Act that the existence of a previously-negotiated enterprise agreement should, a priori, be regarded as providing particular encouragement to collective bargaining. Indeed, the legislation contemplates that, at least generally, once a new enterprise agreement has been made, it will apply to those covered by it at least until its nominal expiry date. Under such an environment of stable industrial regulation, what need there would be for further collective bargaining is not immediately obvious. This perception of the scheme of the FW Act is, of course, consistent with the terms of s 417 – and its companion provision, s 413(6) – which proscribe industrial action until the nominal expiry date of the applicable enterprise agreement.
[25] Thirdly, and relatedly, the period after the nominal expiry date of an enterprise agreement is likely to be the very time that the parties concerned are engaged in serious, if not disputatious, collective bargaining. There is, of course, no suggestion in the FW Act that the relevant employer and its employees would not commence to bargain before, even well before, that date (as happened in the present case), but, if they do so and conclude the terms of a new agreement, the existing agreement will cease to apply immediately it passes its nominal expiry date (s 58(2)(d)(ii)). Alternatively, if there is no new agreement until after the existing agreement has passed its nominal expiry date, the existing agreement will cease to apply when the new one comes into operation (s 58(2)(e)). In the context of an ongoing, single-enterprise, business, the most obvious situation in which recourse might be had to s 226 of the FW Act would be where an existing agreement had passed its nominal expiry date (a jurisdictional fact under the section) but where no new agreement had been made. This is the very situation in which collective bargaining is likely to be proceeding; and it is the only time in which industrial action associated with such bargaining might be – subject to compliance with other statutory requirements – protected under Div 2 of Pt 3-3 of the FW Act. The proposition that, as a matter of statutory policy, there should be a predisposition towards regarding it as contrary to the public interest to terminate an enterprise agreement during a period when collective bargaining is taking place must, in the circumstances, be regarded as a most unlikely one.”24
[70] Amongst other implications of these and later authorities, is that the object of the FW Act in s.3 may potentially be achieved by various means including enterprise level collective bargaining with an existing agreement in place, and by other means, such as the termination of an expired agreement and the continuation of collective bargaining that has commenced in good faith, for an enterprise agreement that delivers productivity benefits.
[71] In relation to this aspect, we note that the Full Bench of the Commission in Aurizon placed weight on the impact of the restrictive provisions of the enterprise agreements concerned upon the productivity and efficiency of the applicant employer’s business.25 This is also evident in the decision of the Full Bench in “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Griffin Coal Mining Company Pty Ltd26 including the financial and trading position of the employer in that matter.27
[72] Further, there is no presumption under the FW Act that an enterprise agreement will continue unaltered in perpetuity after it has passed its nominal expiry date. The legislation guarantees the continuation of the relevant modern award and NES safety net, not the terms and conditions of employment contained in a nominally expired agreement.
[73] However, there is also no legislative presumption that the termination of an enterprise agreement upon reaching its nominal expiry date is appropriate.28 In addition, the impact of any termination upon the bargaining dynamic, including the impact upon the bargaining positions and options then available to the parties, is a relevant consideration.29 Further, the impact of any termination upon employees by way of diminished terms and conditions of employment is an important matter and any proper undertakings about those matters by an employer would be relevant to that assessment and the exercise of the discretion more generally.30
[74] Although decided in the context of ongoing bargaining for a new enterprise agreement, we consider that the approach adopted in Aurizon to be relevant to the issues before the Commissioner in this matter. This is so, notwithstanding that the specific and different circumstances of the parties in the present case, including the fact that the mine in question was not in operation, the history of the mine and the status of the business, and the fact that no relevant employees were presently engaged, provided a different context that was to be taken into account. Consideration of this different context was required by s.226(b) of the FW Act.
[75] Finally, we observe that s.226 requires the exercise of a type of discretion. As the High Court observed in Coal and Allied Operations v Australian Industrial Relations Commission (footnotes omitted): 31
“ ‘Discretion’ is a notion that ‘signifies a number of different legal concepts’. In general terms, it refers to a decision-making process in which “no one [consideration] and no combination of [considerations] is necessarily determinative of the result.” Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made. The latitude may be considerable as, for example, where the relevant considerations are confined only by the subject-matter and object of the legislation which confers the discretion. On the other hand, it may be quite narrow where, for example, the decision-maker is required to make a particular decision if he or she forms a particular opinion or value judgment.” 32
[76] As discussed in CFMEU v Peabody Energy Australia PCI Mine Management Pty Ltd 33 and CFMEU v AGL Loy Yang Pty Ltd,34 s.226 of the FW Act involves the exercise of a “narrow” discretion of the type described in the last sentence of the above passage, though it remains the case that the evaluative assessments required by s.226(a) and (b) allow a degree of latitude on the part of the decision-maker as to the conclusions to be reached.35
[77] Section 226(b) requires the Commission to take particular matters into account in making its evaluative assessment. A statutory requirement that a matter be taken into account means that the matter is a ‘relevant consideration’ in the sense discussed in Minister for Aboriginal Affairs and Another v Peko-Wallsend Limited and Others (Peko-Wallsend), 36 that is, it is a matter which the decision maker is bound to take into account. The obligation to take into account all of the circumstances including the matters in s.226(b)(i) and (ii) means that each of the matters must be treated as a matter of significance in the decision-making process.37 As Wilcox J said in Nestle Australia Ltd v Deputy Federal Commissioner of Taxation:38
“To take a matter into account means to evaluate it and give it due weight, having regard to all other relevant factors. A matter is not taken into account by being noticed and erroneously discarded as irrelevant.” 39
[78] Against this background it is convenient to commence our consideration with appeal ground 2, in which it asserted that the Decision was contrary to the law, in that the Commissioner either misunderstood or misapplied the relevant provisions. This ground has various elements and many of these are linked to the other appeal grounds that are canvassed below. Three related aspects also warrant separate consideration at this juncture.
[79] The Appellant contends that the Commissioner’s approach to the notion of “fairness” within the present legislative scheme, his priority for enterprise agreements, and a predisposition against their termination, was inconsistent with the terms of the FW Act and established authority and not directed to the particular task required under s.226. Further, the Appellant contends, in effect, that the Commissioner discounted what he found to be the “speculative” public interest benefits associated with the termination of the 2011 Agreement but relied upon equally speculative outcomes in terms of the claimed downward pressure on local wage rates within the coal mining sector. There is some basis for this contention and we will return to this aspect in due course.
[80] At [13] of the Decision, the Commissioner sets out s.3 of the FW Act and emphasises subclause (f) which states “achieving productivity and fairness through an emphasis on enterprise level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action.” While emphasising that aspect of the Objects of the Act the Commissioner went on to set out the approach taken by the Full Bench in Aurizon, 40 and that there is nothing inconsistent between the termination of an enterprise agreement after the end of its nominal expiry date and the continuation of good faith bargaining or the framework and objects of the FW Act.41
[81] However, it appears to us that having stated those principles, the Commissioner did not properly apply them to the matter before him. In the context of the circumstances where the Appellant could not apply to vary the Agreement or renegotiate its terms, given the absence of relevant employees, and where the only viable method of operation was materially different to that in place when the Agreement was negotiated, the assessment of the appropriateness of termination required specific findings about the claimed consequences and proper weight to be afforded to those matters. The capacity for employees to utilise the bargaining provisions of the FW Act to bargain for appropriate terms and conditions, in the event of the termination of the Agreement and the reopening of the mine, should also have been considered.
[82] At [120] of the Decision, the Commissioner commences his conclusion in relation to the notion of fairness by reference to the second reading speech. He then states that “real questions exist as to the whether the Appellant is a going concern”. This observation indicates that the Commissioner was focused upon the financial affairs of the Appellant rather than the broader statutory issues. Although this was relevant to the assessment of the claimed impact of, and need for, the termination of the 2011 Agreement, the absence of specific findings about that impact and the consequences for the determination of the statutory question, namely whether the termination was appropriate in light of the matters we have identified above, does raise concerns about whether s.226 has been properly applied in this case.
[83] We are not persuaded that the Appellant has demonstrated actual or apprehended bias on the part of the Commissioner as advanced in its oral submissions. That proposition is based upon the actual conduct of the proceedings, including the continuation of the determinative process following the “unsuccessful” conciliation of the matter. This ground lacks merit given that at all stages, the Appellant was represented by experienced legal counsel and no objection was taken on the basis of bias at any juncture prior to the appeal. 42 We also note that the Commissioner dealt with the matter in the manner set out by the Full Bench in the First Appeal decision and no issue was taken with that course by the Appellant. To the extent that the Appellant now claims bias based upon the Decision itself, this is certainly not made out and we reject this ground of appeal.
[84] As stated earlier, we do accept that there is some tension between the view taken by the Commissioner that public interest and related benefits are speculative in the absence of approval of mining, while later proceeding on the basis that approval is imminent and that the Appellant should employ persons then negotiate a replacement agreement with them. This is a matter to which we will also return.
[85] We turn now to the various appeal grounds as they more directly address s.226(a) of the FW Act – the public interest grounds. On face value, the Commissioner’s conclusion at [87] that “the public interest is a neutral consideration” is problematic. Given the terms of s.226(a) of the FW Act, the Commissioner was required to form a view as to whether the termination of the 2011 Agreement would be contrary to the public interest. A finding that the termination was contrary to the public interest would have meant that the Commissioner need not determine whether that action was appropriate in all of the circumstances (s.226(b)). A finding that the termination was not contrary to the public interest enlivens the assessment as to whether it would be appropriate. Read as a whole, we consider that a fair reading of the Decision is that the Commissioner did not conclude that the termination was contrary to the public interest. No party contended otherwise, either before the Commissioner, this Full Bench, or in other proceedings, and the fact that the Commissioner ultimately considered whether the termination of the agreement was appropriate, is consistent with the view we have taken on this aspect.
[86] However, the matters taken into account by the Commissioner in forming his view about the public interest also require some consideration. Consideration of the public interest in s.226(a) of the FW Act is informed by the following matters. Firstly, the notion of public interest refers to matters that might affect the public as a whole, such as the achievement or otherwise of the various objects of the FW Act, employment levels, inflation, and the maintenance of proper industrial standards. The ascertainment of the public interest may involve balancing countervailing public interests. Secondly, while the content of the notion of public interest cannot be precisely defined, it is distinct in nature from the interests of the parties and although the public interest and the interests of the parties may be simultaneously affected, that fact does not lessen the distinction between them. Thirdly, the Commission's consideration of the public interest for present purposes is directed to the consequences of terminating the agreement. By definition, this involves a degree of speculation. In a given case, some consequences will be clearly predictable, others will be less so. For the most part, the Commission should be guided by the likely foreseeable consequences of termination rather than speculation about possible consequences.43
[87] We have set out elsewhere the matters identified by the Commissioner in his consideration of the public interest. In relation to the benefits potentially arising from the termination of the Agreement, the Commissioner indicated his view that the positive public interest considerations such as jobs, taxation and community support would be speculative because the Appellant is yet to receive approval from the Department to recommence mining. 44
[88] The Commissioner also considered that if the CFMMEU was to endorse a lower rate of pay in an enterprise agreement for Wollongong Coal, the other mining companies in the District would demand no less favourable treatment. In this regard the Commissioner noted that such an expectation is common in other competitive industries such as electrical contracting and construction where, from his experience, pattern bargaining by both industrial parties is the preferred outcome. This would result in lower wages being paid across the entire coal mining industry in the Illawarra at a time when most companies are enjoying profitable operations. 45
[89] Further, the Commissioner made some comments in relation to climate change observing that the New Year bushfires on the South Coast were catastrophic, as they were in other locations around Australia, and concluded that the issue of coal mining and its link to climate change is a matter for the Government, not the Commission. The Commissioner also noted that Applicant mines coking coal which is used in the steel making process and not thermal coal which is used to generate electricity. 46 Finally the Commissioner observed that the termination of the Agreement does not guarantee that Russell Vale will be re-opened as this is dependent on a decision from the Department and a subsequent decision from the Board of Wollongong Coal.47
[90] With the exception of the reference to climate change, the nature of the matters the Commissioner considered are unexceptional and are relevant to the assessment of the public interest in the present context. It is also apparent that the Commissioner considered and properly dismissed the issue of climate change as not being a matter for the Commission. We are also of the view that on a fair reading of the Decision, the reference to pattern bargaining did not represent a stated preference, but rather, an explanation as to why changes in employment arrangements at one mine might have an influence on wages and conditions within the broader coal mining region. As alluded to earlier, reasonable minds might differ as to the weight to be afforded to the potential impact on wages in the Illawarra region, given that if and when the mine recommenced, the employees then employed would be free to bargain for a new enterprise agreement under the bargaining provisions of the FW Act. Notwithstanding this, that potential impact is not irrelevant.
[91] One of the central points of contention in this matter was the impact of the termination of the Agreement upon the potential resumption of the mine. Although the Commissioner outlined the claimed employment and other benefits cited by the Appellant, he did not make a finding about whether the termination of the Agreement would remove an impediment to its reopening. This would have more fully informed the consideration as to whether the termination was not consistent with the public interest and the issues raised by s.226(b) of the FW Act. We will return to this matter. However, given that the Commissioner ultimately found, in effect, that the termination was not contrary to the public interest, we would not grant the appeal on that basis alone.
[92] The Appellant’s challenge to the Decision as to whether the termination of the 2011 Agreement was appropriate under s.226(b) of the FW Act is largely based upon the propositions that the Commissioner took irrelevant matters into account and failed to have regard to certain relevant matters. We have earlier dealt with the broader challenges based upon alleged bias and what was claimed to be the predisposition against termination, which we have rejected.
[93] We deal first with what are said to have been the irrelevant matters raised in appeal ground 3. In respect of s.226(b) two significant matters were raised by the Appellant. Firstly, the nature of views of the CFMMEU taken into account by the Commissioner in his consideration of s.226(b) and in particular the Union’s view that, based on the overwhelmingly poor financial situation the of Applicant, the termination of the Agreement would make little material difference to the financial position of the Applicant.
[94] The CFMMEU is an organisation covered by the 2011 Agreement. It is evident that s. 226(b) contemplates the Commission taking into account the organisation’s views about the proposed termination of the Agreement. The Commission is also required to consider the likely impact of the proposed termination upon the relevant organisation (amongst others). Read narrowly, the Commissioner took into account the view that the termination of the Agreement (would) have little material difference to the financial position of the Appellant. However, a fair reading of the Decision reveals that the Commissioner was aware of, and took into account, the full basis of the CFMMEU’s position against the termination of the 2011 Agreement as set out earlier in the Decision and referenced in [91]. We do not consider that the CFMMEU’s role in the termination of a particular enterprise agreement, and the relevance of its views about the impact of the termination of an agreement, is limited only to the Union’s capacity as a direct representative of the particular employees concerned. 48 In our view, the CFMMEU has an interest in the coal mining industry generally and the terms and conditions of its members across that industry. The views of the Union about the impact of the proposed termination in relation to its members covered by the Agreement and its membership across the industry generally, and any impact upon it as an organisation, are also potentially relevant to the assessment of whether it is appropriate to terminate an enterprise agreement. We do not consider that the Commissioner had regard to irrelevant matters when considering the position of the CFMMEU under s.226(b)(i) and (ii) of the FW Act. Indeed, the absence of a specific finding about the issues raised by those views is potentially significant in this matter.
[95] The second substantive matter raised in the present context by the Appellant is the Commissioner’s consideration of the view of the former employees. It is evident that the Commissioner, correctly, did not consider those views under s.226(b)(i) of the FW Act. The employees referred to in that provision are employees covered by the enterprise agreement concerned and there are no such employees in this case. Rather, the Commissioner considered this aspect under the heading of “other issues”. Read fairly, we consider that the Commissioner was taking these matters into account on the basis that he was required to take into account all of the circumstances. The question remains whether he was entitled to do so.
[96] In this matter, the Commissioner dealt with two aspects that potentially made this consideration relevant. Clause 18 of the 2011 Agreement provides as follows:
“18. WORKFORCE REDUCTIONS
It is not the intention of NRE No 1 Colliery to implement a program of forced retrenchments.
If Management has made a definite decision to reduce the number of full time employees by means other than ordinary and customary turnover of labour and that decision may lead to termination of employment, management will hold discussions with employee representatives and the employees affected by this reduction.
A full and thorough process of consultation between the parties will occur to enable consideration of all reasonably practicable alternatives to implementing forced retrenchments, which would include:
• Reduction by natural attrition and/or voluntary redundancy based on the operational requirements of the Colliery;
• Exploring the possibilities of employment opportunities within NRE operations.
Where compulsory retrenchment is required of the Company workforce, the skills required to operate the Colliery in a safe and efficient manner will be considered following the implementation of natural attrition and voluntary retrenchment.
If a compulsory retrenchment of permanent employees is to occur during the term of this Agreement, the employees to be retrenched, unless otherwise agreed, are those taking consideration into skills, training and experience, competencies, within their class of work time employed.
Where terminations occur due to redundancy, employees will be entitled to:
• Pay - one (1) ordinary weeks pay for each completed year of service
• Retrenchment Pay - two (2) ordinary weeks pay for each completed year of Service
NRE No 1 Colliery will not be liable for payment of severance and retrenchment pay where, with in seven (7) days of the termination of employment of the employees, if it obtains or causes to be made available reasonable permanent alternative employment for the employee within the Southern Districts.
• That the employee is competent to perform;
• In a position that carries the same or higher classification rate of pay;
• That can be reasonably be regarded as permanent.
Continuous years of service with NRE No 1 Colliery are required for the purpose of payments under this clause.
When the Company decides to recruit employees, then ex NRE No 1 Colliery employees who were made redundant involuntarily shall be re-employed provided that:
• The personnel covered by th is agreement are those people who were ex-full time employees of NRE No 1 Colliery.
• The positions being recruited for are full time permanent.
• The applicants have the necessary skills and experience for the position.
• Applicants are capable of performing the inherent requirements of the job for which they apply. For this purpose a medical examination will be required.”
[97] In addition, the Commissioner concluded that the Appellant’s former CEO gave a commitment to the workforce that if the mine were to recommence operation then they would be re-employed. 49 This did not mean that the Appellant could not subsequently seek to terminate the Agreement and change the previously agreed arrangements, but the existence of the clause and any commitment which may have been made in relation to it was itself a relevant consideration and a matter to which the Commissioner was entitled to have regard.
[98] Although not one of the prescribed factors to be taken into account in s.226(b), those considerations are not exhaustive, and the Commission’s statutory charter is to take into account all of the circumstances. In light of clause 18 of the 2011 Agreement and the position advised to the former employees, the fact that the termination of the agreement would mean that clause 18 would no longer apply, was a relevant consideration. 50 A fair reading of the Decision indicates that this is the effect of the approach adopted by the Commissioner. That is, although the Commissioner discussed somewhat similar arrangements applying in other industries and in other coal mining agreements, this appears to be context rather than central to his consideration.
[99] We are not satisfied that the Appellant has demonstrated that the Commissioner had regard to irrelevant matters when reaching his decision. We turn now to the contention that relevant matters were not given any weight, or given insufficient weight, in the Decision – appeal ground 4. The Appellant’s primary contention in relation to s.226(b) of the FW Act is that the Commissioner failed to take into account its views and the consequences for it as the employer. This proposition was based upon the Commissioner’s statement that he had regard to the fact that the Appellant had no means to address the fact that the 2011 Agreement was too costly and inefficient to recommence operations at the Russell Vale mine and that any resumed mining would involve the more labour intensive bord and pillar operation. 51 However, despite the fact that the public interest considerations were neutral, and no other party was directly affected by the operation of the 2011 Agreement, the Commissioner still declined to terminate the agreement.
[100] There can be no doubt that these views and consequences, to the extent justified by the evidence, were entirely relevant to the assessment of the s.226 application. Regrettably, the Commissioner did not make direct findings about the substance of some of these matters other than to describe them as being speculative. Should the Commissioner have found that the Appellant would not reopen the mine without the termination of the Agreement, whilst still contingent upon mining approval and finance, this finding would have significantly informed the Commission about the impact of the termination, and its appropriateness. Alternatively, if the Commissioner found that the mine might reasonably reopen without the termination, this would have had a significant impact upon the assessment required by the FW Act. It appears to us, with respect, that the Commissioner found that the Mine should reopen without the termination of the Agreement. However, in so finding, the Commissioner did not properly engage with the findings and considerations required by s.226(b) of the FW Act.
[101] We turn now to consider the proposition that the Commissioner mistook the facts or made findings that were not available on the evidence – appeal ground 5. These can be grouped as follows. At [94] the Commissioner found that it would be “foreseeable” that employees would not be paid their entitlements if Wollongong Coal was again to face cashflow constraints. The Appellant contends that there was no proper foundation for this finding. This was relevant as it concerned, amongst other matters, the weight to be given to the undertaking proffered by the Appellant. The evidence before the Commission supports the finding that the Appellant had, at previous times, variously not paid employees and not met some taxation obligations when required. The non (delayed) payment to employees during an earlier time of cashflow constraints, was not in dispute and relevant to the ultimate finding made on this matter. The more recent changes in the corporate structure of the Appellant was also a relevant element and this was advanced by the Appellant and apparently taken into account by the Commissioner.
[102] However, the evidence provided by the Appellant was that other changes had taken place to avoid the kind of events that took place in 2013 and it is not clear that this featured in the decision-making process undertaken by the Commissioner. The acknowledgment by the Appellant’s Company Secretary, Mr Sharma, that there remained the potential for some delays (of payments) “once in a while”, 52 referenced by the Commissioner was relevant but should be understood that this was referring to supplier payments and not necessarily to wages and other employee entitlements. On balance, the Commissioner’s conclusion on this aspect was open on the evidence before him, albeit in our view this remained somewhat speculative.
[103] The Appellant contended that the Commissioner’s finding at [104], that there would be an annual cost saving of between $650,000 and $1,000,000 if the 2011 Agreement was terminated and that this saving would not be sufficient to “turn around” Wollongong Coal’s financial position, was based on his own undisclosed calculations and there was no evidence to support any such finding. We accept that the foundation for the cost saving figure is, at best, unclear. However, the Appellant conceded that the termination of the 2011 Agreement would not make a material difference to the overall financial performance of the company. 53 As a result, the finding itself was reasonably open to the Commissioner.
[104] At [114] The Commissioner found that Wollongong Coal had been “secretive” as to its financial affairs. The Appellant submits that this view was based on Wollongong Coal’s publicly available financial accounts as an ASX listed company and was not open to the Commissioner. We agree that there is little foundation for this finding. It was the case that the complexity in the financial affairs of the Appellant, with the range of different foreign corporate entities, was acknowledged by the Appellant. 54 On balance however, we do not consider that this finding was significant and that it constituted an appealable error.
[105] At [115] the Commissioner found that interest paid by Wollongong Coal was based on an “inflated” interest charge of 5%. This finding reflects that the Commissioner was open to the fact that within a group of companies, one legal entity may extend finance to another. The rate of the interest charge as found by the Commissioner was open on the evidence. Whether it was “inflated” is a matter of judgement. We apprehend that this was part of the Commissioner’s consideration of the financial status of the Appellant. This finding was probably unnecessary but given the overall finding about the nature of the Appellant finances, we do not consider that this was an appealable error.
[106] At [125] the Commissioner found that the 2011 Agreement will result in Wollongong Coal making a profit in 26 of the next 30 years, when its current application to resume mining is only for a 5-year period with no certainty beyond that. This finding was based upon relevant evidence and the finding was open to the Commissioner. The fact that the mining approval was being sought for 5 years was recognised by the Commissioner.
[107] Lastly, we turn to the Appellant’s contentions that the Decision was against the weight of the evidence, the Commissioner failed to properly exercise the jurisdiction under s.226 of the FW Act and that the Decision was unreasonable or plainly wrong – appeal grounds 1 and 6.
[108] As would clear from the above, while there are a number of issues that were canvassed by the Commissioner that had marginal relevance to the matter, none of these were of significance given the findings made on each of the considerations involved. Further, reasonable minds might differ on some aspects of the findings and the weight to be given to each element. This includes the degree to which the likely benefits and other consequences of the termination of the 2011 Agreement were speculative.
[109] However, the difficulty with the Decision is that certain critical findings that would underpin the assessment of whether the proposed termination was appropriate were not made by the Commissioner. The Commissioner did not make a finding about the benefits of termination in terms of whether it would facilitate the reopening of the mine or whether the mine would not reopen without that occurring. Although there is a degree of speculation involved in that assessment, the credibility (or otherwise) of the Appellant’s evidence about that matter provided a proper foundation for such a finding. Further, the consequences claimed by the CFMMEU in terms of coal industry rates, was also very speculative given the factors present in this matter including the capacity for the employees, with the assistance of the CFMMEU, to bargain for a new enterprise agreement, in the event that the Agreement was terminated and the mine reopened.
[110] The absence of the necessary findings and the other errors outlined above mean that the questions in s. 226(b) were not properly considered, and the Commissioner acted upon wrong principle. Given the importance of these matters for the ultimate finding made by the Commissioner, this is a circumstance of appealable error within the contemplation of House v King and the appeal must be granted.
7. Conclusions and disposition of the appeal
[111] For reasons set out above, we have determined to uphold appeal grounds 2 and 4 insofar as they relate to the s. 226(b) considerations. We otherwise reject the remaining grounds of appeal. We conclude that:
• Permission to appeal should be given;
• The appeal is granted; and
• The Decision is quashed.
[112] We consider that, given the history of the matter, the s.226 application should be determined by us on a rehearing, having regard to the material that is already before the Commission. We also consider that it is appropriate to afford the parties an opportunity to provide additional evidence about any relevant developments that have occurred since the matter was heard by the Commissioner. Further, the parties should be afforded the opportunity to make final submissions in light of our decision. In these circumstances we have determined not to admit the evidence sought to be tendered by the Appellant in the appeal and to deal with this matter in the rehearing should the Appellant press the tender of the Affidavit of Chris Bell.
[113] Directions will be issued shortly on behalf of the Full Bench.
DEPUTY PRESIDENT
Appearances:
G Hatcher SC with K Brotherson of counsel, both with permission for the Appellant.
A Walkaden of the Construction, Forestry, Maritime, Mining and Energy Union, the Respondent.
Hearing details:
2020
June 22
By Telephone.
Printed by authority of the Commonwealth Government Printer
<PR720955>
1 [2020] FWC 1844.
2 [2019] FWCA 216.
3 [20190 FWCFB 3306.
4 Applicant’s Outline of Submissions on Re-Hearing at 23 and [2020] FWC 1844 at [42].
5 [2020] FWC 1844 at [43]
6 Decision at [87].
7 Decision at [126].
8 Ibid.
9 [2015] FWCFB 540.
10 (2005) 139 IR 34.
11 [2017] FWCFB 1019.
12 Decision at [81].
13 Decision at [84].
14 Decision at [82].
15 Decision at [92].
16 Decision at [94].
17 (1936) 55 CLR 499.
18 Construction, Forestry, Mining and Energy Union v Peabody Energy Australia PCI Mine Management Pty Ltd[2016] FWCFB 3591 at [16] – [18]. See also House v King.
19 Relying upon Construction, Forestry, Mining and Energy Union v AGL Loy Yang Pty Ltd[2017] FWCFB 1019 (CFMEU v Loy Yang) at [30].
20 Clause 18 of the Agreement
21 see Linfox Australia Pty Ltd v Fair Work Commission [2013] FCAFC 157 at paras [47] to [49].
22 See Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 and Nestle Australia Ltd v Federal Commissioner of Taxation (1987) 16 FCR 167 at 184.
23 Ibid at [125].
24 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Aurizon Operations Ltd [2015] FCAFC 126 at [23] – [25].
25 Ibid at [171], [172] and [178].
26 [2016] FWCFB 4620.
27 Ibid at [43], [75] and [93].
28 Construction, Forestry, Mining and Energy Union v AGL Loy Yang Pty Ltd T/a AGL Loy Yang[2017] FWCFB 1019 at [31].
29 Ibid at [33].
30 Ibid.
31 Coal and Allied Operations v Australian Industrial Relations Commission (2000) 203 CLR 194.
32 Ibid at [19].
33 [2016] FWCFB 3591 at [16].
34 [2017] FWCFB 1019 at [29].
35 See also Gangell v Lobethal Abattoirs Pty Ltd T/A Thomas Foods International[2018] FWCFB 4244.
36 [1986] HCA 40; (1986) 162 CLR 24.
37 See Friends of Hinchinbrook Society Inc v Minister for Environment (No 3) (1997) 77 FCR 153; Australian Competition and Consumer Commission v Leelee Pty Ltd [1999] FCA 1121; Edwards v Giudice [1999] FCA 1836 and National Retail Association v Fair Work Commission [2014] FCAFC 118.
38 (1987) 16 FCR 167.
39 (1987) 16 FCR 167 at 184.
40 Decision at [17].
41 Based upon Aurizon at [151].
42 See also the principles summarised by the Full Federal Court in ALA15 v Minister for Immigration and Border Protection [2016] FCAFC 30 at [35]-[36], cited with approval in AXQ15 v Minister for Immigration and Border Protection [2016] FCAFC 73 at [31].
43 The application of the public interest test was canvassed by the then AIRC in Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34 and by the Full Federal Court in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Aurizon Operations Ltd [2015] FCAFC 126. See also CFMEU v Peabody at [25] as the need to assess the likely impacts of termination when assessing s.226 applications.
44 Decision at [84].
45 Decision at [85].
46 Decision at [86].
47 Decision at [87].
48 See the approach of the Full Bench in The Australian Workers’ Union v Alcoa of Australia Limited[2019] FWCFB 2427 at [59].
49 Decision at [96].
50 See also Loy Yang at [40].
51 Decision at [89].
52 Notes at [101] of the Decision.
53 Mr Sharma – transcript PN264 to PN436.
54 Mr Jakeman (CEO) at transcript PN1485.
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