DECISION

Fair Work Act 2009
s.604—Appeal of decision

INPEX Australia Pty Ltd
v
The Australian Workers’ Union
(C2020/6567)

Appeal against decision [2020] FWC 3843 of Deputy President Binet at Perth on 24 August 2020 in matter number B2020/286

[1] This decision concerns an appeal under s 604 of the Fair Work Act 2009 (Cth) (FW Act) lodged by INPEX Australia Pty Ltd (INPEX) from a decision 1 of Deputy President Binet made on 24 August 2020, and associated amended orders made on 27 August 2020.2 The decision and orders relate to an application for a majority support determination made by the Australian Workers’ Union (AWU) under s 236. In her decision, the Deputy President determined two preliminary questions. First, she decided that the method by which she should determine whether a majority of employees wanted to bargain for an enterprise agreement, for the purpose of s 237(2)(a), would be a ballot of employees conducted by the Australian Electoral Commission (AEC). Secondly, the Deputy President decided that the group of employees who would be covered by the AWU’s proposed enterprise agreement had been fairly chosen, for the purpose of s 237(2)(c). The Deputy President’s amended orders required that a postal ballot of employees be conducted by the AEC (order 2), and that the Commission pay the costs of the AEC for conducting the ballot (order 7).

[2] INPEX advances six grounds of appeal. Grounds 1 and 2 contend that the Deputy President had no jurisdiction to decide to order a ballot because the AWU had not demonstrated a sufficient basis for doing so. Ground 3 submits that the orders made by the Deputy President were beyond jurisdiction because they were made without having addressed INPEX’s case in relation to s 237(2)(d) of the FW Act, which concerns whether it is reasonable to make a majority support determination. Ground 3A contends that INPEX was denied a reasonable opportunity to present its case as to the form of the orders, however leave was sought to amend this ground at the hearing and we return to this below. The fourth ground of appeal submits that if the decision was within jurisdiction, the Deputy President’s discretion to order the ballot nevertheless miscarried, because she failed properly to consider the alternatives. The fifth and sixth grounds of appeal contend that the Deputy President erred in concluding that the group of employees was fairly chosen by failing to make a finding as to whether the group was distinct in any of the ways contemplated by s 237(3A), and by wrongly placing the onus on INPEX to show that the group was not fairly chosen.

[3] The AWU contends that the Deputy President’s decision was both within jurisdiction and unaffected by any discretionary error. It submits that the Commission has a wide discretion under s 237(3) of the FW Act to use ‘any method’ it considers appropriate to ascertain whether a majority of employees want to bargain, and that a ballot is a common method used by the Commission. It says that the group of employees in respect of which it seeks to bargain was plainly fairly chosen, because it is the same group covered by the existing enterprise agreement.

[4] INPEX sought to lead fresh evidence in the appeal in the form of a witness statement of Mr Garry Smith dated 27 August 2020. The Full Bench is empowered by s 607(2) to admit and take into account fresh evidence, however for the reasons addressed further below, we decline to admit the statement.

Background

[5] The factual background to the appeal is largely uncontroversial and can be briefly stated. INPEX operates facilities for the extraction and processing of natural gas off the coast of Western Australia, and an onshore facility in the Northern Territory. In 2014, it entered into the INPEX Ichthys Operations Multi-Location Agreement 2014 (2014 Agreement). The nominal term of the Agreement expired in October 2018.

[6] On 3 March 2020, the AWU wrote to INPEX and proposed to commence bargaining for a new enterprise agreement. On 23 April 2020, INPEX replied to the AWU and advised that it did not agree to bargain. On 25 May 2020, the AWU filed its application under s 236 of the FW Act for a majority support determination. The application stated that the AWU had received signed individual petitions from a majority of INPEX’s relevant employees, and that it would provide these petitions to the Commission on a confidential basis to enable the Commission to confirm that a majority of relevant employees have indicated a desire to bargain. INPEX submitted to the Deputy President that it should be provided with unredacted copies of the petitions. The AWU objected to this course out of concern, as we understand it, that petitioners might encounter or fear recriminations from INPEX. The Deputy President made no orders or directions concerning the petitions. They were ultimately not provided either to the Commission or INPEX. However, the AWU remained willing to provide them to the Commission. And INPEX did not object to the Commission’s use of the petitions, subject to it being accorded procedural fairness.

[7] By directions dated 23 June 2020, the Deputy President identified two questions to be answered prior to the determination of the application. The first was the method by which the Commission should determine whether a majority of relevant employees wanted to bargain for an enterprise agreement. The second was whether the proposed group of employees who would be covered by the AWU’s proposed agreement was fairly chosen. These questions were determined on the papers by consent of the parties.

[8] In her decision of 24 August 2020, the Deputy President determined, at [50], that a ballot of the relevant employees, conducted by the AEC, was the most appropriate way to determine whether a majority of employees want to bargain; and at [60], that she was satisfied that the group of employees to be covered by the proposed agreement had been fairly chosen.

[9] On the same day, the Deputy President made an order for the conduct of the ballot. On 25 August 2020, INPEX, exercising liberty to apply in relation to the matters contained in the order, applied by email for certain variations to the form of the order. On 26 August 2020, the Deputy President circulated to the parties a draft amended order, requesting the parties to make any submissions in response. INPEX’s appeal was lodged on 26 August 2020. The amended orders were issued on 27 August 2020. The operation of the orders has since been stayed pending the hearing and determination of this appeal.

Consideration

[10] By grounds 1 and 2 of its notice of appeal INPEX contends that the Deputy President’s decision to order a ballot was affected by jurisdictional error because it was not made judicially, in the sense that it was made arbitrarily or lacked justification. INPEX contended that the Deputy President either concluded that the mere fact of an application having been made under s 236 of the FW Act was a sufficient basis for the making of an order under s 237(3), or that the brief references made at [31] of the decision to employees’ apparent interest in bargaining were a proper basis to order a ballot. INPEX contended that each of these conclusions were erroneous.

[11] We agree that a mere application under s 236 of the FW Act, or a bald assertion in an application that majority support exists with no proffered justification, may not be sufficient to provide the Commission with a jurisdictional basis to make orders to ascertain whether majority support for bargaining exists. There is force in the proposition that an application under s 236 is for a determination that majority support exists, not a speculative investigation into whether it exists. The provision appears to us to operate upon a premise that the bargaining representative applying for a determination has a reasonable hypothesis that there is majority support for bargaining. The materials before the Commission should bear out a reasonable foundation for such a hypothesis.

[12] However, we reject the proposition that the Deputy President concluded, or proceeded on an assumption, that the mere fact of an application having been made under s 236 of the FW Act was a sufficient basis for the making of an order under s 237(3), or that this was a case where there was insufficient material before the Deputy President for her to proceed upon the AWU’s contention that a majority of employees wished to bargain. The AWU had in our view presented at least a prima facie case of majority support which could be the subject of a majority support determination, subject to the Commission’s satisfaction as to the matters in s 237.

[13] The application signed by Mr Zachary Duncalfe, the AWU’s national legal officer, stated that the AWU had received signed individual petitions from a majority of relevant employees. It was a brief statement, however it conveyed to the Commission that the union had petitioned employees and that it considered, based on the petitions, that a majority of those whom it sought a new enterprise agreement to cover were in support of collective bargaining. It represented to the Commission that its petitions existed and could be produced and that, if the confidentiality of the identities of the petitioners could be maintained, the petitions could and would be provided also to INPEX. We do not understand INPEX to be suggesting that the AWU’s representation as to the existence of the petitions was fraudulent. Indeed, in its written submissions on ground 4, INPEX affirmed that it did not challenge the ‘reliability or integrity’ of the petitions. In the ordinary course, the Commission would ask for the petitions to be produced. It is implausible that the AWU would represent that it had collated petitions and argue before the Commission that these should be the basis of the Commission’s calculation of whether majority support was present if the petitions did not exist.

[14] It is not clear why the petitions were not produced to the Commission. The AWU was willing to provide them. INPEX did not object to the Commission receiving the petitions but wished to see the unredacted documents. The Deputy President did not ask to see them, perhaps because she anticipated a lengthy debate about what use she should make of documents that had not been produced in unredacted form to INPEX. However, in our view, the Deputy President was entitled to proceed on the basis that the petitions existed and that in the AWU’s opinion those petitions reflected majority support for bargaining.

[15] There was no sworn evidence about the petitions and their import before the Commission, but there was information contained in the application to which the Deputy President was entitled to have regard. In this connection, the Commission may inform itself in relation to any matter before it in such manner as it considers appropriate (s 590(1)). This provision applies to the Commission’s deliberations as to whether there is a sufficient basis for a reasonable hypothesis about the existence of majority support for bargaining, such as to found jurisdiction to issue an order for a ballot or adopt some other method of working out whether a majority of employees want to bargain. We consider that the Deputy President plainly had jurisdiction to order a ballot. Whether the decision to do so was affected by discretionary error is a different matter, to which we return below in connection with the fourth ground of appeal. We reject the first and second grounds of appeal.

[16] By its third ground of appeal, INPEX contends that the order made by the Deputy President, consequent upon her decision to use a ballot as the relevant ‘method’ for the purpose of s 237(3) of the FW Act, was affected by jurisdictional error because the order was made without the Commission having considered INPEX’s case under s 237(2)(d). It submitted that the Deputy President had caused it to reasonably believe that if she determined that there should be a ballot, no order for the conduct of a ballot would be made until INPEX had presented its arguments in respect of s 237(2)(d) (whether a majority support determination was reasonable in the circumstances). INPEX sought leave to tender fresh evidence in the appeal as to what occurred at and after the conference before the Deputy President on 11 June 2020 that reasonably led INPEX to this belief.

[17] It is clear that INPEX wished to make submissions to the Deputy President to the effect that it would not be reasonable in all the circumstances to make a majority support determination and had contended in written submissions to the Deputy President that, if a ballot was to be ordered, it should not occur until its arguments in respect of s 237(2)(d) of the FW Act had been heard. However, we agree with the AWU that the Deputy President simply rejected INPEX’s request that the Commission hear its arguments on s 237(2)(d) before ordering a ballot. No reasons were provided for the rejection, but that does not go to jurisdiction. We do not consider that the fresh evidence of Mr Smith, sought to be adduced in the appeal by INPEX, would affect our conclusion in relation to this matter. We decline to admit the evidence and reject ground 3.

[18] INPEX sought leave to amend ground 3A of the notice of appeal to replace its contention that it had been denied an opportunity to present its case on the form of the ballot order with a different contention, namely that the Deputy President’s order was made without affording persons affected by it an opportunity to be heard, these being the eligible employees, the AEC, and, in relation to the question of the costs of conducting the ballot, the Commission itself. We grant leave to amend the notice of appeal. The revised ground goes to the Commission’s jurisdiction to make the order for the ballot and is also responsive to questions raised by the Full Bench with the parties at the commencement of the hearing of the appeal.

[19] We doubt that the Commission has power to require the AEC to conduct a ballot in connection with an application for a majority support determination. The AEC is a statutory authority that is required to undertake the functions and powers prescribed by the Commonwealth Electoral Act 1918 (Cth) (Electoral Act). Section 7(1)(a) of the Electoral Act states that the AEC performs the functions that are permitted or required to be performed by it under that Act. Section 7(1)(g) provides that the AEC will also perform ‘such other functions as are conferred on it by or under any law of the Commonwealth’. In this regard, Part 3-3 of the FW Act confers functions on the AEC in relation to the conduct of protected action ballots. In particular, s 449 provides that a protected action ballot must be conducted by the AEC or another person specified in the protected action ballot order. The FW Act contains no similar provisions in relation to the AEC’s involvement in ballots concerning other applications made under the FW Act.

[20] Even if the Commission had power to make an order that the AEC conduct a ballot outside of Part 3-3 of the FW Act, the Commission would be required to afford the AEC an opportunity to be heard on the matter. In its further appeal submissions, the AWU contended that there was evidence of the AEC having had such an opportunity. First, the AWU submitted that, in an email sent to the parties on 25 August 2020, the Deputy President stated that in order to arrange for the ballot to be conducted, ‘the AEC requires the number of employees eligible to be balloted’. The AWU said that this is demonstrative of communications having passed between the Commission and the AEC. INPEX said that the email can just as comfortably be read as a statement of the obvious. Evidently there had in fact been some communication between the Deputy President’s chambers and the AEC. The Commission’s case management system shows that on 26 August 2020, the Deputy President’s associate sent an email to the AEC at ‘secret.ballots@aec.gov.au’. It states: ‘As per my telephone call yesterday from the AEC, I have been in correspondence with the employer and they have advised there are 344 eligible employees to be balloted. Please let me know if you require anything further.’ It is not clear from this note who called whom the previous day, or what was said. It is possible that the AEC had conveyed to the associate that it would need to know the number of employees to be balloted. It is also possible that the officer of the AEC wrongly assumed that the Commission had ordered the ballot under Part 3-3 of the FW Act. In short, it is not at all clear to us that the AEC assented to the order, such that any denial of procedural fairness has been rendered moot.

[21] Secondly, the AWU said that an email sent by the Deputy President’s chambers to the parties on 26 August 2020 attaching the draft amended order was copied to ‘secret.ballots@aec.gov.au’. The email invited submissions concerning the draft amended order by 9.00am the following day. The AWU contends that by this email, the AEC was afforded an opportunity to be heard. However, the email invites the ‘parties’ to make submissions, not the AEC, and it is doubtful that by simply copying a group email address in this way, an organisation can properly be afforded an opportunity to be heard. Further, by 26 August 2020, the decision to require the AEC to conduct the ballot had already been made. The emails of 26 August 2020 only provided information about the number of employees and conveyed the form of the order. There is nothing to indicate that the AEC was afforded a proper opportunity to be heard in relation to the question of whether it should, or could, be ordered to undertake the ballot. This amounted to a denial of procedural fairness.

[22] It is also clear that the Deputy President had no power to decide that the Commission would incur the expense associated with having the AEC conduct the ballot. First, the Deputy President is not authorised to incur expenditure on behalf of the Commonwealth. For the purposes of the Public Governance, Performance and Accountability Act 2013, the General Manager of the Commission is the accountable authority of the Commission (see s 673A). The General Manager has not authorised the expenditure. Secondly, we consider that there is a clear negative inference arising from s 464 that the costs of ballots outside of Part 3-3 will not be covered by the Commonwealth. Section 464 expressly provides that if the AEC is the protected action ballot agent, the Commonwealth will be liable for the costs incurred by the AEC in relation to the protected action ballot. The Deputy President’s order that the Commission pay the costs of the ballot was beyond power.

[23] INPEX contended that employees to be balloted were also not afforded an opportunity to be heard on the question of whether, as the Deputy President’s orders would have required, their private information should be disclosed. It said that such disclosure would be inconsistent with the basis on which they had entrusted it to INPEX. However, it is unnecessary for us to determine this matter, in light of our other conclusions.

[24] For these above reasons, we uphold appeal ground 3A. This is a sufficient basis for us to uphold the appeal and quash the decision. However, as we propose to remit the application, and for the purposes of guidance, we will address grounds 4 and 5.

[25] By ground 4 of the notice of appeal, INPEX contends the Deputy President’s decision to order a ballot was affected by discretionary error. The Deputy President concluded at [50] of the Decision that the ballot ordered was ‘the most appropriate way on the facts of this Application to determine whether a majority of employees want to bargain for a new Agreement’. INPEX said that the Deputy President reached this conclusion despite not having seen the petitions on which the AWU purported to rely, and without hearing any evidence concerning the petitions. INPEX contended that this was a conclusion to which no reasonable decision-maker could have come. It said that if the petitions had been examined by the Commission, it is possible that they may have borne out what the AWU contended, namely that a majority of employees wished to bargain. If so, reliance on the petitions would plainly have been a more appropriate method by which to ascertain majority support, because it would have obviated the effort, time and expense caused by a ballot. And if the petitions had manifested an obvious paucity of numbers, the application might simply have been dismissed.

[26] INPEX submitted that the Deputy President failed to appreciate that, while it had requested access to the petitions, it had not disputed their reliability or integrity. INPEX said that this misunderstanding was reflected in the second paragraph D of the preamble to the original and the amended orders, which states that INPEX did dispute the reliability and integrity of the petitions.

[27] In our view, by proceeding to make orders for a ballot without inspecting the petitions, the Deputy President failed to have regard to a relevant consideration, namely the possibility that the petitions could be relied upon to establish majority support for bargaining, as the AWU contended. Without taking this step, it seems to us that the Deputy President could not have concluded that a ballot was an appropriate method for the purpose of s 237(3), because an assessment of what is an appropriate course depends on what the available alternatives are. If the question of whether there was majority support could have been determined by reference to material before the Commission, it is difficult to see how conducting a ballot could also have been an appropriate method, because it would have been unnecessary.

[28] From [48] of the decision, it would appear that the Deputy President preferred to ascertain whether there was majority support by means of a ballot rather than by reliance on the petitions because she considered that this would address INPEX’s concerns about procedural fairness. And, as the AWU pointed out, the Deputy President evidently accepted, at [46], that there were grounds for the AWU’s concerns about disclosing the names of employees to INPEX. The AWU suggested that the Deputy President may have perceived something of a ‘quagmire’ if she proceeded to rely on the petitions and therefore steered clear of them. However, the AWU’s concerns about the confidentiality of the petitioners’ names and INPEX’s contention that it should see them was not a barrier, or an impediment, to the use of the petitions. Redacted copies of the petitions might yet have been provided to INPEX. Unredacted copies might have been provided to counsel to inspect on an undertaking to keep confidential the names of the petitioners. INPEX had confirmed in its written submissions that it was prepared to consent to reasonable and workable orders to ensure that particular evidence remained confidential. Section 237(3) of the FW Act affords the Commission a broad discretion to use any method that it considers appropriate to work out whether a majority of employees support bargaining. However, in determining whether a particular method is appropriate, the alternatives must be considered. The Deputy President did not consider the content of the petitions, nor, it would appear, the possibility of simply rejecting what she considered to be INPEX’s ‘vigorous insistence’ (see [46]) on open access to the original petitions, and instead charting a middle course. We uphold the fourth ground of appeal.

[29] Appeal ground 5 contends that the Deputy President erred in concluding that the group of employees to be covered by the proposed agreement was fairly chosen. INPEX contended that, because the proposed agreement would not cover all of its employees, the Deputy President was required by s 237(3A) of the FW Act to make a finding as to whether the group of employees to be covered by the agreement was geographically, operationally or organisationally distinct, and that the Deputy President failed to make any such finding. It contended that the absence of such a finding indicates that the Deputy President did not consider the issue, in circumstances where she was bound to do so, and that she thereby failed to perform the statutory task required by s 237(2)(c). It said that mere advertence to the issue (which is found at [57] of the decision) is not sufficient to demonstrate that the Deputy President gave consideration to it in the requisite sense.

[30] We agree. In Cimeco Pty Ltd v Construction, Forestry, Mining and Energy Union and others 3, a Full Bench of the Commission concluded, in relation to analogous provisions in ss 186(3) and (3A), that if all of the employees of the employer are not covered by the proposed agreement, the Commission must make a finding under s 186(3A) as to whether the group of employees covered by the agreement is geographically, operationally or organisationally distinct.4 Absent such a finding, the Commission cannot properly perform its statutory task. In Construction, Forestry, Mining & Energy Union v Deputy President Hamberger,5 Katzmann J held that a failure by the Commission to take into account the matters in s 186(3A) is jurisdictional error.6

[31] The AWU contended that the scope of the proposed agreement was the same as that of the 2014 Agreement, and that INPEX had represented to the Commission in the application for approval of that agreement that the group was indeed fairly chosen. However, the fact that a particular group was considered by the Commission to be fairly chosen on a previous occasion does not mean that the same grouping will necessarily be fairly chosen in the future, although very often that may be the case. The AWU also contended that on a fair reading of the Deputy President’s decision, she must be taken to have consider the matters referred to in s 237(3A) of the FW Act and concluded that the group was geographically distinct. The AWU refers to [51] of the decision, where the Deputy President paraphrases s 237(3A) and refers to the Full Bench decision in Cimeco. But this is a statement of the legal framework, not an application of it. The AWU points to [52] of the decision as evidence of a finding, where the Deputy President stated:

“[52] While the question of whether the group of employees to be covered by the Proposed Agreement is geographically, operationally and/or organisationally distinct must be evaluated, and given due weight, it is not a determinative consideration. It is not necessary to make a finding that the group is geographically, operationally, and/or organisationally distinct in order to be satisfied that a group of employees was fairly chosen.”

[32] It appears from this passage that the Deputy President may have believed that she did not need to make a finding as to whether the group was geographically, operationally or organisationally distinct. If so, that was in error. It is also possible that the Deputy President meant that, if the Commission finds that the chosen group is not distinct in one of the relevant ways, it may nonetheless be fairly chosen. If so, that is correct. In any event, this paragraph does not contain a finding in relation to the matters in s 237(3A) of the FW Act.

[33] The AWU referred to the following passage in support of its contention that the Deputy President found the group to be geographically distinct:

“[56] Inpex has led evidence that the Current Agreement has previously applied to employees working overseas and that employees are not performing work in these locations at present. Inpex has not explained how this now makes the group of employees covered by the Current Agreement no longer geographically, operationally or organisationally distinct. In fact, arguably if the Proposed Agreement will only apply to workers located in Australia, the group of employees proposed to be covered by the Proposed Agreement is, in fact, more geographically distinct.” (emphasis added)

[34] In our view this falls short of a finding. An arguable relativity is not a positive finding.
It may seem plain that a proposed enterprise agreement with a scope reflecting that of a current agreement is likely to be fairly chosen, however the FW Act requires the Commission to take certain steps in reaching its conclusion. When the Commission is required to consider whether a fact or state of affairs exists, it must make a factual finding. Neither of the paragraphs above records any such finding. The decision read fairly, and as a whole, records no finding as to whether the group of employees who will be covered is geographically, operationally or organisationally distinct. This was an error of jurisdiction. We uphold ground 5.

Conclusion and orders

[35] We have decided to grant permission to appeal in the public interest, because the decision is affected by jurisdictional and other error. We consider that it is appropriate to remit the application to the Deputy President.

[36] We make the following orders:

(1) Permission to appeal is granted.

(2) Grounds 3A, 4 and 5 of the appeal are upheld.

(3) The decision ([2020] FWC 3843) and orders (PR722190 and PR722012) are quashed.

(4) The application is remitted to Deputy President Binet.

DEPUTY PRESIDENT

Appearances:

I. Neil S.C. and R. Kumar of counsel for INPEX Australia Pty Ltd
S. Crawford for the AWU

Hearing details:

2020
Melbourne (by video link)
17 September

Printed by authority of the Commonwealth Government Printer

<PR723323>

 1  [2020] FWC 3843

 2   PR722190

 3   [2012] FWAFB 2206

 4   At [10]

 5   [2011] FCA 719; (2011) 195 FCR 74

 6   At [95]