[2010] FWAFB 6021 |
FAIR WORK AUSTRALIA |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
VICE PRESIDENT LAWLER |
|
Appeal against decision [[2010] FWA 4880] and order PR998815 of Deputy President McCarthy in matters B2010/3147 and B2010/3150.
[1] This is an application for permission to appeal and, if permission is granted, an appeal against a decision of Deputy President McCarthy given on 2 July 2010 making an order pursuant to s.426 of the Fair Work Act 2009 (FW Act) suspending protected industrial action by certain employees of Mammoet Australia Pty Ltd (Mammoet) for a period of three months.
Intervention by the ACTU
[2] The ACTU applied for leave to intervene and make submissions on the proper construction of s.426. One of the respondents to the present appeal, Woodside Burrup Pty Ltd (Woodside), opposed that application. We granted Mr Clarke of the ACTU permission to appear for the ACTU and indicated that we would give reasons for that interlocutory decision in our final reasons for decision. We give those reasons now.
[3] Unlike the WR Act in relation to the AIRC, the FW Act does not expressly empower FWA to grant an interested person leave to intervene in a proceeding. However, in our view, s.589(1) and s.590(1) each contain a conferral of power that allows FWA to grant leave to an interested person to intervene in a proceeding in an appropriate case. Woodside relied on a passage in the judgment of Gibbs CJ in R v. Ludeke J & Ors; ex Parte The Customs Officers’ Association of Australia, Fourth Division. 1 That passage is concerned with when a refusal by a tribunal to allow a person to intervene in proceedings, or to intervene fully, will constitute a denial of procedural fairness. It was not concerned with laying down general principles for when an application for leave to intervene ought be refused and, in our view, provided no support for Woodside’s contention that the ACTU ought be refused leave to intervene.
[4] In Re an appeal by the Australian Industry Group 2 a Full Bench of FWA held that the Australian Industry Group (AIG) had standing, as a “person aggrieved”, to bring an appeal against a decision of Commissioner Ryan to approve an enterprise agreement made under s.185 of the FW Act. AIG contended that the agreement should not have been approved because it contained an unlawful term. AIG relied on the following to give it standing to bring the appeal:
(a) it is a major registered organisation which represents employers in a wide range of industries;
(b) it is a “peak council” as defined in s.12 of the Fair Work Act;
(c) the proceedings affect thousands of [AIG] members who have received a notice by a union official to enter their premises or who are parties to or may bargain for enterprise agreements; and
(d) the outcome of the appeal will have a direct and substantial impact on a large number of [AIG] members.
[5] The Full Bench referred to the decision of the Full Court of the Federal Court in Tweed Valley Fruit Processors Pty Ltd v Ross 3 and noted that “the term ‘person aggrieved’ is capable of extending beyond persons whose legal interests are affected by the decision in question and extends to persons with an interest in the decision beyond that of an ordinary member of the public.”4 The Full Bench held that the AIG was a “person aggrieved” by the decision and had standing to bring the appeal. If a person could, in that sense, be a “person aggrieved” by a decision in a particular proceeding then it will be open, but not obligatory, for FWA to grant that person leave to intervene in the proceeding. The ACTU has an interest in the present matter similar to the interest of the AIG in the matter the subject of the appeal to which we have referred. We were satisfied that it was appropriate to grant the ACTU leave to intervene in the present appeal.
Background
[6] Woodside is undertaking a very large natural gas development on the Burrup peninsular in Western Australia know as the Pluto project (Project). The Project has on-shore and off-shore components. The construction of the on-shore components of the Project is said to have a value of $9 billion. A major on-shore component is the construction of what is known as an LNG processing train. It is consists of a series of modules that have been constructed off site, transported to the site, lifted into position and then connected together. Mammoet has the heavy lifting subcontract for the Project and is responsible for lifting the modules into place. UGL Resources Pty Ltd (United) is the major mechanical subcontractor on the Project and is responsible for installing the necessary pipework and other physical connections between modules in the LNG processing train. Kentz E& C Pty Ltd (Kentz) is the main electrical subcontractor on the Project and is responsible for electrical installation in relation to the LNG processing train.
[7] Speaking broadly, United cannot commence the major work it has to perform on a module until the module has been lifted into place by Mammoet and Kentz cannot commence the major work it has to perform on a module until United has finished its major work on the module.
[8] In an earlier decision, the Deputy President noted: 5
“[10] Mammoet is one of approximately 60 or so contractors performing work on the Project for the performance of specific packets of work. Almost all of the contractors engaged on site have a current enforceable employee collective agreement. Each of these agreements covers the relevant contractor for its period of contracted works on the Project with most of the terms expiring in 2014. These agreements collectively provide for the same terms and conditions to apply consistently across the Project, and they substantially reflect the contents of the Agreement. Indeed, the pay scales, rates and allowances are uniform among all agreements on the Project, which is not unusual for large infrastructure projects of this type.
[11] Works that are currently being undertaken at the Project involve the onshore infrastructure for a single LNG processing train. It is hoped, if not expected, that a further one or two trains will be built for the project. Works for any further trains are hoped to begin in 2011 and would most likely take a further two or three years.”
[9] Mammoet made an employer greenfields agreement approved under the provisions of the Workplace Relations Act 1996 known as the Mammoet Australia Proprietary Limited Pluto Project Greenfields Agreement 2008 (Mammoet Pluto Agreement) that had a nominal expiry of 18 September 2009. Some 12 employees of Mammoet (Employees), critical to the operation of the very large cranes that it uses to undertake the heaving lifting on the project, have been bargaining for a new agreement with improved wages and conditions since about October 2009. The CFMEU is their bargaining representative. In his earlier decision the Deputy President noted that “[t]here have been a significant number of meetings, telephone calls and exchanges of emails. Each [of the parties] have their own version of the progress and positions being taken and assumptions about the others approaches. Suffice for me to say is that there seems to have been a lot of activity.” 6
[10] The bargaining did not produce an agreement. An order was made for a protected action ballot. On 21 April 2010 the ballot was declared approving protected industrial action. The Employees commenced protected industrial action in the form a 28 day stoppage on 25 April 2010. On 27 April 2010 Mammoet notified employer response action in the form of a lockout of Employees for a period of 28 days commencing on 26 May 2010, that is, the day after the employee stoppage finished).
[11] On 2 June 2010 the Deputy President dismissed an application by Mammoet pursuant s.425 for a suspension of protected industrial action as a ‘cooling off’. 7 In his reasons for decision, the Deputy President noted:
“[31] Mammoet argued that the absence of the ability to take industrial action would be beneficial as it would provide an environment free of industrial action and therefore have the effect of the bargaining representatives concentrating on their differences. The CFMEU on the other hand argued that it was the existence of the capacity to take industrial action and indeed the taking of it that had the effect of reducing the differences between the parties and making an agreement more likely.
[32] The history of the matter and the approach taken by Mammoet to date would tend to support the view expressed by the CFMEU. It appears to me that at each step of the process of the CFMEU pursuing its rights Mammoet have endeavoured to prevent the obtaining of rights to take industrial action. Indeed the almost immediate reaction of Mammoet to the taking of employee claim action was to notify its own employer response action, thus immediately creating an expectation of two 28 days of industrial action rather than one.
[33] Mammoet rather than withdrawing its own industrial action, seeks to rely on it as a means of preventing themselves or employees of taking protected industrial action. In my view the issuance of an order of the type sought given the opposition of Mammoet throughout to the obtaining of a right to take protected industrial action is likely to be less conducive to an agreement being reached rather than what Mammoet contends.
[34] I therefore do not consider that a cooling off period would have a beneficial effect in resolving the matters at hand.”
[12] The CFMEU notified a further period of protected industrial action in the form of another 28 day work stoppage which commenced on 24 June 2010.
[13] On about 24 June 2010 Woodside, United and Kentz made application pursuant to s.426 of the FW Act for an order suspending protected industrial action by employees of Mammoet. It is the decision to grant that application that is the subject of the present appeal.
Section 426
[14] Section 426 of the Fair Work Act 2009 provides:
426 FWA must suspend protected industrial action—significant harm to a third party
Suspension of protected industrial action
(1) FWA must make an order suspending protected industrial action for a proposed enterprise agreement that is being engaged in if the requirements set out in this section are met.
Requirement—adverse effect on employers or employees
(2) FWA must be satisfied that the protected industrial action is adversely affecting:
(a) the employer, or any of the employers, that will be covered by the agreement; or
(b) any of the employees who will be covered by the agreement.
Requirement—significant harm to a third party
(3) FWA must be satisfied that the protected industrial action is threatening to cause significant harm to any person other than:
(a) a bargaining representative for the agreement; or
(b) an employee who will be covered by the agreement.
(4) For the purposes of subsection (3), FWA may take into account any matters it considers relevant including the extent to which the protected industrial action threatens to:
(a) damage the ongoing viability of an enterprise carried on by the person; or
(b) disrupt the supply of goods or services to an enterprise carried on by the person; or
(c) reduce the person’s capacity to fulfil a contractual obligation; or
(d) cause other economic loss to the person.
Requirement—suspension is appropriate
(5) FWA must be satisfied that the suspension is appropriate taking into account the following:
(a) whether the suspension would be contrary to the public interest or inconsistent with the objects of this Act;
(b) any other matters that FWA considers relevant.
Order may only be made on application by certain persons
(6) FWA may make the order only on application by:
(a) an organisation, person or body directly affected by the protected industrial action other than:
(i) a bargaining representative for the agreement; or
(ii) an employee who will be covered by the agreement; or
(b) the Minister; or
(ba) if the industrial action is being engaged in in a State that is a referring State as defined in section 30B or 30L—the Minister of the State who has responsibility for workplace relations matters in the State; or
(bb) if the industrial action is being engaged in in a Territory—the Minister of the Territory who has responsibility for workplace relations matters in the Territory; or
(c) a person prescribed by the regulations.
[15] Section 427 requires FWA to specify the period of suspension in the order. Section 428 confers a power on FWA to make an order extending a period of suspension provided “FWA is satisfied that the extension is appropriate taking into account any matters FWA considers relevant including the matters specified in the provision under which the suspension order was made.” (s.428(1)(c)). Only one such extension may be granted (s.428(1)(b)).
The decision below
[16] Paragraphs [1] to [8] of his Honour’s decision describe the parties. Paragraphs [9] to [17] describe the Project. Paragraphs [18] to [24] describe the history of industrial action taken by employees of Mammoet. Paragraphs [25] to [33] constitute a section of the decision entitled “The Contentions of Woodside and Kentz” and contain a summary of the assertions of Mammoet, Woodside, Kentz and United. Paragraphs [34] and [35] constitute a section of the decision entitled “The Contentions of the CFMEU”. Paragraphs [36] to [67] of the decision constitute a section entitled “Consideration”. This section of the decision opens with brief comments on the standing of the applicants, notes the adverse effect of the protected industrial action on Mammoet and, commencing at paragraph [41], proceeds to a subsection entitled “Significant harm to a third party”. His Honour notes “potential other classes of persons” to whom significant harm could be caused as including other employees of Mammoet and employees of other contractors (including employees of United and Kentz) whose employment may be under threat as a result of the protected industrial action. His Honour observed that it was open but unnecessary for him to “include those classes of person in my considerations” and expressed “no concluded view” on whether it is appropriate to consider the effects on those classes of persons.” The Deputy President noted that:
“[43] The issue therefore for me to consider is whether Woodside, Kentz and United (the Third Parties) are under threat of significant harm being caused to them by the protected industrial action. The Third Parties contended that they had been harmed which was caused by the industrial action that had occurred and that there was a threat of further harm being caused. They contended that the harm was significant and that significant harm is threatened.
...
[45] The Third Parties did not contend that there was a threat to their ongoing viability. The Third Parties did assert that the protected industrial action threatened to disrupt the supply of goods or services to their enterprises and cause economic loss. Kentz and United also asserted that they were under threat of having a reduced capacity to fulfil their contractual obligations.”
[17] The balance of section entitled “Significant harm to a third party” addresses the position of Woodside, Kentz and United. Counsel for the CFMEU submitted that this whole section contains only a summary of evidence but no findings. While this part of the decision is couched in terms that justify that submission, it is tolerably clear from the balance of the decision that the Deputy President generally accepted the evidence brought by the applicants.
[18] The core of the decision commences at paragraph [69] under the heading “Conclusion”:
“[69] In the context of s.426 of the FW Act I consider protected industrial action to be "threatening" to cause harm if I consider that harm is likely to occur. The meaning of threatening in the context of s.426 I take to mean that the protected industrial action is likely to injure or be a source of danger to a third party being harmed. The threatening harm also needs to be significant. Indeed the primary argument of the CFMEU was not so much that harm was not occurring, nor that it was not likely. Their main contention was that any harm would not be significant.
[70] The Macquarie Dictionary defines significant as being of important or of consequence. The Explanatory Memorandum to the Fair Work Bill 2008 states, in respect of s.426, that:
“The purpose of this clause is to provide FWA with a means to address significantly serious impacts that industrial action is having on the welfare of third parties. It allows for a respite from industrial action which is causing them significant harm. The harm to the third party would need to be significant, that is a more serious nature than merely suffering of a loss, inconvenience or delay. Therefore, it is anticipated that FWA would suspend industrial action on this basis only in very rare cases.”
[71] In this matter I consider the harm to be serious. The project is large, there are interdependencies between contractors and the sequential nature of the work deriving from those interdependencies are critical and complex. Those interdependencies and the evidence relating to those interdependencies were summarised by Mr Meehan as:
1. The relevant United work cannot commence until completion of the relevant work by Mammoet;
2. Kentz work cannot commence until completion of the relevant work by United;
3. Commissioning and start up work cannot commence until completion of the relevant work by Mammoet, United and Kentz.
[72] The CFMEU endeavoured to portray any potential losses as not being substantial or significant. The potential losses in my view are substantial and appear to me to have a chain reaction effect. The more each aspect of delays impacts on the interdependencies between the third parties.
[73] I am also satisfied from the evidence that the threatening harm is more than an inconvenience. The incapacity to perform some works at all, the rescheduling of works and the lack of efficient utilization of labor goes far beyond being an inconvenience and goes to the capacity to perform important and critical works. The delays likely to be caused are also not insignificant or ordinary ones particularly because of the interdependencies between the contractors.
[74] The extent of the harm to the supply of services and the capacity to fulfill contractual obligations are substantial. It is difficult to make any assessment of the extent of economic losses, particularly as it is unclear as to who would be liable for any of those losses given the contractual relationships between the third parties. Suffice for me to say that I consider the economic losses likely to be incurred to be significant regardless by whom they would eventually be borne by.
[75] I find that the supply of goods or services to the enterprises of Kentz and United is threatening to be disrupted and that the extent of disruption threatened is substantial. I also find that economic loss is threatened to be caused to most likely all of the third parties and that the extent of the economic loss is likely to be substantial. I also find that the protected industrial action is threatening to cause Kentz and United to have a reduced capacity to fulfil their contractual obligations and that the extent of that reduced capacity is substantial.
[76] I therefore find that as a consequence of the protected industrial action significant harm is threatening to be caused to Woodside, Kentz and United.
[77] I do not consider that the issuance of an order suspending the protected industrial action would be contrary to the public interest. I have had regard to the objects of the FW Act and the fact that there has been nothing unlawful or improper in the actions of the employees or the CFMEU and its officials in their conduct to date. However the extent of and significance of the harm that is threatened to be caused to the third parties is significant and in my view causes it to be appropriate to issue an order suspending protected industrial action
[78] I therefore am of the view that the requirements of s.426 have been met.
[79] I considered the term of the suspension and, in particular, whether the suspension should be confined to the period of the protected industrial action currently being taken. In considering that I also had regard to the taking of the employer response action by Mammoet. However having taken those matters in the context of the history of the negotiations and the nature of the project with the interdependencies and critical path timelines I decided that the term sought by the applicants’ was appropriate, namely three months. I have however provided a liberty for any party to seek to have the order varied.”
(footnotes omitted)
Consideration
[19] Although s.426(1) is expressed in mandatory terms (that is, FWA “must” make an order suspending the relevant protected industrial action if the requirements set out in s.426 are met), the requirement in s.426(3) that FWA be “satisfied” that the protected industrial action is “threatening to cause significant harm” to a relevant person and the requirement in s.426(5) that FWA be “satisfied” that the suspension is “appropriate” having regard to whether the suspension would be “contrary to the public interest” and “any other matters that FWA considers relevant” mean that a decision to make an order pursuant to s.426 suspending protected industrial action is properly characterised as a discretionary decision that, for the purposes of an appeal, attracts the operation of principles in House v The King 8 where the High Court held:
“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.”
[20] The focus of the arguments on appeal was the proper meaning of the expression “significant harm” in s.426(3).
[21] In construing a provision of an Act, the task is to ascertain the intention of the parliament. The starting point is always the ordinary English meaning of the words of the provision. However, a provision of an Act must always be construed in the context of the Act as a whole and account must always be taken of the purpose of the Act: a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object. 9 Resort may be had to extrinsic materials, including the explanatory memorandum, to assist in ascertaining the purpose of an Act (the mischief it was intended to overcome and its purpose or objects10) and in the particular circumstances identified in s.15AB of the Acts Interpretation Act 1901 which, relevantly for present purposes, include to determine the meaning of a provision when the provision is ambiguous.11
[22] In CIC Insurance Ltd v Bankstown Football Club Ltd 12 Brennan CJ, Dawson J, Toohey J and Gummow J observed:13
“It is well settled that at common law, apart from any reliance upon s 15AB of the Acts Interpretation Act 1901 (Cth), the court may have regard to reports of law reform bodies to ascertain the mischief which a statute is intended to cure. Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd, if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent.”
(footnotes omitted)
[23] In Project Blue Sky v Australian Broadcasting Authority 14 McHugh, Gummow, Kirby and Hayne JJ said:15
“The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed.”
(footnotes omitted)
[24] As to the ordinary English meaning of the word “significant”, as noted, by the Deputy President, the relevant ordinary English meaning, as defined in the Macquarie Dictionary, is “important; of consequence”.
[25] Turning to the context of the Act as a whole, we note first that for many decades prior to the WorkChoices amendments to the Workplace Relations Act 1996 (WR Act), the Australian Industrial Relations Commission and its predecessors had the power to settle (interstate) industrial disputes through compulsory arbitration. Where a dispute over terms and conditions of employment was resolved by arbitration this occurred through the making of an award, binding the disputants, that had statutory effect. That long standing power to settle disputes by compulsory arbitration was essentially removed by the WorkChoices amendments to the WR Act and has not been restored by the FW Act. Rather, enterprise bargaining may now be seen as a central component of the industrial relations regime provided for in the FW Act by which employees may act collectively to secure improvements in their terms and conditions of employment.
[26] Industrial action is defined broadly in s.19 of the FW Act. Section 408 defines “protected industrial action”. Subject to various requirements, industrial action taken for the purpose of advancing claims for a proposed enterprise agreement is “protected industrial action”. FW Act which confers immunity from civil action in relation to protected industrial action (s.415). The taking of industrial action that is not protected industrial action is effectively proscribed. Once an enterprise agreement has been made and approved, any industrial action taken by employees covered by the agreement before the nominal expiry date of the agreement will be unprotected (s.417). A person affected by unprotected industrial action that is happening, threatened pending, probable or being organised can apply to FWA for an order that the industrial action stop, not occur or not be organised. If FWA is satisfied that industrial action, that is not, or would not be, protected industrial action, is that happening, threatened pending, probable or being organised then FWA must make an order that the industrial action stop, not occur or not be organised (s.418). Contravention of such an order is prohibited and both civil remedies and injunctive relief are available for such a contravention (s.421) and, in the case of injunctive relief, with all the consequences that flow from breaching an injunction.
[27] Protected industrial action in support of claims for an enterprise agreement, as authorised by the FW Act, is the only lawful mechanism available to employees to achieve improvements to wages and conditions that an employer is not otherwise prepared to agree to.
[28] The FW Act makes provision for the suspension or termination of protected industrial action in certain circumstances. FWA has been given the power to suspend or terminate protected industrial action where such action
(a) is causing or threaten to cause “significant economic harm” to any employer or employees who will be covered by the proposed enterprise agreement, provided such harm is imminent (s.423); or
(b) has threatened, is threatening or would threaten to endanger the life, the personal safety or health, or the welfare, of the population or a part of it; or to cause “significant damage” to the Australian economy or an important part of it (s.424); or
(c) is threatening to cause significant harm to a third party (that is, a person other than a bargaining representative for the proposed agreement or an employee who will be covered by the proposed agreement) (s.426).
[29] FWA also has the power to suspend protected industrial action to facilitate a ‘cooling off’- that is, where the suspension would be beneficial to the bargaining representatives for the proposed agreement because it would assist in resolving the matters in dispute (s.425).
[30] Division 7 of Part 3-3 of the FW Act makes provision for the Minister to terminate protected industrial action by making a declaration that the industrial action is threatening, or would threaten, to endanger the life, the personal safety or health, or the welfare of the population or a part of it, or to cause significant damage to the Australian economy or an important part of it (s.431). When such a declaration is made the Minister may, for the purposes of removing or reducing such threat, give a direction that specified bargaining representatives or employees take, or refrain from taking, specified actions (s.433). Contravention of such a direction is prohibited and civil remedies are available (s.434).
[31] When protected industrial action is terminated, either by FWA pursuant to s.423 or s.424 or by the Minister pursuant to s.431, and agreement cannot be reached during a post-industrial action negotiating period, FWA is obliged to make a “workplace determination” in accordance with Part 2-5 of the FW Act whereby FWA arbitrates the improved terms and conditions that will apply for the period of operation of the workplace determination. Thus, a workplace determination represents a benefit that accrues to employees when the ‘right’ to take industrial action is removed through a termination of protected industrial action pursuant to s.423, s.424 or s.431.
[32] The power conferred by s.426 of the FW Act is a power to suspend protected industrial action on the basis of significant harm to a third party. There is no power conferred on FWA to terminate protected industrial action the basis of significant harm to a third party. Importantly, there is no provision for a workplace determination where an order suspending protected industrial action is made under s.426.
[33] The absence of a power in FWA to terminate protected industrial action on the basis of significant harm to a third party (as distinct from suspend protected industrial action on that basis) and the fact that only one suspension on that basis may be ordered are matters of particular significance in the present context. It is to be inferred that Parliament did not intend that protected industrial action should be terminated on the basis of harm to third parties unless that harm, actual or threatened, can be brought within the circumstances in identified in s.423 or s.424 or unless the Minister can be persuaded to make a declaration pursuant to s.430. This suggests, as is emphasised in the Explanatory Memorandum, that Parliament intended that a suspension under s.426 to provide a single instance of temporary respite for third parties from the adverse effects of protected industrial action.
[34] The objects of the FW Act are set out in s.3:
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. 16
[35] The objects in (a), (f) and (g) are the objects most obviously engaged in the present context with the object in (f) of particular relevance.
[36] Since protected industrial action is confined to the process surrounding the making of agreements Section 171 which sets out the object of Part 2-4 of the Act is also relevant. Section 171 provides:
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.”
[37] The objective to “facilitate good faith bargaining and the making of enterprise agreements” is of particular relevance. Like the Workplace Relations Act 1996 before it, the FW Act creates what the Explanatory Memorandum justifiably describes as a “right” in employees to take protected industrial action in support of claims for an enterprise agreement. That legislation may properly be seen as the means by which Australia has given effect to its important obligations under the International Labour Organisation Conventions particularly Convention no. 87 Freedom of Association and Protection of the Right to Organise 1948 and Convention No, 98 Right to Organise and Collective Bargaining 1949, both ratified by Australia in 1973.
[38] Viewed in the context of the Act as a whole, and having regard to the legislative purpose behind the regime in the FW Act for the taking of protected industrial action as a means of advancing claims for an enterprise agreement as the vehicle through which employees are able to seek to achieve improvement in their terms and conditions of employment, the precise meaning intended by the Parliament in using the expression “significant harm” in s.426(3) is unclear. The ordinary meaning provides insufficient guide to distinguish what harm is significant for the purposes of Section 426 since most industrial action threatens harm which is “important” or “of consequence” to the bargaining parties and also often to third parties. This ambiguity activates an entitlement to have regard to the Explanatory Memorandum pursuant to s.15AB(1)(b)(i) of the Acts Interpretation Act 1901.
[39] The Explanatory Memorandum for the FW Act includes the following in the introductory remarks in relation to Part 3-3 which deals with “Industrial Action”:
“Division 6 – Suspension or termination of protected industrial action by FWA
1706. Division 6 sets out the grounds upon which FWA may suspend or terminate protected industrial action organised, or engaged in, in relation to a proposed enterprise agreement.
1707. Suspension or termination of protected industrial action brings to an end the right to take protected industrial action. Protected industrial action may be resumed after any period of suspension, but will be subject to any requirements for the giving of notice before any action may be taken. A termination of protected industrial action may lead to FWA making a workplace determination under Part 2-5.
1708. The Bill recognises that employees have a right to take protected industrial action during bargaining. These measures recognise that, while protected industrial action is legitimate during bargaining for an enterprise agreement, there may be cases where the impact of that action on the parties or on third parties is so severe that it is in the public interest, or even potentially the interests of those engaging in the action, that the industrial action cease — at least temporarily.
1709. It is not intended that these mechanisms be capable of being triggered where the industrial action is merely causing an inconvenience. Nor is it intended that these mechanisms be used generally to prevent legitimate protected industrial action in the course of bargaining.
1710. Under the Bill, FWA:
(emphasis added)
[40] The Explanatory Memorandum contains the following in relation to s.426:
“1726. FWA is required to suspend protected industrial action if action is being engaged in and it is satisfied that (subclause 426(1)):
1727. The factors that FWA may take into account when determining whether protected industrial action is threatening to cause significant harm to a third person are specified in subclause 426(4). They are:
1728. FWA may make the order on application by an organisation, person or body directly affected by the industrial action, the Minister, or a person prescribed by the regulations (subclause 426(6)). The Bill provides employees with right to take protected industrial action in support of a proposed single enterprise agreement. The purpose of this clause is to provide FWA with a means to address significantly serious impacts that industrial action is having on the welfare of third parties. It allows for a respite from industrial action which is causing them significant harm. The harm to the third party would need to be significant, that is a more serious nature than merely suffering of a loss, inconvenience or delay. Therefore, it is anticipated that FWA would suspend industrial action on this basis only in very rare cases.
1729. Protected industrial action cannot be terminated on this ground.”
(emphasis added)
[41] As members of a specialist industrial tribunal, we observe that effective industrial action will almost always cause harm to the employer’s business which, in turn, will frequently adversely affect third parties being the customers, clients or other persons who depend upon the timely supply of goods or services by that employer. This was recognised by Drummond J in FH Transport Pty Ltd v TWU 17 where his Honour observed:
“It is inevitable... that action engaged in directly by unions against very many kinds of employer will, by disrupting the business operations of those employers, also have a direct or indirect disruptive impact on the business and other activities of third parties.”
[42] In National Tertiary Education Industry Union v University of South Australia 18 a Full Bench was concerned with an appeal against a decision suspending protected industrial action pursuant to s.424 of the FW Act. The Full Bench observed:
“[8] Within the scheme of the Act, the powers in relation to the suspension or termination of protected industrial action are intended to be used in exceptional circumstances and where significant harm is being caused by the action. This is clear from the Explanatory Memorandum to the Fair Work Bill 2008:
The Bill recognises that employees have a right to take protected industrial action during bargaining. These measures recognise that, while protected industrial action is legitimate during bargaining for an enterprise agreement, there may be cases where the impact of that action on the parties or on third parties is so severe that it is in the public interest, or even potentially the interests of those engaging in the action, that the industrial action cease — at least temporarily.
It is not intended that these mechanisms be capable of being triggered where the industrial action is merely causing an inconvenience. Nor is it intended that these mechanisms be used generally to prevent legitimate protected industrial action in the course of bargaining.” [paras. 1708-1709]”
(emphasis added)
[43] Just as that Full Bench considered that the power in s.424 was intended to be used only in “exceptional circumstances”, we consider that the power in s.426 is likewise intended only to be used in exceptional circumstances. That outcome is determined by a proper construction of the expression “significant harm’ and also by a proper appreciation of when it will be “appropriate” to make an order within the meaning of s.424(5). It is also consonant with the approach taken by the majority of the Full Court of the Federal Court in relation to s.170MW of the Workplace Relations Act 1996 in Re Polites; Ex parte Construction, Forestry, Mining and Energy Union 19 and paragraphs 1709 and 1728 of the Explanatory Memorandum in particular.
[44] When regard is had to context of the FW Act as a whole and to the explanatory memorandum, the expression “significant harm” in s.426(3) should be construed as having a meaning that refers to harm that has an importance or is of such consequence that it is harm above and beyond the sort of loss, inconvenience or delay that is commonly a consequence of industrial action. In this context, the word “significant” indicates harm that is exceptional in its character or magnitude when viewed against the sort of harm that might ordinarily be expected to flow from industrial action in a similar context. In this way, an order will only be available under s.426 in very rare cases, as contemplated by the Explanatory Memorandum. It follows that it will not, of itself, be sufficient that the harm, viewed in isolation, can be characterised as “substantial”. Substantial harm to third parties is a common consequence of effective industrial action. Unless the harm is out of the ordinary then suspension would contrary to the legislative intention that suspension should not be able to used generally to prevent legitimate protected industrial action in the course of bargaining. In assessing whether there is “significant harm” context is also important. A particular quantum of financial loss may constitute “significant harm” in one context but not in another.
[45] In Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission 20 the High Court was concerned with whether a decision of a Full Bench of the AIRC allowing an appeal against a decision of Boulton J making an order pursuant to s.170MW of the Workplace Relations Act 1996, as it then stood, suspending a bargaining period. Pursuant to s.170MW(1) the AIRC had a discretion to suspend or terminate a bargaining period (which necessarily involved a suspension or termination of industrial action) if, but only if, it was satisfied as to one of the circumstances set out in subsections (2) to (7) of s.170MW. Section 170MW(3) provided:
“A circumstance for the purposes of subsection (1) is that industrial action that is being taken to support or advance claims in respect of [a] proposed agreement is threatening:
(a) to endanger the life, the personal safety or health, or the welfare, of the population or of part of it; or
(b) to cause significant damage to the Australian economy or an important part of it.”
[46] Gleeson CJ and Gaudron and Hayne JJ held:
“[27] For reasons that will be given shortly, it is not necessary to decide whether the Full Bench of the Commission was correct in ascribing error to Boulton J. However, it may conveniently be noted that the process by which the Full Court concluded that Giudice J "[identified] errors that, in truth, were not errors" is not beyond criticism. For example, the Full Court considered that Giudice J mistook the nature of the exercise involved in forming the satisfaction that industrial action is threatening "to cause significant damage to the Australian economy" for the purposes of s 170MW(3)(b) of the Act because he implied "that a measurable likely effect on the economy must be identified and then an assessment made whether that was 'threatening ... to cause significant damage'." In the view of the Full Court, Giudice J was in error because all that was necessary was that "there [be] some material that might reasonably found that satisfaction".
[28] As already explained, the nature of the threat as to which a decision-maker must be satisfied under s 170MW(3) of the Act involves a measure of subjectivity or value judgment. A decision under that sub-section would involve appealable error if, for example, regard was had to irrelevant material, relevant material was disregarded, or, although there was some factual material by reference to which the decision-maker might be satisfied, he or she mistook those facts. If the Full Court intended to suggest otherwise, it was wrong. More to the point, however, is that a decision under s 170MW(3)(b) that industrial action is "threatening ... to cause significant damage to the Australian economy or an important part of it" (emphasis added) is not simply a matter of impression or value judgment. The presence of the words "significant" and "important" in s 170MW(3)(b) indicate that the decision-maker must have some basis for his or her satisfaction over and above generalised predictions as to the likely consequences of the industrial action in question. That was the point of the observations of Giudice J with respect to the absence of economic data.”
(footnotes omitted)
[47] In the same way, the presence of the word “significant” in the expression “significant harm” s.426(3) of the FW Act, and the attention that s.426(4) directs to the “extent” of harm of the kind expressly identified in s.426(4), means that a member at first instance must have some basis for his or her satisfaction over and above generalised predictions as to the likely consequences of the industrial action in question. That is not to say that, in relation to financial loss, the evidence must precisely quantify the amount of a loss. Rather, there must be evidence that allows for an assessment of the order of magnitude of any financial harm relied upon by an applicant. Contrary to the submissions of the CFMEU, we accept that there was some evidence of that sort in this case. The decision in Coal and Allied reinforces our view that the expression “significant harm” when properly construed has a meaning that in truth accords with the Explanatory Memorandum.
[48] It was uncontroversial that, at the time of the hearing before the Deputy President, the work required to complete Mammoet’s subcontract would take about 4-6 weeks with the possibility of additional time being required on account of poor weather. The Deputy President made an order suspending industrial action for a period of 3 months. The practical effect of that order was to terminate the industrial action because, barring unforeseen circumstances, Mammoet will have completed all work under its subcontract before the period of suspension expires.
[49] Given that no workplace determination is available following an order made under s.426 the fact that an order under s.426 that will have the practical effect of terminating the industrial action rather than merely suspending it is a manifestly relevant matter to be considered in determining whether it is “appropriate” to make the order as required by s.426(5). We do not regard the submission of the advocate for the CFMEU at first instance at transcript PN828 as justifying a suspension for three months: the CFMEU was resolutely opposed to any order. The submission merely underscored the importance attached by the CFMEU to their submission that there be no order and cannot reasonably be seen as consent or acquiescence to an order for three months.
[50] We respectfully consider that the Deputy President erred in:
(a) Failing to appreciate that on the proper construction of s.426, “significant harm” required the identification of harm that was over and above harm of the sort that is commonly a consequence of protected industrial action with the result that his Honour did not apply the correct test.
(b) Failing to take account of a manifestly relevant consideration, namely, that, on the evidence before him, the period of suspension that his Honour ordered almost certainly had the practical effect of terminating the protected industrial action rather than merely providing a temporary respite from the effects of that action. This is all the more so when account is taken of the evidence that indicated that Mammoet had work demobilising its equipment that would extend for some weeks after the completion of the remaining lifts it is required to perform under its subcontract. It was the completion of those lifts that was impacting on the critical path of the Project and preventing United and Kentz from completing their work in a timely fashion. The Deputy President’s order had the effect of depriving the Employees of applying pressure to Mammoet during the period of demobilisation when the action would not have the impact on the critical path of the project. Any basis that supported a suspension of the protected industrial action pursuant to s.426 did not extend to that work. The period of three months was manifestly excessive and inappropriate.
Permission to appeal
[51] This is the first appeal that calls for a consideration of the proper construction of s.426. There is a public interest in that consideration occurring. We are satisfied that there is a public interest in granting permission to appeal in this matter. Accordingly, we are required by s.604(2) to grant permission to appeal and we do so. We should note that we would, in any event, have exercised our discretion to grant permission to appeal on the conventional considerations governing a grant of permission (leave) to appeal. Having granted leave to appeal, the appeal proceeds as a rehearing albeit that we cannot exercise our powers to interfere in the decision of the Deputy President unless error is demonstrated. 21
Rehearing
[52] The Deputy President’s order was made on 2 July 2010. There is nothing before us to suggest that the Employees did not return to work forthwith after the order was made. The present appeal was not filed until 20 July 2010. A stay hearing was conducted on 21 July 2010 at which the presiding member indicated a provisional view that there should be no stay and that, instead, the hearing of the appeal ought be expedited. The CFMEU expressed satisfaction with that course and the appeal was heard on Thursday 29 July 2010.
[53] Given the nature of the application at first instance and the lapse of time since the hearing before the Deputy President, we considered it appropriate on the rehearing to determine the application by reference to the facts as they stand now rather than as they stood at the time of the hearing before the Deputy President. We indicated that we would receive fresh evidence on the current state of work on the project.
[54] Material addressing that issue was filed on Monday 2 August 2010, including a supplementary submission from Woodside. A further submission from the CFMEU was received on 4 August 2010. The CFMEU did not seek to cross-examine the makers of the supplementary statements filed by Woodside and we admit those statements as fresh evidence. This decision is dated 6 August 2010. Thus, the relevant Employees have now been back at work for just on five weeks. It is clear that Mammoet has completed a number of lifts such that there is now work for United to proceed with and Kentz behind it. While it is clear that a number of lifts remain to be completed by Mammoet it appears that only two of those lifts need to be completed by Mammoet in the sense that they are lifts for which no other contractor is reasonably available with the capacity to perform them. Those two lifts were scheduled to have occurred by 4 August 2010. The remaining lifts are capable of being undertaken by other contractors even if there may be some delays before this can be arranged. Woodside has always had the capacity to vary its contract with Mammoet to enable this to occur should it be necessary and on 28 July 2010 it did in fact vary to contract to this effect. 22
[55] The sort of harm complained of by Woodside, Kentz and United is the sort of harm that will be caused by industrial action by employees on any large construction project where such action affects the critical path of the project. We reject any proposition that an order under s.426(3) will be available and appropriate in all such cases.
[56] Moreover, on the evidence before the Deputy President it was far from clear that either Kentz or United would ultimately suffer any substantial loss as a result of the delays to the performance of their subcontracts arising from the industrial action by the Employees of Mammoet. This is because, on the material before the Deputy President, it is probable, even highly probable, that both Kentz and United will be entitled to an extension of time in respect of the delays arising from the industrial action by the Employees of Mammoet such that they will not ultimately suffer any substantial loss as a result of the protected industrial action. Woodside accepted that this was a likely outcome. 23
[57] It costs Woodside about $3.5 million per day to run the project team and site based services, 24 that is, excluding payments to the contractors undertaking the actual construction work on the Project. Woodside relies upon this and the consequent delay in the commencement of the revenue stream from LNG sales (estimated to be in the order of millions of dollars per day) as the quantum of the loss that it will suffer as a result of the protected industrial action given that that action was affecting the critical path of the Project and that there were, according to Woodside, only a few days of buffer left in the project timeline before these losses begin to be incurred. It is clear from the evidence that delays unrelated to the industrial action by the Employees have also contributed to placing Woodside in this position.
[58] The position of Woodside requires particular comment. Woodside, while technically a third party, is not the usual position of a third party. The evidence demonstrated, unsurprisingly, that, pursuant to the relevant subcontracts, Woodside exercised very significant control over Mammoet in relation to industrial relations. Woodside retained a right of veto over any industrial agreement that Mammoet could enter in relation to the Project. 25 Mammoet was required to engage an industrial relations advisor acceptable to Woodside26 and was required to notify Woodside in the event that they did not accept their advice and the reasons why the advice was not accepted.27 In the event, Mr Colin Milne, acted as industrial relations adviser with the approval of Woodside to all the contractors engaged on the Pluto project, including Mammoet Australia Pty Ltd.
[59] The amount of potential daily loss identified by Woodside is a function of the enormous size of the Project. In our view, those amounts are not significant in the relevant sense when considered in the context of the project as a whole unless the further delays on account of the protected industrial action become very protracted. On the evidence it is more likely than not that the dispute will be resolved before that point is reached. Indeed, in his earlier decision, the Deputy President expressed support for a CFMEU contention that it was the existence of the capacity to take industrial action and indeed the taking of it that had the effect of reducing the differences between the parties and making an agreement more likely. We think that there is a reasonable prospect that the dispute will be resolved relatively quickly if the protected industrial action is permitted to continue.
[60] We are not persuaded on the evidence (which amounts to little more than mere assertion) that the reputational loss relied upon by Woodside, United and Kentz is likely to be very great, let alone constitute “significant harm” in the relevant sense.
[61] We assume, without deciding, that the applicants below were entitled to rely on harm to third parties (employees of United and Kentz) who are not parties to the proceeding (although there are arguments to the contrary). We are not persuaded by the relatively scant and equivocal evidence in relation to threatened harm to employees of United and Kentz that those employees are threatened with “significant harm”. The work of United and Kentz has to be performed and the employees are required for that work to be performed sooner or later.
[62] At present, the loss that is threatened is as a consequence of mere delay of the sort that is commonplace on large construction projects. We can see nothing in the evidence to relevantly distinguish this case from any construction project where protected industrial action is affecting the critical path. Of course, none of Woodside, United or Kentz suggested that that action was threatening their ongoing viability.
[63] As an aside, we note that had we considered that the harm threatened in this case was “significant harm” within the meaning of s.426 properly construed, we would, on the rehearing, have wanted to explore the measures available to Woodside to mitigate the effects of the protected industrial action being taken by the Employees. We would have been disinclined to accept, without more, the assertions in Woodside’s evidence that there were no alternative measures that could have been taken to mitigate the effect of that protected industrial action.
[64] The evidence indicates that the Employees are earning between of $156,000 and $184,000 per annum. 28 The outstanding issues between the Employees and Mammoet were:29
[65] Mr Robinson, Mammoet’s Senior Project Manager, acknowledged that negotiations were not yet at an impasse. 30
[66] Given that Mammoet’s work on the project will likely conclude before 1 September 2010, the monetary value of the difference between the parties on the size of the pay increase and its commencement date in relation the Employees is less than $50,000 (2% of $184,000 for 1 year x 12 Employees). Assuming that the proposed agreement would apply to all Mammoet employees on the Project, the monetary difference would be in the order of $100,000.
[67] Absent some enforceable agreement of which there is no evidence, the remaining Employees will become redundant at the end of the project and are liable to have their employment terminated if Mammoet chooses not to redeploy them to another location (where their employment will no longer be subject to the Mammoet Pluto Agreement). Again, absent some enforceable agreement of which there is no evidence, Mammoet will not be obliged to reengage any of the Employees on subsequent stages of the Pluto development should those stages proceed and should Mammoet be successful in securing the heavy lifting subcontract for a subsequent stage. Suffice it to say, it is more likely than not that Woodside could contain its losses to an amount that is trivial in the context of the Project as a whole by agreeing to fund the cost of the difference between the Employee’s claim and Mammoet’s offer. It may be inferred that Woodside is reluctant to go down that path because it may encourage employees of other contractors to seek higher wage increases when the opportunity arises than would otherwise be the case.
[68] Turning to the requirement in s.426(5), we note that the Employees have been bargaining since October 2009 when the Mammoet Project Agreement had passed its nominal expiry date. This is not a case that raises any question of a union or employees cynically exploiting their leverage by waiting until the eleventh hour before seeking to make an agreement.
[69] Woodside, United and Kentz have had the benefit of a substantial respite from the protected industrial action of the Employees. It is not appropriate that the Employees be permanently deprived of their right to take protected industrial action in relation to bargaining that has been proceeding for the best part of a year.
[70] On the rehearing, even if we were satisfied that the protected industrial action was causing “significant ham” to third parties within the meaning of s.426(3) and considered that a suspension was appropriate, we would not regard a suspension in excess of that which has in fact occurred through the lapse of time consumed by the appeal process to be appropriate. The proper orders on the appeal are to allow the appeal, to quash the decision and order of the Deputy President and dismiss the originating application. Orders to that effect have issued in conjunction with this decision.
VICE PRESIDENT
Appearances:
Mr R. Reitano, counsel, on behalf of the CFMEU.
Mr H.J Dixon SC with Mr S.R Meehan, counsel, on behalf of Woodside Burrup Pty Ltd.
Mr D. Pearson, counsel, on behalf of Kentz E & C Pty Ltd.
Hearing details:
2010.
Melbourne:
29 July.
1 (1985) 155 CLR 513 at 520
3 (1996) 137 ALR 70 at 90-91
4 [2010] FWAFB 4337 at para [11] citing (1996) 137 ALR 70 at 90-91
5 [2010] FWA 4389 at paras [10] - [11]
6 [2010] FWA 4389 at para [16]
8 (1936) 55 CLR 499 at 504-5
9 s.15AA of the Acts Interpretation Act 1901
10 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 per Brennaqn CJ, Dawson, Toohey and Gummow JJ.
11 s.15AB(1)(b)(i) of the Acts Interpretation Act 1901
12 (1997) 187 CLR 384
13 (1997) 187 CLR 384 at 408
14 (1998) 194 CLR 355
15 (1998) 194 CLR 355 at para [69]
16 [1997] FCA 567
17 [1997] FCA 567
19 (2002) 117 FCR 212 per Lee and Madgwick JJ esp. at [54]
20 (2001) 203 CLR 194
21 Coal and Allied Operations Pty Ltd v AIRC (2001) 203 CLR 194 at [17] and [32]
22 Statement of Mr Brennan of 2 August 2010 para [13]
23 Statement of Brennan AB/120-AB/122 see also the relevant subcontracts: Exhibit C4, clauses 34 (AB/181) and Exhibit C6, clause 34 (AB/194-5).
24 Statement of Mr Brennan at para [59] (AB121)
25 Exhibit C1 (AB/160), clause 38.2(g)
26 Exhibit C1 (AB/160), clause 38.2(c)
27 Ibid
28 Statement of Mr Robinson at para [43] (AB134)
29 Statement of Mr Robinson at paras [46] - [48] (AB135)
30 Statement at Mr Robinson at para [45] (AB135)
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