[2012] FWAFB 3534 |
FAIR WORK AUSTRALIA |
DECISION |
Fair Work Act 2009
s.604 —Appeal of decisions
VICE PRESIDENT WATSON |
|
Appeal against decision [2011] FWAA 9129 of Vice President Lawler at Melbourne on 20 December 2011 in matter number AG2011/406. Appeal against decision approving enterprise agreement -timing for when an agreement is genuinely agreed -notice of employee representational rights -when to assess reasonable grounds for believing there has been genuine agreement by the employees - when does the requirement to give a notice of representational rights arise -unilateral mistake - application of common law contracts to Part 2-4 of the Fair Work Act 2009 - rights of parties to withdraw from agreements made under Part 2-4 of the Fair Work Act 2009 prior to approval- discretionary decision - permission to appeal - public interest - Fair Work Act 2009, s 173, 174, 180,181, 182, 186, 187, 188.
Introduction
[1] This decision concerns an application for permission to appeal by CJ Manfield Pty Ltd (CJ Manfield) against a decision 1 of Vice President Lawler at Melbourne on 20 December 2011. The decision granted an application by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) for approval of the Manfield Colair and CEPU Electrical Division Northern Territory Enterprise Agreement Gove Alumina Refinery and Mine Site - 2010/2012 (the agreement).
[2] The appeal concerns the situation where an employer that has made an enterprise agreement with its employees, and who discovers an error in the agreement prior to the approval of the agreement, seeks to withdraw from the agreement and avoid the agreement coming into effect by opposing the approval of the agreement by Fair Work Australia.
[3] On 22 December 2011 a stay of the approval decision was ordered, upon the receipt of undertakings, pending the hearing and determination of the appeal or further order. 2
[4] At the hearing of this matter on 4 April 2012, Mr M Follett of counsel appeared on behalf of CJ Manfield and Mr M Wright appeared on behalf of the CEPU.
Background
[5] CJ Manfield provides electrical and refrigeration services to the Rio Tinto Alcan Refinery site at Gove, Northern Territory. It has provided such services at the Gove site for a number of years. In March 2010, CJ Manfield was successful in obtaining a renewal of its contract with Rio Tinto Alcan. The new tender required it to move from a two weeks on, two weeks off roster, to 19 days on, nine days off, 10 hour shift roster. Two 20 minute rest breaks were provided during the 10 hour shift.
[6] Negotiations for a new enterprise agreement commenced under previous legislation and continued on the commencement of the Fair Work Act 2009 (the Act). In September 2009 a second version of the agreement was distributed for voting. The proposed agreement was not accepted. Further negotiations were suspended while the contract negotiations were occurring. On obtaining the contract renewal, the enterprise agreement negotiations recommenced. For the purposes of negotiations, the site superintendant of CJ Manfield, Mr Kieren Francis represented CJ Manfield with advice and assistance from the Electrical Contractors Association of Queensland (ECAQ). The CEPU was the bargaining representative for the employees. Its organiser, Mr Trevor Gauld was the chief negotiator for the CEPU. Mr Hayes, a union delegate, was a member of the EBA negotiating committee.
[7] At the request of CJ Manfield, the CEPU provided a number of redrafted clauses to CJ Manfield to make the provisions clearer than the original draft. On 12 and 13 November 2009, various proposed clauses were sent by Mr Gould to Mr Francis, who passed them onto ECAQ for incorporation into the agreement. One such clause dealt with rest and meal breaks. Mr Francis gave evidence that there was a very brief discussion about the rest and meal breaks clause at a meeting on 27 September 2010 and that the union negotiator, Mr Hayes confirmed his understanding that the clause in question, relating to a third meal break, would not apply to 10 hour shifts, and that the third meal break would only apply for work in excess of 10 hours. Mr Francis said that there was never any claim to provide a third meal break on each 10 hour shift, and never any decision to provide one.
[8] Mr Hayes did not deny the absence of a specific claim and a specific concession to apply a third meal break for 10 hour shifts beyond the terms of the draft agreement. He gave evidence that he could not recall whether the conversation of 27 September 2010 took place.
[9] The draft rest and meal breaks clause provided by the CEPU was inserted by the ECAQ into the draft agreement as clause 41. Clause 41.2 provides:
“An employee who is required to work 2 or more hours overtime shall be allowed a crib time of 20 minutes at the prevailing overtime rate. For each four hours of overtime worked after an employee is entitled to a further 20 minutes crib break paid at the prevailing overtime break.”
[10] The parties submitted a statement of agreed facts 3 in the approval hearings which detailed the events leading up to the agreement being made. The statement read:
“The admissions contained in this Statement of Agreed Facts are made only for the purposes of this proceeding.
1. On 3 June 2009, the Communications, Electrical, Electronic, Energy. Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) issued to CJ Manfield Pty Ltd (CJ Manfield) a Notice to Initiate a Bargaining Period under s.423 of the Workplace Relations Act 1996 (Cth), in relation to eligible members of the CEPU employed by CJ Manfield to work at the Rio Tinto Alcan Gove Alumina Refinery and Mine Site in the Northern Territory (Relevant Employees).
2. On 23 September 2009, CJ Manfield issued to the Relevant Employees a Notice of employee Representational Rights in accordance with the Fair Work Regulations 2009, dated 11 September 2009.
3. An “agreement” was put to a vote of Relevant Employees between 14-22 October 2009, but the vote was declared void by mutual agreement and no votes were counted.
4. On or about 26 October 2009, CJ Mansfield issued to the Relevant Employees a Notice of Employee Representational Rights in accordance with the Fair Work Regulations 2009, dated 26 October 2009.
5. An “agreement” was put to a vote of Relevant Employees between 5-6 May 2010. but was rejected by the Relevant Employees.
6. On or about 4 June 2010, CJ Manfield issued to the Relevant Employees a Notice of Employee Representational Rights in accordance with the Fair Work Regulations 2009, dated 4 June 2010.
7. An “agreement” was put to a vote of Relevant Employees between 22 June and 1 July 2010, but was rejected by the Relevant Employees.
8. On or about 28 September 2010, CJ Manfield issued to the Relevant Employees a Notice of Employee Representational Rights in accordance with the Fair Work Regulations 2009, dated 28 September 2010.
9. An “agreement” was put to a vote of Relevant Employees between 29 October and 4 November 2010, but was rejected by the Relevant Employees.
10. On or about 16 November 2010, CJ Manfield issued to the Relevant Employees a Notice of Employee Representational Rights in accordance with the Fair Work Regulations 2009, dated 16 November 2010.
11. An “agreement” was put to a vote of Relevant Employee between 3-7 December 2010 and was approved by the Relevant Employees.
12. Annexure A sets out a list of changes to the composition of the Relevant Employees (new additions plus cessations) between the period 23 September 2009 and 7 December 2010.
13. There were 39 Relevant Employees employed at the time of the close of the vote on 7 December 2010.
14. Of those 39 Relevant Employees, 13 remain employed by CJ Mansfield, but only 8 of those will have their employment covered by any “agreement” (4 of the others are now working outside the scope of the “agreement”, and the 5th will be working outside the scope of the “agreement” from 1 January 2012).
15. Since the time of the close of the vote on 7 December 2010, an additional 29 employees have commenced employment with CJ Manfield, whose employment will be covered by the “agreement”, and who did not participate in any negotiations or vote for the “agreement”.
Annexure A
Date range |
Relevant Employees at start of date range |
New additions during period |
Cessations during period |
23 SEPTEMBER 2009 - 25 OCTOBER 2009 |
25 |
2 |
0 |
26 October 2009 - 3 June 2010 |
27 |
17 |
9 |
4 June 2010 - 27 September 2010 |
35 |
12 |
5 |
28 September - 15 November 2010 |
42 |
2 |
3 |
16 November 2010 - 7 December 2010 |
38 |
2 |
1 4 |
”
[11] On 20 December 2010, CJ Manfield made an application to Fair Work Australia, pursuant to s.185 of the Act for approval of the agreement.
[12] After lodging the application for approval, CJ Manfield discovered what it described as a significant error present in clause 41.2 of the agreement.
[13] CJ Manfield contends that it had not contemplated the words “two or more hours overtime” in clause 41.2 to apply to 10 hour shifts and therefore it had not understood that workers working 10 hour shifts under the agreement would receive a total of three paid crib breaks rather than two.
[14] When CJ Manfield realised its mistake in agreeing to this clause it applied to withdraw the application for approval and on 24 February 2011, filed a Notice of Discontinuance. The CEPU objected to any discontinuance and consequently filed its own application for approval of the agreement on 7 March 2011.
[15] CJ Manfield’s application to withdraw its application and the CEPU’s application for approval of the agreement was heard by Deputy President Sams on 19 April 2011. CJ Manfield opposed the CEPU’s application for approval and made the objection that the application was made outside of the 14 day time limit specified in s.185(3)(a) of the Act. Deputy President Sams found that CJ Manfield was able to discontinue its own application, refused to extend the time for lodging of the CEPU’s application for approval of the agreement and ultimately dismissed the application. 5
[16] The CEPU appealed this decision. A Full Bench upheld the conclusion of Deputy President Sams that an application for approval of an enterprise agreement can be discontinued. However, it found that the Deputy President had erred in failing to extend the time for lodging the application and granted the extension of time sought by the CEPU. 6 The application for approval of the agreement was then remitted to Vice President Lawler.
[17] CJ Manfield again opposed the approval of the agreement relying on four grounds which it presented before Vice President Lawler. 7 On 20 December 2011, Vice President Lawler issued his decision approving the agreement and it is this decision which is the subject of the present appeal.
The Decision under appeal
[18] Vice President Lawler reconsidered arguments raised initially before Deputy President Sams. Four arguments were raised and considered as follows:
1. The Tribunal cannot be satisfied that the agreement has been genuinely agreed to by the employees covered by the agreement (s.186(2)(a)), because it cannot be satisfied that there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees (s.188(c)) (change in composition objection);
2. The Tribunal cannot be satisfied that the agreement has been genuinely agreed to by the employees covered by the agreement (s.186(2)(a)), because it cannot be satisfied that the employer covered by the agreement (CJ Manfield Pty Ltd) complied with s.181(2) of the FW Act (s.188(a)(ii)) (representational rights objection);
3. The Tribunal cannot be satisfied that the agreement has been genuinely agreed to by the employees covered by the agreement (s.186(2)(a)), because it cannot be satisfied that CJ Manfield complied with s.180(2) of the FW Act (s.188(a)(i)) (failure to distribute the agreement objection); and
4. No valid application for the approval of an “enterprise agreement” has been made, as there is in existence no “enterprise agreement” within the meaning of s.172 of the FW Act.” (unilateral mistake objection)”. 8
[19] The Vice President rejected each of these arguments and approved the agreement.
Grounds of Appeal
[20] In the appeal proceedings, CJ Manfield reiterated the objections raised initially before Deputy President Sams and subsequently before Vice President Lawler. It submitted that each of the four grounds of objection deprived the tribunal of jurisdiction to approve the agreement.
[21] In its notice of appeal, CJ Manfield submitted 10 grounds of appeal under the umbrella of the same four general headings it also pursued before Vice President Lawler. The grounds of appeal are as follows:
● change in composition objection (appeal grounds 1-3);
● representational rights objection (appeal grounds 4-5);
● failure to distribute the agreement objection (appeal grounds 6-8); and
● unilateral mistake objection (appeal grounds 9-10).
[22] It argued that each of the conclusions reached by the Vice President were in error and if any of the conclusions are found to be wrong, the appeal should be allowed and the decision approving the agreement quashed.
Nature of the Appeal
[23] Different principles apply to an appeal depending on the nature of the decision under appeal. If a decision is properly characterised as an error of jurisdiction or an error in a finding of a jurisdictional fact then the appeal bench must determine whether the conclusion reached was in error. 9 Alternatively, if the decision under appeal is properly characterised as a discretionary decision, then the appeal can only be successful if an error of the type described in House v R.10 There is some overlap in the tests to be applied especially when a decision is challenged on the basis of the correct application of the statute or relevant legal principles. It will be necessary to consider each of the objections separately to determine which test applies. It will also be necessary for CJ Manfield to establish grounds for granting permission to appeal under s.604 of the Act.
Permission to Appeal
[24] Permission to appeal can be granted if Fair Work Australia is satisfied that it is in the public interest to do so, or on other conventional grounds for obtaining permission to appeal. The matters raised in this appeal involve complex questions as to the construction of statutory provisions concerning the approval of enterprise agreements, the role of the tribunal in approving agreements and the interrelationship between the statutory provisions and common law contractual principles. Because of the matters involved in the appeal we grant permission to appeal.
Statutory Provisions
[25] The objects of Chapter 2, Part 2-4 of the Act include “to provide a simple, flexible and fair framework that enables collective bargaining in good faith...” and “to enable FWA to facilitate good faith bargaining and the making of enterprise agreements including through.... ensuring that applications to FWA for approval of enterprise agreements are dealt with without delay.” It has been held that the scheme of the Act implies that the requirements for approval be applied in a practical manner without unnecessary technicalities. 11
[26] Enterprise agreements under the Act are different in nature to common law contracts. They are made and approved by following the processes in Part 2-4 of the Act. The differences between an agreement made under Part 2-4 and common law contracts include the fact that enterprise agreements made and approved under the Act bind all employees to whom they are expressed to apply, including those not employed at the time of a vote, those covered by the agreement but who do not vote at all and those who vote against approval of the agreement.
[27] The Act is quite prescriptive about the requirements to make an enterprise agreement. Section 182 of the Act provides that a single enterprise agreement is made when a majority of employees, who cast a valid vote, approve an enterprise agreement, after the employer requests the employees employed at the time who will be covered by the agreement to approve the agreement pursuant to s.181 of the Act.
[28] The general duty on Fair Work Australia to approve agreements is contained in s.186 of the Act. It provides that if an application for the approval of an enterprise agreement is made, Fair Work Australia must approve the agreement if the requirements of ss.186 and 187 are met.
[29] In our view s.186 establishes a mandatory obligation to approve agreements subject to compliance with the statutory requirements. There is no general discretion by reference to public interest considerations, the objects of the Act or general equity considerations to consider whether to approve an agreement that otherwise satisfies the statutory tests. Cases which have dealt with similar provisions in predecessor legislation reinforce this conclusion. 12
[30] The task of the tribunal therefore is to determine whether the tests in ss.186 and 187 are satisfied. These sections, in turn, invoke other provisions of the Act. We deal with other relevant statutory provisions below in relation to the specific grounds of appeal.
Change in composition Grounds
[31] Section 186(2) provides that Fair Work Australia must be satisfied that the agreement has been genuinely agreed to by the employees covered by the agreement. This concept is defined in s.188 as follows:
“188 When employees have genuinely agreed to an enterprise agreement
An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if FWA is satisfied that:
(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:
(i) subsections 180(2), (3) and (5) (which deal with pre-approval steps);
(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and
(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and
(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.”
[32] CJ Manfield submits that at the time the application was heard by Vice President Lawler, 80% of the employees who would be covered by the agreement did not in fact vote on the agreement or were eligible to vote, because they were not employed by CJ Manfield at the time of voting. As a result, this change in composition gave rise to reasonable grounds to believe that the agreement has not been genuinely agreed to. This submission depends on an interpretation of s.188(c) that the relevant facts applicable to this consideration are those in existence when Fair Work Australia considers whether to approve the agreement, not the facts in existence when the employee vote itself took place. The CEPU submits that the relevant facts are those in existence at the time the relevant vote was taken.
[33] These grounds of appeal relate to a provision of the Act which involves discretion. Hence the principles in House v R apply to the appeal.
[34] His Honour’s conclusions can be summarised in the following passage:
“[21] On the proper construction of s.188 the legislature is not (to) be taken as having intended that, absent some deliberate scheme, the ordinary turnover of employees in a business should provide “ reasonable grounds for believing that [an] agreement has not been genuinely agreed to by the employees” within the meaning of s.188.
[22] Section 188(c), on its proper construction, requires a consideration of all relevant circumstances revealed by the material before FWA at the time FWA considers the application for approval in order to ascertain whether there are reasonable grounds for rejecting the genuineness of the agreement given by employees when they made the agreement by voting to approve it. It is those employees to which the expression “the employees” in s.188(c) refers.”
[35] The explanatory memorandum relating to s.188(c) is as follows:
“796. Paragraph 188(c) provides that FWA must only approve an agreement if there are no other reasonable grounds to believe that the agreement was not genuinely agreed to by the employees. FWA can refuse to approve an agreement where there are reasonable grounds to believe that the agreement has not been genuinely agreed to by the employees who will be covered by the agreement.” 13
[36] The use of the words “was not” in the first sentence of this paragraph, interchangeably with the words “has not been” in the second sentence, and in s.188(c), strongly infers that the construction adopted by the Vice President is correct. For this reason, and the reasons given by his Honour, we are of the view that in applying this test, the relevant circumstances to which consideration is to be given are those that existed when the agreement was voted on by the employees then employed. Any change to the composition of the workforce in the intervening period is not relevant to this test. In our view his Honour did not make an error of principle in applying this provision. Indeed we consider that he was correct in finding that there were no other reasonable grounds for believing that the agreement has not been genuinely agreed to. We therefore reject the grounds of appeal under this heading.
Notice of representation rights
[37] As set out above, s.188(a)(ii) provides that one component of a finding that an enterprise agreement has been genuinely agreed to by employees is compliance with s.181(2).
Section 181 relevantly provides:
“181 Employers may request employees to approve a proposed enterprise agreement
(1) An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it.
(2) The request must not be made until at least 21 days after the day on which the last notice under subsection 173(1) (which deals with giving notice of employee representational rights) in relation to the agreement is given.
...”
[38] CJ Manfield submits that it failed to comply with s.181(2) as two employees employed at the time of the vote and who were to be covered by the agreement, were not given the notice of representational rights at least 21 days in advance of the vote, and two employees who were to be covered by the agreement never received a notice all.
[39] These appeal grounds relate to a part of the decision which was not discretionary. On the appeal we must determine whether the Vice President was correct in his application of the provision. 14
[40] On this matter his Honour found as follows:
“[31] The Company says that the expression “last notice” means what it says, that on the agreed facts the last notice was given fewer than 21 days before employees were requested to vote on the Agreement with the result that the requirement in s.181(2) is not satisfied. However, on the agreed facts, all of the employees who were to be covered by the Agreement and who voted on whether to approve the Agreement had been given a notice under s.173 previously during bargaining and certainly more than 21 days before the employees were requested to vote on the Agreement in the period 3 to 7 December 2010.
[32] In my view, on the proper construction of s.181 the intent of the legislature was to ensure that employees had a proper knowledge of, and opportunity to exercise, their representational rights before being asked to approve an agreement. The reference to “last notice” should be construed as the last notice given to an employee who had not been given such a notice already in connection with the bargaining. On that construction the requirement in s.181(2) was met in this case.”
[41] CJ Manfield submits that his Honours construction of the Act is correct but he was mistaken on the facts because four employees did not have a notice for at least 21 days. That is because the last notice was issued 17 days before the vote in November 2010 to two employees who had not received a notice previously and in addition, two employees who were employed subsequent to the issuing of that notice did not receive a notice at all.
[42] The CEPU contends that the notice issued on 23 September 2009 was the relevant notice and subsequent notices issued on 26 October 2009, 4 June 2010, 28 September 2010 and 16 November 2010 were not required to be issued.
[43] In order to determine this matter it is necessary to refer to the terms of s.173. It provides:
“173 Notice of employee representational rights
Employer to notify each employee of representational rights
(1) An employer that will be covered by a proposed enterprise agreement that is not a greenfields agreement must take all reasonable steps to give notice of the right to be represented by a bargaining representative to each employee who:
(a) will be covered by the agreement; and
(b) is employed at the notification time for the agreement.
Note: For the content of the notice, see section 174.
Notification time
(2) The notification time for a proposed enterprise agreement is the time when:
(a) the employer agrees to bargain, or initiates bargaining, for the agreement; or
(b) a majority support determination in relation to the agreement comes into operation; or
(c) a scope order in relation to the agreement comes into operation; or
(d) a low-paid authorisation in relation to the agreement that specifies the employer comes into operation.
Note: The employer cannot request employees to approve the agreement under section 181 until 21 days after the last notice is given (see subsection 181(2)).
When notice must be given
(3) The employer must give the notice as soon as practicable, and not later than 14 days, after the notification time for the agreement.
Notice need not be given in certain circumstances
(4) An employer is not required to give a notice to an employee under subsection (1) in relation to a proposed enterprise agreement if the employer has already given the employee a notice under that subsection within a reasonable period before the notification time for the agreement.
How notices are given
(5) The regulations may prescribe how notices under subsection (1) may be given.”
[44] It will first be seen that the requirement to provide a notice in s.173 is not an absolute requirement. The requirement is to take “all reasonable steps to give notice”.
[45] Secondly, the requirement is to take all reasonable steps to give the requisite notice to all employees who will be covered by the agreement and who are employed at the notification time for the agreement. The notification time for the agreement is defined in subsection (2). In this case negotiations commenced under the previous legislation and continued when the Act come into force. The first notice was issued in September 2009. It appears to be agreed between the parties that this was within 14 days of the notification time as required by s.173(3) and the notice was given to all of the employees to whom it was required to be given under s.173(1).
[46] Thirdly, it should be noted that the employer is not required to issue a notice to an employee if it has already given a notice within a reasonable period before the notification time.
[47] In our view the effect of these provisions is that the requirement in s.173 arises at the notification time and applies only to employees employed at the notification time. If negotiations continue and several attempts are made to secure a positive vote - as occurred in this case - there is no obligation to reissue notices. In this case the notices issued in September 2009 to the employees then employed satisfied the requirements of s.173.
[48] On this construction the request to vote on the agreement on 3 December 2010 was well in excess of the requisite 21 days from September 2009. His Honour therefore made no error in finding that this provision was satisfied. These grounds of appeal must fail.
Failure to distribute the agreement objection
[49] CJ Manfield submits that the agreement circulated to employees and voted upon in December 2010 was not the agreement that the employer sought to make, in that it never agreed to provide a third meal break on 10 hour shifts. It submits that it follows from this contention that there was no agreement for the employees to vote upon and hence no agreement was ever made.
[50] These appeal grounds relate to a non-discretionary decision.
[51] In relation to this argument his Honour said:
“[36] This argument is without merit and I reject it. The mistake alleged by the Company is its own unilateral mistake. It does not contend, and on the evidence cannot contend, that the Union, as bargaining representative of the employees, made that same mistake and agreed to the position on meal breaks for 10 hours shifts that the Company now says it always intended. There is simply no question of there being some other agreement, different to the written Agreement annexed to the application for approval, that is the “true agreement” between the Company and the Union, let alone between the Company and the employees. This is a case where the Company contends that it is entitled to rescission on the basis of unilateral mistake, not rectification of a written contract to reflect the true agreement between the parties.”
[52] CJ Manfield submits that his Honour erred in the construction of s.180(2) of the Act by failing to accept that bound up in the obligation to distribute the agreement to the employees, is an intrinsic obligation to distribute the agreement or the written document that the employer intends to make with the employees, essentially the employer’s offer, of which the employees can accept or reject. If the employer distributes a written agreement that they do not in fact intend to make, then the statutory obligation has not been met and the agreement cannot be approved.
[53] In our view his Honour’s conclusion is correct. An employer who wishes to propose an agreement to its employees has a responsibility to ensure that the agreement reflects its intentions. If it proposes an agreement which contains a mistake of one type or another then we think it must take responsibility for that situation. We do not believe that the employer can subsequently say that the document it distributed to employees and requested its employees to approve is not something it agreed to. By its very actions it was.
[54] We are reinforced in this view by a consideration of the facts in this case. The error was made well before the vote for the agreement. Indeed the relevant clause was contained in three previous versions of the agreement submitted to the workforce for approval and rejected. On the fourth occasion it formed part of a proposed agreement a majority of the employees voted to accept the agreement put to it.
[55] These grounds of appeal must fail.
Unilateral mistake
[56] CJ Manfield submits that if ordinary common law principles of contract applied in this matter, then it should be able to rescind the agreement, based on the fact that it made a unilateral mistake. Following on from this, if the agreement is voidable because it is able to be rescinded, then in effect there is no ‘enterprise agreement’ under s.172 of the Act and Fair Work Australia therefore has no jurisdiction to approve the agreement. His Honour’s decision on this point was not discretionary.
[57] The proposition advanced by CJ Manfield was rejected by his Honour in the following terms:
“[40] Sections 186 and 187 specifies a set of criteria of which, if satisfied, enliven a statutory duty to approve the agreement. The “basic rule” in s.186(1) is that if an application for the approval of an enterprise agreement is made under s.185, FWA “must approve the agreement under this section if the requirements set out in [section 186] and section 187 are met.” Unilateral mistake by an employer justifying rescission at common law is not germane to any of those requirements. Moreover, the FW Act makes specific provision for the termination of enterprise agreements. There is no provision made for termination on a basis equivalent to recession at common law for unilateral mistake or for a variety of other ways in which a common law contract can be terminated. When regard is had to the detailed regime for the making and regulation of enterprise agreements in the FW Act, I am driven to the conclusion that on the proper construction of the FW Act, the legislature did not intend that an enterprise agreement can be rescinded (terminated) for unilateral mistake such that a recession based on common law principles brings an enterprise agreement to an end such that, in a case like the present, there is no “enterprise agreement” continuing to exist that I can approve.
[41] In summary, I am not persuaded that an enterprise agreement made under the FW Act can be rescinded at common law for unilateral mistake such that I am entitled to refuse an application for approval under s.185 if a party establishes a unilateral mistake that would entitle it to rescind the agreement as if it were a common law contract. This ground of objection must is rejected.
[42] Even assuming that the common law principles governing rescission of contract for unilateral mistake apply to enterprise agreements, I am not persuaded that the circumstances of this case come within those common law principles. However, given my primary finding, I do not propose to give further reasons for that conclusion.”
[58] Establishing a basis for withdrawing from an agreement at common law on the ground of unilateral mistake is a difficult task. The test has been described by the High Court as follows:
“..a party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of the mistake or misapprehension.” 15
[59] We have examined the evidence in this matter. We do not think the evidence can sustain such a finding. The employer had the benefit of time and advice to consider the implications of the terms of the agreement it proposed to the workforce. It did so in relation to the allegedly mistaken terms on a total of four occasions. At most the conduct of the bargaining representatives could be described as opportunistic or hopeful, even if it could be said that they were themselves, fully aware of the implications of the clause.
[60] Further, although Fair Work Australia must take into account equity in performing its functions in matters before it, 16 it does not appear to us that this general duty can override the specific duty in s.186 of the Act to approve an agreement if an agreement has been made and the statutory requirements are met. If there was a general discretion to approve agreements, the circumstances of an employer seeking to withdraw from an agreement prior to its approval would be a relevant consideration. In our view his Honour did not have such a discretion and he was correct in considering himself bound by s.186 to approve the agreement. These grounds of appeal must fail.
Conclusions
[61] As indicated above, the matters raised in this appeal involve difficult questions as to the construction of various provisions of the Act relating to the approval of enterprise agreements and we therefore grant permission to appeal.
[62] However for the reasons above, none of the grounds of appeal are made out and we dismiss the appeal. The stay of the order approving the agreement is discharged.
VICE PRESIDENT WATSON
Appearances:
M. Follett of counsel for CJ Manfield Pty Ltd.
M. Wright for the CEPU.
Hearing details:
2012.
Melbourne .
April, 4.
3 [2011] FWAA 9129 at para [10].
4 Exhibit 1 from AG2011/406.
5 Application by CEPU [2011] FWA 3934.
6 CEPU v CJ Manfield [2011] FWAFB 6845.
7 [2011] FWAA 9129 at para [11]. (AB 147-8).
8 Ibid. (AB 137-8).
9 Pawel v AIRC (1999) 94 FCR 231.
10 (1936) 55 CLR 499.
11 McDonald’s Australia Pty Ltd & anor [2010] FWAFB 4602.
12 Australian Nursing Federation and Others; PR951805.
13 Explanatory memorandum to the Fair Work Bill 2009.
14 Pawel v AIRC (1999) 94 FCR 231.
15 Taylor and Others v Johnson [1983] 151 CLR 422 at 432.
16 Section 578 of the Fair Work Act 2009.
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