[2013] FWCFB 7453

FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.604 - Appeal of decisions

Australian Municipal, Administrative, Clerical and Services Union
v
Yarra Valley Water Corporation
(C2013/5138)

VICE PRESIDENT HATCHER
SENIOR DEPUTY PRESIDENT WATSON
COMMISSIONER LEWIN

SYDNEY, 30 SEPTEMBER 2013

Appeal against decision [[2013] FWCA 3816] of Commissioner Gregory at Melbourne on 4 July 2013 in matter number AG2013/1334.

Introduction

[1] This appeal, for which permission to appeal is required, challenges a decision, issued ex tempore by Commissioner Gregory on 24 June 2013 and in written form on 4 July 2013 1 (Decision), in which he approved the Yarra Valley Water Enterprise Agreement 2012 (Agreement). In the hearing before the Commissioner, and in the appeal, there was no issue that the content of the Agreement contained no impediment to its approval, and that the Agreement satisfied the “better off overall test” contained in s.193 of the Fair Work Act 2009 (the Act). However the appellant (ASU), with the support of The Association of Professional Engineers, Scientists and Managers, Australia (APESMA), submitted before the Commissioner that the requirement in s.186(2)(a) that the Agreement must have been genuinely agreed to by the employees covered by it was not satisfied. That submission is maintained in the appeal, albeit it is advanced on a different basis (as we discuss later).

Factual Background

[2] The controversy before the Commissioner arose out of certain events which occurred in the course of bargaining for the Agreement. Bargaining for the Agreement involving the respondent (Yarra Valley Water), the ASU, the APESMA and other bargaining representatives commenced in April 2012. By about November 2012, Yarra Valley Water had produced a draft agreement which it then put to an indicative vote of the employees to be covered by it. Notwithstanding that the ASU recommended that employees vote against the draft agreement, it was approved by about 70% of employees who voted.

[3] It was then necessary for Yarra Valley Water, being a State-owned corporation, to obtain the approval of the Victorian State Government for the agreement in order to be able to progress it any further. For that purpose, it submitted the draft of the agreement to the Department of Treasury and Finance (Department) for consideration. After some delay, the Department communicated to Yarra Valley Water that some changes to the draft agreement were necessary.

[4] Yarra Valley Water then sent two emails to employees concerning the changes required by the Department (Emails). The first, dated 29 April 2013, was sent by Anne Farquhar, General Manager - People and Culture, to the employees who had participated in the earlier negotiations. This included the ASU and the APESMA representatives. The critical part of the email read as follows:

[5] The email went on to attach a table setting out changes to 24 provisions of the draft agreement that the employees had voted on in November 2012 that were required by the Department (Table). The Table was set out in three vertical columns. In the left-hand column was contained the original provision appearing in the draft agreement. In the middle column was the modified clause required by the Department (although in a few cases the provision was required to be moved entirely). In the right-hand column were short comments explaining the rationale for the modification. In all but a few cases, the rationale (expressed in slightly different ways) was: “required to gain approval”. In relation to seven of the provisions, the modifications concerned references to unions and their role with respect to various matters. It was common ground that these modifications arose as a result of a Victorian State Government policy concerning “union neutrality” in agreements.

[6] The second email was sent by Ms Farquhar to all employees on 2 May 2013. This email said:

[7] The link referred to in the penultimate paragraph of the email took the reader to a copy of the Table.

[8] A short explanation of the “Parks Victoria” reference in the Emails is required at this point. Parks Victoria v Australian Workers’ Union and others 2 was a decision of a Full Bench of this Commission arising out of an arbitration conducted under s.266 of the Act for a workplace determination following the termination of protected industrial action. Parks Victoria was an agency of the Victorian State Government. In the course of the proceedings, Parks Victoria contended that a number of terms that were agreed between the parties could nonetheless not be included in the workplace determination to be made because of the operation of the Fair Work (Commonwealth Powers) Act 2009 (Vic) (the Referral Act) and the implied constitutional limitation on Commonwealth legislation curtailing the capacity of the States to function as governments as explained in Re Australian Education Union; Ex parte Victoria (Re AEU)3. The Referral Act, broadly speaking, referred to the Commonwealth workplace relations matters such as to permit the Act to apply to employers in Victoria which were not “national system employers” as defined in s.14 of the Act and their employees. However s.4(1)(a) of the Referral Act excluded from the referral “matters pertaining to the number, identity or appointment (other than terms and conditions of appointment) of employees in the public sector who are not law enforcement officers”, so that there was no power under the Act to deal with these matters in a workplace determination insofar as Victorian employers which were not national system employers, and their employees, were concerned. These exclusions from the referral were intended to encompass the same matters identified by the High Court in Re AEU as being essential to the functioning of the States and thus not capable of being regulated by the Commonwealth.4 In the Parks Victoria decision, it was therefore necessary for the Full Bench to determine whether a number of agreed terms concerning seasonal employees, fixed term employees, casual employees, appointments, promotions and relocations were capable of being included in the workplace determination it was required to make. It is not necessary for present purposes to identify what the specific conclusions of the Full Bench were as to those matters.

[9] In addition to the Emails, Yarra Valley Water also communicated to its employees about the Agreement in a number of ways, including by further emails, “roadshows”, information packs for managers to brief employees, and information sessions. One email to all employees dated 10 May 2013 contained the following statements:

[10] The evidence did not disclose that prior to the vote upon the Agreement taking place on 22 May 2013 the ASU ever communicated to Yarra Valley Water or the employees that it considered the Emails to be misleading or that it otherwise took issue with the contents of the Emails. On 15 May 2013 the ASU distributed and placed on union notice boards a leaflet entitled “Yarra Valley Water News” which advocated a “no” vote in relation to the Agreement. It began with the sub-heading “YVW Slash Working Conditions of Staff” and said “The agreement that you voted on last year looks nothing like this proposed agreement”. It contained a long list of conditions (set out over three pages) which it contended had been changed or removed compared to the previous Yarra Valley Water agreement. Provisions identified as required to be modified in the Table were included in the list. The ASU leaflet ended with the statement: “To save your hard won conditions: Vote No”. On 21 May 2013 a modified form of the leaflet (with some added material) was distributed by ASU delegates to all employees via the Yarra Valley Water email system. Yarra Valley Water responded to the first version of the ASU leaflet with a document of its own entitled “EA Myth-Busters - Don’t listen to the rumours ... get the FACTS!!!”. This leaflet stated as a “FACT”: “Since the informal vote a number of changes had to be made to comply with Government and Fair Work Australia rules - all the changes were detailed in the email sent to all staff on 2 May.” The document ended with the statement: “YVW offers good wages, conditions, benefits and work environment. VOTE Yes!”. A further leaflet issued by Yarra Valley Water on 22 May 2013 (the morning of the vote) referred to the fact that it had “already provided a complete list ... about all the changes to the EA which were necessary to comply with the Parks Victoria decision and Government policy”.

[11] On 22 May 2013 the Agreement was approved in a vote of employees, with about 74% of those who voted voting in favour.

Proceedings before the Commissioner and the Decision

[12] On 19 June 2013, after Yarra Valley Water had applied to the Commission for approval of the Agreement under the Act, the ASU sent a letter to Commissioner Gregory (being the member allocated to deal with the application) attaching a Form F18 Declaration made by Michelle Jackson, Acting Assistant Branch Secretary, expressing opposition to the approval of the Agreement. The declaration set out 10 grounds for the objection to approval of the Agreement, inter alia on the basis that the second of the Emails, the Table, the roadshows, the “EA Mythbusters” leaflet and the statements in the 10 May 2013 email concerning backpay were actually or potentially misleading. The grounds did not actually state the statutory basis for the objection, but the covering letter stated:

[13] The Commissioner conducted a hearing with respect to Yarra Valley Water’s approval application on 24 June 2013. The ASU began its closing submission as follows:

The ASU then expanded upon this submission at some length, and in the course of the submission made specific references to s.180(5), including in the course of a dialogue with the Commissioner. After completing this part of its submissions, the ASU then made the following submission:

[14] The Commissioner, as earlier stated, determined to approve the Agreement. His reasoning for this conclusion in the Decision was as follows:

Appeal submissions

[15] The ASU’s amended notice of appeal contained five grounds of appeal. Those grounds, and the submissions made in support of them, may be summarised as follows:

(1) The Commissioner erred in failing to expose his path of reasoning as to his findings: The Commissioner failed to identify the material steps which led him to conclude that s.188(c), and therefore s.186(2)(a), had been satisfied as required by the principles stated in Barach v University of New South Wales. 5

(2) The Commissioner failed to take into account material considerations: The Commissioner failed to take into account that the Emails and the Table were misleading and sought to use the imprimatur of the Commission to further Yarra Valley Water’s objective of obtaining employee approval for the Agreement. Genuine approval by employees under the Act requires informed consent without coercion: Re Grocon Pty Ltd Enterprise Agreement (Victoria) 6; Coles Supermarkets Australia Pty Ltd v SDAEA7. Where the agreement of employees is obtained in a misleading manner, it does not amount to genuine approval: Manfield Colair and CEPU Electrical Division Northern Territory Enterprise Agreement Gove Alumina Refinery and Mine Site - 2010/20118, affirmed on appeal in CJ Manfield Pty Ltd v CEPU.9 The Emails and the Table were misleading in that it mischaracterised the significance of the alterations, incorrectly indicated that the alterations involving limitations on union involvement were necessary by virtue of the Parks Victoria decision10, and also incorrectly indicated that all the alterations were necessary in order for the Agreement to be capable of approval by the Commission.

(3) The Commissioner failed to apply the law to the facts: The Commissioner only considered the Communication in the context of s.180(5), and failed to consider it under s.188(c). If he had done so, he would have had to conclude that there were reasonable grounds for believing that the Agreement had not been genuinely agreed to by the employees and therefore could not be approved.

(4) The Commissioner failed to correctly apply the law: The Commissioner failed to apply s.188(c) to his assessment of whether the test in s.188 had been met. Had he done so, he would have reached the same conclusion as in (4) above.

(5) The Commissioner erred as he did not have jurisdiction to approve the Agreement: On the basis of grounds 2, 3 and 4, the Commissioner did not have jurisdiction to approve the Agreement.

[16] The ASU disavowed any challenge to the Commissioner’s conclusions concerning compliance with s.180(5). We also note that the ASU’s appeal did not involve any re-agitation of its argument before the Commissioner that the good faith bargaining requirement in s.228 had not been met.

[17] Yarra Valley Water submitted that:

(1) The Emails and the Table were not misleading, and in particular the references in the Table to changes being “required to gain approval” could be read as referring to the need for State Government approval, not Commission approval. However, it conceded in oral submissions that an available reading of the Emails was that all the changes identified in the Table were required to be made because of the Parks Victoria decision as distinct from government policy, and that the Emails could have been better expressed.

(2) The “genuine agreement” requirement in s.188(c) was to be considered as at the date the Agreement was made, which was the date of the voting process (22 May 2013). The ASU leaflets, and the further information provided by Yarra Valley Water after the Emails and before the vote were sufficient to cure any misleading effect of the Emails.

(3) In the Decision, the Commissioner took into account all matters relevant to s.188(c) and gave adequate reasons for his conclusions.

Relevant statutory provisions

[18] Section 186 sets out the basic requirements applicable to the approval of enterprise agreements. Subsections (1) and (2) provide:

[19] “Note 1” to subsection 2 states: “For when an enterprise agreement has been genuinely agreed to by employees, see section 188.” Section 188 provides:

[20] For completeness, s.180(5) (which is referred to in s.188(a)(i)) provides:

Consideration

[21] The first comment which must be made about the ASU’s case on appeal is that it is a substantially different case to that which it put before the Commissioner. As earlier explained, the ASU’s primary submission before the Commissioner was that the requirement in s.180(5) had not been complied with. It also put, somewhat tentatively and sketchily, a subsidiary argument that the good faith bargaining requirements in s.228 had not been met, and that this was “potentially relevant to whether an agreement was genuinely made”. We cannot identify in the record of the proceedings before the Commissioner that the ASU ever made any specific reference to s.188(c), and we do not consider that the ASU squarely put the case which it has put in this appeal to the Commissioner.

[22] In his Decision at paragraph [3] the Commissioner made a global finding that the requirements of ss.186 and 187 had been satisfied, subject to what he had to say about the ASU’s s.180(5) argument. The s.186 finding necessarily encompassed a finding that the “genuinely agreed” requirement in s.186(2)(a), which called up the requirements of s.188 including s.188(c), had been satisfied. In circumstances where the scope of the adversarial discourse before him was confined to a primary s.180(5) argument and a subsidiary “good faith bargaining” argument, we consider that the Commissioner was entitled to express his satisfaction about the other statutory requirements that were not in contest in the global way that he did. Just as the Commissioner did not make a specifically-expressed finding about the better off overall test (BOOT) requirement in s.186(2)(d), as articulated by s.193, in circumstances where all the parties before him submitted that there was no doubt that the BOOT was satisfied, nor was he required to make a specific statement concerning s.188(c) given that he was not faced with any proper submission putting that provision clearly in issue. To be clear, we are not suggesting that a member of the Commission considering approval of an enterprise agreement is not required to satisfy him or herself that all the requirements of ss.186 and 187 have been met. Rather, the point is that a member of the Commission does not fall into error merely because the member’s satisfaction as to those requirements is expressed in a global way having regard to the issues which were actually in contest before him or her.

[23] For that reason, we reject grounds 1-4 of the ASU’s appeal. The criticisms that the Commissioner failed to give reasons for his satisfaction as to s.188(c), or failed to take into account considerations material to s.188(c), or failed to properly consider s.188(c) or apply it to the facts before him, all fall away once it is concluded that the s.188(c) requirement was never clearly or specifically put into contest before him.

[24] Ordinarily that conclusion would lead to permission to appeal being refused. The usual principle is that a party should not be permitted to argue a case on appeal which it did not raise at first instance. This principle, and the policy rationale which supports it, was explained in Coulton v Holcombe 11 the following way:

[25] However the position is different if the new issue being raised is jurisdictional in nature. 12 The Commission has an overriding duty to ensure that it acts within the scope of the powers conferred upon it by its governing statute. Ground 5 of the ASU’s appeal contends that the Commissioner had no jurisdiction to approve the Agreement because, on the evidence, there were for the purpose of s.188(c) reasonable grounds for believing that the Agreement had not been genuinely agreed to by the employees covered by it. We consider that it is necessary for us to consider this jurisdictional argument even though we have concluded it was not properly raised before the Commissioner.

[26] As earlier outlined, the ASU’s case on appeal emphasised the misleading nature of the Emails and the Table. We accept the submissions of the ASU in this respect. The import of the Emails is that all the changes identified in the Table were necessary in order for the Agreement to be capable of approval by this Commission, having regard to the jurisdictional issues considered in the Parks Victoria decision. The references in the Table to changes being “required to gain approval”, when read with the contents of the Emails, would reasonably be understood by the layperson to mean “required to gain approval by the Commission”. In fact, a number of the changes had nothing to do with any arguable interpretation of the Parks Victoria decision, but were changes made in order to comply with Victorian State Government policy, including in particular its policy on “union neutrality”. That was, inexplicably, simply not mentioned in either the Emails or the Table.

[27] We regard this as a serious matter. To falsely represent that a provision of a proposed enterprise agreement is incapable of approval by the Commission, or must be altered in a certain way to make it capable of approval, necessarily involves the misleading propositions that the subject matter of the provision is removed from any further negotiation and that acceptance of the provision proposed by the employer is non-optional if any valid enterprise agreement is to be made at all. It also has the effect of improperly putting the imprimatur of this Commission on employer proposals which merely represent the employer’s preferred view as to the relevant subject matter.

[28] A false representation or a material non-disclosure by an employer in the course of bargaining for an enterprise agreement may constitute a reasonable ground for believing under s.188(c) of the Act that an enterprise agreement has not genuinely been agreed to by employees if it could reasonably be expected to have had the effect of deceiving those employees into voting for something which, if they had known the true position, they would not have voted for. 13 The question in this appeal is whether the misleading representations in the Emails and the Table could reasonably be expected to have had this effect.

[29] We consider, for two reasons, that they could not. The first reason is that, in the context of the Agreement as a whole, those provisions which were listed as modified in the Table and which did not relate to an arguable view about the application of the Parks Victoria decision (including the associated issue of Re AEU) were relatively trivial in nature. In its oral submissions, the ASU took us through each provision listed in the Table, and once those provisions which arguably related to the Parks Victoria decision were put to one side (noting that the ASU did not concede that any provision was actually affected by that decision), was unable to identify any modified provision which compared to the equivalent provision found in the original draft of the Agreement detrimentally affected employee entitlements to any appreciable degree. In particular, the changes which resulted from the application of the State Government’s “union neutrality” policy did not involve any substantive change to the rights or role of unions in the workplace. Therefore, even if the workforce at Yarra Valley Water was highly unionised and sensitive to any changes to the role of unions - a matter in relation to which there was no evidence whatsoever - it is highly unlikely that these changes would have played any significant role in the decision of employees as to whether to vote to approve the Agreement. They were trivial compared to the major issues such as increases in rates of pay and the financial benefit to be obtained from backpay upon approval of the Agreement.

[30] Secondly, because the issue of genuine agreement under s.188(c) is to be assessed by reference to relevant circumstances existing as at the date the employees voted for and thereby made the Agreement 14 - that is, as at 22 May 2013 - it is necessary to take into account information supplied to Yarra Valley Water’s employees after the Emails and the Table in determining whether they were misled in a way which affected their voting decisions. We consider that the robustly-expressed ASU leaflets, which strongly urged rejection of the Agreement on the ground that it reduced entitlements, and mentioned in that connection some of the changes contained in the Table, was sufficient to alert employees to the need to carefully consider all the provisions of the Agreement, including those that had been changed since the original November 2012 draft, in making their decision as to whether to vote to approve the Agreement. We would also infer from the lack of any challenge in those leaflets to the purported Parks Victoria rationale for the changes that the ASU did not consider that this would play any role of significance in employees’ decision-making. Further, we note that by 21/22 May 2013 Yarra Valley Water had (at last) told employees that “Government ... rules” and “Government policy” were part of the rationale for the changes identified in the Table. The fact that, in the face of this information, the vote of employees on 22 May 2013 was more or less the same as the indicative vote in November 2012 strongly suggests that the changes that were made to the Agreement were taken into account by employees and not considered to be a vote-changing issue.

[31] We note, for completeness, that the ASU briefly raised in its submissions the possibility that Yarra Valley Water was a trading corporation and therefore a “national system employer” as defined in s.14 of the Act, with the potential consequences that the Referral Act exclusions had no application to it and the Parks Victoria decision could not be of any possible relevance. However the ASU did not elaborate on this submission and did not contend that the Emails were misleading for this reason, nor was there any evidence before us as to Yarra Valley Water’s activities such as to permit any consideration as to whether it was a trading corporation.

[32] We do not consider that there were, for the purposes of s.188(c) of the Act, any reasonable grounds for believing that the Agreement was not genuinely agreed to by the employees covered by it. Ground 5 of the ASU’s appeal is therefore rejected. The Commissioner had jurisdiction to approve the Agreement.

Conclusion

[33] Because of the misleading nature of the Emails and the Table, we are satisfied that this appeal has raised issues that are sufficiently serious such as to attract the public interest and require the grant of permission to appeal. For the reasons discussed above, we dismiss the appeal.

VICE PRESIDENT

Appearances:

E. Burgio solicitor for the Australian Services Union

P. O’Grady of counsel for Yarra Valley Water Corporation

Hearing details:

2013.

Melbourne:

18 September.

 1   [2013] FWCA 3816

 2   [2013] FWCFB 950

 3   (1995) 184 CLR 188

 4   See Parks Victoria v AWU at [308].

 5   [2010] FWAFB 3307

 6   PR927672

 7   T2319

 8   [2011] FWAA 9129

 9   [2012] FWAFB 3534

 10   [2013] FWCFB 950

 11   (1986) 162 CLR 1 at 7

 12   See Goumas v Wattyl Australia Pty Ltd (2005) 145 IR 256 at [43]-[48]

 13   Grocon Pty Ltd Enterprise Agreement (Victoria) PR927672 at [45]-[47], [52]-[53]; Manfield Colair and CEPU Electrical Division Northern Territory Enterprise Agreement Gove Alumina Refinery and Mine Site - 2010/2012 [2011] FWAA 9129 at [24].

 14   CJ Manfield Pty Ltd v CEPU [2012] FWAFB 3534 at [36]

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