| FWCFB 317|
|FAIR WORK COMMISSION|
Construction, Forestry, Mining and Energy Union
Fair Work Act 2009
s.604 - Appeal of decisions
VICE PRESIDENT CATANZARITI
SYDNEY, 16 JANUARY 2017
Appeal against decision PR587924 of Deputy President Asbury at Brisbane on 25 November 2016 in matter number B2016/1173.
 On 25 November 2016, Deputy President Asbury issued an oral Decision 1 (“Decision”) dismissing an application for a bargaining order made by the CFMEU (“Appellant”) under section 229 of the Fair Work Act 2009 (Cth) (“the Act”). In her Decision, the Deputy President found that the Respondent did not engage in capricious or unfair conduct that undermined the freedom of association or collective bargaining contrary to the good faith bargaining requirement under section 228(1)(e) of the Act. The Deputy President subsequently issued written reasons for her Decision.2
 On 1 December 2016, the Appellant lodged a Notice of Appeal appealing the Deputy President’s Decision. The Appellant also amended its grounds of appeal in light of the Deputy President’s written reasons published on 8 December 2016. We heard the appeal on 15 December 2016 and reserved our decision.
 At the hearing on 15 December 2016, Mr Docking of Counsel sought permission to appear for the Appellant and Mr Neil of Senior Counsel, together with Mr Parkin of Counsel, sought permission to appear for the Respondent. Given the complexity of the matter, and having regard to section 596 of the Act, permission was granted to both parties to be represented.
 The Deputy President identified the following two factors that the Commission must be satisfied of in order to find a breach of the good faith bargaining requirement pursuant to section 228(1)(e):
1. The bargaining representative has not refrained from conduct which is capricious or unfair or that the bargaining representative has engaged in conduct that is capricious or unfair; 3 and
2. That conduct undermines freedom of association or collective bargaining, or both.
 Therefore, the Deputy President concluded it was not sufficient, for the purposes of section 228(1)(e), that the impugned conduct was simply unfair or capricious. Rather, the Deputy President concluded that the conduct must also have had the effect or likely effect of undermining freedom of association, collective bargaining, or both.
 The Deputy President formed the view that the evidence established that, as a result of the industrial action, there were insufficient operators attending for work to operate both the draglines and the Shovel and its associated fleet. As the dragline was more cost effective, the Respondent opted to focus its available labour resources on the operation of the dragline. This led to a large piece of excavation equipment, an electric shovel or rope shovel (“the Shovel”), falling behind the dragline to the point that it could not operate for several months and was required to be “parked” up for at least that period.
 In this regard, the Deputy President was satisfied that the decision of the Respondent to focus its labour resources on the operation of the dragline was for legitimate and valid operational reasons, including significant cost saving to the Respondent of approximately $40 million over three years. On this basis, the Deputy President concluded that the Respondent was not “undermining” collective bargaining or freedom of association. Therefore, the Deputy President did not accept that the proposal adopted by the Respondent (“the Proposal”), by way of reduction of capacity through “parking” the Shovel and the resulting decision to dismiss employees by way of redundancy, was because those employees had taken or were intending to take protected industrial action.
 The Deputy President concluded that it is not unfair or capricious for an employer suffering loss and damage as a result of employees taking protected industrial action to decide, on legitimate business grounds, to restructure its business to manage or offset that loss and damage. As a result, the Deputy President found that the conduct of the Respondent was not unfair or capricious, which, as mentioned above, must be established to enliven section 228(1)(e) of the Act.
 Therefore, the Deputy President was of the view that the section was not enlivened and that the Respondent did not fail to meet the good faith bargaining requirement under section 228(1)(e) of the Act.
 The Appellant submitted three grounds of appeal which the Respondent disputed.
 At the heart of the dispute was whether the Deputy President erred in her construction and application of section 228(1) of the Act. That is, whether the Respondent failed to meet the good faith bargaining requirement under section 228(1)(e) of the Act by implementing its Proposal, by focussing its labour resources on the draglines thereby making 83 positions redundant, at the same time that members of the Appellant were engaged in sustained and ongoing protected industrial action.
 Firstly, the Appellant submitted there was documentary and oral admissions and objective direct evidence which constituted proof of the facts that established a failure to comply with the section 228(1)(e) good faith bargaining requirement. The Appellant relied on the following four examples in making this submission:
(a) The note of Mr Heaton, Executive Head of Open Cut Operations, dated 15 September 2016 sent to staff stating “[t]he strike is having an impact as you would expect and the mine plan (and as a result, potentially jobs) is being put at risk by the decisions taken by the CFMEU” (being a reference to the Shovel having to park up because of the protected industrial action);
(b) On 28 September 2016, in a telephone conversation between Ms Oppermann, Human Resources Manager, and Mr Scales, Ms Oppermann advised that the Respondent was considering effecting 90 redundancies as a result of parking up the Shovel and an “unplanned delay”. In this regard, the Appellant asserted it was admitted by Mr Heaton that the expression “unplanned delay” was a reference to the protected industrial action;
(c) The “Confidential Note” dated 2 November 2016 contained, in particular, “Reasons for the Proposal” including “… as you know, the shovel did not stay on schedule because there were insufficient personnel available to adequately man and operate the truck and shovel fleet, giving rise to an unplanned delay”;
(d) On 28 September 2016, Mr Gentle sent a letter to the CFMEU attaching an “Employee Question and Answer” document and a letter to employees. The Appellant contended that cross-examination of Mr Heaton established that:
(i) The unplanned delay only ever referred to the protected industrial action;
(ii) The proposal raised by the Respondent was because of that unplanned protected industrial action; and
(iii) The Respondent reviewed the mine plan because people were out taking protected industrial action.
 Secondly, the Appellant contended that Mr Gentle contributed to the making of Mr Heaton’s decision and Mr Gentle’s contributions were an essential part of the process leading to that decision. In this regard, the Appellant asserted that the Deputy President made an error in principle by not applying National Tertiary Education Union v Royal Melbourne Institute of Technology 4, a case involving the termination of employment by redundancy, and the authorities cited therein. The Appellant submitted that the Deputy President erred by not applying the finding in PN17 of the Decision that Mr Gentle’s communication about the Proposal to “employees was, at best, disingenuous and, at worst, untruthful”, to reject the Respondent’s previous dishonest explanations for the restructuring proposal and concluding with greater certainty that the Respondent had not met or was not meeting the good faith bargaining requirement referred to in section 228(1)(e) of the Act.5 Further, the Appellant asserted, by way of eleven examples ((a) to (k)), that Mr Gentle’s responses to the Appellant and employees regarding what was meant by the “unplanned delay” were dishonest or untruthful.
 Thirdly, the Appellant contended that the Deputy President erred in her interpretation and application of the good faith bargaining requirement and by failing to make a bargaining order. In particular, the Appellant highlighted that the Deputy President was invited by the Respondent to apply a causation approach to the impugned conduct. The Appellant cited Simpson Design Associates Pty Ltd v Industrial Court of New South Wales, 6 which demonstrated the need to analyse causation by reference to the factual circumstances of each case. In the circumstances before the Deputy President, the Appellant posited that it was enough if it was shown that, but for the protected industrial action, all the other events would not have occurred as they did.
 The Appellant also had regard to the Explanatory Memorandum 7 of the Fair Work Bill 2008 to demonstrate that the Legislature recognised that industrial action can have a negative impact, particularly in terms of productivity. However, bargaining participants should have the right to take protected industrial action and an employer should have the right to provide a proportionate response. The Appellant asserted that the Deputy President erred in positing that section 228(1)(e) is only or exclusively directed to or requires conduct of dismissing an employee because the employee was taking or intending to take protected industrial action. In this regard, the Appellant contended that the Deputy President wrongly applied the enquiry or approach in a general protections claim in which an employer is prohibited from taking adverse action against an employee because of proscribed reasons.8 Therefore, the Appellant posited that its position remained that the Respondent had failed to refrain from engaging in unfair conduct that undermined freedom of association or collective bargaining.
 The Appellant noted that the Deputy President was correct at PN19 of the Decision, namely, that the purpose of the protected industrial action was to cause loss and damage to the employer, and that it was directed at pressuring the employer to change or compromise a bargaining position. Further, the Appellant posited that the Deputy President was correct in stating at PN23 that the dismissals for reasons of redundancy would likely have an adverse impact on the bargaining power of CFMEU members and their ability to continue to place pressure on the Respondent by taking protected industrial action. However, the Appellant asserted that the Deputy President erred in not then being satisfied that the Respondent had not met or was not meeting the good faith bargaining requirement under section 228(1)(e) of the Act for the following five reasons:
1. Consideration of the grammatical meaning of the text demonstrated that the Commission needed to be satisfied that the Respondent engaged in unfair conduct that undermined freedom of association or collective bargaining;
2. The Decision did not take into account the subject, scope and purpose of sections 3(e), 3(f) and 171 of the Act;
3. Engaging in protected industrial action was a benefit conferred upon the employees under the Act;
4. The relevant provision had to be construed and applied so that it was consistent with the language and purpose of all the provisions of the Act; 9 and
5. The reasoning at PN21 and PN22 of the Decision about deciding on legitimate business grounds to restructure its business to manage or offset damage and loss was impermissibly driven by what the Deputy President regarded as the desirable result in a specific case or her own idea of desirable policy. 10
 The Appellant further contended that the Respondent was given notice of the protected industrial action so that it could take legally available and appropriate defensive action. The Appellant asserted that the alternative case put was one of capricious conduct, that is, conduct subject to, led by, or indicative of a sudden change of mind without apparent or adequate motive that undermines freedom of association or collective bargaining. In this regard, the Appellant contended that the inflict of loss or damage contemplated by Parliament to occur as part of employees lawfully exerting industrial pressure in a collective bargaining regime did not, in this legislative scheme, justify a change of mind to make 83 positions redundant.
 Fourthly, the Appellant asserted that the residual ground for appeal in House v The King was relied upon for the reasons outlined above.
 Fifthly, the Appellant posited that it was an error not to include, in all the circumstances in respect of unfair conduct, the Respondent not calling for voluntary redundancies.
 The Respondent submitted that permission to appeal ought to be refused as there was no utility in the appeal. In this regard, the Respondent contended that, even if the appeal were successful, it would be too late to make the only substantive order sought in the primary proceedings, namely, that “the respondent must not terminate the employment of the CFMEU members who are employed by the respondent by reason of redundancy”.
 The Respondent noted that the Deputy President firstly made findings of fact as to the Respondent’s conduct and, secondly, made evaluative assessments as to whether the conduct was capricious or unfair within the meaning of section 228(1)(e) of the Act. In this regard, the Respondent posited that the heart of the appeal was the Appellant’s challenge to those evaluative assessments. On this basis, the Respondent contended that the appeal is governed by Warren v Coombes, 11 not House v The King,12 as to which various instructions in Branir v Owston Nominees (No 2) Pty Limited13 apply.
 The Respondent replied to each of the five grounds asserted by the Appellant as outlined below.
 Regarding the first ground of appeal, the Respondent asserted this ground was factually incorrect. In particular, that this ground went nowhere as all of the evidence to which it referred went only to the causal connection between the protected industrial action and the Proposal, which connection was never controversial.
 In relation to the second ground of appeal, the Respondent highlighted that the Deputy President noted the CFMEU’s submission that NTEU should be applied, but rightly did not apply it. In this regard, the Respondent contended that the Appellant, in its application for a bargaining order, held the legal and evidentiary onus of satisfying the Commission that the factual conditions for the order existed. 14 Further, the Respondent asserted that there was no error in the way the Deputy President approached the fact that Mr Gentle was not called as a witness. In particular, the Respondent noted that, pursuant to Jones v Dunkel, the absence of such a witness could not be relied upon to fill any gap in the other party’s case. Further, the Respondent submitted that the Appellant’s case was entirely inferential, in particular, that the Appellant inferred that the Proposal was capricious or unfair because Mr Gentle held an improper motive. The Respondent contended that such an inference was not available and that, to draw such an inference, assumed wrongly that Mr Gentle’s views could ever have been relevant.
 Regarding the third ground of appeal, the Respondent posited that there was only one question of causation posed by section 228(1)(e) of the Act. That is, whether any capricious or unfair conduct had the requisite relationship with undermining of freedom of association or collective bargaining. In this regard, the Respondent contended that the Appellant’s case was predicated on the erroneous position that the answer to an entirely different question of causation, namely, what caused the conduct in question, was by and of itself determinative of the statutory question posed by section 228(1)(e). On this basis, the Respondent asserted that the Respondent’s proposition involved an error as discussed in Board of Bendigo Regional Institute of Technical and Further Education v Barclay, 15 as it implied into section 228(1)(e) a test that was different from, and not required by, the language of that provision.
 In relation to the fourth ground of appeal, the Respondent contended that, having regard to paragraph 33 of the Appellant’s submissions, this ground did not appear to be an independent ground of appeal.
 Regarding the fifth ground of appeal, the Respondent posited that the Deputy President was entitled to conclude that the Appellant had abandoned a ground in circumstances where: (a) the Appellant did not make submissions orally or in writing about that matter; and (b) the Respondent had suggested that it understood the ground to be abandoned in its written submissions and counsel for the Appellant did not take issue with that suggestion until the appeal.
Consideration – Permission to Appeal
 The Commission will grant permission to appeal only if it is in the public interest to do so. 16 The test of assessing whether a matter is in the public interest is discretionary and involves a broad value judgement.17 In GlaxoSmithKline Australia Pty Ltd v Colin Makin,18 the Full Bench summarised the test for determining the public interest as follows:
“ Appeals have lain on the ground that it is in the public interest that leave should be granted in the predecessors to the Act for decades. It has not been considered useful or appropriate to define the concept in other than the most general terms and we do not intend to do so. The expression ‘in the public interest’, when used in a statute, classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only by the objects of the legislation in question. [Comalco v O’Connor (1995) 131 AR 657 at p.681 per Wilcox CJ & Keely J, citing O’Sullivan v Farrer (1989) 168 CLR 210]
 Although the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters, it seems to us that none of those elements is present in this case.”
 Alternately, it may be in the public interest to grant permission to appeal if the decision is attended with sufficient doubt to warrant its reconsideration or if substantial injustice may result if permission is refused. 19
 In determining whether permission to appeal should be granted we have reviewed and considered all material filed by the parties including all submissions, correspondence and relevant authorities.
 We find that permission to appeal should be granted in this matter. We are of the view that the appeal raises important questions concerning the application of section 228(1)(e) of the Act in circumstances where the Deputy President’s discretion to determine whether the Respondent engaged in capricious or unfair conduct contrary to the good faith bargaining requirement is an issue in the dispute. We consider this to be an important matter regarding the Deputy President’s approach in making such a determination and, therefore, the dispute arising in this case is a matter of public interest. It is on this basis that permission to appeal is granted.
Consideration – The Appeal
 Section 228(1)(e) of the Act states:
“(1) The following are the good faith bargaining requirements that a bargaining representative for a proposed enterprise agreement must meet:
(e) refraining from capricious or unfair conduct that undermines freedom of association or collective bargaining …”
 At the heart of the appeal is the Appellant’s contention that the Deputy President erred in finding that the Respondent’s conduct was neither unfair nor capricious. It is necessary, then, for us to consider whether the Deputy President erred in her evaluative assessment of the Respondent’s conduct. We agree with the Respondent to the extent that it asserts, whether pursuant to Warren v Coombes 20 and other precedents, that we must not disturb the Deputy President’s evaluative assessment unless we are positively persuaded that her assessment was vitiated by error.
 In considering the Respondent’s response to the action, we note the following salient facts:
• Protected industrial action involving approximately 140 employees commenced on about 19 August 2016 and has continued;
• While the protected industrial action continued, the Appellant was put in a position where it necessarily had to prioritise mining coal and uncovering coal with draglines so that it could deliver on committed contracts and protect and maintain cash flow, as well as its commercial reputation. Although some Shovel operators attended for work during the protected industrial action, there was insufficient personnel to operate the Shovel and associated fleet, as well as continuing coal mining and coal uncovering;
• In about early September 2016, Mr Heaton was informed that in the foreseeable future, there would be a “point of no return” when the Shovel would not be able to stay in front of the draglines and that when this occurred, the business plan that had previously been proposed would cease to be viable;
• At the “point of no return”, there would no longer be sufficient time for the Shovel to pre-strip the next dragline strip and it would be a number of months until it could pre-strip another dragline strip;
• This meant that the shovel would not be required for the short to medium term and would need to be “parked up”, at least for a number of months which would in turn impact on the assumption built into the business plan for 2017-2019;
• There were two options before the Appellant:
1. Option 9A – This involved parking the Shovel indefinitely and implementing a restructure, which would save the business approximately $40 million over three years; and
2. Option 9B – This involved bringing the Shovel back into operation in April 2017 and not implementing a restructure, which would deliver free cash flow of negative $30 million in 2017 and negative $54 million over three years.
• Option 9A was subsequently adopted.
 The Respondent’s adoption of option 9A was, in our view, a legitimate response to the commercial and operating circumstances which the Respondent found itself in as a result of the protected industrial action. The Respondent, in adopting this option, was, in our view, motivated by, and acted in accordance with, its legitimate business concerns.
 For the reasons outlined above, we are not persuaded that the Deputy President’s evaluative assessment of the Respondent’s conduct was vitiated with error and, in particular, we agree with the Deputy President’s finding that:
“ It is not unfair for an employer suffering loss and damage as a result of employees taking industrial action to decide, on legitimate business grounds, to restructure its business to manage or offset that loss and damage, and to decide to make employees redundant in the process.”
 Employers will be at risk of breaching their good faith bargaining obligations under section 228(1)(e) of the Act if they make employees redundant without having legitimate business reasons for doing so. In this case, we are satisfied that the Respondent has shown legitimate business reasons that justify its conduct, specifically, that its conduct assisted it to save approximately $40 million. That is to say, we are satisfied that the Respondent’s conduct was not unfair or capricious in the particular circumstances before it.
 Another issue of importance to the disposition of this appeal is whether, as contended for by the Appellant, the Act provides employers with a right to make a proportionate response to protected industrial action, such as taking employer response action under section 411 of the Act or applying for an order to suspend or terminate protected industrial action under sections 423 to 428 of the Act, but that does not include the termination of employment contracts. We reject this submission. Employees who engage in protected industrial action are “protected” in that their action is not unlawful under the Act and that they are immune from certain civil and criminal liability for engaging in the action. This does not, however, mean that an employer of employees who take protected industrial action is not able to respond to protected industrial action, or to circumstances created by such action, in a manner that addresses its legitimate business interests, provided it meets its obligations under the Act.
 On the basis that the Respondent’s conduct was not unfair or capricious, section 228(1)(e) of the Act is not enlivened. As a result, the appeal cannot succeed and must be dismissed.
 It is unfortunate that 83 employees will lose their employment, especially considering that employment can be difficult to gain and maintain in central Queensland. However, in circumstances where the Respondent has met its good faith bargaining requirements under the Act, there is no basis to remedy this unfortunate situation by making a bargaining order.
 The Appeal is dismissed.
Mr Docking of Counsel for the Appellant
Mr Neil of Senior Counsel and Mr Parkin of Counsel for the Respondent
15 December 2016
2  FWC 8847
3 Australian Mines and Metals v MUA  FWC 738.
4  FCA 451.
5 Lightning Bolt Co Pty Ltd v Skinner & Anor  QSC 62.
6  NSWCA 316, -.
7 At .
8 Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2014) 253 CLR 243 (French J and Kiefel J) at , , ,  and  (Gageler J) at , ,  and .
9 Lloyd’s Underwriters, ; Uniline, , .
10 Lloyd’s Underwriters, .
11 (1979) 142 CLR 531.
12 (1936) 55 CLR 499.
13 (2001) 117 FCR 424.
14 Wilson Security Pty Ltd v United Voice  FWA 6038, .
15 (2012) 248 CLR 500, .
16 Fair Work Act 2009 (Cth) s 604(2).
17 Esso Australia Pty Ltd v AMWU; CEPU; AWU  FWCFB at .
18  FWAFB 5343 at .
19 Esso Australia Pty Ltd v AMWU; CEPU; AWU  FWCFB 210 at .
20 (1979) 142 CLR 531.
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