DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)
v
Kerman Contracting Pty Ltd
(C2020/6070)

Appeal against decision [2018] FWCA 1923 of Commissioner Johns at Sydney on 3 April 2018 in matter number AG2017/5452.

Introduction

[1] In April 2018, Commissioner Johns approved the Kerman Contracting Pty Ltd Enterprise Agreement 2017 (Agreement) with undertakings.¹ On 4 August 2020, some two years and four months after the decision approving the Agreement was made, the "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) applied for permission to appeal, and if granted, appeals that decision. The lodgement of the notice of appeal occurred well outside the time that the Fair Work Commission Rules 2013 (FWC Rules) prescribe.² The AMWU also applies to be allowed a further period within which it may lodge the Appeal.

[2] In light of the substantial delay in lodging the appeal, it is necessary to set out the background to the appeal. The background which follows is not controversial.

Background

[3] Kerman Contracting Pty Ltd (Kerman), the respondent to the appeal, applied to the Commission for the approval of the Agreement after it was made by two employees covered by the Agreement voting to approve it on 10 November 2017.³ The Agreement’s coverage extended to employees in classifications and at worksites beyond that of the two employees who voted to approve the proposed agreement.⁴

[4] Kerman’s approval application proceeded without objection from the AMWU or any other person or organisation. The Agreement was approved on 3 April 2018 and commenced operating on 10 April 2018 with a nominal expiry date of 3 April 2022.⁵ Relevantly the approval decision provided:

“[2] The Applicant has provided written undertakings. A copy of the undertakings is attached in Annexure A. I am satisfied that the undertakings will not cause financial detriment to any employee covered by the Agreement and that the undertakings will not result in substantial changes to the Agreement.

[3] Subject to the undertakings referred to above, I am satisfied that each of the requirements of ss.186, 187, 188 and 190 as are relevant to this application for approval have been met.”⁶

[5] So far as is presently relevant, the material before the Commissioner about the steps taken by Kerman to ensure the terms of the Agreement and the effect of those terms were explained to the relevant employees - a matter relevant to assessing whether the requirement in s.186(2)(a) has been met - was contained in the employer’s statutory declaration (Form F17) filed in support of the application to approve the Agreement.⁷ Mr Charmaine Alexander, Kerman’s Human Resources Adviser, made the following declaration about the steps taken:

“Employees were invited into the office and explained the terms and conditions of the agreement. They were then asked if they had any questions or concerns relating to any term or condition explained to which they responded in the negative.”8

[6] The AMWU is said to have learned about the Agreement on around 30 May 2018 when one of its organisers was told about it at a site visit at the Greenbushes mine site in Western Australia.⁹ In or around July or August 2018, the AMWU engaged external lawyers to assist it with appealing the decision to approve the Agreement.¹⁰

[7] On 30 August 2018, lawyers acting for the AMWU made a request to the Commission for a copy of its file in relation to the approval application.¹¹ It is asserted, without demur, that the AMWU did not know at that stage whether there was error in approving the Agreement.¹² Access to the file was given to the AMWU’s lawyers on around 12 September 2018.¹³

[8] Prior to receiving access to the Commission’s file, lawyers for the AMWU had apparently advised the AMWU that it was too late to lodge an appeal against the decision to approve the Agreement, but if there were errors discovered in the decision-making process, the AMWU may be able to apply to the Federal Court of Australia to challenge the approval.¹⁴

[9] Between 30 May 2018 and 10 April 2019, the AMWU worked with its organisers and some of Kerman’s employees to understand the circumstances surrounding the Agreement’s making as well as pursuing a site-specific enterprise agreement for the Greenbushes mine site.¹⁵

[10] The AMWU applied to the Federal Court of Australia for judicial review of the decision to approve the Agreement on 10 April 2019.¹⁶ Noting that the AMWU’s lawyers were given access to the Commission’s file on around 12 September 2018, why it is that the AMWU required almost 7 months to make the Federal Court application is unexplained.

[11] In arguing jurisdictional error, the grounds for review advanced by the AMWU in the Federal Court proceeding are in substance the same as those found in grounds 1 and 2 of the notice of appeal (to which we will return) lodged in the Commission.¹⁷

[12] Kerman defended the decision to approve the Agreement arguing:

•  the Commission did not commit any error in coming to the requisite satisfaction that Kerman Contracting had taken all reasonable steps to explain the terms and the effect of the terms of the Agreement to the relevant employees;

•  alternatively, if there be error, the error was within jurisdiction; and

•  in any event Kerman did take all reasonable steps to ensure that the terms of the Agreement were explained to the relevant employees.¹⁸

[13] The application had been scheduled for trial on 20 April 2020. The trial did not proceed. Instead the AMWU and Kerman executed a deed of settlement on 20 July 2020¹⁹ by which they agreed, relevantly, that the AMWU would discontinue the Federal Court application²⁰ and would initiate an appeal against the approval decision in the Commission.²¹ Kerman did not concede that the AMWU should be allowed a further period within which the appeal could be lodged or that permission to appeal should be granted.²²

Consideration

Appeal lodged outside of the time prescribed by Rule 56(2)(a)

[14] Rule 56(2) of the FWC Rules states, amongst other things, that an appeal must be lodged within 21 calendar days after the date of the decision against which an appeal is brought. The appeal was lodged almost 28 months after the approval decision was made and more than 27 months after the time for lodging an appeal had passed. Rule 56(2)(c) provides that the Commission may allow further time within which the appeal is to be lodged.

[15] There are sound reasons for setting a limit to the time in which an appeal against a decision of the Commission may be lodged.  Time limits of the kind in Rule 56(2)(a) should not simply be extended as a matter of course. The time limit should only be extended where there are good reasons for doing so. The authorities indicate that the following matters are relevant to the exercise of the Commission’s discretion under Rule 56(2)(c):

•  whether there is a satisfactory reason for the delay;

•  the length of the delay;

•  the nature of the grounds of appeal and the likelihood of one or more of those grounds being upheld if time were extended; and

•  any prejudice to the respondent in the appeal if time were extended.²³  

[16] In broad terms, the issue for the Commission is whether, in all the circumstances and having regard to the matters set out above, the interests of justice favour an extension of the time within which to lodge the appeal.²⁴ 

[17] We turn to consider these matters below.

1. Reason for the delay

[18] The AMWU relies on the background chronology which we have earlier set out as explaining the reason for the delay.²⁵

[19] A number of things may be noted about the background that are relevant to the question of whether there is a satisfactory reason for the delay. First, the background establishes that the AMWU made a forensic choice to apply to the Federal Court for judicial review rather than lodging an appeal in the Commission and applying for an extension of time. That choice appears to have been made at some point between 12 September 2018 and 10 April 2019 after its lawyers conducted a review of the file and identified that which the lawyers regarded as errors in the decision to approve the Agreement. The delay between accessing the Commission’s file and commencing judicial review proceeding (almost 7 months) is not explained. Having made the choice to commence a judicial review proceeding, the steps taken to conduct that proceeding explain the delay from that point for the period while that proceeding was on foot (April 2019 to July 2020), but not satisfactorily in the sense that it should be accorded any weight favouring the grant of an extension of time. The delay was the product of the choice made by the AMWU.

[20] Secondly, the period of delay between the time for lodging an appeal elapsing and 30 May 2018 is satisfactorily explained by the absence of any knowledge on the part of the AMWU that the Agreement had been approved. While is it doubtless the case that registered organisations maintain a keen eye on enterprise agreement approval applications and approval decisions which affect employers and employees in industries in which organisations have an industrial interest, the sheer volume of applications processed by the Commission means that not all applications and decisions of interest are noticed.

[21] Thirdly, whilst we accept that some short period of delay after becoming aware of the Agreement may be satisfactorily explained by the need to make enquires in the workplace, assess the product of any inquiries and obtain advice, there is no explanation why the AMWU waited until “July 2018 or August 2018” to engage lawyers to “assist with appealing the decision”, much less any explanation for the delay until 30 August 2018 on which date the request for the Commission’s file was made. Moreover, one would think the first step after becoming aware of the Agreement would have been to request the Commission’s file, but the request was made 3 months after the AMWU came to notice the Agreement. No satisfactory explanation for this delay is provided. We find thoroughly unconvincing, as an explanation for the delay, the suggestion that the AMWU was trying to negotiate a site specific agreement with Kerman during the period between 30 May 2018 and 10 April 2019.²⁶ Even if it were successful in so doing, such an agreement would not have applied to the employees of Kerman covered by the Agreement, and still now would not apply because the nominal expiry date of the Agreement is 3 April 2022.²⁷ Thus, a large portion of the period of delay between 30 May 2018 and 30 August 2018 remains unexplained.

[22] Fourthly, the period between 30 August 2018 and 12 September 2018 is satisfactorily explained because the AWMU was waiting to receive access to the Commission’s file.

[23] Fifthly, once the AMWU’s lawyers were given access to the Commission’s file on 12 September 2018, a short delay may be satisfactorily explained by the need to review the file, take instructions, provide advice and draw proceedings, but beyond that, no explanation is given for the remainder of the delay until the judicial review application was made on 10 April 2019. Mr McLaren’s statement that the reason for that delay in making the judicial review application are unknown to him²⁸ is weak and seeks to skirt around the issue. Surely Mr McLaren could have asked for an explanation. Better still, the solicitor responsible for the conduct of the judicial review application could have made a statement explaining the delay. Neither was done. There is therefore no explanation, much less a satisfactory one, for most of the period between 12 September 2018 and 10 April 2019.

[24] Finally, the period between shortly before the trial date of 20 April 2020 and the lodgement of the notice of appeal on 4 August 2020 is satisfactorily explained by the negotiation and execution of the deed of settlement under which the judicial review proceeding was to be discontinued and the AMWU was obliged to lodge the notice of appeal.

[25] As is apparent from the foregoing, only a small portion of the delay is satisfactorily explained. That this is so weighs against the exercise of our discretion to extend the time within which the appeal may be lodged.

2. Length of the delay

[26] The delay is extraordinarily lengthy. The AMWU, correctly in our view, accepts that the length of the delay weighs against the exercise of our discretion to extend the time within which the appeal may be lodged.²⁹

3. Nature of the grounds of appeal and the likelihood of one or more of those grounds being upheld if time were extended

[27] The AMWU contends that its appeal grounds have a strong chance of being upheld if time were extended. Kerman concedes, again properly in our view, that if an extension of time were granted, a finding of error as to ground 1 of the notice of appeal is inevitable and there may also be error as alleged in ground 2.³⁰ It says however that the appeal would be of little utility because the underlying facts to support the satisfaction by the Commission that the Agreement was genuinely agreed to by the relevant employees did indeed exist.³¹ It argues that if the appeal were to be upheld and the approval application reconsidered by the Commission, Kerman would expand upon the evidence prepared in that regard to date by Ms Alexander.³² It contends that the evidence will likely lead to the Commission approving the Agreement afresh.³³

[28] Kerman also says that its concession is not intended to be a criticism of the Commission at first instance. The Agreement, it argues, was approved before the Full Court of the Federal Court’s decision in One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union³⁴ and it is notorious that, until that time, the Commission and those appearing before it, were under a misapprehension as to what was required by the Commission to form the satisfactions required by Part 2-4 of the Fair Work Act 2019 (Act).³⁵

[29] It is necessary first to say something about this last contention. True it is that the approval decision was made before the Full Court’s judgment in One Key Workforce, but to the extent there was any doubt about an employer’s obligations under s 180(5) of the Act, that doubt was removed by Flick J in Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd³⁶ delivered on 8 November 2017, well before the approval decision was made. Relevantly, Flick J said:

“. . . None of these steps, either individually or cumulatively, satisfied the requirements imposed by s 180(5). The series of telephone calls between Ms Ind and each of the three then employees on 17 August 2015 were, with respect, no more than a formality. Ms Ind, as she accepted, did little more than read to each of those employees parts of the text of the Agreement. The emails on 25 August 2015 added no further explanation. The requirement imposed by s 180(5) to “take all reasonable steps to ensure that ... the terms of the agreement, and the effect of those terms, are explained” is an important obligation imposed upon an employer to ensure that employees are as fully informed as practicable. The requirement is not a mere formality. Whatever steps may be necessary will depend upon the facts and circumstances of each particular case; but those steps are not satisfied by a person reading – without explanation – the terms of an agreement to an employee.”37 [Our underlining]

[30] His Honour’s observation, underlined in the excerpt above, is significant in the context of the description of the steps taken by Kerman in the employer’s statutory declaration, which is earlier set out, read together with [31] of Ms Alexander’s Affidavit filed in the judicial review proceeding.

[31] Moreover, more than two years before the first of the One Key Workforce judgments, a Full Bench of the Commission upheld an appeal against the approval of an enterprise agreement on the basis, inter alia, that there was “no information . . . about the explanation provided during” meetings said to have been held with employees to explain the terms of the agreement and the effect of the terms, with the consequence that on the material the first instance Member could not properly have been satisfied that the agreement was genuinely agreed to by the relevant employees.³⁸

[32] Returning then to the nature of the appeal grounds and the likelihood that one or more of them will be upheld, it seems clear enough that appeal grounds 1 and 2 contend jurisdictional error in that on the material before the Commissioner, he was not able to reach the requisite state of satisfaction as to the requirement in s 186(2)(a) of the Act. It is uncontroversial that at least ground 1 would be upheld. Ground 2 also has good prospects. However, whether the appeal will have any real utility will largely be determined by the adequacy of the explanation given by Ms Alexander to the two employees. The AMWU has reasonable prospects of success in a hearing on remittal, but it is by no means a certain or even likely outcome. Moreover, there is no dispute that the Agreement passed the better off over all test and no other approval requirement is challenged. And if any deficiency in the explanation were found to have occurred, it is possible that the relevant concern might be resolved by an undertaking.

[33] The strength of the appeal grounds weighs in favour of exercising our discretion to extend the time within which the appeal may be lodged but is moderated by the consideration that there is a question as to whether there would be utility in granting permission to appeal.

4. Prejudice to the respondent in the appeal if time were extended.

[34] Kerman contends that an extension of time would cause it significant prejudice in the following ways:

•  If time is extended, the appeal is upheld and the approval decision quashed, Kerman and in its management will have likely committed numerous contraventions of s 50 of the Act. This is because it has paid its employees (for well over two years) in accordance with the Agreement. That is, it has not paid those employees in accordance with the enterprise agreement the Agreement replaced (and thereby will have contravened the terms of that earlier agreement). This means that Kerman and its management will be exposed to prosecution, orders for compensation, and civil penalties;

•  Extending time will cause Kerman significant immediate commercial detriment. This is largely said to arise because of the need to disclose any appeal proceeding in its tenders for work and that such disclosure is likely to have a deleterious effect on its prospects of being awarded the work;³⁹

•  If the appeal were to be upheld and the approval decision quashed, Kerman is likely to be required to inform various of its commercial partners of the fact that its warranties as to industrial matters were misleading and would cause Kerman incalculable commercial damage; and

•  If the application for approval must be redetermined by the Commission, Kerman will, inter alia, seek to provide further evidence about the reasonable steps it took to ensure that the terms of the Agreement (and the effect of those terms) were explained to the relevant employees. This will involve evidence from the individuals involved in those explanations (Ms Alexander and the employees). The explanations were given in October 2017 and Kerman will be significantly prejudiced because of the effect such a period of time is likely to have had on a witness’s recollection.

[35] Dealing with the last issue first, the alleged prejudice seems to us incongruous with the confidently stated earlier submission that Kerman will, on a rehearing by evidence be able to establish compliance with s 180(5) of the Act which “will likely lead to the Commission approving the EA afresh.”⁴⁰ However we accept Ms Alexander’s evidence (in para [18] of her statement) that she does “not now remember many of the specific details of the conversations the appeal and remit has (sic) they took place such a long time ago”. If we are to extend time, uphold the appeal and remit the application for a rehearing Kerman will need to adduce further evidence as to the content of the explanations it gave to the two employees covered by the Agreement in October 2017. Ms Alexander will need to recall what she said to the two employees covered by the Agreement more than 3 years ago in circumstances where Kerman was not put on notice of any challenge to the agreement until it had been in operation for more than 1 year. This constitutes an unfair disadvantage and amounts to real prejudice.

[36] Of the remainder of the identified prejudicial matters, the continuing commercial prejudice is the most persuasive of the matters advanced. That commercial prejudice commenced when the challenge to the validity of the Agreement was commenced by the AMWU more than a year after the Agreement was approved and more than 10 months after the AMWU became aware of the Agreement’s existence. This was already a belated challenge to a decision to approve an enterprise agreement, giving rise to uncertainty for the parties covered by the Agreement and commercial risk to the employer, particularly as Kerman conducts a contracting business and needs a stable and certain set of terms and conditions for its employees to tender for and win work. The longer the period between the decision of the Commission to approve an enterprise agreement and a challenge to that decision, the greater is likely to be the prejudice accruing to the employer. That prejudice may be exacerbated in cases such as the present matter where there is further delay between the commencement of the challenge to the approval of the agreement and the resolution of that challenge. In this case, Kerman has already suffered commercial prejudice since the AMWU filed its application in the Federal Court in April 2019. If an extension of time to lodge the appeal were granted, it would continue to suffer such prejudice until the appeal was determined and, if the appeal were upheld and remitted to a single member, until the remittal was heard and determined.

[37] The delay in the period from the commencement of the Federal Court proceedings until the filing of the notice of appeal and the prejudice flowing from that delay has been caused by the AMWU’s forensic decision to apply to the Federal Court for judicial review of the Commissioner’s decision to approve the Agreement, rather than lodging an appeal in the Commission in April 2019 (or perhaps much earlier, since it was aware of the Agreement in late May 2018). The very lengthy delay in filing the appeal resulting from the forensic decision to pursue the Federal Court application instead of lodging the appeal much earlier has caused real commercial prejudice to Kerman, which prejudice would continue if we extended time.

[38] Given the length of the delay, there will be real and significant prejudice to Kerman occasioned by extending time, and in our assessment, this weighs significantly against exercising our discretion to extend the time within which the appeal may be lodged.

[39] Weighing these matters individually and collectively, we are not persuaded that it is in the interests of justice to extend the time within which the appeal may be lodged in this case. The length of the delay is significant and much of the period of delay is not satisfactorily explained. The prejudice to Kerman is real, significant and ongoing. The grounds of appeal would likely succeed but success on a rehearing is by no means certain.

[40] We therefore refuse to allow a further period to the AMWU to lodge an appeal against the approval decision outside of the time prescribed by the FWC Rules.

Permission to appeal

[41] We should indicate that even if further time to lodge the appeal were allowed, we would not grant permission to appeal. We are not persuaded that it would be in the public interest to grant permission to appeal a decision to approve an enterprise agreement where the appeal is lodged more than two years out of time, in circumstances where it could have been brought much earlier. We would therefore not be compelled by s 604(2) to grant permission to appeal. Although the appeal grounds raise jurisdictional error, there is a question about the utility of the appeal in this matter. Further, the Agreement has been in operation for two and a half years, it passed the better off overall test and it is not suggested by the appeal grounds that any employee covered by it suffered disadvantage or exploitation as a consequence of the Agreement’s operation. The approval decision does not manifest an injustice. In these circumstances, we would also not exercise our discretion to grant permission to appeal on the conventional basis.

Conclusion

[42] For the reasons stated, the application by the AMWU to be allowed a further period (until 4 August 2020) within which it may lodge an appeal against the decision in Re Kerman Contracting Pty Ltd [2018] FWCA 1923 is refused.

DEPUTY PRESIDENT

Determined on the papers

Written submissions:

Appellant: 27 August 2020 and reply on 16 September 2020
Respondent: 11 September 2020

Printed by authority of the Commonwealth Government Printer

<PR723700>

1 Re Kerman Contracting Pty Ltd [2018] FWCA 1923

2 Rule 56(2) provides that an appeal must be lodged within 21 calendar days after the date of the decision being appealed or within such further time allowed by the Commission on application.

3 Appeal book at p 58

4 Kerman Contracting Pty Ltd Enterprise Agreement 2017 at cl 2, cl 5, cl 6, Schedule A and Schedule B

5 [2018] FWCA 1923 at [4]

6 Ibid at [2]-[3]

7 Appeal Book at pp 53-66

8 Appeal Book at p 57

9 Witness Statement of Glenn McLaren, Assistant Secretary of the AMWU WA Branch at [2]

10 Ibid at [4]

11 Ibid at [5]

12 Ibid

13 Ibid at [7]

14 Ibid at [6]

15 Ibid at [8]

16 Ibid at [10]-[11] and Attachment 1 thereto

17 Ibid at [11], Attachment 3 thereto and Notice of Appeal dated 4 August 2020 at pp 4-5

18 Ibid at [11] and Attachment 4 thereto

19 Ibid at [16] and Attachment 5 thereto

20 Ibid, cl 3.1

21 Ibid, cl 3.4

22 Ibid, cl 3.6

23 See for example Stevenson-Helmer v Epworth Hospital, Print T2277, 19 October 2000; Dundovich v P&O Ports, Print PR923358, 8 October 2002; SPC Ardmona Operations Ltd v Esam and Organ (2005) 141 IR 338; Tokoda v Westpac Banking Corporation [2012] FWAFB 3995; Jobs Australia v Eland [2014] FWCFB 4822; Lesic v No. 1 Riverside Quay Pty Ltd [2015] FWCFB 395

24 Jobs Australia v Donna Eland [2014] FWCFB 4822 at [6]

25 Appellant’s Outline of Submissions at [4]-[19]

26 Witness Statement of Glenn McLaren, Assistant Secretary of the AMWU WA Branch at [8]

27 See Fair Work Act 2019 s 58

28 Witness Statement of Glenn McLaren, Assistant Secretary of the AMWU WA Branch at [10]

29 Appellant’s Outline of Submissions at [20]

30 Respondent’s Outline of Submissions at [22]

31 Ibid at [25]

32 Ibid; Witness statement of Charmaine Alexander witness statement and the attachments thereto

33 Ibid

34 [2018] FWCAFC 77; (2018) 262 FCR 527

35 Respondent’s Outline of Submissions at [23]

36 [2017] FCA 1266

37 Ibid at [103]

38 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Mirait Technologies Australia Pty Ltd [2015] FWCFB 5078

39 Witness statement of Mark Nagle, Kerman’s Projects and Commercial Director at [5]-[16]

40 Respondent’s Outline of Submissions at [25]