PR956868
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AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

Workplace Relations Act 1996
s.45 Appeal to Full Bench

Appeal by Dyno Nobel Asia Pacific Limited
(C2005/1650)

Construction, Forestry, Mining and Energy Union

and

Dyno Nobel Asia Pacific Limited
(C2003/3762)

Coal industry

   

VICE PRESIDENT LAWLER
SENIOR DEPUTY PRESIDENT HAMBERGER
COMMISSIONER LEWIN

SYDNEY, 14 JULY 2005

Appeal - dispute finding - eligibility rules - distinction between industry rules and vocational rules - discremen of eligibility under industry rules -“substantial character” test - appeal allowed

DECISION OF LAWLER VP AND HAMBERGER SDP

[1] This is an appeal against a finding of dispute between the Construction, Forestry, Mining and Energy Union (“union”) and Dyno Nobel Asia Pacific Limited (“Dyno Nobel”) made by Senior Deputy President Drake on 23 December 2004 pursuant to a decision given on 2 November 2004 1 and a supplementary decision given on 23 December 20042 That finding was based on the service of a log claims by the union and the rejection of that log by Dyno Nobel.

Leave to Appeal

[2] An appeal lies to a Full Bench only with the leave of the Full Bench: s.45(1) of the Workplace Relations Act 1996 (“the Act”). This matter raises important questions about the proper application of a class of union eligibility rules known as ‘industry’ rules. Those questions have a significance far broader than the contest between the parties. In our view the appeal is of such importance, that in the public interest leave to appeal should be granted. Accordingly, by virtue of s.45(2) of the Act, we are obliged to grant leave to appeal and we do so.

[3] Leave having been granted, the appeal proceeds by way of a rehearing 3 on the evidence before her Honour and any fresh evidence admitted pursuant to the discretion conferred by s.45(6)(a). However the Full Bench can allow an appeal and exercise its powers under s.45(7) if and only if there was error on the part of the member at first instance. 4

Issue in the Appeal

[4] The Commission has no jurisdiction to find that there exists between a federally registered union and an employer an “industrial dispute” within the meaning of s.4 of the Workplace Relations Act 1996 unless, on the proper construction of the union’s eligibility rules, the employees concerned are eligible to become members of the union. 5

[5] Rule 2D of the eligibility rules of the CFMEU is in the following terms:

[6] The central issue before her Honour was whether, pursuant to Rule 2D, employees of Dyno Nobel were eligible to become members of the CFMEU. Her Honour held that employees of Dyno Noble who worked out of depots on or near coal mining leases were eligible to become members of the CFMEU and proceeded to find a dispute, albeit a finding that was not limited to this class of employees. Dyno Nobel contends that her Honour erred in finding a dispute and in the width of the dispute finding.

[7] Whether an alleged dispute is an “industrial dispute” within the meaning of the Act is a question going to the jurisdiction of the Commission. As such, the issue on appeal is not whether the finding that employees of Dyno Nobel were eligible to become members of the CFMEU was reasonably open to her Honour but rather whether that finding was correct on the evidence before her Honour. 6 The matter was put succinctly by the Full Bench in Australian Human Resources Institute Pty Ltd v National Tertiary Education Industry Union:7

The Decision Below

[8] Dyno Nobel manufactures and supplies explosives and provides various explosive related services to its customers, including customers in the coal mining industry. Her Honour summarised the work performed by Dyno Nobel employees at various coal mines and at depots on or near coal mine leases as follows:

[9] Her Honour set out extracts from various authorities and summarised the question for determination as follows:

[10] Her Honour then made the following findings:

The Proper Construction of Rule 2D

[12] The scope of a union eligibility rule is matter of the proper construction of the rule. This is “a legal question to be solved by legal considerations”. 8 The basic principles governing the construction of union eligibility rules are well established and need not be repeated here.

[13] The Courts and the Commission have long recognised two particular categories of eligibility rule:

[14] The approach to the proper construction and application of eligibility rules properly classified as ‘industry rules’ dates back to the decision of the High Court in R v Hibble; Ex parte Broken Hill Proprietary Co Ltd 9 (“Hibble”). In that case the High Court was concerned with the proper construction of an eligibility rule of the Australasian Coal and Shale Employees’ Federation that provided:

[15] The issue was whether employees of BHP engaged in converting coal to coke for use in its steelworks were “employed in or in connection with the coal and shale industry” within the meaning of the relevant eligibility rule. The High Court unanimously held that the employees in question were not eligible for membership pursuant to that rule. Five of the six members of the bench (Knox CJ, Gavan Duffy, Powers, Rich and Starke JJ) delivered a joint judgment in which they held: 10

[16] Rule 2D of the CFMEU eligibility rules refers to “employees engaged in or in connection with the coal and shale industries”. It is an industry rule and the discremen of eligibility is the trade or business of Dyno Nobel. Indeed, counsel for the CFMEU acknowledged that Rule 2D is the current manifestation of the very rule considered by the High Court in Hibble. Accordingly, we are bound, as was her Honour, to apply the decision in Hibble to Rule 2D. 11 Thus, the issue in this appeal turns on the proper characterisation of the business of Dyno Nobel, that is, whether the business of Dyno Nobel is “in or in connection with” the coal industry.

Determining the industry of the employer

[17] Her Honour set out extracts from a number of authorities that appear to lend support her approach to the characterisation of the industry of Dyno Nobel. In those circumstances it is necessary to consider the authorities in some detail.

[18] In R v Central Reference Board; Ex parte Thiess (Repairs) Pty Ltd 12 (“Thiess Repairs”) the High Court was concerned with whether the Central Reference Board had jurisdiction to consider an unfair dismissal claim by a shop fitter, Mr Belmar, who was employed by Theiss Repairs Pty Ltd. The Board had jurisdiction in relation to the coal-mining industry. The question was whether Belmar was employed in that industry. Thiess Brothers Pty Ltd operated a coal mine in which it utilised earthmoving machinery. Minor repairs to that machinery were performed by employees of Thiess Brothers Pty Ltd . Major repairs were performed by a closely related company, Thiess Repairs Pty Ltd, in a engineering workshop situated on same mining lease. Such repairs formed the major part of its work, but it also undertook some general engineering work. The High Court (Latham CJ, Rich and Starke JJ; Dixon and McTiernan JJ dissenting) held that Theiss Repairs Pty Ltd did not perform work in the coal mining industry and that, consequently, the Board did not have jurisdiction in relation to order the reinstatement of Mr Belmar.

[19] The leading judgment is that of Chief Justice Latham. The Chief Justice observed: 13

[20] Although her Honour referred to the judgment of Latham CJ 14, she did not refer to the passage we have set out, which is the passage that is most relevant for present purposes.

[21] Dixon J described the case as being “very much upon the border line” and observed: 15

(emphasis added)

[22] Notwithstanding that Dixon J was in dissent, his reasoning has subsequently been cited with approval. It is important to note that notwithstanding his finding that the major repair and overhaul of the earthmoving machines performed by Thiess (Repairs) Pty Ltd was “essential to the mining operation”, Dixon J regarded the key question as being “whether they [ie. the mining and the repair work] form a main and an incidental part of the same undertaking”. Dixon J saw two alternatives:

[23] Distinguishing between these two alternatives “must depend upon circumstances, the chief of which must be separateness of establishments in point of control, organization, place, interest, personnel and equipment”. The better view is that Dixon J’s dissent is the result of a differing judgment in relation to the facts of a borderline case. It is doubtful whether the two approaches can lead to different results in a case that is not a borderline case.

[24] In Re Federated Liquor and Allied Industries Employees’ Union of Australia; Ex parte Australian Workers’ Union 16 (“Poon Bros”) the High Court was concerned with an eligibility rule of the AWU that declared as eligible for membership “every bona fide worker... engaged in manual or mental labour in or in connection with the following industries or callings, namely... metalliferous mining... and... employees engaged in or in connection with ... all work in laundries.” Two companies were contracted by iron ore mining companies to supply catering, cleaning, laundry, housekeeping and garbage services for townships purpose built by the mining companies to house the workers who operated the mines. The issue was whether the employees of the contractors were engaged in or in connection with the metalliferous mining industry and thus eligible for membership of the AWU. Barwick CJ (with whom the rest of the Court, Gibbs, Stephen, Mason and Jacobs JJ, agreed) noted:17

[25] The Chief Justice observed: 18

[26] Finally, the Chief Justice noted that employees of the contractors who were performing laundry work may have been eligible for enrolment under what his Honour must have seen as a vocational portion of the rule: 19

[27] We note that, while referring with apparent approval to the remarks of Dixon J in Thiess Repairs, Barwick CJ applied the “substantial character” test of Latham CJ to the business of the contractors. To the extent that these approaches might lead to different outcomes, the decision in Poon Bros suggests that the outcome ought not be contradicted by the “substantial character” test, which, of course, is a test directed towards the character of the employer’s business or enterprise.

[28] We note that when Barwick CJ said “put another way [the question is], whether the employees of the respondent companies are employed by those companies in or in connexion with the industry of metalliferous mining carried out by those companies” 20 his Honour ought be taken as referring to the employees of a distinct business, enterprise or undertaking of the employer as a whole and not as intending to suggest that the question could be answered in the affirmative if a small proportion of the employees within a given business, enterprise or undertaking could be so characterised. His Honour applied Hibble and approach of Latham CJ in Thiess Repairs and they indicate as much.

[29] In paragraph [340] her Honour set out an extract from the judgment of Aickin J 21 in R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia22 (“Uranium Mining case”). In that case a dispute had been raised by the AWU in relation to an enormous uranium mining project before the construction of the project had commenced. Four mining companies and a number of project engineers had been named as respondents in the log of claims. The construction of the mine and its associated facilities was to be carried out by contractors yet to be engaged by the project engineers. Relevantly for present purposes, the High Court was concerned with whether the AWU was entitled to enrol employees of the project engineers as members. The relevant eligibility rule authorised the AWU to enrol workers “engaged in manual or mental labour in or in connection with the following industries or callings, namely:... metalliferous mining...” The principal judgments are those of Aickin J and Jacobs J. Barwick CJ agreed Aickin J. Stephen J agreed with Jacobs J. Gibbs J agreed with both Jacobs J and Aickin J.

[30] Jacobs J held: 23

[31] Aickin J set out a lengthy extract from Poon Bros, including the passage set out above, and said: 24

(emphasis added)

[32] We note that the emphasised portions of this passage demonstrate that, consistent with Hibble, Thiess Repairs and Poon Bros, Aickin J was concerned with the characterisation of the business (“enterprise”) of the project engineers. Bearing in mind that the Uranium Mining case concerned a project in a remote location that was truly enormous, it is reasonable to conclude that an unarticulated major premise of the reasoning of Aickin J was that the size and remoteness of the project meant that, on any view, it would amount to a distinct ‘establishment’ or ‘industrial enterprise’ for each of the project engineers.

[33] We note also that, the ‘enterprise’ in which the project engineers and their employees were engaged was in or in connection with the metalliferous mining industry notwithstanding that it could also be characterised as within the civil construction industry. The Uranium Mining Case is thus an example of how industries may overlap and the one enterprise of an employer may have a substantial character that places it in two industries simultaneously.

[34] We further note that neither Jacobs J nor Aickin J made direct reference to Hibble or Thiess Repairs. Each referred to Poon Bros with approval. Indeed, Aickin J regarded the case as being determined by the decision in Poon Bros. We do not think that Aickin J or Jacobs J can properly be taken as having intended to alter the law as established by Hibble and Thiess Repairs.

[35] In paragraph [341] of her decision her Honour extracted a passage from the joint judgment of Deane and Dawson JJ (with whom Mason ACJ and Brennan J agreed) in the R v Coldham; Ex party Australian Workers’ Union 25 (“Worsley Alumina case”). That case concerned construction work on a bauxite extraction and refining project. The work involved at the mine site included the construction of offices, workshops and amenities buildings, sewerage tanks, fencing and roads. At the refinery site, it included the construction of similar buildings and facilities and of a power plant, refinery tanks, waterworks, railway sidings, bridges and pipe racks. The refinery site was located fifty kilometres from the mine site and a conveyor belt connecting the two sites was to be constructed. The relevant passage in the joint judgment is as follows:26

(emphasis added)

[36] The portion with underline emphasis is the part of the passage extracted by her Honour. It was “plain” that the relevant workers in Worsley Alumina case were performing work in or in connection with the industry of metalliferous mining because all of the workers were engaged in construction work on a very large bauxite extraction and refining project and the Uranimum Mining Case found such construction work to be in or in connection with the metalliferous mining industry notwithstanding that it could also be characterised as construction work. The portions of the passage with bold emphasis demonstrate that Deane and Dawson JJ were cognizant that it was the business of the employer that was being characterised. Again it may be inferred the size of the work meant that the businesses of the construction employers thereby had a substantial character that was in or in connection with the metalliferous mining industry by virtue of their involvement in the project.

[37] In R v Isaac; Ex parte Transport Workers Union 27 (“Argyle Diamond case”) the High Court was concerned, inter alia, with whether workers engaged in the construction and operation of the Argyle Diamond mine were employed “in connection with... the reducing and refining of ores” within the meaning of the eligibility rules of the AWU. The Court (Gibbs CJ, Deane, Wilson and Dawson JJ; Brennan J dissenting) answered this question in the affirmative. The mine owner had established a substantial crushing plant, proximate to the mine, where the diamonds were extracted from ore in which the diamond content was less than 1/600,000th part of the ore. The leading judgment was given by per Gibbs CJ (with whom Deane and Dawson JJ agreed). His Honour stated”:28

[38] We note that when Gibbs CJ stated that the answer to the question of whether a particular description fits and industry or calling “may depend on the "substantial character" of the activities carried on” his Honour must be taken as referring to the activities of the employer and its employees in the particular business of enterprise of the employer. The passage from the Uranium Mining case to which his Honour refers is from the passage from the judgment of Aickin J set out above. We have already noted that it is clear from that passage that Aickin J, in the context of an industry rule, was focused on the characterisation of the business of the employer.

[39] Wilson J (with whom Deane and Dawson JJ also agreed) said: 29

[40] Wilson J then set out a lengthy passage from the decision of the Full Bench of the Commission in which it concluded that the construction and operation of the mine was distinct from the ore crushing operation and continued:

[41] Her Honour also placed reliance on the decision of the Full Bench in CPSU v EDS Australia. 30 In paragraph [343] of her decision her Honour observed:

[42] The decision of the Full Bench in CPSU v EDS Australia was challenged by the employer parties in an application for prerogative relief in the High Court. That application was remitted to the Full Federal Court. In IBM Global Services Australia Limited 31 the Full Federal Court refused the application for prerogative relief. However Gray J (with whom Whitlam and Moore JJ agreed) did not adopt or endorse the reasoning of the Full Bench but rather embarked afresh on a construction of the relevant eligibility rule: Rule 2, Pt 1A.1(iv) of the CPSU Rules. It is clear from that analysis that the outcome turned on the particular form of the rule which relevantly stated “all persons employed in the telecommunications industry as defined in Rule 3E...”. The definition in Rule 3E defined that industry to mean, inter alia, “[a]ny business, or part of a business, whose principal function is incidental, ancillary or complimentary to the supply and/or installation and/or maintenance of telecommunication services as defined in the Telecommunications Act 1991”. This definition meant that the Rule 2, Pt 1A.1(iv) was not a conventional industry rule. Unsurprisingly, the words of the definition, rather than a simple application of the conventional tests, determined the outcome. Indeed, there is no reference in the Gray J’s reasons to the “substantial character” test or to Hibble, Thiess Repairs, Poon Bros, the Uranium Mining case, the Worsley Alumina case or the Argyle Diamond case.

[43] We make the following observations in relation to the extract from the decision of the Full Bench in CPSU v EDS Australia relied upon by her Honour. First, since the outcome in that case turned on the definition of “telecommunications industry” included in the particular rules, to the extent that the Full Bench in CPSU v EDS Australia might be seen as commenting on the construction of conventional industry rules, such comments are strictly obiter dicta. Secondly, the “principles” referred to in the opening sentence of the extract are the general principles of construing union eligibility rules established by the High Court as summarised in Australian Theatrical and Amusement Employees Association v Professional Radio and Electronics Institute 32 and TWU v Serco Australia Pty Ltd,33 being summaries that that do not concern the question of characterisation of the industry of an employer or an application of the “substantial character” test. Thirdly, the extract from Technicsearch is immediately preceded by the following paragraph:34

The High Court cases cited [the Uranium Mining case and the Argyle Diamond case] do not discard an examination of the substantial character of the industrial enterprise in which the relevant employee will be engaged as a test to be applied in establishing whether an activity is in connection with a relevant industry for purpose of a union eligibility rule. Aickin J in the Uranium Mining Case expressly applied the test quoted [R v Moore & Others; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 @ 485]. But the Court has also made it clear that tests of that kind, including the related test of "the primary and predominant purpose of the activity" for which the employee is engaged, should not divert the Commission from the path of construction of the relevant eligibility rule [R v Isaac (1985) 159 CLR 323 @ 344 per Wilson J. Similarly in the Worsley case: R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 @ 431-434 per Deane and Dawson JJ who identify the prime issue as establishing the proper connotations of the relevant industry based on a construction of the union's rule.]. In our view, it is essential to focus on construction of the rule and to then apply it to the circumstances of the case.

[44] Thus, the “emphasis” referred to in the opening line of the extract from Technisearch set out in paragraph [89] of CPSU v EDS Australia is an emphasis on it being “essential to focus on construction of the rule and then to apply it to the circumstances of the case”, an unremarkable proposition, and not to be “diverted” from that task by the “substantial character” test and the “primary and predominant purpose test”, an equally unremarkable proposition since the “substantial character” test does not become relevant until the rule in question has, on its proper construction, been characterised as a conventional industry rule.

[45] The opening words of paragraph [343] and the emphasis supplied by her Honour to the extract from CPSU v EDS Australia suggest that, in the context of applying “the principles in relation to construction of eligibility rules”, her Honour regarded the decision in CPSU v EDS Australia as having had the effect of “widening of relevant considerations to encompass greater scrutiny of the activities of the employee”. For ourselves, we find the precise import of paragraph [90] of CPSU v EDS Australia obscure. As the Full Bench in Technisearch acknowledged, the “substantial character” test for determining the industry of an employer in context of an industry rule has not been discarded. Nor, we would add, has it become a test that is satisfied in relation to a given industry simply by showing that work of a few employees, viewed in isolation from the overall business of their employer, can be seen as work in that industry.

[46] The mere supply of goods or services to an industry not, of itself, sufficient to render the business of the supplier one that “in connection with” the industry of the business supplied, even if those goods are essential to the operation of that business. 35 This point is usefully illustrated by an example given by Latham CJ in Thiess Repairs:36

[47] The decision of Northrop J in Burgess v Connell-Mott 37 provides a further illustration.

[48] Her Honour correctly identified the decision of the High Court in R v Drake Brockman; Ex parte National Oil Pty Ltd 38 as establishing that a single employer may carry on two or more industries. In that case a company mined shale and, at a manufacturing works adjacent to the mine, it extracted oil from the shale. By virtue of a war time regulation the Central Reference Board had jurisdiction to deal with disputes in the “coal-mining industry”39 which term was defined to include shale mining industry. The issue was whether the Central Reference Board had jurisdiction to deal with a particular dispute in the manufacturing works. The High Court (Latham CJ, Rich and Williams JJ; Starke and McTiernan JJ dissenting) held that the company carried on two separate enterprises. One in the shale mining industry the product of which was shale and the other an industry the products of which were oil and petroleum coke. This finding was made notwithstanding that, in Australia at that time, shale was utilised solely for the obtaining of petrol and that, in the form in which it was being mined, the shale was not otherwise a product for which there was a market. Latham CJ observed:40

[49] Her Honour relied upon a passage from the judgment of Gibbs CJ in the Argyle Diamond case where his Honour stated”: 41

His Honour then gave the example of the road makers in the Uranium Mining case who were engaged in road making as well and in or in connection with metalliferous mining.

[50] The sentences that precede and follow the emphasised sentence suggest that Gibbs CJ was using the word “purpose” as an analogue of description which implies that determining a “purpose” of a business is a way of pointing to its substantial character. Thus, notwithstanding that an enterprise may have two “purposes” and notwithstanding that it is not necessary to decide which is predominant, consistent with Thiess and Poon Bros, it is still necessary for each “purpose” to confer a character on the enterprise that can properly be described as “substantial” before the “purpose” can ground a conclusion that the enterprise is in or in connection with the relevant industry.

Summary of Principle

[51] Drawing the High Court authorities together, we think the position is as follows:

[52] We acknowledge that, on one view, there is a certain tension between the way in which the question of characterisation in relation to an industry rule was addressed in some judgments in the later cases (particularly in some parts of the joint judgment in the Worsley Alumina case and in the judgment of Wilson J in the Argyle Diamond case) and the approach in the earlier cases (Hibble, Thiess Repairs and Poon Bros). In particular, some of the language used in the later cases, including in passages set out by her Honour, is suggestive of a characterisation process in relation to industry rules that can turn entirely on the nature of the work performed by employees engaged on a particular project rather than on an explicit characterisation of the business of their employer. However, there is no suggestion in the later cases that that the High Court was intending to overturn the earlier cases. On the contrary, the first of the later cases, the Uranium Mining case, was expressly determined by an application of Poon Bros. The subsequent cases, the Worsley Alumina case and the Argyle Diamond case, adopted and applied the Uranium Mining case and, as we have endeavoured to show, in fact continued to preserve the emphasis on the characterisation of the business of the employer laid down in the earlier cases. In those circumstances, until the High Court or the Full Federal Court holds otherwise, we think it necessary to construe the later cases in a way that is consistent with the earlier cases. In particular, each of the later cases was concerned with a project that was so enormous that the sheer size of the project meant that the substantial character of the business of relevant employers was altered by their involvement in the project such that those businesses took on, if they did not already have it, a substantial character that placed them in or in connection with the industry of the project.

The industry of Dyno Nobel

[53] We turn now on the rehearing to the proper characterisation of the industry of Dyno Nobel on the evidence of before her Honour. There can be no doubt, as her Honour found, that shot firing is necessary for the removal of overburden which in turn is an integral part of open cut coal mining. Historically the loading of explosives into shot holes and shot firing was work performed by direct employees of mining companies. The trend in modern times has been for this work to be contracted out to the specialist contractors or to the explosive suppliers themselves. No doubt increasingly stringent safety and security regulations have made contracting out a more expedient and cost effective way of having that work performed.

[54] The main explosive used in mining in Australia is known as ‘ANFO’ and is made by combining ammonium nitrate, in a granular form known as ‘prill’, with diesel oil. When the blasting is to occur in “wet” holes, an emulsion is also added. These materials are transported to the blasting site in separate tanks on an ‘explosives truck’ and the ingredients are mixed directly into the blast hole. Ammonium nitrate and diesel oil are classified as oxidisers rather than explosives. It is only when the ingredients are mixed that an explosive is formed. In a very real sense the explosive manufacturing process undertaken by Dyno Nobel for supply to the mining industry continues to the very point where the ingredients are mixed by its employees at blast holes. 49 To the extent that an employee then proceeds to fire the shot, such activity is properly to be seen as incidental to Dyno Nobel’s principal business activity, namely the manufacture and supply of explosives.50

[55] On the evidence before her Honour Dyno Nobel employed some 312 persons across Australia. 51 About 155 of those persons were classified as “operational” employees.52 Of these, 51 employees operated out of depots located on or close to coal mining leases and performed work on coal mining leases.53 The duties of these 51 employees typically consisted of maintaining the explosives store and ensuring compliance with safety and security regulations, maintenance of the ‘explosives truck’, attending shot holes with the ‘explosives truck’ and mixing the required quantity of explosive into the shot holes. Of these 51 employees, 8 also performed shot firing work as part of their regular duties for Dyno Nobel as contractor to coal mining companies (a further 6 employees were qualified to fire shot and did so only on an occasional ad hoc or relieving basis).54 Those employees held qualifications and authorisations to perform those tasks as required by state legislation regulating the coal industry. One employee was a technical adviser in relation to the company’s products who occasionally devised blast patterns for client coal mines.55

[56] On the evidence before her Honour, Dyno Nobel operates a single integrated business. There was no suggestion in the evidence that it operated an organisationally and functionally distinct enterprise for the supply of shot firing and blast design services to the coal industry or to the mining industry generally such that Dyno Nobel could be characterised as operating a ‘separate’ business or enterprise in relation to the supply of such services. Indeed, it is clear on the evidence that Dyno Nobel did not even maintain separate accounts in relation to the supply of such services and information on the value of those services had to be extracted manually from the accounting records of the company. 56 There is no basis in the authorities for concluding that, because an employer conducts its business at a number of geographically separate locations, that mere fact is sufficient to allow its operations at a particular location to be treated as a separate or distinct business.

[57] Dyno Nobel supplies explosives to clients in the coal mining industry, the metalliferous mining industry and the civil engineering industry. While about 29% off Dyno Nobel’s revenue is derived from the sale of explosives into the coal mining industry, 57 a mere 0.24%58 of its revenue ($400,000 out of $166,300,00059) was derived from shot firing services for coal mining companies. It is not to the point that that a significant proportion of the explosives manufactured by Dyno Nobel are supplied to businesses in the coal industry or that Dyno Nobel also provides some explosives related services to businesses in the coal industry. The mere supply of goods or services to an industry is not, of itself, sufficient to render the business of the supplier one that “in connection with” the industry of the business supplied, even if those goods are essential to the operation of that business.

[58] We do not place significant weight on the fact that Dyno Nobel has certified agreements with the CFMEU to cover the work it performs in Queensland or that Dyno Nobel’s competitor is a respondent to a coal industry award. Those facts no doubt reflect a certain practical industrial relations reality on the ground but have little relevance to the proper construction of Rule 2D.

[59] The predominant purpose of the single integrated business operated by Dyno Nobel is the manufacture and supply of explosives. This confers a “substantial character” that places the business of Dyno Nobel in the explosives industry or, more generically, the chemical industry. The issue comes down to whether, because a small number of Dyno Nobel employees perform some work that can be regarded as work in the coal industry (the back-filling of shot holes and shot firing work performed by between 8 and 14 employees and the devising of blast patterns by one technical adviser), the single integrated business of Dyno Nobel also has a “substantial character” that places it in or in connection with the coal industry within the meaning of Rule 2D of the CFMEU rules. In our view, the fact 8 out of some 160 operational employees perform shot firing as a relatively small part of their overall work for Dyno Nobel, that a further 6 employees occasionally perform shot firing on an ad hoc or relief basis and that one technical adviser sometimes devises blast patterns for coal mining companies (which together accounts for about one quarter of one percent of Dyno Nobel’s revenue) does not give the single integrated business of Dyno Nobel an additional “substantial character” as a business in or in connection with the coal industry. When considered in the context of the business of Dyno Nobel as a whole, these activities are too minor and incidental to confer an additional character on the business of Dyno Nobel that could properly be described as “substantial”. Rather, these activities are properly to be seen as the supply of a service to employers in one industry by an employer whose business is in another industry not unlike the laundry and hotel example given by Latham CJ: the laundering of towels and bed linen is as integral to the operation of an hotel as shot firing is to the operation of an open cut coal mine.

[60] In essence, the approach adopted by her Honour was that, because the law recognises that an employer may carry on two or more industries, an employer should be found to carry on business in a given industry if some of its employees perform work that is properly characterised as being in that industry, irrespective of the proportion of employees so engaged and the nature of the employer’s overall business and the context of the work in question in that overall business. We think that such an approach involves error. The fact that some employees perform work that, viewed in isolation, may be characterised as being in a given industry, while certainly a relevant factor, will not necessarily be determinative of a “substantial character” of the business of the employer. An example may serve to illustrate the point. Suppose the sole business of an employer is the operation of a chemical plant and suppose the employer directly employs several security guards to monitor the gate and patrol the plant. Undoubtedly the work of the security guards is work that could be characterised as being work in the security industry. However, that fact would not thereby result in the business of the employer having a “substantial character” that placed it in the security industry as well as the chemical industry.

[61] At this point, it is useful to restate the question that her Honour posed for herself:

[62] It is clear from this, and from paragraphs [366] to [370] of her decision, that her Honour was concerned to characterise the ‘industry’ of Dyno Nobel. However, it is equally clear from those paragraphs that her Honour approached the task of characterisation on the basis that if work performed by a group of employees of Dyno Nobel was work that could be characterised as being in or in connection with the coal industry then the coal industry is an industry that Dyno Nobel operates in or in connection with within the meaning of Rule 2D. So much is apparent from the use of the word “therefore” in paragraph [359]. Moreover, it is apparent from the last sentence of paragraph [359] that her Honour did not regard herself as required to characterise the industry or industries in which Dyno Nobel operated by reference, amongst other things, to a consideration of the overall business of Dyno Nobel. For the reasons we have given, focussing only on the work performed a small number of Dyno Nobel’s employees and failing to have regard to the totality of the business of Dyno Nobel led her Honour to ask herself the wrong question in determining the “substantial character” of the business of Dyno Nobel. This amounts to a jurisdictional error. 60

[63] The approach adopted by her Honour substantially undermines the distinction between conventional industry rules and vocational rules. This distinction has a long history and has, for many years, informed the drawing of union rules and the resolution of demarcation disputes. If, as her Honour appears to have accepted, the fact that work performed by a small number of employees is work in a particular industry necessarily brings the business or enterprise of the employer within that industry, no matter how small the number and no matter what the character of the overall business of the employer, then the discrimen referred to in Hibble and Poon Bros is substantially shorn of its content as a means of distinguishing conventional industry rules from vocational rules.

Conclusion

[64] On the evidence before her Honour, the employees of Dyno Nobel were not engaged in or in connection with the coal industry within the meaning of Rule 2D and were therefore not eligible for membership of the CFMEU pursuant to that rule. Accordingly, the Commission had no jurisdiction to find a dispute in this matter and her Honour erred in finding otherwise.

[65] If, contrary to our view, the mere fact of geographical separateness allows the depots operated by Dyno Nobel on or near coal mining leases, to be treated as distinct businesses which may then be said to have had a “substantial character” that placed them in or in connection with the coal industry, her Honour erred in finding a dispute that involved Dyno Nobel generally rather than a dispute that was confined to those distinct businesses.

[66] We allow the appeal. In terms of the dichotomy between judicial and administrative decisions, decisions of the Commission are administrative rather than judicial decisions because the Commission is not established as a court exercising federal judicial power pursuant to Chapter III of the Constitution. Where an administrative decision is affected by jurisdictional error there is at law “no decision at all”. 61 Nevertheless, given that a Full Bench on appeal has no power to provide declaratory relief, the appropriate course is to quash her Honour’s dispute finding in relation to Dyno Nobel. The matter will not be remitted because, for the reasons we have given, on the evidence before her Honour the business of Dyno Nobel does not have a substantial character that places it in or in connection with the coal industry within the meaning of Rule 2D of the CFMEU rules so that employees of Dyno Noble were not eligible to become CFMEU and, accordingly, on the evidence before her Honour the Commission has no jurisdiction to find a dispute between the CFMEU and Dyno Nobel.

DECISION OF LEWIN C

[67] This is an appeal by Dyno Nobel against a decision and finding of an industrial dispute pursuant to s.101 of the Workplace Relations Act 1996 (the Act). The decision and finding were made by Senior Deputy President Drake on 2 November 2004 in [PR952859].

[68] I have had the advantage of reading the reasons for decision of Vice President Lawler and Senior Deputy President Hamberger. I am grateful for the benefit of the extensive discussion of the relevant cases and judgments which should guide the Full Bench in its consideration of the Appeal in this matter.

[69] As for leave to appeal, I concur for the reasons stated by my colleagues that the appeal is of such importance that, in the public interest, leave to appeal should be granted.

[70] I also agree with my colleagues that the Senior Deputy President applied the wrong test in her characterisation of the industry in which Dyno Nobel conducts its business. However, my reasons are more narrow than those of my colleagues. I would dispose of the appeal differently, for reasons which are also expressed below. In my view, having regard to the alternative possibility alluded to by my colleagues at paragraph 65 and for the reasons associated therewith it is appropriate to remit the matter to Senior Deputy President Drake.

[71] The appellant submits that the finding of dispute made by Senior Deputy President Drake was not open to the Commission because the notifier of the dispute, the Construction, Forestry, Mining and Energy Union (CFMEU), while having served a letter of demand and log of claims upon Dyno Nobel, lacked the necessary standing to do so. This, the appellant, submits is because, while the union is entitled to represent employees engaged in, or in connection with, the coal industry, Dyno Nobel is not conducting a business or enterprise in the coal industry.

[72] It was unexceptional in the proceedings both below and before us that Dyno Nobel:

[73] To the extent required by regulations applicable in the coal industry Dyno Nobel’s employees hold the relevant qualifications and authorisations to perform such tasks.

[74] It was submitted at both first instance and before us that as Dyno Nobel was not engaged in or in connection with the Coal Industry the union was unable to represent the interests of employees of Dyno Nobel either present or future, as such employees were not eligible to be members of the union. In the appellant’s submission this is so on a proper construction of the meaning of the union rule 2D, which is in the following terms.

[75] It follows that if this submission is correct no dispute could arise between the union and Dyno Nobel.

[76] The union submitted at first instance, and before us, that Dyno Nobel employed persons engaged in or in connection with the coal industry and thus the service of the letter of demand and log of claims had the legal effect in the factual circumstances of creating a dispute, the claims not having been acceded to by Dyno Nobel.

[77] Consequently, the proceedings at first instance, to a considerable extent, revolved around the question of whether or not the employees of Dyno Nobel were engaged in or in connection with the coal industry and whether the industry of the employer could be characterised accordingly. There were differences of approach to the question reflected in the submissions put by the parties at first instance. The critical distinction, implicit in the argument between the parties, which was also maintained before us, concerned the extent to which the answer to that question could be discerned by a factual analysis of what work was performed by the employees of Dyno Nobel.

[78] In essence, while the CFMEU accepted that the test was to be applied against the trade or business of the employer 62, it contended and maintained that the answer to whether or not the employer was engaged in a trade or business in, or in connection with, the coal mining industry could be established conclusively from a factual analysis of the work of the employees of the employer said to be so engaged63.

[79] On the other hand, Dyno Nobel both before the Commission at first instance and before us, submitted that the work performed by those employees said to be engaged in, or in connection with, the coal industry formed only a part of the answer to the question of whether or not the employer’s trade or business was in or in connection with the coal industry.

[80] Moreover, Dyno Nobel submitted to us on appeal that the Senior Deputy President at first instance had explicitly rejected what had been described by them as the “holistic approach” to the determination of whether or not the employer, Dyno Nobel, carried on trade or business in or in connection with the coal industry.

[81] In this particular respect the grounds of appeal and the submissions of Dyno Nobel identify the explicit rejection of this approach by the Commission at first instance, at paragraph 359 of the decision under appeal. At that point of the decision at first instance the Commission said:

[82] In my view, this submission highlights the critical issue in this matter. To determine the industry of the employer requires that the Commission considers the facts revealed by the evidence in a particular manner. Most particularly the manner in which the facts are construed must be in accordance with applicable legal principle.

[83] In my view, the earlier discussion by my colleagues of the various decisions of the High Court makes it clear that the industry of the employer cannot be established simply by considering and determining the nature of the tasks, duties and responsibilities, the work, of the employer’s employees. To approach the matter in this manner would, I think, be a jurisdictional error. The nature of that error would be for the decision maker to ask the wrong question. That is to say “what is the work of the employees”?

[84] What is required by the relevant authorities is for the decision maker to consider the nature of the employer’s business, including, importantly, the work performed by the employees in the enterprise(s) 64 undertaken by the employer. In my view, my colleagues correctly emphasise the following passage from the decision of Chief Justice Latham in R v Central Reference Board; Ex parte Thiess (Repairs) Pty Ltd

[85] In my respectful view, the Chief Justice there makes clear that it is the combination of the work of the employees and the entrepreneurial activity of the employer that is to be considered for the purpose of characterising the industry or industries of the employer. Moreover, to determine the nature of the enterprise(s) and the business of the employer exclusively by reference to the work performed by some of the employees of the employer and to determine the industry of the employer without wider consideration is to apply an inappropriate test, in my view. I consider that while in a difficult case like this the concept of a “holistic” test might lack precision of meaning it does capture the necessity for a field of view in the determination of the industry of the employer which is wider than simply the work of the employees the subject of the alleged dispute. On the other hand, I am likewise inclined to the view that measuring the volition of the employer in relation to the structure of its corporate legal personality for the conduct of its business is not determinative of the industry or industries in which it is engaged.

[86] In my respectful opinion, the Senior Deputy President confined her consideration in that part of her decision in which the crucial decisional steps were taken to the facts of the work of the employees. By doing so the wrong question was asked and the wrong test was applied. The result was a constructive error of jurisdiction 65 so that the dispute finding was not properly made.

[87] Therefore I would uphold the appeal for this reason. The record of finding should be quashed.

[88] As for the disposition of the appeal, I would, for the reasons upon which I have reached the conclusion that the appeal should be upheld, among others, refer the matter to the Senior Deputy President to determine according to law. Whilst there is transcript of evidence and considerable documentary material from which the Full Bench might determine whether or not a dispute exists, as alleged or otherwise, to elect to do so is a matter of discretion 66. My preference to exercise the discretion available in relation to the disposition of the appeal so as to refer the matter to the Senior Deputy President arises because I do not have the benefit of either participating in the inspections or of hearing the evidence and obtaining the understanding gained accordingly. The application of the correct test as to the industry of the employer could result in a somewhat more limited finding of dispute which distinguishes the industries or enterprises in which the employer is engaged. The scope or boundaries of such a dispute may be discovered from the evidence and the understanding gained by the inspection.

BY THE COMMISSION:

VICE PRESIDENT

Appearances

Mr A Herbert of counsel for the Appellant, Dyno Nobel Asia Pacific Ltd

Mr T Slevin of counsel for the Respondent, the Construction, Forestry, Mining and Energy Union

Hearing Details

2005
Brisbane:
March 24

 1   PR952859

 2   PR954681

 3   Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194 at para [17]

 4   ibid at paras [17] and [32]

 5   R v Portus; Ex parte Federated Clerks’ Union of Australia (1949) 79 CLR 428 at 432-3, 436; R v Watson; Ex parte Australian Workers’ Union (1972) 128 CLR 77; R v Aird; Ex parte Australian Workers Union (1973) 129 CLR 654 at 666; R v Neil; Ex parte Cinema International Corporation Pty Ltd (1976) 134 CLR 27 at 30; R v McKenzie; Ex parte Actors and Announcers Equity Association of Australia (1982) 148 CLR 573 at 574-5.

 6   Staff Aid Services v Bianchi (2004) 133 IR 29 at [16] and see also Pawel v AIRC (1999) 94 FCR 231

 7   PR941696, Williams SDP, Lacy SDP and Foggo C, 10 November 2003 at para [10]

 8   R v Aird; Ex parte Australian Workers Union (1973) 129 CLR 654 at 659

 9   (1921) 29 CLR 290

 10   at 296-8

 11   R v Coldham; Ex party Australian Workers’ Union (1983) 153 CLR 415 at 430-1.

 12   (1948) 77 CLR 123

 13   at 134-5

 14   at para [337]

 15   at 141-2

 16   (1976) 51 ALJR 266 at 268-9

 17   at 268

 18   at 268-9

 19   at 269

 20   A passage relied upon by her Honour at para [340]

 21   The passage is incorrectly attributed to Jacobs J.

 22   (1978)140 CLR 470

 23   at 477

 24   at 485

 25   (1983) 153 CLR 415

 26   at 433

 27   (1985) 159 CLR 323

 28   ibid at 332ff

 29   ibid at 340ff

 30   PR939419, Munro J, Marsh SDP and Deegan C, 17 October 2003

 31   [2005] FCAFC 66, Gray, Whitlam and Moore JJ, 29 April 2005

 32   Print H5675 at 3-4

 33   (1996) 67 IR 28 at 29

 34   (1996) 66 IR 38 at 42

 35   Argyle Diamond case (1985) 159 CLR 323 at 333 per Gibbs CJ (with whom Deane and Dawson JJ agreed)

 36   (1948) 77 CLR 123 at 131

 37   (1979) 27 ALR 427

 38   (1943) 68 CLR 51

 39   It may be noted that the jurisdiction of the Central Reference Board was in relation to disputes “in” the coal-mining industry (as defined) and not “in or in connection with” the coal-mining industry.

 40   ibid at 57

 41   (1985) 159 CLR 323 at 332-3

 42   Re Federated Liquor and Allied Industries Employees’ Union of Australia; Ex parte Australian Workers’ Union (1976) 51 ALJR 266 at 268

 43   R v Hibble; Ex parte Broken Hill Pty Co Ltd (1921) 29 CLR 290 at 297; Re Federated Liquor and Allied Industries Employees’ Union of Australia; Ex parte Australian Workers’ Union (1976) 51 ALJR 266 at 268

 44   ibid

 45   R v Central Reference Board; Ex parte Thiess (Repairs) Pty Ltd (1948) 77 CLR 123 at 135; Re Federated Liquor and Allied Industries Employees’ Union of Australia; Ex parte Australian Workers’ Union (1976) 51 ALJR 266 at 268

 46   R v Drake Brockman; Ex parte National Oil Pty Ltd (1943) 68 CLR 51 at 57

 47   R v Isaac; Ex parte Transport Workers Union (1985) 159 CLR 323 at 333

 48   R v Hibble; Ex parte Broken Hill Pty Co Ltd (1921) 29 CLR 290

 49   See the evidence of Mr Wyllie at AB1, Tab 5, Transcript PN1551-1557

 50   Compare Burgess v Connell-Mott (1979) 27 ALR 427 at 442

 51   AB2, Tab 13, Affidavit of Mr Wyllie of 24 July 2003, annexure DW-1

 52   ibid

 53   Counsel for Dyno Nobel submitted that the true number was 51. Annexure DW-1 to Mr Wyllie’s affidavit of 24 July 2003 suggests that the number was 60. Re-examination of Mr Wyllie at PN1804-5 indicates that 9 of the 60 did not work away from the relevant depots. Transcript PN2092-2108 indicates that the representatives of the parties agreed that counsel for Dyno Nobel would put the correct figure from the bar table to avoid the need to recall Mr Wyllie.

 54   Mr Wyllie’s initial affidavit indicated that there were 14 employees (13 permanent and one casual) who performed shot firing work as part of their duties (AB2, Tab 13, annexure DW-1). His subsequent affidavit suggests the true number was 8 (AB2, Tab 14, annexure DW-1). He confirmed this number in oral evidence (AB1, Tab 5, Transcript PN 1570) and explained the discrepancy at AB1, Tab 5, Transcript PN1684-6.

 55   AB1, Tab 5, Transcript PN1504-1520

 56   See the evidence of Mr Wyllie at AB1, Tab 5, Transcript PN1540-2

 57   AB2, Tab 13, Affidavit of Mr Wyllie of 24 July 2003, para 4

 58   AB2, Tab 13, Affidavit of Mr Wyllie of 10 November 2003, para 3

 59   AB1, Tab 5, Transcript PN1569

 60   Craig v South Australia (1995) 184 CLR 163 at 179 (per the Full Court); Minister for Immigration & Multicultural Affairs v Yusuf (2001) 206 CLR 323 at [82] per McHugh, Gummow and Hayne JJ (with whom Gleeson CJ agreed).

 61   Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at para [51]

 62   R v Hibble; Ex parte Broken Hill Proprietary Co Ltd (1921) 29 CLR 290

 63   Transcript PN441

 64   R v Central Reference Board; Ex parte Thiess (Repairs) Pty Ltd (1948) 77 CLR 123

 65   Craig v The State of South Australia (1995) 184 CLR 163

 66   Workplace Relations Act 1996 s.45(7)