TRANSCRIPT OF PROCEEDINGS
Fair Work Act 2009 34102-1
SENIOR DEPUTY PRESIDENT ACTON
AM2010/225
s.158 - Application to vary or revoke a modern award
Application by Master Builders Australia Limited
(AM2010/225)
Building and Construction General On-site Award 2010
(ODN AM2008/15)
[MA000020 Print PR986361]
AND
AM2010/257
s.158 - Application to vary or revoke a modern award
Application by The Master Builders Association of New South Wales
(AM2010/257)
Building and Construction General On-site Award 2010
(ODN AM2008/15)
[MA000020 Print PR986361]
Melbourne
10.04AM, TUESDAY, 7 DECEMBER 2010
Reserved for Decision
PN1
THE SENIOR DEPUTY PRESIDENT: Can I have the appearances, please.
PN2
MR T. STANLEY: May it please the tribunal, my name is Stanley. I seek permission to appear for Master Builders Australia as agent for the Master Builders Association of South Australia, the Master Builders Association of New South Wales, the Master Builders Association of Tasmania, the Master Builders Association of the Northern Territory, the Master Builders Association of Victoria, the Master Builders Association of the Australian Capital Territory in matter 225/2010; and permission to appear for the Master Builders Association of New South Wales in matter 257/2010.
PN3
THE SENIOR DEPUTY PRESIDENT: Canberra?
PN4
MS A. MATHESON: If it please the tribunal, my name is Matheson, initial A., appearing on behalf of the Housing Industry Association.
PN5
MR A. KENTISH: If it pleases, Kentish, initial A., appearing on behalf of the CEPU.
PN6
MR S. MAXWELL: If the tribunal pleases, my name is Maxwell, initial S. I appear on behalf of the Construction, Forestry, Mining and Energy Union.
PN7
MR G. NOBLE: Noble, initial G., appearing for the NWU.
PN8
MR L. BUNTMAN: If it pleases the tribunal, Buntman, initial L., appearing on behalf of the Australian Workers Union.
PN9
THE SENIOR DEPUTY PRESIDENT: Thank you. Is there any objection to Mr Stanley's application for permission to appear? Permission is granted, Mr Stanley.
PN10
MR STANLEY: If the tribunal pleases, there are two applications which mirror each other for a variation to the on-site award pursuant to section 160 of the act. There is a challenge to a standing that has been raised by the CFMEU. Can I tender an affidavit of Wilhelm Harnish, sworn 2 December 2010.
PN11
MR KENTISH: If it pleases, the CEPU has an objection to the attachment to that affidavit. Would the tribunal like to hear the oral objection at this point?
PN12
THE SENIOR DEPUTY PRESIDENT: Okay. What is the attachment?
PN13
MR KENTISH: The attachment is a letter from Mr Peter Glover, dated 2 December 2010, to Richard Calver. Our oral objection to the letter being included in that affidavit of Mr Harnish is basically made on three grounds. Firstly, the letter is not actually addressed to the witness. The second ground is that the author has not provided sworn evidence, although Mr Harnish's affidavit tries to make it such. Thirdly, the author refers to other associations which the author doesn't actually purport to represent. In any event, your Honour, we say it is of very low evidentiary value as it contains no details concerning any agency relationship other than an adoption of that term apparently by the MBA of New South Wales, if it pleases.
PN14
THE SENIOR DEPUTY PRESIDENT: Does anybody else object? What have you got to say about it, Mr Stanley?
PN15
MR STANLEY: Senior Deputy President, the CEPU's objections really don't go to the admissibility of the affidavit but to the weight that the tribunal should afford it. In my submission, the fact that the letter is not addressed to Mr Harnish is of no moment whatsoever. Plainly it's addressed to an officer of Master Builders Australia of whom Mr Harnish is the chief executive officer. That objection is the closest that you can have to the matter of admissibility. The other two objections, in my submission, purely go to questions of weight; as to the reliance that can be placed on the letter in evaluating the matters deposed to in Mr Harnish's affidavit.
PN16
THE SENIOR DEPUTY PRESIDENT: Yes. Anything else, Mr Kentish?
PN17
MR KENTISH: No, thank you, your Honour.
PN18
THE SENIOR DEPUTY PRESIDENT: Well, I'll allow it in as part of the affidavit, but whether it ultimately proves to be of any relevance to the issue that I understand is contended between the parties, will be a matter for submission. Mr Stanley?
PN19
MR STANLEY: Thank you, Senior Deputy President. The challenge to the standing has been brought on the basis that section 160(2)(b) of the act provides that a determination may be made pursuant to subsection (1) "on application by an employer, employee, organisation or outworker entity that is covered by the modern award." The submission being put against us is that Master Builders Australia doesn't meet the description of any of those categories in subparagraph (2)(b) of section 160.
PN20
The basis upon which the MBA meets the objection to standing is that Master Builders Australia is a peak body of a number of registered organisations who do meet the description of "organisation" within subsection (2)(b) and that Master Builders Australia, as the peak body, acts as agent for those organisations and prosecutes this application for and on their behalf, as is apparent from the terms of Mr Harnish's affidavit. On that basis, it is my submission that the objection to standing must be dismissed.
PN21
In the alternative, the application 257/2010 is brought by Master Builders Australia New South Wales, which is a registered organisation under the RO Act and that application mirrors the application brought by Master Builders Australia in action 225/2010.
PN22
THE SENIOR DEPUTY PRESIDENT: You say it's brought by Master Builders Association of New South Wales?
PN23
MR STANLEY: Yes.
PN24
THE SENIOR DEPUTY PRESIDENT: Where am I to find that?
PN25
MR STANLEY: Where can you find the application?
PN26
THE SENIOR DEPUTY PRESIDENT: Yes, well, that's exactly right. Where am I going to find that they bring it?
PN27
MR STANLEY: The matters have been listed together. I was hoping that the tribunal had the application 257/2010.
PN28
THE SENIOR DEPUTY PRESIDENT: That's an application which went up on the web site just a few days ago. There may be questions about whether anybody has had the opportunity to file submissions in respect of that application.
PN29
MR STANLEY: There may be. What we say, if it please the tribunal, is that application mirrors the application 225/2010, so it's unlikely - except in respect of submissions that have been made by the CFMEU in relation to standing - that any other submission would be put by any interested body or organisation; but if there is, then obviously the tribunal will entertain that. We ask that the tribunal hear that application which has been listed today together with the application 225/2010.
PN30
THE SENIOR DEPUTY PRESIDENT: Do you have any authority for your first proposition?
PN31
MR STANLEY: No, I can't direct the tribunal to any authority. One matter I do point to, if the tribunal pleases, is that in our submission the role of peak councils such as Master Builders Australia is recognised in the act, in particular in section 596 and in particular in subsection (4)(b)(iii). In our submission, it's clear there's an underlying legislative intention that peak councils be able to act to represent the interests of their members. In our submission, the application brought by Master Builders Australia as agent for its constituent organisations is consistent with that underlying legislative intention.
PN32
THE SENIOR DEPUTY PRESIDENT: Yes.
PN33
MR STANLEY: May it please the tribunal.
PN34
THE SENIOR DEPUTY PRESIDENT: Is there anything the HIA want to say about this point?
PN35
MS MATHESON: No, your Honour. We're just here in support of the applicants named.
PN36
THE SENIOR DEPUTY PRESIDENT: Who is going first? Mr Kentish?
PN37
MR KENTISH: Your Honour, there's nothing on the face of the application nor in the initial submissions to suggest that the MBA was occupying the position of any other party other than itself in bringing the application. Belatedly there's a suggestion that the MBA was acting as an agent for, amongst other entities, 30,000 unnamed employers. We say that that's not credible. Section 160 does not refer to a peak body bringing an application. If the MBA were doing so on behalf of another, that should, and we say would, have appeared in the documentation which commenced the proceedings. With respect to the affidavit which has been admitted into evidence, we say firstly that the make-up of the board of the MBA is not relevant. The MBA is its own entity and has directors who presumably owe a duty to the company, not as representatives of various other associations.
PN38
Secondly, we say the evidence of the board authorising the applications suggests that the authorisation was for the MBA's own behalf and there is no mention of "agency" in that part of Mr Harnish's statement. Thirdly, we say that although Mr Harnish at paragraph 4 of his affidavit adopts the terminology of "agent" when describing what the MBA does on behalf of members when undertaking litigation, we say there is insufficient information concerning the true nature of any agreement or the exact circumstances of the relationship between the MBA and the principals that it now claims to be occupying the position of in bringing this application.
PN39
Fourthly, in relation to the letter of Mr Peter Glover, which is attached to the affidavit, we note again that it is not a sworn document. It does not say when the MBA started apparently acting as what is described as an agent for MBA New South Wales and we say it doesn't give sufficient details of the agreement supposedly between the MBA and MBA New South Wales that gives rise to an agency relationship in any respect. In all the circumstances we say there's insufficient credible evidence to make a finding that the MBA was in fact acting as an agent when it brought the application in its own name, if it pleases.
PN40
THE SENIOR DEPUTY PRESIDENT: Mr Kentish, have you got anything to say about whether I should then proceed with application AM2010/257?
PN41
MR KENTISH: I don't, no.
PN42
THE SENIOR DEPUTY PRESIDENT: You have nothing to say about that?
PN43
MR KENTISH: I would have no objection to the matter being heard.
PN44
THE SENIOR DEPUTY PRESIDENT: Thank you. Anybody else want to add anything? Mr Maxwell?
PN45
MR MAXWELL: Thank you, your Honour, just briefly. The representative for the MBA sought to rely on section 596 of the act. We point out that under section 596 a person may be represented with permission. Under 596(1), "A person may be represented in a matter before Fair Work Australia by a lawyer or paid agent only with the permission of Fair Work Australia." To act as the lawyer or paid agent, they must first receive permission. We say a paid agent can't make an application because they would not have permission to make that application in the first place where a party seeks to make an application from fresh.
PN46
We also note that where the act deals with lawyers or a paid agent, it consistently refers to the lawyer or paid agent receiving permission first by Fair Work Australia; and similar provisions are found in section 376(1) and section 401(1) of the act. We'd also note that under the rules, under rule 17.1 a person who commences to act as a solicitor or paid agent or other representative of a party to a matter already before Fair Work Australia, must lodge a notice in accordance with form F53. We note that under rule 17.2 that can be waived, but we note that the MBA have not sought to provide such a form. Your Honour, we submit that the requirements of section 160 are quite specific. They are limited to registered organisations. Clearly Master Builders Australia is not a registered organisation and we submit on that basis there is no valid application before the tribunal.
PN47
We also note that to the extent they seek to rely on the affidavit of Mr Wilhelm Harnish which seems to imply their role as a paid agent of the state MBAs, we note the only date that's referred to in that statement that refers to any authorisation by the board of Master Builders Australia is, I think, 19 November. This application was made on 30 September, so we submit that the matter was not authorised or there was no authorisation to act as a paid agent in regard to this matter at the time the application was made. In regard to the other application by the New South Wales MBA, we have no objection to the matter being dealt with under that application.
PN48
THE SENIOR DEPUTY PRESIDENT: Thank you. Anybody else?
PN49
MR NOBLE: Your Honour, I would support what my colleagues have just said. I found a recent case decision by Watson VP in the Fast Food Industry Award - where the standing of the National Retail Association came into question. I have the decision here, if you'd like a copy. At paragraph 24 of that decision, after some discussion about the standing of the NRA, the Vice President states:
PN50
The application in this matter is made in the name of the NRA. It is clear in my view that the NRA is not an organisation within the meaning of that term in the act or an employer in the industry and cannot make an application in its own name.
PN51
Similarly, it was not until the hearing that they sought to assert they were authorised to make an application on behalf of employers. It would appear to me the facts are somewhat analogous to what's going on here. The application brought by the New South Wales Master Builders Association was obviously done in a moment of - well, maybe "panic" is too strong a word, but a realisation that Master Builders Australia didn't actually have the standing to bring this matter; so we would also object.
PN52
In regard to the Master Builders Association of New South Wales application, the only grounds that they are relying on says that the proposed variation will clarify the basis on which the period of service of the award is to be calculated. There's nothing else in the actual application itself which lends any weight to that conclusion, if the tribunal pleases.
PN53
THE SENIOR DEPUTY PRESIDENT: Mr Buntman, anything you want to add?
PN54
MR BUNTMAN: Thank you, your Honour. The Australian Workers Union wholly relies on submissions filed today and oral submissions made by my union colleagues here today.
PN55
THE SENIOR DEPUTY PRESIDENT: Thank you. Anything in reply, Mr Stanley?
PN56
MR STANLEY: If the tribunal pleases, in our submission the passage relied upon by the AMWU from the Fast Food Industry Award in the reasoning of Watson SDP in paragraph 24, in particular the last sentence of paragraph 24, reflects precisely what Master Builders Australia is doing in this matter. Steps have been taken to make the application in the name of the constituent registered organisations who authorised it to act on its behalf, as is evident from the affidavit of Mr Harnish.
PN57
I'll just address the submission put on behalf of the CFMEU, the effect of which is that the application has not been validly authorised because the application was brought in September and the board only considered the matter on 19 November 2010. In my submission, that contention is met on two bases. Firstly, when the tribunal has regard to the terms of paragraph 3 of Mr Harnish's affidavit, it's plain that the reference to the board meeting on 19 November 2010 is the last occasion on which the board considered and was authorised to proceed by the registered organisations who are its constituent members.
PN58
THE SENIOR DEPUTY PRESIDENT: This is the board of MBA?
PN59
MR STANLEY: Yes.
PN60
THE SENIOR DEPUTY PRESIDENT: So the board of MBA authorised the MBA to take the action?
PN61
MR STANLEY: Well, no. The board is authorised by its constituent members, who are those registered organisations who MBA acts as agent for.
PN62
THE SENIOR DEPUTY PRESIDENT: There's a difference between authorising MBA as agent to take an action in the name of the MBA New South Wales - in which case the application would say, "MBA New South Wales application lodged by," for example, "Mr Stanley."
PN63
MR STANLEY: Your Honour, that would be to perfect the application and it would perhaps be preferable that it had been done in that way.
PN64
THE SENIOR DEPUTY PRESIDENT: Yes.
PN65
MR STANLEY: It wasn't, but the tribunal could be satisfied on the basis of Mr Harnish's affidavit that there is a sufficient evidentiary basis before the tribunal on which it can proceed to determine this matter, on the basis that Master Builders Australia is authorised by its constituent members to bring this application for and on their behalf. The objection on the basis that this only occurred subsequent to the issuing of the application, in my submission can't be substantiated firstly on the basis that the evidence is merely that 19 November was the last occasion on which the board was authorised to proceed and, secondly, in any event, the board and its constituent members are entitled to ratify previous acts where they choose to do so, may it please the tribunal.
PN66
THE SENIOR DEPUTY PRESIDENT: I will dismiss application number AM2010/225. In my view the application is incompetent, not having been made pursuant to section 162(b). I will proceed with AM2010/257. Mr Stanley?
PN67
MR STANLEY: If it please the tribunal, the application for a variation is brought pursuant to section 160(1) to vary the on-site award to remove an ambiguity or an uncertainty as to the operation of clause 17 of the on-site award, which provides for payment of a redundancy severance benefit to employees in the industry upon termination of employment except in specified circumstances; namely, termination for misconduct or refusal of duty. The variation is sought to resolve the ambiguity by the addition of a subclause 17.8, which would provide, "Service under this clause 17 must be calculated from 1 January 2010. Where an employee is engaged after that date, from the date of engagement."
PN68
The basis of the application is the contention of MBA New South Wales that the existing provision is uncertain as to whether service prior to the date of operation of the award is to be included in the calculation of continuous service for the purposes of clause 17.3 of the award. The unions submit that such service is to be included and the employers contend to the contrary. Master Builders Australia New South Wales accepts that, firstly, a precondition to the exercise of Fair Work Australia's power to vary the award pursuant to section 160 is its satisfaction that the award is ambiguous or uncertain. Secondly, this requires an objective assessment of the words of the award in the context, including where appropriate the application of the Fair Work Act.
PN69
Thirdly, that Fair Work Australia will generally err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and an arguable case is made out for more than one contention. In that regard, can I refer the tribunal to a decision of the full bench of the commission in a matter of Tenix Defence Pty Ltd Certified Agreement PR917548. I hand a copy of that up.
PN70
THE SENIOR DEPUTY PRESIDENT: Yes.
PN71
MR STANLEY: Could I invite the tribunal to turn to page 4 of the decision.
PN72
THE SENIOR DEPUTY PRESIDENT: Yes.
PN73
MR STANLEY: Your Honour will see a reference there to section 170MD, just before paragraph 27. Section 170MD, in my submission, is the equivalent provision to section 160 of the Fair Work Act. The full bench there, after reciting the terms of subsection (6)(a), makes the point in paragraph 28 that:
PN74
Before the commission exercises its discretion to vary an agreement pursuant to section 170MD(6)(a), it must first identify an ambiguity or uncertainty. It may then exercise the discretion to remove that ambiguity or uncertainty by varying the agreement. The first part of the process - identifying an ambiguity or uncertainty - involves an objective assessment of the words used in the provision under examination. The words used are construed having regard to their context, including where appropriate the relevant parts of a related award.
PN75
As Munro J observed in Re Linfox - CFMEU (CSR Timber) Enterprise Agreement 1997, "The identification of whether or not a provision in an instrument can be said to contain an ambiguity, requires a judgment to be made of whether, on its proper construction, the wording of the relevant provision is susceptible to more than one meaning. Essentially the task requires that the words used in the provision be construed in their context, including where appropriate the relevant parts of the parent award with which a complementary provision is to be read."
PN76
We agree that context is important. Section 170MD(6)(a) is not confined to the identification of a word or words of a clause which give rise to the ambiguity or uncertainty. A combination of clauses may have that effect. The commission will generally err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and an arguable case is made out for more than one contention.
PN77
The full bench goes on at paragraph 33 to observe that the identification of an ambiguity or uncertainty is the jurisdictional fact which enlivens what was then the commission's jurisdiction to vary the agreement pursuant to section 170MD. Pursuant to clause 17 of the on-site award, the calculation of an employee's redundancy severance benefit is based on continuous service. The unions assert that clause 17.3, when it refers to continuous service, means - at least in respect of an employee engaged prior to the commencement of the operation of the award - the entire period of that employee's service if the service is unbroken.
PN78
The employers, on the other hand, contend that continuous service cannot include any period prior to the commencement of operation of the award. That is to say, prior to 1 January this year. The employers submit that the terms of clause 17 are uncertain or ambiguous and that there is an arguable case that clause 17 has more than one meaning when considered in its context. The MBA New South Wales seeks to pre-empt actual disputation by the variation sought to clarify the application of clause 17. It's in that context that the MBA seeks a referral of a question of law by the President to the court pursuant to section 608 of the act.
PN79
The MBA submits that the President should exercise the discretion conferred by section 608 to refer a question of law posed to the court in accordance with the principles in Finemores v Papa. Can I provide the tribunal with a copy of that decision. Finemores v Papa was a decision of the full bench of the commission under the Industrial Relations Act 1988. There the full bench had to consider the operation of section 46 of the Industrial Relations Act 1988, which is in substantially similar terms but not identical terms to section 608 of the Fair Work Act. Nonetheless, in MBA's submission the principles applicable as identified by the full bench to the operation of section 46 of the Industrial Relations Act, are equally applicable to the operation of section 608 of the Fair Work Act.
PN80
At page 4 of the decision, at about point 2 on that page, the full bench made clear that section 46 confers a discretion on the commission "as to whether a question of law arising in a matter should be referred to the Industrial Relations Court." The approach to the exercise of the discretion was described by a full bench of the commission in the terms then quoted, the important features of which are that the full bench identified that -
PN81
questions of law often arise in proceedings in the commission and the resolution of them is within the jurisdiction of the commission, although their determination is not conclusive.
PN82
It went on to find:
PN83
It is unlikely that the legislature intended that when a question of law arises in proceedings in the commission, one party can, by a request that the question be referred under section 46, require its determination by a Full Court of the court. The effective operation of the commission could thereby be substantially frustrated by a party seeking delay.
PN84
As they said:
PN85
In our view, whether a question of law is referred under section 46 is a matter for the commission to determine having regard to the circumstances in which the question of reference arises.
PN86
The full bench then continued:
PN87
It has been said by another full bench that amongst the criteria to be considered in determining whether to refer a question of law to the court are the nature of the question, the context in which the question arises and the nature of the delay that may be involved by such a reference.
PN88
The full bench continued:
PN89
We endorse and adopt the approach of these full benches in the consideration of applications for the reference of questions of law to the Industrial Relations Court. In particular, we consider that the discretion should, where possible and appropriate, be exercised in such a way as to avoid undue delay in the determination of matters before the commission and to ensure that the effective operation of the commission is not frustrated by legal manoeuvres of one or other party before it.
PN90
Now, in our submission those principles are equally applicable to the exercise of the tribunal's discretion pursuant to section 608, save and except of course that unlike the provision under section 46 of the Industrial Relations Act, the discretion was reposed on the commission whereas under section 608, the discretion is reposed in the President. I'll come back to that. The question which is sought to be referred is whether an employer, subject to the provisions of the on-site award, who receives a claim from an employee, should calculate the entitlement under clause 17 of the award on the basis that any service prior to 1 January 2010 should be included in the calculation of continuous service for the purpose of clause 17.3.
PN91
Master Builders Association of New South Wales submits that the referral is desirable in the interests of the most efficient and effective disposition of the present application. The present application requires this tribunal to determine as a jurisdictional fact whether the terms of clause 17.3 in its context are ambiguous or uncertain. Consequently, Fair Work Australia can decide that the terms of clause 17.3 are ambiguous or uncertain or it can decide that they are not. Presumably if it decides they are not, it will refuse the variation that's sought. If it was to decide that the clause is ambiguous or uncertain, it necessarily must conclude what the true meaning of the provision is. Whatever decision it makes in that regard, on the plain authority of Tenix, is not conclusive.
PN92
If it were to determine, for example, that the true meaning of the clause - having decided it's not ambiguous or uncertain - was that contended for by the MBA, then that interpretation may not be accepted by the unions because the tribunal's interpretation on the authority of Tenix is not conclusive, or vice versa. If it was to find that the clause is not ambiguous or uncertain and that its true meaning is that contended for by the unions, an employer or employers in the industry subject to the on-site award may not accept that interpretation as conclusive. Either way, that is likely to result in litigation. If the Federal Court was to construe the clause subsequently contrary to the interpretation afforded to the clause by Fair Work Australia, that would have undesirable consequences, for example.
PN93
If Fair Work Australia interpreted the award and found it was not ambiguous or uncertain, and adopted a meaning by way of construction of the award that was consistent with that contended for by Master Builders Australia New South Wales, presumably it won't vary the award. If subsequently a person or organisation brought civil remedy proceedings in the court for a contravention of the award based on the union's interpretation and that interpretation was upheld by the court, it's then likely that the MBA would revive its application for a variation of clause 17 on the basis that the court's construction did not reflect the true intention of the full bench of the commission when it made the on-site award, consistent with the approach that was taken in Brack's case.
Now, obviously that scenario would be undesirable. It would involve both avoidable delay in the ultimate resolution of the dispute that plainly exists between employers and employees in the industry, and itself would be productive of disputation. That brings me back to the various scenarios that are before the tribunal. There are two basic scenarios as far as the relevant jurisdictional fact is concerned. The tribunal could find that the provisions of clause 17 are ambiguous or uncertain or they could find that they're not. If the tribunal finds that the award is ambiguous or uncertain, it will then presumably proceed to vary the award so as to resolve the ambiguity or uncertainty.
PN95
The only application for a variation before the tribunal at present is that sought by MBA New South Wales. For the purpose of the argument it's accepted, however, that the tribunal - if it was to find ambiguity or uncertainty existed - is not bound to vary the award in accordance with the terms of the MBA's application, but that is the only application for variation before the tribunal in the event that the jurisdictional fact is established. Nonetheless, the other scenarios in the event of such a finding, apart from varying the award in the terms sought by the MBA, would be for the commission either to decline to vary the award which would be unlikely given the finding of ambiguity or uncertainty, given the clear imperative of section 160 for the tribunal to resolve such a situation, given its potential for disputation, or to vary the award in some other way.
PN96
The tribunal, should it proceed from a finding that ambiguity or uncertainty exists, in my submission will be assisted by a conclusive interpretation of the award by the court. It will do so in a way that is illustrated by the decision in Brack's case. Can I hand up to the tribunal a copy of that decision. As the tribunal would appreciate, Brack's case is a decision of the High Court which is reported in volume 51 ALR 731, but this is obviously an unreported copy of the decision.
PN97
The case before the High Court concerned a writ for the removal of a decision of the commission into the court for prohibition or certiorari on the ground that Brack C, in making an order varying clause 10 of the Hydro-Electric Commission (Tasmania) Carpenters and Painters Award, failed to observe section 110(3) of the Conciliation and Arbitration Act 1904, which provided the decision of the court upon the application to interpret the award "is final and conclusive and binding on all organisations and persons bound by the award which or who have been given an opportunity of being heard by the court."
PN98
Argument proceeded on the basis that the Federal Court comprising of Morling J, had, pursuant to an application under section 110, interpreted the award and identified its true construction, and subsequently Brack C had varied the award in the course of which the commission made certain observations which are set out on page 2 of the print in the middle of the page, the commission saying in respect of the industry allowance, that:
PN99
It is meant to cover disabilities which do not crop up in construction work and the allowance is an averaged one to take account of the reasonable and not so good conditions, but of course it is not designed for situations which are always good or in which the disabilities associated with construction work do not normally arise in the course of the work from job to job. I am firmly of the view that it was not the intention of the parties or of Vosti C -
PN100
I interpolate there, who had made the award originally or the provision under consideration -
PN101
that the industry allowance should apply in the award in the case of painters who had not previously been paid industry allowance because of the type of work on which they were engaged. I consider also, in the absence of any compelling submissions, that the industry allowance should not be extended to such painters. Because industry allowance has been paid to carpenters not on construction work since about 1962, the HEC should see through its administrative procedures that such payment is not altered as a result of this decision.
PN102
I have gone through a different exercise from that in which the court was involved, but in any event it is perhaps not surprising that I have reached a different conclusion from the court which had no factual position before it as to the work performed.
PN103
In the ratio of the High Court's judgment dismissing the application, the High Court then says:
PN104
We do not read this passage as indicating a refusal on the part of the Commissioner to accept the Federal Court's interpretation of clause 10 and as a determination to depart from it. On the contrary, we read it as an acknowledgment that it was the role of the Federal Court not that of the commission authoritatively to interpret the award. The Commissioner points out that it was his function to consider whether the award should be varied in the light of the circumstances set out in the passage which we have quoted. These circumstances include the actual intention of the parties and that of Vosti C, and the suitability of making fresh provision in lieu of the old provision concerning payment of the industry allowance, more particularly in light of the practice of the respondent in paying the industry allowance to employees employed under the award.
PN105
In taking these circumstances into account and regarding them as a basis for varying the award, the Commissioner did not fail to observe section 110(3). What he did was to accept the Federal Court's interpretation and determined that the operation of the award provision so interpreted was unsatisfactory, having regard to the circumstances already mentioned.
PN106
In our submission, that's the position from which the tribunal can proceed in the event that the tribunal was to find that there was no ambiguity or uncertainty. The tribunal, nonetheless, might conclude that the true meaning of the award might provide a basis upon which it should be varied because the true meaning did not reflect the intention of the full bench when it made the award. In our submission, like the situation in Brack's case, the tribunal would be assisted by an authoritative or inclusive interpretation of the award provision in determining what variation, if any, should be made to it.
PN107
It would obviously be assisted by a conclusive and authoritative interpretation of the award in the event it was to conclude that there was ambiguity or uncertainty, because the conclusive decision of the court might resolve that ambiguity or uncertainty. Nonetheless, as indicated by Brack's case, the authoritative determination of the true meaning of the award might itself provide the foundation stone for a variation of the award if the true construction of the award as identified by the court is not consistent with that which was intended by the full bench when it made the award in the first instance. In our submission, all of this is complex and points to the desirability of a conclusive interpretation of the award by the court.
PN108
The authority of Finemores v Papa to which I've earlier taken the tribunal, identifies there as not only a relevant but a highly pertinent consideration as to whether the referral of a question of law should occur, whether that would occasion undue delay in the determination of a matter before the tribunal. It reflects a concern on the part of the then commission that section 46 of the Industrial Relations Act as it then was should not become a device by which the effective operation of the commission could thereby be substantially frustrated by a party seeking to delay. In the MBA's submission, that cannot be a persuasive factor in this matter.
PN109
While it must be the position that the tribunal, like the commission in Finemores v Papa, would be concerned to avoid an application for a referral being used as a device to frustrate the operation of the tribunal, that would typically occur where one party seeks a referral to the court to delay the commission's determination of the other party's application. Now, that's not the situation here. It is the MBA which is seeking the referral on the MBA's own application. It cannot be that the MBA is seeking to frustrate the determination of its application by the tribunal by seeking a referral.
PN110
Delay of the kind that quite properly agitated the commission in Finemores v Papa, is not a relevant consideration in this matter for that reason. On the contrary, in the MBA's submission the conclusive interpretation by the court of the award will provide the definitive foundation for the tribunal's determination of the application. The court may interpret the award in a way that is inconsistent with the parties' understanding or the full bench's intention, or it may result in the withdrawal of the application to vary, but whichever way the interpretation of the award goes in the court if the referral is made, it has the potential to dissolve a source of dispute between the parties to the award.
PN111
As I've indicated, one relevant point of distinction between section 46 of the Industrial Relations Act and section 608 of the Fair Work Act, is that the nature of the application pursuant to section 608 means that it can only be decided by the President. Now, the President has directed that the application pursuant to section 608 be made before your Honour and that subsequent to the hearing, the President will consider the transcript and the various submissions of the parties, and so it must be in accordance with the principles of natural justice that as the matter can only be decided by the President, the request for a referral must be remitted to him for decision.
PN112
Before I leave section 608, I just wanted to address what I'll call the Hamzy point which has been raised by the CEPU and supported by the CFMEU, and presumably by the other unions. Can I just take the tribunal to the submission of the CEPU. Does your Honour have paragraph 8 of the CEPU's submission?
PN113
THE SENIOR DEPUTY PRESIDENT: Yes.
PN114
MR STANLEY: I won't read it. Your Honour will see there a passage cited from the judgment of the Federal Court in Hamzy v Tricon International Restaurants t/as KFC, a passage which analyses the predecessor provision to section 608, which was section 412 of the Workplace Relations Act. The proposition of the CEPU is that there is no question arising in a matter before the tribunal. Contrary to that submission, the MBA New South Wales submits that the preceding analysis demonstrates that where there are conflicting constructions of the award adopted by both employers and unions subject to the award, that there is a question of law arising in the matter before the commission.
PN115
The fact that no actual employee has a claim for a redundancy severance benefit in which the calculation of continuous service based on a period of service prior to 1 January 2010 is in issue, does not gainsay the proposition that there is a question of law which arises in the application to vary the award to remove an ambiguity or uncertainty. A question of law can arise in the application before the commission to vary pursuant to section 160 without there being actual litigation in the court to enforce a particular claim, so long as the tribunal is satisfied that there is an arguable dispute in relation to the construction of the award. Against that background can I then turn to the threshold question, which is the existence of ambiguity or uncertainty in the award. That depends on the - - -
PN116
THE SENIOR DEPUTY PRESIDENT: Hang on. Have you finished your section 608 submissions?
PN117
MR STANLEY: I have, yes.
PN118
THE SENIOR DEPUTY PRESIDENT: I'm unclear what you're wanting me to do then. Do you want me to hear everything and if the President decides against your 608 application, then determine the matter, or do you want the 608 application decided before we go onto the ambiguity, merits of your other application?
PN119
MR STANLEY: The latter course.
PN120
THE SENIOR DEPUTY PRESIDENT: So do you want me to go away and have the President decide it, and if he decides against you, we reconvene on another day?
PN121
MR STANLEY: Yes.
PN122
THE SENIOR DEPUTY PRESIDENT: Right.
PN123
MR STANLEY: Having said that, it's necessary to put the submissions as to why there is ambiguity or uncertainty in order for the President to properly assess the question of whether or not there should be a referral to the court.
PN124
THE SENIOR DEPUTY PRESIDENT: That's why I asked you if you had finished with the section 608 application.
PN125
MR STANLEY: What I mean is I've finished addressing section 608. I'm now proposing to address the question of ambiguity or uncertainty for the purposes of the President's consideration of the section 608 application.
PN126
THE SENIOR DEPUTY PRESIDENT: Yes.
PN127
MR STANLEY: Your Honour, the question of ambiguity or uncertainty is obviously a matter of construction. There are plainly conflicting constructions. Can I commence by a consideration of the terms of the on-site award that are applicable and the operation of the relevant provisions of the Fair Work Act. Subclause 17.1 of the on-site award provides as follows:
PN128
The following redundancy clause for the on-site building, engineering and civil construction industry is an industry specific redundancy scheme as defined in section 1 of the NES. In accordance with section 64(4)(b) of the NES, the provisions of subdivision B, redundancy pay, of division 10 of the NES, do not apply to employers and employees covered by this award.
PN129
That obviously refers to the NES as it was prior to its enactment in the Fair Work Act, but the substance of the provisions did not change. Subclause 17.2 defines redundancy for the purposes of the clause to mean "a situation where an employee ceases to be employed by an employer to whom this award applies, other than for reasons of misconduct or refusal of duty." Now, pursuant to section 43 of the Fair Work Act, the main terms and conditions of employment of an employee provided under the Fair Work Act are those set out in the NES and in a modern award or an enterprise agreement or a workplace determination that applies to the employee.
PN130
Section 55 is an important provision, in the MBA's submission. Section 55(1) provides that, "A modern award," inter alia, "must not exclude the National Employment Standards or any provision of the NES." Subsection (2) of section 55 provides that:
PN131
A modern award may include any terms that the award or agreement is expressly permitted to include (a) by a provision of part 2-2 (which deals with the National Employment Standards) or (b) by regulations made for the purposes of section 127.
PN132
Subsection (3) provides, "The NES have effect subject to terms included in a modern award as referred to in subsection (2)," and subsection (4) provides that
PN133
A modern award may also include the following kinds of terms: (a) terms that are ancillary or incidental to the operation of an entitlement of an employee under the National Employment Standards; (b) terms that supplement the National Employment Standards but only to the extent that the effect of those terms is not detrimental to an employee in any respect, when compared to the National Employment Standards.
PN134
Section 55 provides for the interaction between the NES and, amongst other things, the modern award. "A modern award or enterprise agreement must not exclude the National Employment Standards or any provision of the National
Employment Standards." Now, part 2-2 of the act provides for the NES and division 11 of part 2-2 concerns notice of termination and redundancy pay. Subdivision (b) of division 11 which comprises sections 119 to 122, is especially concerned with redundancy pay. Pursuant to section 119(1), redundancy pay is the payment prescribed by section 119(2) to an employee whose employment is terminated -
PN135
(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or (b) because of the insolvency or bankruptcy of the employer.
PN136
Sections 120 to 123 qualifies the entitlement conferred by the NES to redundancy pay. In particular, section 121 provides certain exclusions from the obligation to pay redundancy pay. Section 121(1) provides that section 119 does not apply to the termination of an employee’s employment where "(a) the employees period of continuous service is less than 12 months; or (b) the employer is a small business employer." Relevantly, section 121(2) provides that, "A modern award may include a term specifying other situations in which section 119 does not apply to the termination of an employee’s employment."
PN137
Subsection (4)(b) of section 123 provides that subdivision B of division 11 does not apply to "an employee to whom an industry-specific redundancy scheme in a modern award applies." An industry-specific redundancy scheme is defined in section 12 of the act to mean redundancy or termination payment arrangements in a modern award that are described in the award as an industry-specific redundancy scheme. Part 2-3 of the act concerns modern awards. Section 141 forms part of part 2-3. Section 141 provides for industry-specific redundancy schemes. It provides that a modern award may include an industry-specific scheme if the scheme was included in the award, amongst other things, in the award modernisation process. Section 141(1) includes a note that:
PN138
An employee to whom an industry-specific redundancy scheme in a modern award applies is not entitled to the redundancy entitlements in subdivision B of division 11 of part 2-2.
PN139
Every one of the provisions of the act that I've referred to, except section 43, commenced operation on 1 January this year. Section 43, on the other hand, commenced operation from 1 July last year. The Transitional Provisions and Consequential Amendments Act includes in part 3 of schedule 4, clause 5. Clause 5 provides as a general rule that:
PN140
An employee's service with an employer -
PN141
before 1 January 2010 -
PN142
counts as service of the employee with the employer for the purpose of determining the employee's entitlements under the National Employment Standards -
PN143
except for certain irrelevant matters. That general rule, however, is subject to a limitation in respect of redundancy pay in subclause (4) of clause 5. Subclause (4) at clause 5 provides that the general rule -
PN144
does not apply in relation to an employee and an employer for the purposes of subdivision B of division 11 of the National Employment Standards if the terms and conditions of employment that applied to the employee's employment by the employer immediately before -
PN145
1 January 2010 -
PN146
did not provide for an entitlement to redundancy pay.
PN147
Against that legislative background, the MBA puts the following submissions. The on-site award is the modern award made in accordance with part 2-3 of the act and clause 17 of the on-site award is an industry-specific redundancy scheme included in the on-site award pursuant to section 141. Pursuant to section 121 of the act, subsection (2), the on-site award includes in clause 17 a term which specifies that section 119 does not apply to the termination of employment of an employee subject to the on-site award. By reason of the operation of section 121(2) and section 123(4)(b), section 119 does not apply to an employee subject to the provisions of the on-site award.
PN148
The provisions of clause 17 of the on-site award should, in MBA's submission, be considered a term that supplements the NES in accordance with section 55(4)(b). A supplementary term is a term that increases the benefits prescribed by the NES and that's consistent with note 2 to section 55(4) and the ordinary grammatical meaning of "supplement", which the Macquarie Dictionary relevantly defines as "something added to complete a thing; supply a deficiency, or reinforce or extend a whole." The terms of clause 17 of the on-site award supplement section 119 which prescribes the NES for redundancy pay. It extends the definition of "redundancy" so as to confer a benefit where the NES did not otherwise confer a benefit. In that sense, in the MBA's submission, it is supplemental.
PN149
The proposition that's put against MBA that clause 17 does not supplement the NES but supplants it, must be rejected as being contrary to the terms of section 55 of the act and in particular section 55(1), which provides that a modern award must not exclude the NES or any provision of the NES. MBA New South Wales accepts that the entitlements to redundancy pay conferred by clause 17 of the on-site award is not an entitlement under the NES. Rather, it is an entitlement conferred by an industry-specific redundancy scheme under a modern award pursuant to part 2-3 of the act. The explanatory memorandum cited in the CFMEU's written submission at paragraph 3.4 says no more than this.
PN150
The CFMEU puts the submission that the award derived industry-specific redundancy scheme entitlement does not supplement the NES, but applies instead of or in place of the NES. This reaffirmed by paragraph 36 of the award modernisation request which states:
PN151
The NES excludes employees from redundancy entitlements where their award contains an industry-specific redundancy scheme. An industry-specific redundancy scheme in a modern award will operate in place of the NES entitlement, including the NES redundancy definition in these circumstances.
PN152
In our submission, firstly, the act cannot be construed by reference to the award modernisation request which is made under part 10A of the Workplace Relations Act. The Fair Work Act in the first place cannot be construed by reference to the terms of the Workplace Relations Act. Secondly, the award modernisation request is not an instrument of a kind referred to in section 15AB of the Acts Interpretation Act to which the tribunal can have recourse in interpreting the Fair Work Act.
PN153
Finally, we say in any event whilst in accordance with section 15AB of the Acts Interpretation Act, it's proper for the tribunal to have recourse to the explanatory memorandum in order to interpret the act. The terms of the explanatory memorandum are cited in paragraph 3.4 of the CFMEU's submission. It says no more than that the industry-specific redundancy scheme such as in clause 17 is a term that's conferred under a modern award and doesn't become a term of the NES. None of that undermines in any way the MBA's argument.
PN154
Equally, the MBA accepts that clause 5 of part 3 of schedule 4 of the TPCA Act does not apply to the calculation of an employee's entitlement pursuant to clause 17 of the on-site award. This is because clause 5 of part 3 of schedule 4 of the TPCA Act is concerned with the determination of an employee's entitlements under the NES. The entitlement of an employee to redundancy pay in accordance with clause 17 of the on-site award is not an entitlement under the NES. It is an entitlement under a modern award consistent with subsection (2) of section 55. Clause 5 is concerned with entitlements under part 2-2 of the act, not entitlements under part 2-3.
PN155
This begs the question if clause 5 does not apply, how is the calculation of continuous service in clause 17.3 of the on-site award to be undertaken? In the MBA's submission there is a lacuna in the legislation. There is no equivalent of clause 5 of part 3 of schedule 4 of the TPCA Act in relation to calculating service of the employee for the purposes of determining the employee's entitlement under the modern award. Schedule 5 of the TPCA Act addresses modern awards, but does not include an equivalent of clause 5 of part 3 of schedule 4. This, in the MBA's submission, renders the position problematic.
PN156
Section 141 of the act operates prospectively. Section 141 commenced operation on 1 January 2010. It was not possible for a full bench of the commission to include in a modern award an industry-specific redundancy scheme that operated prior to 1 January 2010. This construction, in MBA's submission, must colour the interpretation of clause 17 of the on-site award in calculating employees' entitlements to redundancy severance pay pursuant to clause 17.3. In doing so, the calculation of continuous service, in the MBA's submission, cannot include any period of service on the part of a relevant employee prior to 1 January 2010.
PN157
MBA puts this submission on the following basis. Firstly, the on-site award only commenced operation on 1 January 2010. Secondly, immediately prior to 1 January 2010, employees whose terms and conditions of employment are subject to the on-site award on and from 1 January 2010, did not enjoy an entitlement to redundancy pay of the kind provided by the industry-specific redundancy scheme in clause 17 of the on-site award, for reasons which are explained by the Full Court of the Federal Court in Yirra v Summerton. Can I provide the tribunal with a copy of that judgment - 181 IR 327.
PN158
THE SENIOR DEPUTY PRESIDENT: Yes.
PN159
MR STANLEY: The majority judgment is that of Graham and Tracey JJ, which judgment commences at page 344 of the report. Your Honour, in order to understand the ratio of the decision, perhaps could just start with the two introductory paragraphs in paragraphs 104 and 105. If your Honour then turns to the relevant conclusion, which is to be found at paragraphs 142 and 143 of the reasons. The position is that consistent with Yirra's case, employees subject to the terms of the National Building and Construction Industry Award 2000, which was one of the predecessor awards to the on-site award and the award that covered the majority of (indistinct) employees subject to the on-site award, did not enjoy an entitlement to redundancy pay of the kind provided by clause 17 of the on-site award in the period from 27 March 2006 to 31 December last year.
PN160
The third basis upon which the submission is put, that in calculating continuous service under clause 17.3 of the on-site award, service on the part of a relevant employee prior to 1 January 2010 should not be included, is the absence of any equivalent transitional provision in respect of the on-site award such as clause 5 of part 3 of schedule 4 of the TPCA Act, which would preserve pre-1 January 2010 service.
PN161
THE SENIOR DEPUTY PRESIDENT: Do they have an entitlement to redundancy pay in any other instrument?
PN162
MR STANLEY: I'll just take some instructions about that. If your Honour pleases, I'm instructed that there is a very small number of employees prior to 1 January this year, particularly in Western Australia, who are now subject to the provisions of the on-site award who enjoyed an entitlement to redundancy pay that was consistent with the TCR definition of redundancy pay rather than the terms of the definition "redundancy" that appears in clause 17 of the on-site award.
PN163
THE SENIOR DEPUTY PRESIDENT: So the effect of Work Choices was that all other building workers, unless they were covered by an agreement that provided for redundancy pay, had no entitlement to redundancy pay for several years?
PN164
MR STANLEY: Had no entitlement to redundancy pay in accordance with the definition in clause 16 of the Construction Industry Award 2000.
PN165
THE SENIOR DEPUTY PRESIDENT: That's why I asked did they have an entitlement to redundancy pay under any other instrument.
PN166
MR STANLEY: Yes, and there was a small number under other instruments that did have an entitlement to redundancy pay which differed from the entitlement under the 2000 award.
PN167
THE SENIOR DEPUTY PRESIDENT: Yes, but you're telling me that apart from that small group in Western Australia and unless presumably they had an entitlement pursuant to a workplace agreement, they had no entitlement to redundancy pay for several years.
PN168
MR STANLEY: That's so, yes. Mr Calver instructs me that the proposition I've put may not be as bald as I've put it.
PN169
THE SENIOR DEPUTY PRESIDENT: No, I didn't think it was either.
PN170
MR STANLEY: Your Honour, can we have leave perhaps to file a further written submission that just develops a more comprehensive answer to your Honour's question in due course?
PN171
THE SENIOR DEPUTY PRESIDENT: Yes.
PN172
MR STANLEY: If the tribunal pleases, in paragraph 3.6 of the CFMEU's written submission - - -
PN173
THE SENIOR DEPUTY PRESIDENT: Can I just add to that, Mr Stanley? The extension of the question of course is if your application was to be successful, then what happens to the service of an employee prior to 1 January? For example, I've been working for the same employer for 10 years. Your application would have that only the last year, if I was dismissed on 2 January 2011, would count. Would I have any entitlement for the other nine years under any other instrument?
PN174
MR STANLEY: No. As a bald proposition, no.
PN175
THE SENIOR DEPUTY PRESIDENT: Right.
PN176
MR STANLEY: The explanation for that of course is that there was no entitlement prior to 1 January.
PN177
THE SENIOR DEPUTY PRESIDENT: That's why I asked the question about was there any entitlement and you were going to give me further information on that.
PN178
MR STANLEY: Yes. The short answer to your Honour's question is that for the overwhelming majority of employees subject to the on-site award, there was no entitlement to redundancy pay in the period from 27 March to 31 December. Can I come back to paragraph 3.6 of the CFMEU's written submission. In paragraph 3.6, the CFMEU contends that there's no lacuna as submitted by the MBA because the award modernisation request permitted the full bench to include transitional arrangements in modern awards. However, the fact is there was no transitional arrangement included in the on-site award relevant to clause 17 of the very kind found in clause 5 of part 3 of schedule 4 of the TPCA Act.
PN179
Indeed, the full bench's decision of 2 September last year not to include additional transitional provisions in the on-site award dealing with clause 17, may have been influenced by the CFMEU's submission which is set out in paragraph 3.21 of its written submission in this matter. If I can just take the tribunal to the CFMEU's submission at paragraph 3.21. The tribunal will note that in the passage cited at 3.7 of the citation in paragraph 3.21 of the submission, the CFMEU put this submission to the full bench:
PN180
As the award industry-specific redundancy scheme is to apply in place of the NES, we submit that the same transitional arrangements should apply. That is to say, service prior to the commencement day of the modern award should apply except in those submissions where the terms and conditions of employment that existed prior to the commencement date did not provide for any entitlement to redundancy pay, which would be limited to award free employees or those covered by an AWA or agreement that did not provide for redundancy pay.
PN181
Now, it can't be said with any confidence what persuaded the full bench not to include any additional transitional provisions in the on-site award dealing with clause 17, but if it failed to do so in reliance upon the proposition set out in the CFMEU's submission in respect of transitional arrangements, then that submission is plainly based on a misunderstanding or ignorance of the effect of the Full Court's judgment in Yirra v Summerton.
PN182
In that regard, too, I note the reliance placed by the CFMEU in paragraph 3.11 of its written submission in this matter upon a passage from the judgment of Spender ACJ in Yirra v Summerton. We make the point that the tribunal can't place much reliance upon that passage given that his Honour was in dissent in that case and his reasons were diametrically opposed to the approach of the majority. The submissions put by the CFMEU that Yirra v Summerton is irrelevant for the current proceedings, in our submission that cannot be so and is implicitly contradicted by the approach that is reflected in the CFMEU's own submission to the full bench which was considering transitional arrangements in respect of the on-site award.
PN183
Moreover, the submission of the CFMEU in paragraph 3.11 of its written submissions in this matter to the effect that the Workplace Relations Act no longer determines what can or cannot be included in a modern award and it's only the provisions of the Fair Work Act that are now relevant, is contradicted by its own submission which refers extensively in paragraphs 3.6, 3.7 and 3.10 to the effect of the Workplace Relations Act on this very question. In any event, in our submission the construction of clause 17 considered in its statutory context excludes from the calculation of continuous service, any service prior to the making of the award in circumstances where there was, prior to 1 January 2010, no entitlement of the kind to redundancy pay applicable to employees subject to the on-site award. In our submission, this construction meets the test in Tenix that it is arguable, such that the tribunal can be satisfied that the provision under consideration is ambiguous or uncertain, may it please the tribunal.
PN184
THE SENIOR DEPUTY PRESIDENT: Ms Matheson?
PN185
MS MATHESON: Thank you, your Honour. HIA appears in support of the application made by the applicant to secure a conclusive interpretation of clause 17 of the award regarding the calculation established under that industry-specific redundancy scheme. HIA relies on its written submissions in this matter and supports the applicant's submission that a variation of the nature in the application would provide the desired level of certainty regarding the operation of clause 17.
PN186
In particular, we submit that in calculating the employees' entitlements to redundancy pay, the calculation cannot (indistinct) prior to the operative date of the award. HIA submits that this is appropriate because, as noted by the applicant in paragraph 3.3.10 of its submission and by the ACI at paragraph 5 of its submission, there were a number of employers now covered by the Building and Construction General On-Site Award who didn't enjoy the entitlements for redundancy pay of the kind prescribed by clause 17 of the award.
PN187
We note the CFMEU at paragraph 3.2 infers that the application lacks merit as the transitional provisions relating to redundancy haven't been included in the award or transitional provisions in the nature that were sought by the CFMEU. However, your Honour, we submit this does not mean that there is no uncertainty or ambiguity. In fact it compounds this uncertainty and ambiguity. The CFMEU had sought to include transitional provisions in the award, as per paragraph 3.2.1 of its submission, and that such provisions were not included. We do not know whether the full bench's decision not to include the redundancy provisions was not to recognise service because it was automatically taken not to have effect prior to the award's operative date.
PN188
HIA does submit that this was the plausible outcome given the reliance on the provisions of the National Building Construction Industry Award in formulating the modern award as it stands today and the fact that those bound by that award did not enjoy the redundancy entitlement that is now existent in the modern award. In fact HIA submits that where an instrument terminates, the benefit conferred by that instrument can no longer apply in the absence of some provision within the new instrument or the act expressly preserving the entitlement, as the Fair Work (Transitional Provisions and Consequential Amendments) Act does in the case of termination of an agreement based transitional instrument and on transmission of business, as well.
PN189
HIA is a leading industry association. We represent in the vicinity of 40,000 members in the building construction industry - or one of the largest employer associations. We do provide a service where people can call us for guidance and clarification on a number of issues, including the calculation of termination entitlements. Ambiguity and uncertainty within the award like this, certainly - it would be the interests to remedy them for the benefits of both employers and employees. In this regard, we submit that a binding opinion on this matter or a formal variation to the award will remove the ambiguity and uncertainty that currently exists. In this regard, HIA supports those submissions made by the applicant today, if it pleases the tribunal.
PN190
THE SENIOR DEPUTY PRESIDENT: Thank you. What I'll do is I'll mark all the submissions that have been filed. Some of them go beyond this issue, but it's convenient to mark them all now. I'll mark the submission of the Master Builders, which is dated - do you want me to mark that letter that was dated 5 October?
PN191
MR STANLEY: Yes. Thank you, your Honour.
PN192
THE SENIOR DEPUTY PRESIDENT: I'll mark the letter from the Master Builders Australia to the President as MBANSW1.
PN193
EXHIBIT #MBANSW1 LETTER FROM MASTER BUILDERS AUSTRALIA TO THE PRESIDENT DATED 05/10/
THE SENIOR DEPUTY PRESIDENT: And the submission of 5 November?
PN195
MR STANLEY: Yes, thank you.
PN196
THE SENIOR DEPUTY PRESIDENT: MBANSW2.
PN197
EXHIBIT #MBANSW2 MBA SUBMISSION DATED 05/11/
THE SENIOR DEPUTY PRESIDENT: Did the HIA file a submission?
PN199
MS MATHESON: Yes, your Honour. I think 5 November is the date of submission from - - -
PN200
THE SENIOR DEPUTY PRESIDENT: Here it is. Yes, I see it here. HIA1 for the 5 November 2010 submission.
PN201
EXHIBIT #HIA1 HIA SUBMISSION DATED 05/11/2010
PN203
EXHIBIT #ACCI1 SUBMISSION FROM ACCI
THE SENIOR DEPUTY PRESIDENT: And one from the AFEI, which I will mark as AFEI1.
PN205
EXHIBIT #AFEI1 SUBMISSION FROM AFEI
THE SENIOR DEPUTY PRESIDENT: I'll mark the union's while I'm at it. CFMEU, dated 26 November 2010, I'll mark as CFMEU1.
PN207
EXHIBIT #CFMEU1 SUBMISSION FROM CFMEU DATED 26/11/2010
THE SENIOR DEPUTY PRESIDENT: CEPU, I'll mark as CEPU1.
PN209
EXHIBIT #CEPU1 SUBMISSION FROM CEPU
THE SENIOR DEPUTY PRESIDENT: AMWU, I'll mark as AMWU1.
PN211
EXHIBIT #AMWU1 SUBMISSION FROM AMWU
THE SENIOR DEPUTY PRESIDENT: AWU, I'll mark as AWU1.
PN213
EXHIBIT #AWU1 SUBMISSION FROM AWU
THE SENIOR DEPUTY PRESIDENT: That covers it. We'll take a short adjournment.
PN215
<SHORT ADJOURNMENT [11.52AM]
PN216
<RESUMED [12.08PM]
PN217
THE SENIOR DEPUTY PRESIDENT: Mr Kentish?
PN218
MR KENTISH: Thank you, your Honour. The CEPU is largely content to rely on the written submissions which have now been marked as CEPU1, which were lodged on 26 November 2010. There are just a couple of additional matters that I wanted to draw the tribunal's attention to. I'm not sure that the matters have been brought to the tribunal's attention so far. I apologise if they are in the written submissions of one of the other parties, but I was unable to find it. That is lest there be any question about the intent of the award modernisation full bench, clause 17.7 would appear to shed some light on the intention of the full bench. It reads at (a):
PN219
Where a business is before or after the date of this award, transferred from an employer in a subclause called The Old Employer to another employer and this being a subclause called The New Employer, and an employee who at the time of such transfer was an employee of the old employer in that business becomes an employee of the new employer, (i) the continuity of the employment of the employee will be deemed not to have been broken by reason of such transfer and (ii) the period of employment which the employee has had with the old employer or any prior old employer, will be deemed to be service of the employee with the new employer.
PN220
Your Honour, we submit that clearly shows that the intention of the full bench and indeed the award itself is quite clear insofar as service prior to 1 January 2010 is intended, and in fact can be used to calculate an entitlement which has arisen since 1 January 2010. We also note that subclause 17.7 would fit uncomfortably with the proposed variation of the applicant which provides a new 17.8, "Service under this clause 17 must be calculated from 1 January 2010 and where an employee is engaged after that date, from the date of engagement." That would certainly sit not well with clause 17.7, in our submission.
PN221
The other matter I wish to raise is that the CEPU does not consider that the MBA New South Wales has pointed to any reason why there cannot be the entitlements provided for in a modern award which didn't exist prior to 1 January 2010. There have been extensive submissions going to redundancy entitlements which are reliant upon in the NES, but the parties all appear to be in agreement that what we are talking about is an award entitlement in this instance. We say that the MBA New South Wales has provided no reason why service cannot be considered as part of an entitlement which has arisen since 1 January 2010.
PN222
We further say it's clear in the context of the award as a whole that events which occurred prior to 1 January 2010, may be used to calculate the entitlements under the modern award regardless of whether the employees had entitlements prior to it, on 31 December, or before that time. In particular we note the wages paid to trainees under the award is in part dependent on the number of years out of school that a trainee has been. This cannot be interpreted, we say, in any sensible way as years out of school after 1 January 2010, so regardless of if a trainee started in their first year today, we would say that you would look at the number of years out of school that they had been and you would go back further than 1 January 2010.
PN223
The MBA submission would also appear to have fourth year apprentices back in their first year of their apprenticeship, because presumably service which was given to the employer prior to 1 January 2010 wouldn't count. We say that is obviously a nonsense, but that is in effect what the MBA New South Wales are pressing. Other than that, we're content to rely on what has been put in writing and the other submissions of the unions, if it pleases.
PN224
THE SENIOR DEPUTY PRESIDENT: Mr Kentish, I might have missed this but what do you say about the section 608 application?
PN225
MR KENTISH: The section 608 application, we oppose the matter being referred. We deal with that in our written submissions. Nothing that I've heard from the MBA New South Wales today would affect or cause us to add to the matters which are pressed there, if it pleases.
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THE SENIOR DEPUTY PRESIDENT: Thank you. Mr Maxwell?
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MR MAXWELL: Thank you, your Honour. Similar to the CEPU, we mainly seek to rely on our written submissions. We note that submissions of Mr Stanley mainly reflect the written submissions of the MBA in their letter of 5 October 2010 and there wasn't anything of significance that we saw that was added in submissions today. Your Honour, even though we submit that the decision in Yirra is not relevant to these proceedings, we would seek to disagree with the interpretation put on that decision by the MBA New South Wales. We say the decision in Yirra dealt with a situation where an employee terminated his employment by a decision of the employee and then sought to claim a redundancy benefit.
PN228
In Yirra, the court determined that in that situation it wasn't a severance payment and the employee did not have an entitlement to redundancy under the award, because to the extent that it allowed for redundancy payments on the - "self-termination" is probably the wrong word, but in a situation where the employee terminated their employment on their own decision, that they weren't entitled to a redundancy benefit, but in other situations where termination was as a result of a decision of the employer to make the employees redundant, then they still had an entitlement to redundancy under the award. That's reflected in the quote that's made from the decision of Spender ACJ and it's also found in the last sentence of paragraph 142 of Yirra, where the majority said that:
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It therefore ceased to have effect on 27 March 2006, to the extent that it contained provisions outside section 513(1)(k) and it did not require Yirra to make a redundancy payment to Mr Summerton.
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So to the extent that the award provision provided for a redundancy payment where the employee terminated the employment, they said that that was not allowable and therefore there was no redundancy payment, but it didn't preclude a redundancy payment under the award where the termination was at the initiative of the employer. We say that despite Yirra, there was still the entitlement for employees to receive a redundancy payment where the termination was at the initiative of the employer.
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THE SENIOR DEPUTY PRESIDENT: Let me just pursue on that a little. What you say is that - and this was the redundancy pay provision under the National Building and Construction Award, was it?
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MR MAXWELL: That's correct.
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THE SENIOR DEPUTY PRESIDENT: Employees that prior to 1 January 2010 were covered by that award, had an entitlement to redundancy pay if the termination was at the initiative of the employer.
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MR MAXWELL: That's correct.
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THE SENIOR DEPUTY PRESIDENT: Right. There is some contention in this, I think, that the provision in the modern award - whether that's similar to that within the National Building and Construction Award.
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MR MAXWELL: My understanding is that the definition of "redundancy" under both awards is identical.
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THE SENIOR DEPUTY PRESIDENT: Okay. Do you know whether there was redundancy provisions in state instruments?
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MR MAXWELL: The redundancy provisions in state instruments, in the majority of cases they were identical to the provisions in the Construction Award, except I think apart from Western Australia. To the extent that those provisions were reflected in a NAPSA, then they would be caught up in the Work Choices amendments. Employees that were covered by a state award or I think it's a division 2(b) award, and are now part of - well, would be covered by the federal award I think from 1 January - they would have had the full entitlement under the state award to the extent that it reflected the construction industry standard.
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THE SENIOR DEPUTY PRESIDENT: Is the effect of that submission that employees who were covered by either the National Building Trades Award or a NAPSA, and those NAPSAs largely reflected what was in the National Building Trades Award in respect of redundancy entitlements - - -
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MR MAXWELL: Yes.
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THE SENIOR DEPUTY PRESIDENT: Those employees, if they were terminated at the initiative of the employer, had an entitlement to redundancy pay prior to 1 January 2010.
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MR MAXWELL: That's correct.
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THE SENIOR DEPUTY PRESIDENT: So if they had been dismissed on 30 December 2009 by the employer, do you say they would have got a redundancy pay similar to what's in the modern award?
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MR MAXWELL: That's correct.
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THE SENIOR DEPUTY PRESIDENT: That would be most employees in the building industry, wouldn't it?
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MR MAXWELL: That's correct, your Honour. That's the point we made in our submission in June last year. It was that the only employees not covered by that situation would be employees that were award free; so, in other words, those that were employed by a new company that started post-March 2006.
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THE SENIOR DEPUTY PRESIDENT: Yes.
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MR MAXWELL: Or if they were covered by an agreement or an AWA that excluded redundancy.
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THE SENIOR DEPUTY PRESIDENT: Yes, right. There wouldn't have been many agreements that did that, would there?
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MR MAXWELL: I believe there were some AWAs that did that and some agreements did do that, but not that many.
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THE SENIOR DEPUTY PRESIDENT: Right.
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MR MAXWELL: I think some of them may have been MBA members, I'm not sure.
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THE SENIOR DEPUTY PRESIDENT: I see. There are provisions in the act - and I can't tell you the section, but I know they're there - which effectively preserve an entitlement that one had prior to 1 January 2010, but presumably the argument in this instance is, well, if you weren't made redundant, you didn't accrue it. You're shaking your head.
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MR MAXWELL: Sorry. Your Honour, we submit that approach to the situation is incorrect, in that the entitlement arises if the employee is made redundant. That is the circuit breaker. That is the switch. If you were terminated prior to 1 January 2010, then the old instrument would apply. If you were terminated after 1 January, then the modern award applies. That is the switch; it's the termination. It's not the definition of continuous service that's important, it's the decision to terminate.
PN255
THE SENIOR DEPUTY PRESIDENT: No, you misunderstand me. As I understand it, there are provisions - and they might be in the transitional legislation, but in some relevant legislation - to this effect: if the National Building Trades Award had said I should be paid $800 a week and I was being paid $600 a week, then as I understand it there are provisions in the act which have the effect that the application of the new act doesn't override your entitlement to what effectively was a breach of a previous award.
PN256
In this instance though one presumes it wouldn't happen, because if you were terminated prior to 1 January, then - well, I suspect if you were terminated prior to 1 January and you hadn't been paid your redundancy entitlements, that provision would save you, but if you were terminated after, you didn't have that entitlement. In a sense, it didn't accrue because you weren't made redundant.
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MR MAXWELL: We say in that regard that if you're terminated after 1 January, then your wage rate is determined by the modern award and then the transitional arrangements under the modern award would pick up that difference and take home pay orders, as well, to some extent; but we would say you'd still count the service that applied prior to 1 January.
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THE SENIOR DEPUTY PRESIDENT: Well, the upshot of your submission, presumably, is you would say that because the provision effectively existed for the vast majority of employees prior to 1 January, to agree to the application that your service prior to 1 January doesn't count, is to deny the employees something that they wouldn't have been denied if the National Trades Award and the NAPSAs had continued.
PN259
MR MAXWELL: That's correct. It was also a disadvantage to employees compared to those that applied the NES standard. The other point in regard to this issue that we'd make is that prior to March 2006, the employees clearly had an entitlement to redundancy pay under the old award. We also note that the full bench in dealing with the whole issue of redundancy in the award modernisation process, their starting point was, I think, the 2004 full bench redundancy decision; so the approach of the full bench in the award modernisation was to look at what was the situation pre Work Choices. That was a major influence in their dealings on redundancy.
PN260
We'd also note that in terms of the decision in Yirra, this whole issue was before the full bench during the award modernisation proceedings. It was also before them in dealing with the transitional issues. We note that whilst we did submit that a transitional provision should be inserted into the modern award dealing with redundancy, when the full bench was dealing with the transitional issues, we note that none of the employer organisations actually supported the submission of the CFMEU. If they had have done, then maybe we wouldn't be here today, but that was a decision of their choosing. Your Honour, I don't think there's anything I can really add to our written submission at this stage and so we'd seek to rely on the submissions that we've made.
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THE SENIOR DEPUTY PRESIDENT: Thank you. Mr Noble?
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MR NOBLE: I'll be similarly brief. We also rely on our written submissions and I won't go over those again. I'd just like to respond in relation to the referral to the Federal Court of the question of law. Mr Stanley was saying that you don't need any sort of factual issue for the President to exercise a discretion and refer the matter. I would contend that that would be an artificial construct. Your Honour, I found a case by Wheelan C. It's print number 908224. It's a decision in 2001 of the AIRC. Now, I wasn't able to print it off last night. It just kept spinning around on the database and unfortunately I wasn't able to download it, but I'll forward it to your chambers later.
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THE SENIOR DEPUTY PRESIDENT: Just give us the print number and we'll find it.
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MR NOBLE: Okay. It's 908224.
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THE SENIOR DEPUTY PRESIDENT: 908224. PR, is it?
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MR NOBLE: That's right.
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THE SENIOR DEPUTY PRESIDENT: Thank you.
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MR NOBLE: And that's on 28 August 2001. In that decision, he refers in part to an earlier decision by Riordan SDP. It's an application by the State of New South Wales and Others where Riordan SDP set out the history of section 46 of the Industrial Relations Act as it was then. He concluded that the power was intended to find a discretion. He further concluded that:
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The power to refer a question of law for the opinion of the Federal Court requires the matter of practical necessity at least some review of the facts, and probably a comprehensive review in most cases, before a proper case or question can be formulated for the opinion of the court.
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At paragraph 12, Wheelan C states:
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It is the normal incidence of the commission's statutory functions to consider and determine issues of jurisdiction. The effective operation of the commission will be substantially frustrated if every case which involved a question of jurisdiction which had not been determined by a court were to be referred to the court as a question of law. Given the regularity with which the legislation is amended, such cases could arise frequently.
PN272
He goes on a little bit further. Under section 608, it's now the discretion only of the President to make that referral and the AMWU would submit that that should be interpreted as being a reasonably high threshold, and some onus should be attached to that. I think what we've been presented with by the MBA New South Wales hasn't borne that out and I don't think the President should exercise a discretion, but that's a matter for the President.
PN273
In relation to the other submissions just in closing, your Honour, I would support what Mr Maxwell said; that the full bench considered fully the submissions during the award modernisation process and reached its decision taking into account those submissions. What is being sought through this application is what was argued before the full bench. No new material has been brought forward. There haven't been any changed circumstances which would be persuasive in effecting a variation of the award. The decision of the full bench was made within the framework of the modern award's objective and in light of the submissions of the parties. We'd say on the material before the tribunal, the AMWU submits that it's not persuasive enough to grant the variation which would succeed in achieving this object.
PN274
Mr Stanley referred to the Tenix decision. At paragraph 31 - which is the last part I think he quoted - "The commission will generally err on the side of the finding of ambiguity or uncertainty where there are rival contentions advanced," and the next word is "and", and that "and" is emphasised, "and an arguable case is made out." I would submit that no arguable case has been made out. However, if the tribunal finds that there is some ambiguity or uncertainty but is of the belief that the MBA New South Wales' contention is wrong, then the tribunal may exercise its discretion to vary the award and make clear that the service prior to 1 January 2010 should be taken into account.
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THE SENIOR DEPUTY PRESIDENT: Thank you. Mr Buntman?
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MR BUNTMAN: The AWU has nothing further to add other than our filed and oral submissions today, your Honour.
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THE SENIOR DEPUTY PRESIDENT: Thank you, Mr Buntman. Mr Stanley?
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MR STANLEY: If the tribunal pleases, I'll just be brief. Your Honour, I'd just address the CEPU's additional submission and reliance upon the terms of clause 17.1 of the award. Your Honour will note that clause 17.7 is, as the CEPU's submission properly identifies it, a provision concerned with the transfer of business. It is not a transitional arrangement provision. While the submission put by the CEPU is a relevant matter for consideration, it's not a complete answer to the argument and it would be unlikely that the full bench had intended to achieve the result pressed for by the unions, as it were, by a side wind in slipping a particular phrase into the transfer of business provision. While we accept that it's a relevant matter for consideration, it can't be, as it put, a complete answer.
PN279
If I can just turn to the CFMEU's submission in relation to the effect of the majority judgment in Yirra v Summerton, firstly. The relevant passage is relied upon in paragraph 142 of the reasons for decision in the report in volume 182 of the Industrial Relations Report, where their Honours in the joint judgment in the last sentence in that paragraph say:
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Clause 16 ceased to have effect on 27 March 2006 to the extent that it contained provisions falling outside section 513(1)(k) and it did not require Yirra to make a redundancy payment to Mr Summerton.
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It is the submission of MBA New South Wales that the relevant provision - namely, clause 16 - did fall outside section 513(1)(k), because if your Honour looks to the terms of clause 16 which are set out in paragraph 12 of the judgment, clause 16.1 relevantly contained the definition of "redundancy". Then if your Honour looks to paragraph 16 of the judgment, you'll see the relevant extract from section 513 of the act. Subsection (1)(k) provided that:
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Subject to this part, an award may include terms about the following matters - allowable award matters only: redundancy pay within the meaning of subsection (4) -
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and then subsection (4) is set out. Subsection (4) is completely inconsistent with the terms of clause 16.1. Accordingly, in our submission, clause 16 was a provision that fell outside section 513(1)(k) and on that basis we - - -
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THE SENIOR DEPUTY PRESIDENT: You're suggesting the whole clause was struck down, are you?
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MR STANLEY: Yes.
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THE SENIOR DEPUTY PRESIDENT: That's not what they say.
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MR STANLEY: Well, they say "to the extent that", and that is the extent.
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THE SENIOR DEPUTY PRESIDENT: That therefore it ceased to have effect to the extent that it contained a provision falling outside 513(1)(k).
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MR STANLEY: Yes. That's our submission, if your Honour pleases. It did fall outside it. We are content, however, to pick up the point that was made by the CFMEU. As Mr Maxwell puts it, the employers before the full bench did not support the CFMEU's submission to the full bench in relation to transitional arrangements and, if they had, perhaps we would not be here now. Well, that submission, with respect, we say just reflects the fact that there is ambiguity or uncertainty and that's why we we're here now.
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The last point in relation to the AMU's submission, even accepting what fell from Wheelan C in that matter, doesn't detract from the proposition that there is a question of law that arises in the matter before the tribunal which, for the reasons we've put, the President should properly refer to the court. Unless there's anything further I can assist the tribunal with, may it please the tribunal.
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THE SENIOR DEPUTY PRESIDENT: All right. I'll refer the matter to the President for his decision in respect to the section 608 matter. I'll now adjourned.
<ADJOURNED INDEFINITELY [12.38PM]
LIST OF WITNESSES, EXHIBITS AND MFIs
EXHIBIT #MBANSW1 LETTER FROM MASTER BUILDERS AUSTRALIA TO THE PRESIDENT DATED 05/10/ PN194
EXHIBIT #MBANSW2 MBA SUBMISSION DATED 05/11/ PN198
EXHIBIT #HIA1 HIA SUBMISSION DATED 05/11/2010 PN202
EXHIBIT #ACCI1 SUBMISSION FROM ACCI PN204
EXHIBIT #AFEI1 SUBMISSION FROM AFEI PN206
EXHIBIT #CFMEU1 SUBMISSION FROM CFMEU DATED 26/11/2010 PN208
EXHIBIT #CEPU1 SUBMISSION FROM CEPU PN210
EXHIBIT #AMWU1 SUBMISSION FROM AMWU PN212
EXHIBIT #AWU1 SUBMISSION FROM AWU PN214