AUDIO MALFUNCTION [10.01 AM]

PN1

DEPUTY PRESIDENT GOSTENCNIK: Mr Wood, similarly for the respondent?

PN2

MR S WOOD: To the extent the permission hasn't already been granted in the directions hearing of 11 October 2019, we are, Deputy President.

PN3

DEPUTY PRESIDENT GOSTENCNIK: Yes, all right. Well to the extent that it hasn't, and assuming there's no opposition, we're satisfied having regard to the complexity of the matter the matter will be dealt with more efficiently if we were to grant permission to each of the parties to be represented by a lawyer and we do so. Yes, Ms Howell, shall we deal with the issue of the amendment to the grounds of appeal first?

PN4

MS C HOWELL: Yes, thank you. If it please the Commission.

PN5

DEPUTY PRESIDENT GOSTENCNIK: I gather that's not opposed?

PN6

MR WOOD: No, Deputy President.

PN7

DEPUTY PRESIDENT GOSTENCNIK: Permission to amend is granted, Ms Howell.

PN8

MS HOWELL: Thank you. If it please the Commission, once the administrative matter - in the appeal book, the second decision of Beaumont DP does not have the agreement attached. If it's convenient I might just hand up a copy which actually has the agreement attached.

PN9

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN10

MS HOWELL: In case the Commission doesn't have enough paperwork already.

PN11

DEPUTY PRESIDENT GOSTENCNIK: So this is behind tab 4 of volume 1?

PN12

MS HOWELL: Tab 2 is the decision on 16 September, if it please the Commission.

PN13

DEPUTY PRESIDENT GOSTENCNIK: Yes, all right. You can take it that the Members of the Bench, Ms Howell, have had an opportunity to read the outlines of submissions that have been filed, albeit not in compliance with the practice direction.

PN14

MS HOWELL: Yes, I apologise for that.

PN15

DEPUTY PRESIDENT GOSTENCNIK: That's all right.

PN16

MS HOWELL: If it please the Commission, I did try to keep my submissions in‑chief brief.

PN17

DEPUTY PRESIDENT GOSTENCNIK: Yes. Perhaps it's the double‑spacing that makes it difficult to meet the 10‑page limit.

PN18

MS HOWELL: In respect of the reply, I can only quote Wright J, who used to say if I had more time I could have written less.

PN19

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN20

MS HOWELL: If I could just address two matters briefly about the way the appeal grounds logically should be considered, and then I'll turn briefly to each of the appeal grounds themselves, and I also apologise if I'm a little bit croaky. The smoke in Sydney is quite something.

PN21

DEPUTY PRESIDENT GOSTENCNIK: Yes, I was there last week and it's a bit like downtown Hong Kong sometimes.

PN22

MS HOWELL: So I'll certainly try to talk less because of that, if it please the Commission.

PN23

DEPUTY PRESIDENT GOSTENCNIK: Very much so.

PN24

MS HOWELL: The first is the order of consideration of the grounds, and this really arises because the parties have addressed the grounds in different sequence.

PN25

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN26

MS HOWELL: The grounds by overview relate to the all reasonable steps under section 180(5): the question of the undertaking, the minor procedural error, genuine agreement, and fairly chosen, and we say that's in broad terms the appropriate sequence to deal with the grounds, that you would start with the all reasonable steps requirements and identify whether there are any defaults in that respect, additional to the default that the Deputy President found, and would then proceed to the question of undertaking, minor procedural error, et cetera. That's how we say they should logically be dealt with. The respondent in its submissions seems to deal in a different order, that is, dealing with the undertaking question first and then assessing the all reasonable steps requirement, effectively through the prism of the undertaking; so all reasonable steps in July 2018 are then assessed by reference to the undertaking accepted in September 2019. We say the obvious reason why our approach is correct is because section 180(5) and the question of defaults under that section, first of all, would potentially be determinative of the outcome of the appeal in itself, but secondly, if we're right that there additional defaults to that which the Deputy President found, then that would have an impact on every other ground, with the exception of the fairly chosen ground. So we say it's logical to deal first with section 180(5). We do say that on either approach, even if the respondent's approach is taken, error is demonstrated, but in any event we say logically one would start with section - - -

PN27

DEPUTY PRESIDENT GOSTENCNIK: Ms Howell, would you like a glass?

PN28

MS HOWELL: Yes, it's a little bit unseemly, isn't it.

PN29

DEPUTY PRESIDENT GOSTENCNIK: It is, yes. We'll see if we can find some glasses.

PN30

MS HOWELL: Thank you.

PN31

DEPUTY PRESIDENT GOSTENCNIK: Yes, go on.

PN32

MS HOWELL: The second brief point I want to make about the appeal grounds is the relationship between relevant considerations and the satisfaction not available type grounds, and again we say it's logical to deal with the relevant considerations first and not as the respondent has done, effectively deal with that as an afterthought, for the obvious reason that if relevant considerations were not taken into account then already error is established, and it makes no sense to first ask was a satisfaction properly reached and then go back and say well even if it was were relevant considerations omitted. So again, we say the Commission would first look at whether relevant considerations were not taken into account, and if the answer to that is that no error is demonstrated, then one would go on rationally to the second, the question of whether there was other error in reaching of the satisfaction.

PN33

So with those two preliminary points, I then go to the question of all reasonable steps. This is a straightforward argument of the kind which the Fair Work Commission is very familiar. It's uncontroversial, we say, that all reasonable steps must be taken by reference to matters which include the nature of the changes brought about by the agreement. We deal with this matter broadly in our submissions at 22 to 51, and our reply submissions at 29 to 86. The applicable instrument is the award, and we say that where changes are brought about by the agreement, at least if those changes are not trivial, then those changes will be relevant considerations in considering whether all reasonable steps were taken, and our short submission is that the Deputy President did not identify or analyse the changes brought about by the agreement and therefore necessarily did not have regard to them in assessing compliance with section 180(5). Could I take the Commission briefly to the Deputy President's first decision?

PN34

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN35

MS HOWELL: Which is behind tab 3. The Deputy President dealt with this issue generally at paragraphs 117 to 150, and if I could first go to paragraph 119, I'm just going to pick out what we say are the most relevant paragraphs on this issue. The Deputy President there identifies the complaint of the union, and the Deputy President then proceeds in the succeeding paragraphs to consider some of the evidence, and then at paragraph 127 makes the observation which the respondent relies on, which is:

PN36

An approach where comparisons are drawn with the relevant award will not always be necessary to conclude that all reasonable steps were taken -

PN37

et cetera. The difficulty, in my submission, is that the Deputy President having made that statement doesn't identify when such a comparison will and will not be required. Another statement to similar effect also relied upon by the respondent is at 129:

PN38

However it is not the case that the employer is to provide an explanation that specifically addresses each and every term of an enterprise agreement in forensic detail.

PN39

We don't take issue with those statements as general propositions, but the difficulty is they weren't applied, in our submission, to the facts that were before the Deputy President. At paragraph 140, the Deputy President considers the experience of the two employees as purported by Karijini. There is no dispute that the employees had been in the industry for some years, but there was no evidence that they were familiar with the terms of the Mining Industry Award, which was the reference instrument. The highest the evidence got was that they were told the Mining Industry Award applied, and they had worked under instruments - other agreements which have the award as a reference instrument. Even if you're working in the industry, the award is a safety net. There's no reason to assume that because you work in the industry you're going to be familiar with the nuts and bolts of the award. So that context identified by the Deputy President at 140, really the extent of the evidence is as noted in the last sentence that the two employees were informed that that was the reference award.

PN40

In order to really get to grips with whether a comparison with the award was required, in my submission the Deputy President had to get to grips with the differences between the two instruments, and in my submission had she done that she would have found that there were significant differences, and detriments, some of which were not identified in the F17, which reinforces the need for care in making sure that those provisions were properly explained. And it's the applicant's submission, the CFMMEU's submission, having regard to the factors which we list at paragraph 36 of our submissions in‑chief, and I don't need to take the Commission to them, a comparison of at least the significant changes between the award and the agreements was a reasonable step and therefore necessary, and we've identified some of the significant differences in schedule 3 to our submissions, and we further address them in schedule 1 to our reply. Explanation of those matters was a reasonable step, in my submission, and failure to take into account those differences was a failure to take into account relevant considerations.

PN41

If I can just comment briefly on the major issues, we first make the general point that identification of the effect of the terms is not confined to detriment. That much is obvious, and we take issue with the respondent on that. Categories of employment, which we deal with at 38 to 39 of our submissions, brought about a significant change from the award, because permanent employment was excluded and maximum term employment was included in the agreement, and I should add that the Commission will have read about the TRRC employees and will hear a little bit about them in my oral submissions. They were covered by a different instrument, which is in the appeal authorities - I think it's tab 43. In any event, that agreement specifically excluded maximum term employment. So the employees were clearly concerned about the TRRC employees, and I'll take the Commission to that evidence, but the proposed agreement significantly differed from both the award and the agreement which covered all of the other employees who were working at Roy Hill. This change was obviously significant to the employer, because it made a change from both the award and from its previous agreement as to the categories of employment covered. It was potentially significant to the employees, particularly when redundancy is considered, because as a permanent employee you would be entitled to redundancy if the Roy Hill contract wasn't renewed in 2022. As a maximum term employee you would have no such entitlement, and I'll come to that issue, but in any event it was a significant change, something of which the employees reasonably should have been made aware.

PN42

The second issue which we talk about in our submissions is the issue of meal breaks. Clause 8 of the agreement deals with meal breaks. It's a very short provision. We deal with this in our submissions at 40 and in reply at 46, and I don't repeat those submissions, but even the respondent admits that the changes to the meal break provision involve the detriments, which wasn't identified in the F17. The only detriments really identified were of a monetary nature, loss of allowances, which were rolled up into the pay rates in the agreements. There were three main changes to the meal break provisions: reduction from 40 minutes to 30 minutes - I should say this is in regard to shift workers; a requirement that work continue during the meal breaks. The short and sweet clause, which I might as well just read, is that:

PN43

Meal breaks for the train crew will be a paid 30‑minute meal break and work will continue due to operational requirements.

PN44

So the 'work will continue' provision doesn't appear in the award, doesn't appear in the TRRC agreement, and was not explained to employees. And the third major change in the meal break provisions was the removal of the entitlement to a break after five hours. So you have an entitlement to a 30‑minute break paid, but work has to continue during the break and it could be at any time in the 12‑hour shift - you could have your break after 10 hours. So we say that's an important change. The respondent says well there was an undertaking on meal breaks. True it is that there was an undertaking ultimately given that the meal break be 40 minutes, so that's one of the three issues, if an undertaking is permissible and appropriately considered at this stage, but that undertaking is not very useful when you have to work through your meal break anyway. Work continues, and these people are in safety‑critical environments; I don't need to remind the Commission of that.

PN45

So the meaning of 'work continues' was never explained, and the respondent's answer to that is, well, it's only reflecting the common practice in the industry anyway, but the fact of the matter is it's not in the award; it's not in the TRRC agreement. The employer obviously had some purpose in putting it here. Ambiguous as it is, it can be read as meaning simply you work through your meal break. Whatever it does mean should have been properly explained as a difference between the agreement and the award, and likewise with the removal of the minimum five‑hour work period before a meal break. The lack of a set time for meal breaks was a concern to employees, and that emerges from the notes of the discussions - that's page 362 of the appeal book, Mr Elsom's notes. At no stage was this explained to the employees that actually under the award you would get this, but under the agreement you don't, and again, the answer is well, it doesn't matter, because it wouldn't happen very often. In my submission, that was a matter the employees should have had explained and should have been able to assess for themselves. So the Deputy President did not take that matter into account, and that, I felt, to take into account a relevant consideration, and had she considered it, in my submission, she would have necessarily found that the explanation of the meal break change should have been made, was a reasonable step, and failure to make that explanation meant that the terms of the agreement, at least in respect of meal breaks, the effect of those terms was not agreed. We rely on the other differences in schedule 3 and say that they cannot be considered through the prism of the undertaking, as the respondent urges. That's not what the Deputy President did.

PN46

We then make submissions about redundancy entitlements, and we've dealt with those in our submissions at 24 to 46, and in reply at 56 to 72. This is another important issue which we say was not explained to the employees and which the Deputy President did not turn her mind to. We take issue with the proposition the respondent raises that it wasn't raised before the Deputy President. Clearly it was, in my submission. We put it a little bit higher on appeal than we did below. Below it was put that there was uncertainty as to entitlements. We say now it's clear that, absent peculiar circumstances of fact, for maximum term employees there will be no redundancy.

PN47

DEPUTY PRESIDENT GOSTENCNIK: For a termination at the end of the term?

PN48

MS HOWELL: Yes. Sorry, I should have said that, yes.

PN49

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN50

MS HOWELL: Can I just take the Commission briefly to appeal book page 253? This is - behind tab 9 - and this is Mr Butler's account of this discussion with the two employees, and about three quarters of the way down the page employee B says, 'At the end of this contract are we entitled to redundancy on maximum term contracts?' And Mr Butler says, 'Yes, exactly the same. You will get a redundancy if there's no more work at the end of the contract.' And that's what we say is misleading, because on the face of the agreement no such entitlements exist, that is, under the NES. I think one of the problems that runs through this case is that Mr Butler and others really weren't considering that the agreement would have much practical application, and often the line was blurred between what was the position under the common law contracts, what was the position under the IFAs that the employees were told they would be employed under at some time in the future, and what was the position under the agreement and the award, and in my submission the question from the employees, which I have just taken the Commission to, properly required an answer explaining entitlements under the agreement. The respondent says, and said before the Deputy President, well Mr Butler was right, under the NES if you're at the end of a maximum term contract you will get a redundancy. We say that's clearly wrong and we have given reasons in our written submissions why that's wrong.

PN51

Both parties rely on the Full Bench decision in Kyam(?), which is in the authorities. I don't need to take the Commission to it. The relevant principles are helpfully summarised at paragraphs 75 of that decision, and in my submission the position is clear, applying that analysis under the NES, and particularly section 119(1), unless a particular factual circumstance arises there will be no redundancy payments at the expiry of a maximum term contract, because the termination is by a fluxion of time rather than at the initiative of the employer. If the factual circumstances show that the parties in truth have a different intent, then there might be a redundancy payment, but that is dependent on specific factual circumstances which must be analysed in every individual case. Nothing in the agreement varied the usual position under the NES that maximum term contracts, at the expiry there would be no entitlement to redundancy. And there was nothing in Mr Butler's statement that would give rise to the special circumstances in which a redundancy might arise under the NES. It contained no indication that employment would continue after the end of the maximum term contract, even for the two employees, let alone for the TRRC employees and for other future employees engaged under the agreement. So the employees were given to understand that there was an entitlement to redundancy if there was no more work at the end of the Roy Hill contract. That was a matter which was obviously important to them and about which they were given inaccurate information. The Deputy President didn't consider this issue, and that, in my submission, failed to take into account a relevant consideration, and had she considered it, the Deputy President would have found that the proper explanation of redundancy entitlements under the agreement and the NES would have been a reasonable step, particularly in light of the obvious concern of the employees.

PN52

So those are two major matters about which we say inadequate explanation was provided and all relevant steps not taken - three, I'm sorry. The fourth is the lack of explanation about how the agreement would affect the TRRC employees. This is a matter which we accept was not raised below, and we rely on the authorities in our submissions as to why the Commission should consider it on appeal. It's a matter which - it does go to the jurisdiction of the Deputy President, who approved the agreement. It was a unique situation that was before the Deputy President where it was the respondent's definite intention that the 52 TRRC employees would be transferred and would be covered by the agreement. If I can just take the Commission briefly again to the first decision behind tab 3? That's paragraph 171. The paragraphs between 171 and 175 have relevance to a number of our grounds, so it's convenient - if I take the Commission to those now - it's relevant to the genuine agreement, particularly - and it's relevant in the present context to the quality of explanation which was required. At 171 the Deputy President in the second sentence notes that:

PN53

Mr Butler touched on the matter of planning to transfer the employees from TRRC to Karijini subject to their acceptance of an offer (and of course Karijini winning the contract). In fact, according to Mr Butler one of the two employees had asked questions about the effect of the agreement on the employees of TRRC, who it appeared from the question asked, and answer given, were already contemplated as being intended to be covered by the Agreement, notwithstanding TRRC having the contract at Roy Hill rather than Karijini.

PN54

And then in paragraph 172, second sentence:

PN55

Interestingly, that letter of 5 September 2018 to Karijini referred to the continuity of rail crew supply being important.

PN56

That is, continuity from TRRC to Karijini, and:

PN57

Reference was made to an agreement in the following terms, '[A]s agreed, Karijini will use its best endeavours to engage the existing TRRC employees over the period from now until 1 November 2018'.

PN58

And then also 173 is in similar terms, and then at 175, the Deputy President in the second sentence notes that:

PN59

somewhat central to the controversy before me, was the making of the Agreement by the two employees in circumstances where the TRRC workforce had no input into its contents.

PN60

And while I'm here, I'll just take the Commission to the following two paragraphs: at 176, ALDI Foods Pty Limited v Shop, Distributive & Allied Employees Association [2017] HCA 53 is discussed, and of course that was a case dealing with coverage requirements, and at 177 the Deputy President makes a finding which is relevant to a number of our grounds:

PN61

While there has been much made of the position of the employees of TRRC, ultimately the position of those employees would not appear relevant to the approval requirements imposed by the Act. They are not the 'relevant employees' because they were not employees of Karijini at the relevant time, albeit the notion of them becoming employees was clearly contemplated. That the Agreement could be made with persons who were not yet employed, and might never be employed, in the relevant single business, would seem, to coin the phrase 'a strange result'.

PN62

et cetera. And the point I want to draw from that, which is relevant to a number of grounds, is that the Deputy President had dismissed the relevance of the TRRC employees to any of the statutory considerations, including 'genuine agreement' and including 'fairly chosen.' While she doesn't explicitly refer to those provisions, I think that necessarily follows from the first sentence, 'would not appear relevant to the approval requirements imposed by the Act.' So that was a little bit of a digression, but it will save me from taking the Commission back subsequently. But the point I'm currently making is that the TRRC employees and the effect of the - - -

PN63

DEPUTY PRESIDENT GOSTENCNIK: Although if headings are to be any indication, if one goes back to page 66 of the appeal book, all of that discussion appears under a subheading, 'no other reasonable grounds.'

PN64

MS HOWELL: I'm sorry, could you give me the page?

PN65

DEPUTY PRESIDENT GOSTENCNIK: If headings in the decision are to be given any meaning as to what it is that the Deputy President was discussing, the heading under which that discussion at 171 onwards appears under a heading just above paragraph 152, and 66 of the appeal book, 'no other reasonable grounds.'

PN66

MS HOWELL: Yes.

PN67

DEPUTY PRESIDENT GOSTENCNIK: So on one view, she's having that discussion in that context.

PN68

MS HOWELL: That could be so, if it please the Commission, but the issue wasn't discussed or evaluated in any other context.

PN69

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN70

MS HOWELL: And we know as a matter of fact that the 52 employees, all of them are transferred when the new contract took effect. I think it was 1 November. The employees did ask a number of questions about the TRRC employees. A reference to that is appeal book 646, and we just say that in light of those questions, the effect of the agreement on those employees was a reasonable step; explanation of the effect. We do say that the statement from Mr Butler, which also appears at 646, was misleading. This is in the F17, I should say, and it's in the steps taken to communicate with the employees. At the final dot point:

PN71

During the course of the discussion, unnamed asked me a lot of questions about the effect of the proposed enterprise agreement on the current train drivers working for TRRC and whether they would be disadvantaged as a result. I explained that they would not be disadvantaged, because Karijini would offer them employment and for those who accepted would maintain their existing rates of pay inclusive of CPI -

PN72

et cetera. So it was a very live issue in the mind of the employees, the two employees, but there was no attempt to analyse the effect of the agreement on those employees, and it was at least implicit, in my submission, in the answer to the question that I've just taken the Commission to that the effect of the agreement would be that those matters were protected for the employees. To understand the effect of the agreement on the TRRC employees would really require a comparison with the TRRC agreement, and of course that was not undertaken. One of the key differences for the TRRC employees was that under the TRRC agreement, as I've already referred to, there's no concept of maximum term employment, and 48 of the 52 were engaged as permanent employees, including obviously with redundancy entitlements. Under the proposed agreement, they could only be employed as maximum term, fixed term, et cetera. As a matter of fact they were all employed as maximum term, but the point is there were significant differences between the two instruments. The two employees have a very live concern about the effect on the TRRC employees. None of it was explained to the two employees. The only answer they got was that those employees would be protected.

PN73

So in summary, we say there are significant matters not explained. It would have been a reasonable step to explain each of those matters. It would have been a reasonable step to provide the award, to provide a link to the award; to explain the differences, which we've outlined, which are significant, not trivial; to explain the meal break provisions; to explain the true situation with respect to redundancy; to give an accurate explanation of how the TRRC employees would be affected by the agreement, and by failing to take each of these reasonable steps, the respondent did not comply with section 180(5). The Deputy President didn't turn her mind to those matters and thereby failed to take into account relevant considerations, and failed to undertake the statutory task which was required.

PN74

That's all I want to say about 180(5). Could I just - because it's the first time I've addressed relevant considerations, can I just say a couple of things before going on to the next round? The respondent seems to take the position that in respect of each of the statutory requirements, including 180(5), there are no mandatory relevant considerations because they're not specified in the Act, and the Commission is at large essentially in determining what's relevant and what's not. That's my understanding of how the argument is advanced. As a matter of law, in my submission, that's obviously wrong. What is a mandatory relevant consideration, we depend, where it's not specified in the statute, on the particular facts of the case. I

PN75

just want to give the Commission one example or illustration. First of all, we say that is clear from One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77, and we've referred to the relevant passages in our written submissions, but the authority of HSU v Clinpath, which is at tab 22, if I could just take the Commission to that decision, this decision is quite instructive. The Commission on appeal found that there was a default in the explanation such that all reasonable steps were not taken, but it is in my submission a relatively minor deficiency. The situation was that there were pay increments which were given after a certain amount of service. The service was calculated by reference to hours worked, but there was also a saving provision that if you were employed for two years, if you were for example part‑time or casual, you would automatically get the increments even if you haven't accrued sufficient hours. So the explanation given rightly pointed out that the number of hours to achieve an increment had changed, but omitted the reference to the two‑year saving provision, so the omission to - and that's summarised at paragraph 122 of the decision, 21 and 22. So that was the nature of the error. The employer hadn't explained to the employees that the two‑year saving provision to achieve an increment had been removed in the agreement compared to the prior instrument. And at 28, the Full Bench says:

PN76

In our view it cannot be said the employer took all reasonable steps -

PN77

et cetera.

PN78

The Commissioner did not take these relevant matters into consideration. This was an error of the kind in House v The King warranting the grant of permission to appeal.

PN79

Well we would add that on the basis of One Key Workforce it's also jurisdictional error. It's both of those. But self‑evidently, it was a matter that the Commission had to assess, and on appeal the Commission had to assess whether that was a mandatory relevant consideration, a matter unique to those facts, and it was. One other point I want to make while I'm on Clinpath, at paragraph 32, the Full Bench says:

PN80

Although the error arising from the failure to seek the views of bargaining representatives would be capable of rectification, the error arising from the Commissioner's consideration of section 180(5) is fatal to the application, because we do not consider that on redetermination it would be open to a member of the Commission to be satisfied that the company complied with section 180(5).

PN81

True it is that there were no reasons given for that conclusion, but when one considers the nature of the error, which was an omission to refer to the two‑year saving provision, if the respondent's submissions on the question of undertaking are correct, then that's a matter which could very easily have been fixed by an undertaking, that is, all the employer would have to say, on the respondent's argument, is well we undertake to apply the two‑year saving provision, and that would have fixed it, but it's apparent that the Full Bench at that stage, in September 2018, did not consider that an undertaking would rectify that particular default. It seems that maybe things have changed a little since then, it's conceived, but in any event, that's - - -

PN82

DEPUTY PRESIDENT GOSTENCNIK: Views may have evolved.

PN83

MS HOWELL: So again, I've gone on a little digression there, but I'm now moving on to the question of the undertaking, in any event. The Deputy President dealt with the issue - that's paragraphs 15 to 48 of her second decision; I won't take the Commission to that right now - it's a lengthy analysis; it discusses the authorities, Full Bench and single Member, and particularly relies on the decision of Gostencnik DP in BCG Contracting Pty Ltd [2018] FWC 6936, which she discusses from paragraph 36 of her decision.

PN84

DEPUTY PRESIDENT GOSTENCNIK: And which I didn't accept an undertaking.

PN85

MS HOWELL: Yes, and I have the difficult task of persuading the Commission that that decision was wrongly decided.

PN86

DEPUTY PRESIDENT GOSTENCNIK: I'm always open to persuasion, Ms Howell.

PN87

MS HOWELL: Thank you, your Honour. And I also have the challenge of dealing with the decision which the Commission referred us to in Specialist People Pty Ltd [2019] FWCA 3535, which I'll come to towards the end of my submission on this issue. We deal with the construction issues in some detail in our written submissions at 52 to 72, and in reply at 87 to 103, and I don't really want to add a lot to what we've said in writing on this issue, but there's a couple of points I want to emphasise in our argument. The concern in section 190(1) is whether the requirements set out in section 186 and 187 have been met, and relevantly that means, in my submission, the requirements in section 180(5). So it's our submission that the requirement is concerned with the quality of the explanation, not with the effect of the explanation, and the requirement of all reasonable steps is not that the employees know what they're voting for - it's not about the employees; it's about the conduct of the employer. So in my submission, there is no scope for a factual inquiry about whether employees were misled or whether they had understood the effect of the terms of the agreement, and it's no different when one comes to section 190(1), because one's considering the very concerns which relate to the requirements of 180(5). So there's no inquiry about whether the employees genuinely consented, in my submission; no inquiry as to their knowledge, no inquiry as to whether they were disadvantaged; it's limited to the quality of the explanation. True it is that the underlying purpose is to achieve or to ensure genuine agreement. That much is obvious. But in my submission, the statute deems the process to be so important that in effect if all reasonable steps are not taken then it's simply deemed that there is no genuine agreement, and perhaps section 188(2) is a response to that position.

PN88

DEPUTY PRESIDENT GOSTENCNIK: Your essential point, Ms Howell, is this, as I understand it, that 180(5) and as a consequence 188(1) are concerned with the quality of the explanation as to the terms of the agreement and the effect of those terms in relation to the agreement that was approved, not in relation to the agreement as approved and then altered by operation of an undertaking.

PN89

MS HOWELL: Yes.

PN90

DEPUTY PRESIDENT GOSTENCNIK: And so therefore a failure to be satisfied that there has been adequate compliance means that it is not capable of rectification, whatever the - - -

PN91

MS HOWELL: Yes. No undertaking can address that specific concern, which is the requirement - that's essentially the point. And we say the situation is a little bit analogous to the notice of employee representational requirements. It's an absolute requirement because of the importance of that factor in the process; same with the explanations that if it's not complied with - and again subject to 188(2) - if it's not complied with, no argument or - that really wouldn't have made any difference, or that it can be affected by subsequent undertaking, can affect the fact that it wasn't complied with. That was the requirement, and the concern of the Commission is the requirements.

PN92

DEPUTY PRESIDENT GOSTENCNIK: But it's not - that's an example of one circumstance where one wouldn't be satisfied that an undertaking cured the concern, so that affects the absence of - a notice of employee representational rights affects the period of time at which the employer may request this as a consequence. That time never arrived. But your proposition is essentially that, if I understand it correctly, that no undertaking can ever cure a concern about whether the employees have genuinely agreed to the agreement. Whereas on one view, given that it's a 186 requirement, it's notionally on one view of the statute amenable to an undertaking, and whether or not a particular undertaking meets the concern depends upon the nature of the concern and the undertaking proffered. And so in your example of a NERR, no undertaking can cure that, because of the nature of the problem, but what if I told the employees that a meal allowance had been increased by $10 when in fact on its face it increased by $5, and I gave an undertaking that the allowance would be $10 more than the current allowance - why shouldn't such an undertaking be accepted?

PN93

MS HOWELL: Well our first answer to that is this is a matter of statutory construction. One is not looking at genuine agreement; one is not looking at the requirements of genuine agreement in a broader sense, but rather in the narrow sense. If one was looking at genuine agreement in a broader sense - I was going to come to that in my submissions - a whole range of potential problems arise, but if one was looking at that concept then it might be arguable that there was a narrow category of cases where you could say that the employees voted for X and then the undertaking provided for X, so therefore in the end they got what they voted for. That would be a very narrow category of - if we're wrong on the statutory construction, that would be a narrow category of situations where you may be able to say if there was genuine agreement, but most cases, and this case in particular, are not that case, because nothing in the undertakings can have the effect that the employees got what they were voting for.

PN94

DEPUTY PRESIDENT GOSTENCNIK: I understand that, and that goes to the proposition - the view that I expressed in BCG that at least in theory an undertaking to cure a concern about genuine agreement might be proffered, but in that case given the circumstances, the nature of the concern and the undertaking proffered, it didn't resolve my concern and therefore was not accepted. But if one starts with the provisions which deal with undertakings, the undertakings provisions are engaged if the Commission has a concern about whether one or more of the requirements in 186 or 187 have been met. The statute has taken the approach that there were certain matters which are approval requirements, but which are taken outside of that 186/187 framework. So for example, the consultation term or an individual flexibility term are matters that must be contained in an agreement, but they're not capable of being cured by an undertaking, because those matters are not part of the approval requirements in 186 and 187. They're dealt with elsewhere. So the statute on one view has taken the view that certain matters are not capable of rectification by an undertaking, but other matters i.e. those in 186/186, at least in theory, are capable of forming the basis of an undertaking. Whether or not a particular undertaking will ultimately be capable of curing a concern depends upon the nature of the concern and - - -

PN95

MS HOWELL: Yes.

PN96

DEPUTY PRESIDENT GOSTENCNIK: And the argument that we're having here, putting aside the proper construction, your fundamental point is, when you look at the totality of the efficiencies, even if an undertaking is to be accepted the undertaking given couldn't cure it, and you say no undertaking can cure it.

PN97

MS HOWELL: The only thing I would add in response to that, Deputy President, is that in our submissions we've contended that not all of the requirements of section 186 and 187 are capable as a matter of - - -

PN98

DEPUTY PRESIDENT GOSTENCNIK: And that's because of the nature of the undertaking provisions themselves - yes, I understand that point.

PN99

MS HOWELL: And we gave some examples of provisions which weren't - or provisions other than section 180(5) which weren't capable of being fixed by an undertaking on any view, simply to say that there's no reason to assume that every single provision is capable of being addressed.

PN100

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN101

MS HOWELL: And that drew some very interesting hypotheticals from the respondent to say, well, if half the employees - if there wasn't a valid majority, because the employer miscounted the number of votes, then that could be an undertaking to simply remove all those people who didn't vote for the agreement from the agreement, so therefore that issue could be addressed. And likewise, the issue of whether there has been coercion of the employer in respect of the agreement drew forth - we said you can't fix that issue; there was coercion - an undertaking can't fix that issue, by way of example only - and that drew forth an example of some knife‑wielding maniac, and then after that the agreement which had been subjected to coercion would go to the Commission and - - -

PN102

DEPUTY PRESIDENT GOSTENCNIK: The subject matter with which 186(2)(a) is concerned is whether or not the agreement has been genuinely agreed to by the employees covered by the agreement, and 188 is concerned with the matters about which the Commission must be satisfied. There's nothing in BCG that I said would suggest that each and every single one of those matters is capable of - the subject matter of an undertaking, but simply that, on my reading of the statute, a concern about whether or not the agreement has been genuinely agreed is in theory capable of rectification; whether or not as a matter of fact or law it should be accepted, and as resolving the concern depends entirely on the nature of the concern. The concern might be a particularly minor one. But I understand the submission.

PN103

MS HOWELL: Yes, probably not - I'd be flogging a dead horse - - -

PN104

DEPUTY PRESIDENT GOSTENCNIK: Well I'm not wanting to dissuade you from arguing the toss. It seems to me that whatever views that were expressed by earlier Full Benches, on one view without the benefit of argument, has been laid to rest by Specialist People where plainly the Full Bench accepted an undertaking as curing a concern it had about 180(5).

PN105

MS HOWELL: The only reason we go to those other provisions is just to say, as I've indicated, not all provisions under - - -

PN106

DEPUTY PRESIDENT GOSTENCNIK: Yes. Your argument isn't without merit, Ms Howell. I'm not suggesting for one moment this is an easy area.

PN107

MS HOWELL: And section 180(5) is, as we've said, that it has to be evaluated at the time of the consent, and your Honour is familiar with the arguments.

PN108

DEPUTY PRESIDENT GOSTENCNIK: It's protective, yes.

PN109

MS HOWELL: So I'll just go on to the genuine concerns issue a little bit. If the question of an undertaking is to be assessed by reference to some broader concept of genuine consent then it has to be asked: how do you approach that test; what is the question, and what is the inquiry. It seems to have been framed by saying well once you get the explanation, you then go back and look at the - assume that that was the agreement, when the employees looked at it, and then say well what explanation is necessary in light of the revised agreement. If that's to be the approach, in my submission it has to lead to a factual inquiry about - and essentially the factual inquiry has to boil down to: if the employees who participated or are entitled to participate in the vote had at their disposal both the undertaking and the proper explanation, how would they have voted. The Commission would then be required to reach a conclusion that they would have voted in the same way; otherwise, how can the Commission form a view that the agreement was genuine on any view. So if the answer to that is unclear, or if the Commission can't be persuaded, I mean there's a fundamental difficulty, in my submission, in that kind of speculation about how the employees would have voted. But that is the only way, if any - and we say there isn't a way - but that would be the only way that the Commission could conclude that there was genuine agreement. In my submission, that's not an inquiry that the Fair Work Commission should be embarking on in this approval process; speculating on what employees would have done if certain other factors were in place.

PN110

Can I just say, one of the cases relied on by the respondent really illustrates the difficulties of this, and that's the decision of Johns C in Downer EDI Mining, which is at tab 80. I don't need to take the Commission to that decision because there's one proposition which is relied on. In that case, the Commissioner said that, well, the agreement is only marginal above the award, so all of these explanations were very important because of that and no genuine agreement. But he also advanced an obiter proposition that if the margin is bigger then the requirement for an explanation goes down. So there's a pay margin - and that seems to have been the approach in Specialist People as well, the Full Bench decision, which I'll come to - but the consequence of that approach is every time you have a default in section 180(5), the employer can come along and say we'll give the employees an extra 10 per cent and that buys out in the explanation that we were required to give. The Commission will then have to evaluate the defaults and consider whether that's sufficient to buy out the requirement to make an explanation of relevant changes for effects of terms, but again, the obvious difference is in non‑monetary terms. How is the Commission supposed to form a view that, for example, loss of a guaranteed meal break, having to work through your meal break, any number of non‑monetary terms can be bought out by an extra 10 per cent or 20 per cent on the rates? And what if the employees don't agree with that assessment; I mean how does the Commission know how the employees would have viewed that for the purpose of genuine consent, and this evaluation of buying out of explanations is particularly difficult in the present universe where most of the agreements, or a lot of the agreements, including the one now under consideration, are effectively a new safety net, which is still well below the existing terms and conditions.

PN111

So for example, if the employees in this case were guaranteed their rates of pay for the four‑year duration of the contract, how much benefit is it then to them to say well now it's going in the agreement? True it is that you've moved from a contractual entitlement to a legal entitlement under the agreements, but how much is that worth? How can the Commission make an evaluation of that on behalf of employees and say, well, because of that notional change you didn't need to have the meal breaks explained to you; you didn't need to have redundancy - that's just an example, but that's the type of evaluation that the respondent's approach necessitates, and we say the difficulty of that approach tells against the proposition that the Commission is going to be required to make that kind of evaluation. Effectively, the Commission is being required in that scenario to put itself in the shoes of the employees, think for the employees, decide what the employees would have considered to be appropriate, and assess on all of that how they would have voted if they had got a notional extra 10 per cent or 20 per cent, which made no difference to the money in their pocket but cost them their meal breaks, which they didn't know about, or may not have known about. So in my submission, in that scenario the Commission would never know how the employees would have voted, and if it can't know that, how can it dismiss the lack of explanation as moot, and how can it be confident of genuine agreement? The upshot of all that is we say it tells strongly against the proposition that the Commission can consider improved monetary benefits in particular and say well the rest doesn't matter, because that's such a difficult evaluative process and at the very least - - -

PN112

DEPUTY PRESIDENT GOSTENCNIK: A bit like the BOOT.

PN113

MS HOWELL: Indeed - and at the very least couldn't do that process with respect to non‑monetary terms. Can I just briefly say something about Specialist People?

PN114

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN115

MS HOWELL: First of all, we have had a look at the first decision, which unfortunately I don't have copies of, but I refer the Commission to paragraphs 54 and 57. The Commission there is dealing with how to dispose of the matter having made the findings. It says:

PN116

Had the issue been raised at first instance, the company would have had the opportunity to advance a case that any deficiency in its explanation of the Agreement in this respect was a minor technical or procedural error to which s 188(2) applied.

PN117

And then at 57:

PN118

We propose to quash the Decision and to rehear the company's application for approval of the Agreement. The company will have the opportunity to offer appropriate undertakings to address how the Agreement might pass the better off overall test against the other three awards, and to provide any further submissions addressing s 180(5) and s 188(2).

PN119

So there was no indication there that the Commission - the Full Bench - considered an undertaking to address the all reasonable steps requirements was being contemplated. Then when one turns to the subsequent decision - - -

PN120

DEPUTY PRESIDENT GOSTENCNIK: It was a proposition advanced by the employer, that is, the undertaking.

PN121

MS HOWELL: Thank you.

PN122

DEPUTY PRESIDENT GOSTENCNIK: And that's set out in paragraph 14.

PN123

MS HOWELL: Thank you. The key paragraph is obviously paragraph 23 of the Full Bench decision where the Full Bench says - I think this is the second sentence:

PN124

That is because, by ensuring that employees are better off overall under the Agreement by a significant margin when performing work covered by the -

PN125

three awards -

PN126

it effectively renders moot the omission we have identified in that the detriment which required explanation would no longer exist. Acceptance of the undertaking would therefore allow us to be satisfied that s 180(5) was complied with.

PN127

This obviously was a case where the employer didn't inform the employees that three other awards applied, let alone make any comparison between those awards and the terms of the agreement. The Full Bench did not enter into the exercise of identifying what the differences between the three awards and the agreement were. The circumstances were that it was not explained to the employees that the agreement covered employment under the other awards, and necessarily no comparison was made, but we don't know what the differences were and how significant they were. The undertaking offered was to pay 25 per cent above those awards.

PN128

Even if we're wrong about everything else, in my submission you couldn't accept that undertaking with respect to the Full Bench without some analysis of what the detriments were and what the changes were as between each award and the agreement. To the extent that there were any non‑monetary benefits, in my submission the proposition that more money is capable of rendering an explanation of those differences moot, to use that word, is wrong with respect to the Full Bench for the reasons we've already outlined.

PN129

DEPUTY PRESIDENT GOSTENCNIK: I'll pass that on for you, if you like, Ms Howell.

PN130

MS HOWELL: Yes. I did want to make a submission to the Full Court that the High Court was wrong. It didn't get me anywhere. In my submission, with respect to the logic of paragraph 23 is unclear, and it's really not explained how a rate 25 per cent above the award rates could mean employees no longer need information about the differences and changes or the effect of the terms.

PN131

DEPUTY PRESIDENT GOSTENCNIK: Ms Howell, could I just take you back to Specialist People? You would urge us to come to a different view, or do you say - would you distinguish the present case from that of Specialist People?

PN132

MS HOWELL: First of all, we would ask the Full Bench here to come to a different view. Secondly, we would say it must be distinguished - - -

PN133

DEPUTY PRESIDENT GOSTENCNIK: On what basis?

PN134

MS HOWELL: On the basis that in the present case the precise nature of the failures in respect of 180(5) are known and it can be confidently said, in my submission, that the undertakings did not meet those concerns, whatever view of construction is taken. So if we're wrong on everything about the construction, when it comes to the actual undertakings it didn't address redundancy, it didn't address meal breaks, didn't address some of the other matters in our schedules, which were provisions which were different, so even if we're wrong - but the difficulty with the Specialist People decision is you can't identify whether in fact the differences were merely monetary, in which case the argument that you can address those concerns is at least stronger. So if that was the case, if it was just monetary benefits, then that would obviously be a basis to distinguish the two cases, but we just unfortunately don't know what relevant matters should have been explained in that case to say whether it would. But again, it raises the same difficulties that I've alluded to, which is: what are you actually buying off with the 25 per cent? Would 20 per cent be enough? How do we know? What if the employer had only offered 20 per cent? You just can't put a value on an explanation, in my submission, in that way, especially when the employees are already in all likelihood being paid very substantially above the minimum award rates in any event. Unless there's any questions, that's really all I intended to say on the undertaking issue.

PN135

DEPUTY PRESIDENT GOSTENCNIK: Thank you.

PN136

MS HOWELL: The next issue we deal with in grounds 5 and 6 is the question of whether - or two questions, both concerning section 188(2 - can I just make a correction to my submissions? At paragraph 99, the last sentence should be deleted. Don't read that sentence.

PN137

COMMISSIONER LEE: 99, did you say?

PN138

MS HOWELL: The last sentence, yes, Commissioner.

PN139

DEPUTY PRESIDENT GOSTENCNIK: Another example?

PN140

MS HOWELL: Yes. I didn't like that example.

PN141

DEPUTY PRESIDENT GOSTENCNIK: Yes. Thank you.

PN142

MS HOWELL: Again, we've put our submissions in some detail about the construction issue. We have advanced an argument that with respect to section 180(5), there are some matters which are procedural and some matters which are not, and the content of the explanation is not a procedural matter. I don't want to develop that argument beyond our written submissions. The Deputy President of course relied on the Full Bench decision in the Huntsman case, which is in the authorities and relied upon by the respondent. The only thing I would say about that is it didn't consider the all reasonable steps requirements in any practical way or in any detailed way, although it did obviously say that in some scenarios the minor procedural error provision can apply. We accept that; we just say not in all scenarios and not in this scenario, because the content of the explanation is a substantive matter rather than a procedural matter. The Deputy President relied on the well‑known principle of statutory construction, that the statute will be read as giving every word meaning if at all possible. We've made an analysis of that in our written submissions, but we say if the respondent's proposition, as adopted by the Deputy President, is accepted then there is an obvious redundancy in the word 'procedural,' because essentially the argument is all of those requirements are procedural; all of the pre‑approval steps are, so by definition the word 'procedural' is superfluous. That's the construction argument. But if one can say that the all reasonable steps requirement has procedural requirements and non‑procedural requirements, then the word is not superfluous.

PN143

The more important question for present purposes is whether the defaults in the present case were capable of constituting minor procedural errors, and we say that by definition if there are additional procedural errors not identified by the Deputy President, then there is error, because in considering minor procedural error you would have to obviously consider all of the relevant defaults and that wasn't done, so couldn't be satisfied in that circumstance that there was a minor procedural error. But we do say, even if the pay comparison issue was the only default, it still couldn't be categorised as a minor procedural error, in my submission. And I say at the start of course one has to consider this without reference to the undertaking, because that's what the Deputy President did. She made a finding about the undertaking being acceptable, and then in the alternative considered the minor procedural error issue. Could I just take the Commission back to the first decision, paragraphs 143 to 145? This is really identifying the actual error that the Deputy President found. As the Deputy President notes at the second last line of that paragraph before the quote:

PN144

However, the content of the discussion for the most part centred on the operation of the IFA.

PN145

And then quotes Mr Butler's evidence. So the employees are asking what they get, and Mr Butler's response is you'll have an IFA. So the question is not answered with respect to the agreement; it's simply moving on to the real world rather than the world of the agreement. And then further comment about the paucity of the explanation is made at 145. And then turning to the second decision at 93 to 97, the nature of the error is considered again in the context of the minor procedural error, and the Deputy President finds minor procedural error essentially on the basis that the employees, notwithstanding the deficiency in the explanation, hadn't formed a genuine understanding of the agreement. So the first point we make is that finding wasn't available, that the employees hadn't formed a genuine understanding of the agreement. There was no discussion, as I think I've already indicated, of the state of knowledge of the employees insofar as the rates in the agreement compared to the rates of the award. The evidence got no higher than the award covered the employees and was the relevant reference instrument, and the rates in the agreement are higher than the rates in the award. That's the highest the evidence got. It didn't get higher because, as indicated, the employees were just told effectively it doesn't matter because you'll be on IFAs.

PN146

Can I just take the Commission to appeal book page 252, which is the transcript? I'm sorry, that's not the transcript; that's Mr Butler's statement. So from Mr Butler's statement we get the - I think I've just taken you only to the passage the Deputy President quoted; I'm sorry about that. The employee, about halfway down, asks how the salary is made up, and the reply from Mr Butler is, 'Your IFA rate varies the allowances to create a flat rate,' et cetera. So they ask about the agreement and they're told about the IFAs, and then going back to the transcript at page 150, there's some cross‑examination of Mr Butler there about the IFAs, and at the bottom of the page at paragraph 707, 'So you were referring to the IFA that would be in the proposed agreement?' 'Yes, just the general way we operate in the Pilbara with an IFA to vary, to have an all up rate to cycle,' which they were used to.

PN147

And then over the page, they're asked about the fact that the employees are getting the market rate under their contract, the pay rate above the agreement, and the answer is, 'Yes, they will be above and beyond, but again they're not unfamiliar with IFAs. That's the way the Pilbara operates.' And then at 709 and 710, the evidence just reinforces what they're being told about. It's not the difference between the agreement and the award but the IFAs, and again at 712 and 714. So the only knowledge the employees have was a statement by Mr Butler, and I can't give you the reference but I think it's in the respondent's submissions, that the rates in the agreement were higher than the rates in the award. That was it. That was the extent of their knowledge of the comparison.

PN148

The magnitude of the difference was a matter of significance that should have been explained, in my submission, and Beaumont DP had before her two statements of Mr Bradshaw, who was an expert, and they were extremely complex comparisons between the award and the agreement, and even Mr Bradshaw had to make corrections because he didn't get it right the first time. So to simply say that the agreement is higher than the award cannot lead to a conclusion that the employees were properly informed about the effect of the terms of the agreement, and the failure to explain that matter cannot constitute a minor procedural error on the facts in this case, in my submission. I rhetorically ask, how is it possible to make an informed vote on agreements when you only know that the rates are something above the award, but don't know how far above the award they are.

PN149

I'll move on as quickly as I can to the next appeal grounds, if it please the Commission, which are the 'no genuine agreements' grounds. The Deputy President dealt with this issue in her first decision at 152 to 157. It was correctly identified that there were three general objections under this heading, which was the lack of genuine and informed understanding by the employees; the lack of a proper stake in the agreement; and thirdly, the lack of authenticity or moral authority arising from the situation of the TRRC employees. With respect to 'informed consent,' that's obviously a relevance consideration, and the Full Court in One Key Workforce at 142 and 156 particularly, in my submission, makes clear that informed and genuine understanding as a matter of fact is relevant to genuine consent. I think I've already referred to the Deputy President's conclusion at 157 that, 'It was not the case that the consent of the employees was not informed as to the terms of the agreement.' We say, with respect, that conclusion was not available for the reasons I've already given, that the employees didn't know the margin between the agreement and the award, but probably before that even. If we're right about any of the other defaults in agreement, the Deputy President failed to take into account relevant matters and her assessment on this point was affected by error.

PN150

I've already referred to the evidence on the state of the employees' knowledge, and I rely on and don't repeat that. One point I would add, matters proceeded on the basis that the two employees were going to be on IFAs, so that would affect how much information they needed, arguably, but of course there was no guarantee that the TRRC employees would be on IFAs and there was no guarantee that other future employees would be IFAs. So the differential between the award and the agreement was an issue of live concern. It goes without saying, in my submission, that the effect of the undertaking is not able to be taken into account at this point, because - - -

PN151

DEPUTY PRESIDENT GOSTENCNIK: Sorry, Ms Howell, can I just clarify this point? You say that the two employees were on IFAs?

PN152

MS HOWELL: No.

PN153

DEPUTY PRESIDENT GOSTENCNIK: No. They were on contracts, yes?

PN154

MS HOWELL: They were on individual contracts, but they were told they would be on IFAs.

PN155

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN156

MS HOWELL: And Mr Butler, it must be said, in his evidence tended to blur the issue of whether they were on or would be on in future, but they were unequivocally told they would be on IFAs.

PN157

DEPUTY PRESIDENT GOSTENCNIK: Presumably subject to their agreement?

PN158

MS HOWELL: Yes. They couldn't be on - - -

PN159

DEPUTY PRESIDENT GOSTENCNIK: Rather than as a matter of imposition?

PN160

MS HOWELL: I'm sorry?

PN161

DEPUTY PRESIDENT GOSTENCNIK: Presumably pursuant to their agreement rather than as a matter of imposition, as the employer wouldn't be in a position to impose an IFA?

PN162

MS HOWELL: Indeed, but there was an assumption it would occur. Of course it was not certain in reality, because it would depend on agreements on the terms. But that just reinforces the importance of actually knowing what the differential in pay was. The second point - I was going to say that the undertaking, we say, is utterly irrelevant to the issue of genuine consent. I think the respondent has put another position. It's the quality of the consent at the time the agreement was made, which - and I should say that's another difficulty with the undertaking issue, because some of the factors - the approach of saying well it can all be fixed up after the event by an undertaking does not sit, in my submission, with the requirement that the consent of the employees, which can only be assessed at the time the consent was given, is well informed, et cetera, for the purpose of section 188(1)(c), and the Full Court in One Key Workforce, in my submission, clearly said that that was a requirement that the consent be informed. In any event, that's a slight digression. We also rely on the fact that the employees have no stake in the agreement in the relevant sense, because it was clearly contemplated that they would be covered by IFAs, but I don't add to our written submissions on that.

PN163

The position of the TRRC employees is really probably the most significant issue on this issue of genuine consent. It's a very unusual factual circumstance which arises. I've already referred the Commission to the findings of fact made by the Deputy President at 171 to 174 of her first decision. It was always intended that the 52 employees who worked for TRRC would be the workforce performing the work under the Roy Hill Karijini contract.

PN164

I should just say the Deputy President noted that we raised the issue below and did say well it wasn't really parked anywhere. In my submission, the only matter of relevance it went to below was this issue, because we didn't take the 'fairly chosen' point below, and that left the genuine agreement issue, which the respondent squarely addressed below by saying - and the reference to this is page 566 of the appeal book:

PN165

The position of subsequent employees is not relevant to the approval requirements imposed by section 188(1)(c).

PN166

And that, in my submission, was clearly the position the Deputy President accepted in the passage I've already taken the Commission to at 177. We do submit that that approach, that the TRRC employees' irrelevance is inconsistent with the analysis of the Full Court in One Key Workforce. It's clear, in my submission, from the analysis by the Full Court that the position of future employees or other employees of the group generally may be relevant. So in simply excluding that issue from consideration, in my submission the Deputy President was in error, and that of course is particularly the case having regard to the emphasis in the objects of the Act and Part 2‑4 on collective bargaining at the enterprise level, and we rely on paragraphs 146 and 151 of One Key Workforce particularly for that proposition. And in my submission, it only has to be stated for the absurdity of that conclusion to be apparent, that is, going back a step, what we're concerned with here is what the Full Court and the previous authorities, which the Full Court discussed, described as the 'authenticity of the agreement,' 'the moral authority of the agreement.' It was put squarely in that case that these were matters that had flown the coop and were no longer relevant. The Full Court disagreed with that, and those paragraphs I've referred to.

PN167

But the proposition is, that the respondent advanced, it's not relevant in considering the authenticity or the moral authority of the consent that you have 52 employees doing the work, the exact work covered by the agreement; you have two new employees in a different entity coming along, haven't even started work, they make the agreement which it is intended explicitly will cover the other 52 employees. So on the basis of One Key Workforce, in my submission that has to be a relevant consideration, because the obvious effect of that was to thwart the ability of the TRRC employees performing the very work covered by the agreement collectively to bargain for their terms and conditions. It must at least have been a matter that the Deputy President was required to consider on the particular facts of this case. You probably wouldn't get a more stark example of a lack of moral authority, in my submission, than the facts in this case, and it's understandable that the two employees kept asking: well what's happening to the TRRC employees, how is it going to affect them. The collective that is contemplated in One Key Workforce and elsewhere had been established for a good four years already, and they were deprived of the opportunity to bargain. In my submission, once it's accepted that the position of the TRRC employees is relevant then how could it possibly be said that the consent of the two employees, who hadn't yet commenced work on the Roy Hill project, had the requisite authenticity.

PN168

The only other thing I want to add to our submissions on that is - two things - first of all, the fact that it was a different corporate entity, in my submission, makes precisely no difference; otherwise it would be very easy for employees to just, when they wanted to avoid bargaining, just start up a new entity, and it actually happens. But given the relationship of the companies in the group, both Karijini and TRRC were subsidiaries of the holding company, wholly owned subsidiaries of the holding company. The use of a new entity, in my submission, just doesn't change the facts. It's a device; no more than a device.

PN169

The other point I wanted to just briefly touch on is the question of legitimate business rationale, which appears in some of the cases. The fact which is relied on here is, well, we needed a new agreement to cover the duration of the new Roy Hill contract, and the existing employees in TRRC - their agreement didn't expire till January, so therefore they needed a new one which covered November 2018 to November 2022. So what we would say to that is, firstly, you couldn't properly describe something as a legitimate business rationale when it completely frustrates the object of collective bargaining. We rely on One Key Workforce and John Holland for that. But more importantly, it couldn't be legitimate if you had made no effort whatsoever to bargain with the TRRC employees and to get an agreement which covered the relevant period. I should also make the point that the degree to which that was a compelling factor was very limited. The evidence was Mr Butler said - and this is at appeal book page 646; I don't need to take the Commission to it - in the F17 he said the employees were told there was a risk that Karijini would not reach agreement with Roy Hill for a new contract if no agreement was in place. So we're talking about a risk, not a certainty. And the second point is they entered into a contract without an agreement in place. An agreement had been agreed, but it had never been approved, and there was always a risk that it wouldn't be approved. So the degree to which there was a compelling business rationale is certainly on any view watered down by those two considerations.

PN170

And then, as I've said, there was no attempt to - there were numerous other ways which it could have been achieved which wouldn't have involved excluding the TRRC employees from bargaining about their own terms and conditions. Simple one, number one, go to the TRRC employees and say: here's the issue, we need to address this, can we make a new agreement early; or a joint agreement covering both entities. But there was simply no attempt, and that's undermining any argument about legitimate business rationale. In conclusion on that, for the reasons in our written submissions and the things I've briefly touched on, the position of the TRRC employees was relevant; failure to take them into account was a failure to take into account a relevant consideration, and when those matters are properly considered, in my submission, the Deputy President should have concluded that there was a reasonable ground to believe that the agreement had not been genuinely agreed to.

PN171

I then come to the 'fairly chosen' issue, which again is fairly extensively dealt with in our written submissions and submissions in reply. Can I just draw the Commission's attention to another error, this time in my reply submissions? I'm sure there will be a few more which I've missed altogether. Paragraph 152 of our reply submissions, the very last sentence starting, 'That section 186(3) was not being addressed,' and then the quote which follows that, that sentence should be deleted.

PN172

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN173

MS HOWELL: Of course we accept that this issue was not raised below, and we've referred to the relevant authorities in our submissions and our submissions in reply as to why we say the Commission should nevertheless consider this issue. We say the employees were not fairly chosen on two bases, and that the Deputy President failed to take into account relevant considerations. The first base is that the agreement didn't cover permanent employees, and therefore there was a potential for a dual workforce of permanent employees and maximum term and other employees. We've dealt with that in our submissions and I don't wish to add to it. The second issue is really similar to the genuine agreement issue concerning the TRRC employees. The Deputy President didn't consider the position of the TRRC employees, and really seems to have accepted the respondent's submission that, because the agreements covered all of the employees who voted, there was no need to give further consideration to whether the employees covered by the agreement were fairly chosen within the meaning of 186(3).

PN174

We've referred to the Full Bench decision in The Australian Workers' Union v Rigforce Pty Ltd t/a Rigforce [2019] FWCFB 6960. Can I just briefly take the Commission to that? It's tab - - -

PN175

DEPUTY PRESIDENT MASSON: Tab 6?

PN176

MS HOWELL: Thank you. I just want to briefly take the Commission to paragraph 34 of that decision. Towards the end of that paragraph, which is fairly lengthy, or about halfway - just over halfway through, there's a sentence:

PN177

However, it seems to us that the 'fairly chosen' requirement in s 186(3) and (3A) is concerned with the selection of the group of employees employed by the employer or employers who made the agreement in question, and does not deal with a situation where a group of companies selects (and perhaps manipulates) different employing entities within the group at different times for the purpose of making enterprise agreements and operating as the employer of the relevant part of the workforce.

PN178

That's a proposition which we have to squarely confront and say is incorrect. There wasn't any analysis in that decision of why that should be the case, and we've gone to some lengths in our written submissions to try and explain why, in our respectful submission, it is incorrect, and that's at 146 to 156 of our submissions in‑chief. And we make the simple point that the 'fairly chosen' requirement has to reply to multiple corporate entities in the case of different types of agreement under section 172:

PN179

2 or more employers that are single interest employers may make an enterprise agreement.

PN180

There the 'fairly chosen' requirement has to be applied to two or more entities, and similarly with subsection (3), a multi‑enterprise agreement. Again you have to consider 'fairly chosen' by reference to multiple corporate entities. True it is that all of those entities are covered by the agreement, but it shows that in appropriate circumstances multiple corporate entities can be considered, and we say that in circumstances such as the present, limiting consideration to the employees of the employer entity is reading an unnecessary constraint into the operation of 186(3), and there's nothing in the language of the provision which justifies such a limitation, particularly when regard is had to the fact that this is a protective provision, the purpose of which is to ensure fairness in agreement‑making.

PN181

There is dispute between the parties about whether the discussion in the Pilbara Iron case is relevant in considering this issue. We say it is. It's in the bundle; I don't need to take the Commission to it, and One Key Workforce expressly cited the relevant passages from that case in the context of the genuine agreement requirement, but in my submission it's equally applicable in this context. Pilbara Iron was quite similar to the present case, because what the company did was purport to create an agreement with employees engaged after a certain date, so it created a dual coverage of the workforce, people employed before that date and people employed after that date, and obviously that had implications for bargaining. It didn't use different corporate entities, but the effect was the same. And although it was a different statutory scheme, the observations relied on by the Full Court in One Key Workforce are equally applicable to the present. I mean if the Full Bench is correct that you don't consider any employees of different entities who might have been included for the purpose of coverage, then really section 186(3) is ineffectual for the purpose - it's not capable of guaranteeing that employees are fairly chosen, because if an employer decided to divide its workforce into four different groups, even based on when they were employed, or - so you have employees in one year all in one agreement, employees engaged in the next year in another agreement, so you have four different agreements and all of them expiring at a different time, so they can all bargain - at any one time only a quarter of the workforce can bargain. On any view that would not be fairly chosen. Beyond doubt, it couldn't be fairly chosen. It couldn't be right that the employer can achieve the same thing simply by using four different corporate entities. So the approach of excluding consideration of other employees would frustrate the purpose of the provision - other employers, I should have said - and there's no basis to read it down in that way.

PN182

The Deputy President didn't consider the position of the TRRC employees, and we say had she done so, as she was obliged to do, the conclusion that the employees covered by the agreement were not fairly chosen would have been unavoidable for the same reasons that we articulate in respect of the genuine agreement issue. I think that has covered all the oral submissions I wish to make in addition to the written submissions and submissions in reply, if it please the Commission.

PN183

DEPUTY PRESIDENT GOSTENCNIK: Thank you, Ms Howell.

PN184

MS HOWELL: Thank you.

PN185

DEPUTY PRESIDENT GOSTENCNIK: Mr Wood, do you want a few moments to - - -?

PN186

MR WOOD: I beg your pardon?

PN187

DEPUTY PRESIDENT GOSTENCNIK: Would you like a few moments to organise your papers?

PN188

MR WOOD: No, I think I'm okay to commence. I might ask for a little bit of time after I've made my initial submissions that deal with the overarching points we wish to make.

PN189

DEPUTY PRESIDENT GOSTENCNIK: Yes. Can I ask you this, how long are you likely to be?

PN190

MR WOOD: I thought I'd be about 20 minutes or so with the overarching points we wish to make, and then I was proposing to ask for, say, a five‑minute adjournment to consult with my learned friend, Mr Dimitri, to see if there's anything that has arisen of a microtype that we need to respond to orally. I don't think there is, but I can - I can take that time now if that's convenient.

PN191

DEPUTY PRESIDENT GOSTENCNIK: I'm just trying to assess how long you require in total, because I have some time issues later this afternoon, that's all, so I'm just - - -

PN192

MR WOOD: I would hope to be done in total in 40 minutes.

PN193

DEPUTY PRESIDENT GOSTENCNIK: Well we can do it this way, we could adjourn now for an early lunch and resume, say, in 40 minutes, and then you could have - I just need to be finished by shortly after 2.30.

PN194

MR WOOD: I'm sure we can make sure we can achieve that aim, Deputy President.

PN195

DEPUTY PRESIDENT GOSTENCNIK: Does that cause you any difficulty, Ms Howell?

PN196

MS HOWELL: I don't think so, your Honour.

PN197

DEPUTY PRESIDENT GOSTENCNIK: Are the parties content to adjourn now for early lunch?

PN198

MR WOOD: That would be convenient.

PN199

DEPUTY PRESIDENT GOSTENCNIK: I won't require you to work through the luncheon, as the agreement might, but you know, feel free to do so, Mr Wood.

LUNCHEON ADJOURNMENT [12.02 PM]

RESUMED [12.48 PM]

PN200

DEPUTY PRESIDENT GOSTENCNIK: Yes, Mr Wood.

PN201

MR WOOD: Thank you, Deputy President. We wish to reply to our learned friend's submissions made orally here this morning, only in short compass because we rely extensively on our written submissions.

PN202

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN203

MR WOOD: In order to deal with what is said orally we simply wish to make 12 points, most of them quite quickly. The first is that this is an appeal from a decision. The Commission's jurisdiction on appeal is predicated on there being a decision, which means an order; that is something with operative effect. You don't appeal from reasons. You can only appeal from a decision; something with operative effect, and that is exactly what is being done here when one looks at the notice of appeal. The decision of Deputy President Beaumont of 16 September 2019 to approve an enterprise agreement, clause 1.2 of the notice of appeal, is the decision that's being appealed.

PN204

Then the notice of appeal goes on to say the reasons for decision are found at [2009] FWC 2907 and [2019] FWC A6451. That might seem to be an obvious point but it's a point that's been missed by our learned friends because they say you can bifurcate the reasons for decision. You can't do that; there is one decision that's being appealed and that's the decision to approve the agreement or approve it with undertakings after two hearings. That's the case that we are here to meet. This leads to the second point: what then are the rules that govern such an appeal? It is important to recognise at the outset that there must be error. This is not an attempt to relitigate the case. You can't come to the appeal bench and say, 'I want to run the case again and look at these facts, look at this, look at that. Perhaps you should find something differently to the Deputy President below.'

PN205

You have to demonstrate error. Thirdly, you're not allowed to raise new points, generally speaking. In their reply, the CFMMEU say - this is at paragraph 5 of their reply - that we rely upon authorities which deal with interparties litigation where no statutory duty is involved and where the parties are generally bound by the conduct of the case below. They say those authorities don't apply. But those are the authorities that have been applied by this Commission in numerous Full Bench decisions with the exception that if there is a jurisdictional error, then that point can be litigated, raised, on appeal. We accept that. The difference is there is no jurisdictional error. We expressly said in paragraph 24 of our submissions that a new argument may be raised on appeal if it discloses jurisdictional error.

PN206

This leads to the fourth point: when we talk about error, what are we talking about, when dealing with an appeal? That depends upon the nature of the decision that is being appealed from. What is the nature of the decision that is being appealed from here? It is one that has got two aspects. It's one that's based on the opinion of the Deputy President below and it's one that's discretionary. Now, those two concepts are not in conflict. They operate on different plains. To give an example, a sentencing decision is a discretionary decision. It's perhaps the most obvious discretion decision but it's not one based on the satisfaction of the decision maker. It's just a discretionary decision.

PN207

Similarly, a question as to whether or not the tribunal or a court is satisfied as to whether or not reasonable steps or all reasonable steps were taken to ensure that the terms and the effect of those terms of the agreement were explained is a discretionary decision. It's also one that is based upon the opinion of the decision maker and it's got both attributes: it's one that is founded upon the opinion of the decision maker but it is still a discretionary decision. Now, there are other decisions based on the opinion of the decision maker where the discretion is more narrow or may be no discretion at all. But in this case, in terms of the things that are being attacked, the decision is both one that is predicated on the satisfaction of the decision maker and is discretionary; broadly discretionary.

PN208

It is therefore no answer to our point that the House v King principles apply to say that they don't because it's a decision based on the opinion or satisfaction of the decision maker. The House v King principles apply to a discretionary decision, whether or not it's a decision based on the satisfaction or opinion of the decision maker. The fact that the discretionary decision is one that is predicated upon the satisfaction or opinion of the decision maker does not lower the hurdle for the appeal and that is what our learned friends say. That is just completely wrong. Once that is understood that one is dealing here with discretionary decisions in relation to which the principles in House v King apply, there are only in essence two appeal grounds available and articulated by our learned friends.

PN209

Those are our fifth and sixth points and those two grounds are that the decision was not open, it was unreasonable, it involved inferred error. Alternatively, there was a mandatory relevant consideration the decision maker below failed to take into account. I'll deal with those two separately. I'll deal with the first one as our fifth point, the question of whether the decision was not open, it was unreasonable, it constituted, demonstrated inferred error. Those are the phrases that are used interchangeably to deal with a decision that no reasonable decision maker could make. Now, in the circumstances of this case where we're dealing with section 180(5), the decision maker below has a very broad remit, a very broad discretion in terms of the decision that he or she could make.

PN210

The discretion is very broad. It talks about, when you look at the text in section 180(5), that the Commission must be satisfied - this is in section 186 - the FWC must be satisfied in 186(2)- - -

PN211

DEPUTY PRESIDENT GOSTENCNIK: It's 186(2) when read in conjunction with 188.

PN212

MR WOOD: 188 - yes, thank you.

PN213

DEPUTY PRESIDENT GOSTENCNIK: 188(i).

PN214

MR WOOD: Indeed - so the Commission must be satisfied that the employer has taken all reasonable steps to ensure that the terms of the agreement and the effects of those terms are explained to the relevant employees and I won't read subparagraph (b), because that just qualifies or explains what it meant by, 'explained.' Now, that sort of language - 'all reasonable steps to ensure' - indicates that there are a range of steps which the Commission might be satisfied are reasonable in the circumstances of the case. There is no right or wrong answer to that question. In fact, you might, if each of the members of the appeal bench had have been sitting, come to a different decision. But that doesn't mean that the decision was not open. It was unreasonable in the sense of being a decision that no reasonable decision maker could make or it demonstrated some inferred error, undisclosed by the reasons.

PN215

It just means that you would have come to a different decision. Now, when my learned friend made her submissions - and it is littered through the written submissions - they talk about the decision being not open. None of the times or none of the facts or none of the circumstances that my learned friend identified when weighed in the balance suggest that the decision that the Deputy President below - the decision that she made was not open. That is a very, very hard ground to get up on. It's very hard when properly applied. Now, sometimes - and we've said this in our submissions - because of the unique nature of this tribunal, it's got its own, unlike most administrative tribunals, appellate jurisdiction.

PN216

It also has another arm where it sets standards for employees throughout the country. Sometimes the Full Bench can, as Dr Jessup said in his article, blur the line between reviewing for error and trying to impose a uniform outcome and the reasons for that are very easy to understand, partly because the distinction between that line is not a bright one. But once that line is understood, it's inevitable, we would say, that our learned friends cannot succeed on that ground. Then we go to the next ground. This is our sixth point, the question of whether or not something is a mandatory, relevant consideration.

PN217

Now, relevance in this circumstance needs to be understood with precision, because there are three sorts of relevance that people talk about and they confuse them. The first is logical relevance. Is something that's raised by the parties relevant to the assessment under section 180(5) and we would have to say that all of the things or almost all of them raised by our learned friends fall into that category. They bear some logical relevance to the assessment to be undertaken. That's the first sort of relevance. The second sort of relevance - and it doesn't arise in this case but it rises many times in this tribunal - is what you might call natural justice relevance; that is, has the Commission considered a point that's raised?

PN218

Has it regarded the point as relevant? Do its reasons reflect the fact that it's been raised; a type of natural justice relevance which is different to logical relevance and different to the third type, which is mandatory relevant consideration. But that sort of relevance doesn't arise in this case. Now, mandatory relevant consideration is different to the two other types of relevance. A mandatory relevant consideration is a very confined concept. What my learned friend said to you about the definition of a mandatory relevant consideration is, with the greatest respect, completely wrong. What my learned friend said - this is what she said in her opening submissions: where not specified in the statute, a mandatory relevant consideration depends upon the facts. That is completely wrong. That is 180 degrees wrong.

PN219

A mandatory relevant consideration depends exclusively on the construction of the statute. The facts have nothing to do with it. In their reply submissions the CFMMEU said something similar. Contrary to the - this is at paragraph 18 of their reply submissions:

PN220

Contrary to the respondent's approach, matters may be legally relevant in this sense even though they are peculiar to a particular factual matrix.

PN221

MR WOOD: Now, that was expanded, that submission, so that the proposition became that matters become mandatory relevant considerations even if they are peculiar to a particular factual matrix. That's not correct. They could well be logically relevant. They could be relevant in a natural justice sense in the sense that it's something that you need to consider because it's been put up for your consideration by the parties. But something is only a mandatory relevant consideration if on the proper construction of the statute, it mandates the decision maker has to take it into account and those type of considerations are likely to be very narrow and the reason for that is obvious, because it would be profoundly undemocratic for decision makers, tribunals and courts, to in effect write in to the legislation things that other decision makers must take into account.

PN222

That's the province of parliament. It's not the province of the courts or tribunals to insert words into the text of the Act. Therefore, the room to construe a statute as requiring every decision maker to consider a particular consideration as a mandatory one is quite narrow; very narrow. But the room for logical relevant considerations is very large indeed. If one thinks of it as a sort of - if you think of the mandatory relevant considerations as light, or the day, and the mandatory irrelevant considerations as the dark and the twilight, it's as if the twilight of the logically relevant considerations takes up 23 hours in the day. That's where most of the work is; the logically relevant considerations. The mandatory relevant considerations are things you have to take into account and the mandatory irrelevant considerations are things you may not take into account are very, very confined.

PN223

What does that mean? What does that mean for an appeal like this? It means that it's extremely difficult for our learned friends to get up and say what they've said and say, 'Look at this, look at this, look at this, look at this: these are all mandatory relevant considerations.' No, they're not. Are they logical relevant considerations? Yes, they were. Yes, they are. But there is no error in the decision maker below in treating those logical relevant considerations as having little weight or no weight. That is entirely within the jurisdiction of the decision maker below. That is what occurred. Just to make good that point, can I ask - I don't want to go to too many cases on this point but it is an important one because it's frequently misunderstood. Can I just ask the Bench to go to volume two of our authorities, tab 36?

PN224

This is the seminal case, the case of Sean Investments v Mackellar at pages 374 to 375. You see at the bottom of page 374:

PN225

As has been seen, a failure to take into account a relevant consideration - - -

PN226

MR WOOD: Does the bench have that?

PN227

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN228

MR WOOD: Quoting:

PN229

- - - is a permissible ground for attacking a decision.

PN230

MR WOOD: Then it's the next part I'd like to direct the Bench's attention to; the next sentence:

PN231

This does not, however, mean that a party affected by a decision is entitled to make an exhaustive list of all the matters which the decision maker might conceivably regard as relevant and then attack the decision on the ground that a particular one of them was not specifically taken into account - - -

PN232

MR WOOD: - - - which has been the exact attack you've heard this morning and reflected in the submissions. Then further on on that page 375 in the middle of the page at line 22, the paragraph that commences, 'In a case' - and this is very important:

PN233

In a case such as the present, where relevant considerations are not specified, it is largely for the decision maker in the light of the matters placed before him - - -

PN234

MR WOOD: We would say him or her these days:

PN235

- - - by the parties to determine which matters he regards as relevant and the comparative importance to be accorded to matters which he so regards. The ground of failure to take into account a relevant consideration will only be made good if it's shown that the decision maker has failed to take into account a consideration which he was in the circumstances bound to take into account for there to be a valid exercise of the power to decide.

PN236

MR WOOD: I'll just go to one more decision on this point, the decision of the New South Wales Court of Appeal in Lowe v Chief Commissioner of State Revenue - it's in volume one at tab 26, reported at [2013] volume 85 of the New South Wales law reports at page 86. This is the decision of Justice of Appeal Basten with President Beazley agreeing at paragraph 9. If you start at the second sentence in paragraph 9, if the Bench has that, 'The term relevant considerations?'

PN237

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN238

MR WOOD: Quoting:

PN239

The term, 'relevant considerations,' is widely misunderstood as used in leading authorities such as the Peko-Wallsend case. It refers to a matter in which the decision maker is bound to take into account. The obligation may derive from the express terms of the power conferring statute or may be implied from its subject matter, scope and purpose. A preferable term would be, 'mandatory consideration.' Further, a matter traditionally described as an irrelevant consideration is one which is prohibited because having regard to the subject matter, scope and purpose of the power being exercised, it can be seen to reflect an extraneous or improper purpose or to render the decision arbitrary or capricious.

PN240

MR WOOD: This last line is very important:

PN241

Between these two categories is usually a wide range of permissible considerations which the decision maker may weigh or disregard without committing an error of law.

PN242

MR WOOD: Our learned friends say, well, 'Look at One Key.' One Key is perfectly consistent with the traditional understanding of what a mandatory relevant consideration is and what a mandatory irrelevant consideration is and the fact that there are many things in the middle which are logically relevant considerations and if we - I'll just take you to the passage at volume two, tab 33 in One Key, which our learned friends rely upon and explain what the Full Court in One Key was saying. Sorry about that: paragraph 142 on page 555.

PN243

DEPUTY PRESIDENT GOSTENCNIK: Yes.

PN244

MR WOOD: This is the paragraph our learned friends refer to:

PN245

Paragraph 188(c), now (i)(c), is cast in very broad terms. It's intended to pick up anything not caught by paras A and B, thus any circumstance which could logically bear on the question - - -

PN246

MR WOOD: Logical relevance is what the court is talking about here:

PN247

- - - of whether the agreement of the relevant employees was genuine would be relevant. One obvious example is the provision of misleading information or an absence of full disclosure.

PN248

MR WOOD: Then after the citation, 'Another' - that is another logically relevant:

PN249

- - - circumstance is the likelihood that the relevant employees understood the operation of the various awards that would be affected by the agreement and the extent to which the wages and working conditions for employees under each of these awards would change for better or worse under the terms of the agreement.

PN250

MR WOOD: Then because the court had already found that content was a mandatory relevant consideration in terms of section 180(5), they distinguish between logical relevance and mandatory relevance and find that:

PN251

If we're wrong to conclude that the Commission is bound by section 180(5) - - -

PN252

MR WOOD: - - - conscious of the fact that it's hard to construe a statute to in effect write in another requirement as a mandatory relevant consideration:

PN253

- - - to consider the content of the employer's explanation of the terms of the agreement and their effect in order to be satisfied the agreement was genuinely agreed to, having regard to section 188(a)(i), then for similar reasons we would hold that this was a matter which was not only relevant - i.e. logically relevant to the question raised by para 188(c) - but was a mandatory consideration.

PN254

MR WOOD: Now, one can quibble as to whether or not content, however defined, should be regarded as a mandatory, relevant consideration for section 180(5) and section 188(i)(c). That's what the court has said. The Full Bench of this tribunal is bound by it. Obviously there has to be content given to the mandatory consideration of content. That's as far as it goes. None of the other things that are referred to in that paragraph are other than examples of what might be put before the Full Bench and what the decision maker might regard as having great weight or no weight at all. Once that is understood, that is once it's understood that none of the things our learned friends point to were mandatory relevant considerations, and going back to my previous point or our previous point, that it is in effect inconceivable that our learned friends get up on the ground that this decision was one that no reasonable decision maker could make, that's the end of it.

PN255

Because our learned friends haven't approached this case properly, they've approached it as if it's a free run - 'Let's just run the case again and see what we get' - because they haven't addressed themselves to the strict requirements to prove error according to strict rules when it's a discretionary decision, none of the things they've said constitute either of the grounds that are available. Can I move then to the next point, which I think is our seventh point, which is in assessing error and error in the sense we've just described, what does one look at? One looks at the decision. That's the thing that's being appealed from. One can look at the reasons for decision, and there are two sets of reasons. But one also must look at the undertaking. Why is that? Why must you look at the undertaking for assessing whether or not there's any error in the decision below?

PN256

The reason is the decision itself. When you look at the decision and look at the reasons for decision, this is what the Deputy President below said at paragraphs 99 to 102, which is at appeal book 30. Paragraph 99:

PN257

Karijini has provided written undertakings. A copy of the undertakings is attached to annexure A. I am satisfied the undertakings will not cause financial detriment to any employee covered in the agreement. The undertakings will not result in substantial changes to the agreement. In compliance with subsection (4) of section 190 of the Act, the bargaining representative's views regarding the undertakings was sought. The bargaining representative was provided with the opportunity to raise and address any objections he or she had with the undertakings proffered. No objection was raised.

PN258

101: Subject to the undertakings referred to above and based on the material contained in the application and the accompanying statutory declaration I am satisfied that each of the requirements of sections 186, 187, 188 and 190 are relevant to this application for approval have been met.

PN259

MR WOOD: Then the decision - the agreement was approved on 16 September 2019. That is the decision that's being appealed from; the decision where the satisfaction under section 186 was based upon - as the Deputy President says - the material contained in the application, the accompanying statutory declaration and the undertakings. That is the decision our learned friends have chosen to attack. They could have attacked the earlier decision. Why would you, because it's only an interlocutory decision saying, 'I've given you the opportunity to put in more evidence,' but they could have. They've attacked the later decision. That later decision, the decision that the Deputy President below was satisfied on that basis. That is what you have to construe. That's supported by the statute, of course, because section 191 says if the Commission approves the enterprise agreement the undertaking is taken to be a term of the agreement, as the agreement applies to the employer.

PN260

Then section 190(2) says:

PN261

The Commission may approve the agreement under section 186 if the FWC is satisfied that an undertaking accepted by the Commission under subsection (3) of this section meets the concern, the concern in subsection (1).

PN262

MR WOOD: But what is the power being exercised there; that the FWC may approve the agreement under section 186. That's what's being done. The satisfaction under 186 has been achieved because of a combination of the agreement and the undertakings which the Commission is satisfied meets the concern. That is what you have to look at. That is not to say, as the presiding Deputy President said to my learned friend, that an undertaking will always meet the concerns or should always be accepted. But that's the thing that has to be attacked in total on appeal in accordance with the strict rules which govern an appeal. You can't just hide the undertaking off and say, 'I don't want to have regard to that for the purpose of the appeal.' You've got to deal with it.

PN263

Once you deal with it the question then becomes, was it a mandatory relevant - sorry, our learned friend would say the reception of the undertaking is a mandatory irrelevant consideration, which of course it's not. Or was it not open to accept the undertaking? You can't win on those points. The eighth point that we wish to make is related. That is that our learned friends say - and this isn't a jurisdictional point, this is more a rhetorical point - that on our argument undertakings can cure deliberately false explanations. Well, they can. Now, it's discretionary. You might not accept an undertaking to deal with what is a deliberately false explanation. There might be circumstances where the Commission does. I can envisage circumstances where someone within a corporation has made a deliberately false explanation that has been corrected by other members within the corporation. That first person has been disciplined or fired or whatever and an undertaking is proffered.

PN264

There might be other circumstances where the false explanation is never corrected, no apology is proffered, no remedial action is taken and the Commission will say, 'I'm not prepared to accept the undertaking.' That's just entirely a matter for discretion for the Commission. Similarly, my learned friend says undertakings can't be considered when assessing whether employees had a genuine understanding of the agreement. It gets back to the point, the fundamental point I'm making under this heading, is that the appeal process and the decision to approve the agreement is based on the fact that the undertaking has been proffered and accepted. So when you come to be satisfied under section 186 of all the requirements, that satisfaction under 186 is on the basis of the agreement as voted up and the undertakings as proffered.

PN265

It might seem counter intuitive. That's the way the statute works. The ninth point that we wish to deal with relates to the question of whether Karijini failed to prove a legitimate business rationale for using Karijini rather than TRRC. Again, this ground does not meet the tests required for grounding an appeal but for the sake of completeness, we wish to say this: in the reply submissions at paragraph 144 my learned friend says there was insufficient evidence below to establish a legitimate business rationale. Insufficient evidence is not a ground of appeal. That's how much evidence there was, whether it's sufficient, what weight is given to it is entirely a matter for the Deputy President below. Then my learned friend says in the reply submissions below:

PN266

The onus of establishing such legitimacy was on the respondent below.

PN267

MR WOOD: That is not correct but it doesn't matter because insufficiency of evidence is not a ground. But Mr Butler, who is here in the Commission today, gave evidence that Roy Hill told him that Roy Hill required an enterprise agreement as a condition of awarding the contract. Mr Kentish didn't challenge this proposition. He cross-examined Mr Butler about why Rail Train decided to use Karijini. He didn't suggest that he was lying about Roy Hill requiring an EA and when one looks at it from a business perspective, one very much doubts whether that proposition could seriously be advanced. That evidence was accepted. Now for our learned friends to say that Karijini should have adduced more evidence about this unchallenged fact is not the way you conduct an appeal.

PN268

Our tenth point is related and it relates to the TRRC point. The statute sets up or focuses upon employers. The CFMMEU says in its reply at paragraph 140 that Karijini was required to join TRRC in making the agreement - sorry, they say our position was not that Karijini was required to join TRRC in making the agreement. There are a number of options available to the respondent which would have satisfied the requirements of both section 186(3) and 188(i)(c). The joining of TRRC in the agreement was but one option. What were these other options, according to our learned friends? The only answer seems to be in the reply submissions at 147:

PN269

As a first simple step, the respondent could have sought to negotiate with its existing TRRC employees for a new agreement reflecting the term of the new contract. Alternatively it could have negotiated for a multi-employer agreement.

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MR WOOD: So those things could have been done but what can't be done according to our learned friend is what the statute directs one to do; that is for the employer to make the agreement. The only other option on the basis of what our learned friends say, is for TRRC to make the enterprise agreement. That means our proposition is correct, that their position is Karijini couldn't make an enterprise agreement by itself without joining TRRC. Our learned friends say, well, in their reply submissions the suggestion - this is at 141 - that we advocate piercing the corporate veil is misplaced. This is what they say:

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Where related corporate entities engage in a single enterprise, they may for some purposes be treated as a single entity or might otherwise be treated differently to independent corporations. The notion is unexceptional and appears in numerous statutes including the Corporations Law and the Fair Work Act.

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MR WOOD: That's true. Statutes sometimes do pierce the corporate veil, but not this statute. This statute focuses on the employer and the employer's employees; whether those employees have genuinely agreed to the agreement, not whether some other group of employees has been disadvantaged or could have been involved or some other arrangement could have occurred. Now, the proposition - and this is the 11^th point - that somehow the moral authority of this agreement was affected such that it couldn't be said that there was genuine agreement was dealt with by the Deputy President below at paragraphs 168 to 177. It was found that the agreement was genuinely agreed.

PN273

I can't say that taking into account the position of the TRRC employees would have been a mandatory irrelevant consideration. You just can't do it. Having regards to the statute it's very hard to say certain things are things that are definitely ruled out and definitely ruled in. It is possible that each member of the Bench may have come to a different view. You might have taken that into account and might have formed the view that the moral authority of this agreement was questionable and therefore there was no genuine agreement. That possibility is open. But that's not what occurred. The Deputy President below assessed these things. It was the major focus of Mr Kentish's cross-examination and determined under the heading of - sorry, under a discussion about whether or not the agreement had moral authority at that point.

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Lastly, our 12^th point is our learned friend addressed on what was ground 1(f) of the notice of appeal but in the reply submissions ground 1(f) was said to be dropped. Having regard to the fact that it's been dropped I don't propose to respond to it.

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DEPUTY PRESIDENT GOSTENCNIK: Mr Wood, can I ask you this: the decision in Sean investments is a judicial review under the ADJR Act.

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MR WOOD: Yes.

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DEPUTY PRESIDENT GOSTENCNIK: Lowe appears to be in that context, although described as an appeal. It appears to be a decision akin to judicial review and indeed, the High Court's decision in Peko-Wallsend was also a judicial review decision and the question of relevant considerations is considered in the context of it being a judicial review. In House v King, the matter was an appeal from a judge to an appellate court. The High Court there described the circumstances in which an appellate court might exercise its own discretion to circumstances that include not taking into account some material consideration. It seems to be something different to mandatory consideration. Do you want to say anything about that?

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MR WOOD: We would understand the House v The King test to be - we understand the position or the way in which House v King is construed that a material consideration is a consideration that you're bound to take into account. It's not just one that you may take into account. Then I might - we like the language of mandatory relevant consideration because it actually explains what it is in a way that people can understand - - -

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DEPUTY PRESIDENT GOSTENCNIK: Sure.

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MR WOOD: - - - whereas relevant consideration, material consideration are slightly more opaque. It means the same thing.

PN281

DEPUTY PRESIDENT GOSTENCNIK: Yes, all right; thank you. Yes, Ms Howell.

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MS HOWELL: Thank you. Most of those matters are dealt with in our submissions in reply and we will obviously rely on those. The CFMMEU is not seeking to bifurcate the Deputy President's decision. What happened is obviously that the Deputy President identified what were the defaults in section 180(5) and then proceeded on the rest of her considerations on that basis. So that necessarily flowed through every part of her subsequent decision and you cannot analyse the subsequent decision without first identifying whether there was error in that process and it's ironic that what the respondent is really asking the Commission to do now is to undertake an exercise which was never undertaken by the Deputy President, as if the Tribunal was considering the matter at first instance; that is looking at the section 180 question through the prism of the undertaking.

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The issue of the way in which the error alleged is characterised, we have dealt with that in our reply submissions. The Full Bench in Diamond Offshore dealt with that and we have cited that in paragraph 12:

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An error in relation to satisfaction is a question as to whether the decision maker has reached a state of mind which must be formed reasonably and on a correct understanding of the law.

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MS HOWELL: So that's the task which is applied and as we accepted in our written and oral submissions some of those considerations will also involve discretion and some won't. The parties are not really at odds on that. But I think where we really part ways is on the question of the proposition that you don't have to look at the facts to determine what a relevant consideration is in any given case. The other matters are not specified in the Act. It goes without saying that what is mandatory is considered by reference to the terms of the Act, a necessary implication. But you can't determine that without looking at the facts in any given case. I mean, for example, it's well known that in the case of the BOOT, the Commission has to consider every detriment of any significance.

PN286

Each of those is a mandatory relevance consideration. In the same way, under section 108(5), the Commission cannot exercise its function under the statute unless it considers the content of the explanation which necessarily involves the way in which particular terms were explained. You can't look at the content without looking at how terms were explained if they brought about a change in the employee's circumstances and that follows from One Key Workforce and numerous decisions of this Commission at Full Bench level, all the more so if there is a false or misleading explanation given, as we say was the case with the redundancy. How can the Commission satisfy itself that all reasonable steps were taken without considering the nature of the specific changes brought about by the agreement?

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So in that sense, however you characterise mandatory or material, consideration of those terms fell within both of those descriptions. You can't analyse content without analysing changes and for that reason we say, obviously, where there are significant changes which weren't considered the Deputy President hasn't exercised her statutory function, because she hasn't taken into account material matters. There is nothing in that proposition which is contrary to the authorities which the Commission was taken to by Mr Wood. If the respondent was right about this issue that they would essentially - and I think they've been bold enough to make this submissions - essentially there would be no particular explanations of particular terms which would be material considerations that were required to be taken into account, no matter how egregious the failure to explain a particular term.

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On the respondent's argument, that would be entirely a matter within the discretion of the member, subject only to the overall legal unreasonableness test, which the respondent says applies. In my submission that cannot be correct. In respect of the earlier arguments about the first ground of appeal, by the same token if the Deputy President did not bring her mind to or turn her mind to those matters, then the satisfaction could not be reached and it's not - I think my learned friend did understandably exaggerate the extent to which the bar is placed; the degree of difficulty of reaching that level of satisfaction on the basis of the tests as referred to in Diamond Offshore:

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A state of mind which must be formed reasonably on a correct understanding of the law - - -

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MS HOWELL: - - - of course means that relevant considerations must be taken into account and additionally, if there is a matter which in the Commission's view on appeal was, in the case of 180(5), something that manifestly was a reasonable step which wasn't taken then in my submission, error is established and that's not just a matter of a different opinion; it's a matter of satisfaction couldn't reasonably be reached if a relevant consideration, a relevant detriment was a reasonable step and wasn't explained or alternatively, if there was a misleading explanation. I think the same point was made in a lot of different ways in respect of relevant considerations and I think I can move to the question of the finding about the employees having sufficient, genuine understanding of the agreement. It was referred to our reply at paragraph 144: insufficient evidence of finding of fact is absolutely an error, we say.

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It was put that there was no error in that finding and it was open to the Deputy President so to find. We gave the reasons why we said that finding was not open. It was quite simply the only evidence was that the employees knew that the agreement provided for higher remuneration than the award. That was the only evidence and we said on the basis of that evidence a finding that they were fully informed as to the effect of the agreement, even as far as remuneration was concerned, was simply not available and we maintain that submission. It's not a matter of discretion, it's a matter of whether the finding was open and we say it wasn't. Finally, with respect to the legitimate business rationale, first of all - I mean, the reason we dealt with that at all was because it was relied on by the respondent so we merely say that that couldn't be a countervailing factor to the factors we relied on. That's all we rely on it for.

PN292

But it's said we insisted that an agreement had to be made with TRRC or with TRRC and Karijini. That's simply not the case. There were a number of options. One of those options was that they could have transferred all employees to Karijini, as they subsequently did, and then made an agreement. Really, that is a level of detail - it's the only thing which the respondent has gone into any detail at all in engaging with the actual issues and it's a relatively minor issue but suffice it to say no attempt was made to engage with the employees who were actually performing the work and that's a relevant consideration. I think we otherwise rely on our written submissions in reply, if it please the Commission, unless there's anything else.

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DEPUTY PRESIDENT GOSTENCNIK: Ms Howell, again, you shouldn't take this as my or any of us having formed any concluded view on the matter but if we are to uphold one or more of your grounds of appeal, what would you say should happen?

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MS HOWELL: If it please the Commission, it would depend what the ground was.

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DEPUTY PRESIDENT GOSTENCNIK: Yes, of course.

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MS HOWELL: We can appreciate that if certain findings were made, questions of remittal or reconsideration would arise. If that were to be the case, we would say that the matter should be referred to the Deputy President for reconsideration.

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DEPUTY PRESIDENT GOSTENCNIK: Yes, all right. Mr Wood, do you have a view about that? I mean, it obviously depends on the - - -

PN298

MR WOOD: If it was on one of the grounds that wasn't raised below, and we have said in our written submissions that we would proffer undertakings in relation to that, that perhaps could be dealt with by one of the members of the Bench. If it was more substantial then - I think we just have to wait and see.

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DEPUTY PRESIDENT GOSTENCNIK: Yes, all right. It might be, depending on what if anything, in the event that we are inclined to uphold one of the grounds of appeal, depending on it, if we are unsure about what should happen perhaps, we might just ask for brief submissions from the parties. Again, you shouldn't take that as an indication one way or the other that might - I'm just trying to short-circuit things in the event that that might occur. All right, thank you. I usually like to thank the parties for their helpful submissions so please don't interrupt me. Thanks. I thank the parties for their helpful submissions, both in writing and orally and we will reserve our decision and adjourn, thank you.

ADJOURNED INDEFINITELY [1.48 PM]