AG2001/6916, Transcript of Proceedings [2002] AIRCTrans 2436 (2 July 2002)

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TRANSCRIPT OF PROCEEDINGS

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

COMMISSIONER RAFFAELLI

AG 2001/6916
AG 2001/6917
AG 2001/6918

APPLICATIONS FOR VARIATION OF
CERTIFIED AGREEMENT TO
REMOVE AMBIGUITY

Application under Section 170MD(6) of the Act
by Woolworths Ltd re Franklins Limited
National Retail Team Agreement 2001,
Franklins Limited Big Fresh
Enterprise Agreement 2001 and Franklins
Limited SDA Victoria Agreement 2001

SYDNEY

9.40 AM, TUESDAY, 13 NOVEMBER 2001

PN1

THE COMMISSIONER: Yes, if I could have the appearance please?

PN2

MR S. JAUNCEY: Yes, Commissioner. I appear for Woolworths Ltd, or more correctly I seek leave to appear for Woolworths Ltd. With me, Mr G. Carr, Woolworths National Employee Relations Manager.

PN3

THE COMMISSIONER: Thank you.

PN4

MR J. MERLINO: If it please the Commission, I appear on behalf of the Shop Distributor and Applied Employees Association.

PN5

THE COMMISSIONER: There is no objection to Mr Jauncey being granted leave?

PN6

MR MERLINO: No objection.

PN7

THE COMMISSIONER: Yes, thank you, Mr Jauncey. It's your application?

PN8

MR JAUNCEY: Yes, thank you, Commissioner. Commissioner, I take it from the way that the applications were announced that the three applications are being heard together this morning?

PN9

THE COMMISSIONER: Yes.

PN10

MR JAUNCEY: I will treat them in that fashion. Before I actually continue to the substance of the applications, I note that all three applications are applications made by Woolworths Ltd for variations to three agreements binding on or made by Franklins Ltd to apply in respect of its supermarket operations. I should note at the outset, Commissioner, that under Subsection 170MD(6) an application may only be made by or bound by a relevant agreement. Woolworths concedes for the purpose of these proceedings that it is bound by the three agreements in question, as a result of the transmission of business provisions in Section 170MB of the Act. The transmission arose out of the fact that Woolworths acquired 67 Franklins supermarkets by an agreement by July this year.

PN11

Those supermarkets are spread across the country and as such the three agreements which are the subject of applications here today became binding upon Woolworths as a successor to the business or part of the business of Franklins Ltd. There is one matter that I should just tidy up first of all. Under Rule 54.3 of the Commission rules, Woolworths was required to serve a copy of the applications on the other persons bound by the relevant certified agreements. We have an issue with that. The real problem being that Woolworths is not aware of each and every person who may be bound by the relevant agreements. First of all, each of the agreements as I understand it is a division 2 agreement and as such the employees of Franklins and any successor employer are all themselves bound by the agreement.

PN12

Secondly, as the Commission may be aware, we understand that Franklins has been through the process of divesting itself of other parts of its supermarket operations. We are not exactly sure what stage those other transactions may be up to and most importantly, we also understand that there may be situations where some of the relevant supermarkets might then be onsold to individual operators that Woolworths simply does not know who they are or what has happened in that regard. For that reason an application was forwarded to the Commission along with the other applications, that application being an application for substituted service in respect of each of the other three applications for variation. Does the Commissioner have the application for substituted service?

PN13

THE COMMISSIONER: Yes.

PN14

MR JAUNCEY: Effectively the application of the service we are seeking is an order that it be satisfactory service, that the various applications be served on Franklins Ltd and also on the Shop Distributive and Allied Employees Union and service has in fact been effected on both those persons. So I formally seek an order for substituted service in that regard, Commissioner.

PN15

THE COMMISSIONER: Yes. What is your attitude, Mr Merlino, on the matter?

PN16

MR MERLINO: Yes, we have no objections, Commissioner.

PN17

THE COMMISSIONER: Yes, thank you. On the basis of what you have put, Mr Jauncey, that the Commission exercises discretion to depart from the strict provision of the rules and from that part of the rules that requires service on all parties and instead is asked to make an order for substituted service, it seems to me that in the circumstances notification on Franklins, you said, and the SDA is sufficient and appropriate. A formal order in that regard will issue in due course.

PN18

MR JAUNCEY: Thank you, Commissioner. On that basis I will turn to each of the individual 170MD(6) applications before the Commission today. The first application is application AG 6916 of 2001. That application seeks a variation to the Franklins Ltd National Retail Agreement 2001. The variation is sought under Subsection 170MD(6) of the Act. Now, Commissioner, Section 170MD(6) allows the Commission to make an order varying a certified agreement for the purpose of removing ambiguity or uncertainty. The authorities make it clear that the process to be undertaken by the Commission under Section 170MD(6) is a two-step process. The first step is for the Commission to determine whether an ambiguity or uncertainty exists.

PN19

The second step is if the Commission so determines, the Commission can then exercise its discretion to decide whether in the particular case it should vary the agreement and if so, how the agreement should be varied. But I would emphasise that that second step is discretionary and it is one which could be exercised in different ways in different circumstances. The first issue is ambiguity. In relation to the Franklins Ltd National Retail Agreement 2001 we say that the ambiguity arises in relation to clause 1.3 of that agreement. That clause states that the agreement shall be binding on all Franklins, No Frills, Big Fresh and Fresh outlets, defined as the employer, New South Wales and ACT excluding Big Fresh, Queensland and South Australia, the Shop Distributive and Allied Employees Associations, the SDA, and all team members engaged at those outlets who are covered by the classifications in the agreement, defined as the team members.

PN20

Commissioner, we say that the ambiguity in relation to this clause arises out of the fact that the clause confuses the distinction between the persons bound by the agreement and the extent of application of the agreement. For instance, the clause talks of the agreement being binding on certain outlets, for instance binding on No Frills outlets. Now the problem is that the various outlets and stores themselves are not actually separate, legal entities. They are not separate companies, nor are they any other separate legal entity. In our submission, what they coverage clause is really intending to do is to make it clear that the agreement is binding on Franklins Ltd or any successor in respect of certain outlets.

PN21

This is where we get into the further ambiguity. We accept that the agreement is now binding on Woolworths but we say that it is binding on Woolworths in respect of any outlets operated by Woolworths which are badged as Franklins, No Frills, Big Fresh or Fresh outlets and the simple answer in our submission is that there are no longer any such outlets operated by Woolworths under that badging or that labelling. Instead each outlet that has been purchased by Woolworths has been rebadged as a Woolworths store. The signs have been changed to refer to Woolworths. The layout of the stores has been modified to conform with Woolworths standards.

PN22

Goods have been retagged to carry Woolworths price tags and the employees of course now wear Woolworths uniforms. The effect, we say, is that while the Franklins National Retail Team Agreement binds Woolworths as a party, it has no effective application in its own terms because Woolworths no longer operates any Fresh, No Frills, Franklins or Big Fresh outlets. Now we contend strongly for that interpretation. In fairness I should say that the union certainly does not concede that point and argues strongly that that is not the way in which the coverage clause of the agreement is to be read.

PN23

Now Commissioner, in this case we say that there is no obligation on the Commission to determine which interpretation is correct or incorrect. It's sufficient for the Commission to find that there is an ambiguity and that would be enough to vary the agreement and the parties, if the Commission does find that there is an ambiguity, the parties are in agreement as to the nature of the variation that should appropriately be made. Just on that point, I would refer the Commission to one case. It's the Victorian Public Transport case, print M2454 and I tender a copy.

PN24

THE COMMISSIONER: Yes, I needn't mark that.

PN25

MR JAUNCEY: Certainly. Commissioner, this is a decision of a Full Bench of the Commission constituted by Vice President Ross, Senior Deputy President POlites and Commissioner Grimshaw. It relates to the Public Transport Commission of Victoria. The decision was made under the former Industrial Relations Act 1996. However, the relevant provision then was in very similar terms to subsection 170MD(6). The Commission in this case looked at the circumstances in which it should find whether or not am ambiguity existed. It referred to a number of decisions of the Federal Court including a decision by his Honour, Mr Gray J. At the top of page 4 of the internet copy of the decision the Full Bench states that:

PN26

In our view the approach adopted by his Honour, Gray J, in the PKIU case is a sensible one and should be applied by the Commission in dealing with applications ...(reads)... can be made out for more than contention.

PN27

Commissioner, we say that that is exactly the circumstance here in relation to the Franklins National Retail Team Agreement 2001 and whilst we contend strongly for our interpretation of the clause we accept that it is worded in a sufficiently ambiguous fashion as to raise a real question as to what the coverage and operation of the clause is in the particular circumstances before the Commission. The next application in matter AG 6917 relates to the Franklins Ltd Big Fresh Enterprise Agreement 2001. Commissioner, the Big Fresh agreement is worded in somewhat different terms to the Franklins National Retail Team Agreement.

PN28

Clauses 1.3 and 1.4 of the Big Fresh enterprise agreement are relevant here. I won't read them out. Suffice it to say that clause 1.3 deals with application and clause 1.4 deals with the parties bound. Despite the attempt to separate the issues of the persons on whom the agreement is binding and issues of application, an ambiguity still arises in our submission in exactly the same fashion as it arises in relation to the Franklins National Retail Team agreement. That is because clause 1.3 refers to the agreement being binding Big Fresh Markets and once again the focus is on the outlets on which the agreement is binding and on the outlets to which the agreements apply.

PN29

In this case, now that those outlets have been rebadged and Woolworths no longer operates any Big Fresh Markets, whether in the New South Wales, the ACT or elsewhere, we say that there is a real ambiguity about the manner in which clauses 1.3 and 1.4 of the Franklins Limited Big Fresh agreement operate in practice. Accordingly, we again submit that the Commission should find an ambiguity and should exercise its discretion to vary the Big Fresh agreement in the manner sought in the application. The final application relates to the Franklins Limited SDA Victoria Agreement 2001. I should say at the outset that this agreement is couched in quite different terms from either the National Retail Team agreement or the Big Fresh agreement.

PN30

Clause 4 of the Franklins Limited Victoria agreement is relevant. It states that the :

PN31

The agreement shall be binding on the ...(reads)... in Victoria, hereinafter called the employees.

PN32

Now this clause doesn't operate by reference to the various outlets or the badging of a particular supermarket. In that sense we say that the ambiguity here is almost the reverse of the ambiguity in the other two agreements. First of all, and it's important to look at clause 4 of the agreement fairly carefully in this regard, Commissioner, but first of all clause 4 could be read in a way that a successor employer such as Woolworths would be bound by the Franklins Ltd Victoria agreement in respect of all stores operated by Woolworths and not simply the former Franklins stores. In effect, on one reading of clause 4 the Franklins agreement could roll out to have a broader operation than ever presumably intended.

PN33

What that would also mean is that employees who have previously enjoyed what are generally superior terms and conditions under agreements negotiated by Woolworths with the SDA could suddenly find themselves effectively covered by this new agreement extending the scope of its own application. The second problem with clause 4, Commissioner, is that the clause doesn't actually strictly limit the geographical operation of the agreement at all. This is because the reference to in connection with the employer's operations in retail stores within Victoria, as that phrase appears in the clause it only actually qualifies the extent of the employees who are bound.

PN34

It doesn't actually qualify the extent to which the union is bound. Nor does it qualify the extent to which Franklins Ltd or any successor employer is bound. In order to actually qualify the application of the agreement to the union or to the employer, the clause would have had to have been rewritten so that a comma would have had to have been put in after the words "engaged by the employer" in the second-last line of the clause and then the words "hereinafter called the employees" would have had to have been moved so as to follow that comma which meant that the final words, "in connection with the employer's operations in retail stores within Victoria" qualified the extent to which all the parties were bound rather than simply qualifying the extent to which the employees were bound.

PN35

On that basis we say that there is a real uncertainty and ambiguity as to the meaning and operation of clause 4 of the Franklins Ltd Victoria agreement and we submit that the Commission ought appropriately exercise its discretion to vary that agreement in the manner set out in the application. If it please the Commission.

PN36

THE COMMISSIONER: Mr Jauncey, can I just ask you this. 1) you say there is an ambiguity and 2) the order as sought is what you believe is the correct way of reading the agreement, ie it doesn't apply to Woolworths?

PN37

MR JAUNCEY: Yes, Commission. That's correct. We say that the orders sought effectively reflect what on our submission is the case anyhow. That is not conceded by the SDA, of course.

PN38

THE COMMISSIONER: Yes, I appreciate that.

PN39

MR JAUNCEY: But it is an exercise of discretion and one could imagine another case where the Commission might quite properly exercise its discretion so as to vary an agreement to make it binding or to clarify that it was binding.

PN40

THE COMMISSIONER: Yes.

PN41

MR JAUNCEY: In this case, yes, Commissioner.

PN42

THE COMMISSIONER: Alternatively, and no one is suggesting this, it is possible that the clause that you suggested in the first agreement, is it possible where it says: "and it will apply to Franklins outlets", you could have put in brackets, not those Franklins outlets rebadged and now owned by Woolworths and called Woolworths in which employees walk around with Woolworths badges, etcetera. You could have written it that way. What you say is that is all very nice but the same effect is achieved by the proposed order you put. It's a cleaner way of - - -

PN43

MR JAUNCEY: Yes, yes, Commissioner.

PN44

THE COMMISSIONER: Yes, thank you. Yes, Mr Merlino?

PN45

MR MERLINO: Thank you, Commissioner. Commissioner, I will be relatively brief. As noted by Mr Jauncey, the association certainly does not concede that there is an ambiguity in the operation of the parties bound clauses in those three agreements. We also acknowledge and note to the Commission that there is a commitment between Woolworths Limited and the SDA outlined in the memorandum of understanding that outlines a number of protections of ex-Franklins employees now employed by Woolworths Ltd. In the light of that, Commissioner, we would not proceed any further with any comments, simply to say that we don't concede that there is am ambiguity. If it please the Commission.

PN46

THE COMMISSIONER: Yes, thank you. I have heard the parties in respect of all three matters and although the agreements are somewhat different I think the view of the applicant is that they all contain an ambiguity. That is disputed by the union. The central theme of the ambiguity as suggested by the company is that the respondency or the parties bound operation of the agreements does not sit well with the scope of the agreement or the extent to which the agreement applies, in particular or certainly in respect of two of them, the question of the rebadging of stores that formerly were Franklins but are now clearly Woolworths stores creates not only an ambiguity but perhaps even uncertainty.

PN47

I note that is not a view shared by the union. On the basis of the submissions I find and accept the submissions of Mr Jauncey, that there is an ambiguity in respect of all three of the agreements. That having occurred, it's clear that Woolworths is a party bound pursuant to Section 170MB and as a result pursuant to 170MD(6) it is able to make the application and to have the ambiguity clarified or a variation made to the agreement. I have noted the nature of the ambiguity and in the end am prepared to accept that the proposed wording for a variation to the three agreements suggested by the applicant is appropriate and is a convenient method of dealing with that ambiguity.

PN48

As a consequence of that formal orders in terms of those proposed as drafts by the applicants will issue shortly. The orders will come into effect from - - there is no problem with them taking effect from today?

PN49

MR JAUNCEY: Today would be fine please.

PN50

THE COMMISSIONER: From 13 November 2001 and will remain in force for a period of 12 - well, and will remain in force for the period of the life of the agreement, I think.

PN51

MR JAUNCEY: I am not sure whether you are required to do pick a specific date. It may be that it would be appropriate to pick in each case the nominal expiry date of the agreement, recognising that the orders will continue in force under the Act after that date.

PN52

THE COMMISSIONER: Yes. In fact I think it would be appropriate for the applicant to now provide the Commission with appropriate copies both of the fresh copies of the substituted service orders and the variation orders. As I said, the operative date will be 13 November 2001. On that basis these proceedings are now adjourned.

ADJOURNED INDEFINITELY [10.16am]