C2001/2989, Transcript of Proceedings [2002] AIRCTrans 3658 (19 September 2002)

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TRANSCRIPT OF PROCEEDINGS

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

SENIOR DEPUTY PRESIDENT DUNCAN

C2001/2989

COMMONWEALTH BANK OF AUSTRALIA
EMPLOYEES AWARD 1999

Application under section 113 of the Act
to vary re redundancy

SYDNEY

9.40 AM, WEDNESDAY, 4 SEPTEMBER 2002

Continued from 3.9.02

PN1314

THE SENIOR DEPUTY PRESIDENT: Yes, Mr Lawrence?

PN1315

MR LAWRENCE: If your Honour pleases, just three matters before I continue with my submissions, two concerning cases and another one concerning an exhibit. Yesterday I made reference to a decision of Munro J in a matter that is sometimes referred to as Linfox. It is a CFMEU v Linfox matter. It is print Q2603. I had copies here and I overlooked them. Could I pass to you, a copy of that decision.

PN1316

THE SENIOR DEPUTY PRESIDENT: Thank you.

PN1317

MR LAWRENCE: I just want to draw your Honour's attention to paragraph 29 of that decision, and it is on - at least on my print 8 of 12 and on the third line of paragraph 29 his Honour says:

PN1318

In my view the analysis supplied by a recent Full Bench decision to the limits on the power in Section 298Z to vary an award or agreement to remove an objectional provision applied by analogy to the power in Section 170MD(6)...

PN1319

In other words, the power must be exercised to remove any ambiguity. It may not appropriately be used to re-write an agreement to install something that was not inherent to the agreement when it was made. That is all I wish to refer to there. That, of course, is picked up and consistently subsequent decision some of which I refer to and the obvious point being, we say, that what is proposed here is something that was not inherent to the agreement when it was made.

PN1320

The second matter concerns the PP consultant's case, or rather what flowed from that and what I would like to pass to your Honour is the decision of a Full Court of the Federal Court in Stala Call Centres v CEPU. It is reported as [2001] FCA 106; 2001 106 FCR 302 and what can be said about that is that Stala Call Centres operated a call centre on behalf of Telstra. Telstra of course, conducts a business in the telecommunications industry. The union, the CEPU and other unions contended that the appellant was bound by certain awards and agreements which bound Telstra and pursuant to Section 149(1)(d) and 170M(1) of the Act those awards bound the Stala Call Centres.

PN1321

At page 303 of the Federal Court reports and paragraph 5 of the judgment, it said Stala was incorporated on 13 May 1998 as a joint venture between Telstra and Excel Pacific Proprietary Limited, a subsidiary of Excel Global Services, a company based in the US. Again there's similarities between that situation and the situation here but what I would like to do, just briefly your Honour, is take you to page 310 of this report to paragraph 29 of the judgment where the Full Court refers to the PP Consultant's case. The Court refers to the PP Consultant's case when it was in the Federal Court and after the quote, the joint judgment goes on:

PN1322

In the light of the observations in the joint judgment of the High Court, especially at 655 to 09, quoted above, it is no longer sufficient to ask whether ...(reads)... characterised it substantially corresponds with the character attributable to the transferred business activities in the hands of the new employer.

PN1323

Then the next paragraph is relevant but I won't read it as is the next paragraph but could I start at about half-way through paragraph 31, after the reference to calls from Telstra customers. That is:

PN1324

It is the case of the respondents that the appellant has taken over from Telstra part of Telstra's business, namely that part of Telstra's business which involves the ...(reads)... However, by its statement of claim the first respondent pleaded that Telstra is a corporation which conducts businesses in the telecommunications industry.

PN1325

I will not read the rest but it is relevant to the issue in the present case and again there's reference to what the High Court said. Although perhaps I should read this part. It is about three-quarters of the way down, starting from "however".

PN1326

However, the making of those responses is not a distinct part of Telstra's business within the meaning of section 149(1) as explained by the High Court, any more than, for example, cleaning undertaken as a necessary aspect of the conduct of restaurant is part of the business of the restaurateur. An analogy may be drawn with the business of banking considered in PP Consultants.

PN1327

Again, the following paragraph is relevant but I won't read them, your Honour. What I say in relation to that is similar to what I said in relation to PP Consultants, that is that it demonstrates that what we had in September of 2000 in respect of Colonial and EDS was not a transmission of business.

PN1328

The third matter I wanted to deal with is in respect of exhibit PF41. You might remember, your Honour, that there was an issue at one stage about exhibit PF41 and whether it was the complete reproduction of the original document and it was explained by Mr Douglas that some of it had been deleted because of an issue of privilege. It was claimed or thought that there was a privilege attaching to the part that was deleted. We have had some contact since that time and it is agreed that the full document can go into evidence. The easiest course might be to simply remove PF41 as is presently tendered and put in this document.

PN1329

THE SENIOR DEPUTY PRESIDENT: And substitute.

PN1330

MR LAWRENCE: Yes.

PN1331

THE SENIOR DEPUTY PRESIDENT: Yes, you will do that now will you?

PN1332

MR LAWRENCE: Yes, your Honour. You will see, your Honour, that first paragraph and one of the paragraphs towards the end refers to contact with Free Hills and it is evident that the matters that are recorded in the document, in the form that it was tendered previously, were matters that were prompted by some contact with the lawyers.

PN1333

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1334

MR LAWRENCE: I think in the end it does not change things much. It simply indicates how those matters came to be discussed rather than anything of substance.

PN1335

THE SENIOR DEPUTY PRESIDENT: Anything of the advice?

PN1336

MR LAWRENCE: Yes. There's just one other thing I should say arising out of yesterday and that is in relation to the exception matters. Mr Douglas has said that that is to be held over. He would like that held over to await the outcome in relation to the other matters. In my submission, he shouldn't be able to do that. He shouldn't be able to sit on an application to reserve your rights. This matter has been agitated on the basis that the exceptional matters order is part and parcel of the group of issues before the Commission.

PN1337

It was part and parcel of the application that was made in December for a Full Bench reference. In fact, it was the very basis upon which a Full Bench reference was sought, that is, it was advanced as an inextricable part of these issues and we don't think it is fair that the interveners and, perhaps, even the FSU, but they can speak for themselves, should be put in a position where a number of the issues are brought out at this stage for agitation with the possibility that something at a later stage will be resurrected. It is just not fair.

PN1338

We thought that the matter would be agitated in these days, and we shouldn't have to come back at a later stage. That is, we are hopeful, of course, of favourable answers on the questions that Mr Douglas wants the Commission to determine at this stage. We think it is unfair that our people should be threatened with the re-agitation of the exceptional matters aspects later on.

PN1339

THE SENIOR DEPUTY PRESIDENT: Yes. What do you say, Mr Ginters?

PN1340

MR GINTERS: Well, your Honour, as Mr Lawrence has said, the matter is before your Honour. It was pressed before your Honour in the reference applications. It is strange, to say the least, that it should be called then to be revisited if there is unfavourable outcome. The material is before the Court. It should be part of the application that is presently before the Commission. I have nothing really further I can add, your Honour.

PN1341

THE SENIOR DEPUTY PRESIDENT: Mr Douglas?

PN1342

MR DOUGLAS: Your Honour, I think I would like to think about that a bit further but, your Honour, that application is before the Commission to do some work if the Commission determines that it is unable to vary the certified agreement in accordance with 170MD(6), and until a determination of - our primary position is that until a determination is made on that, then one won't know whether the exceptional matters order application is to go forward. I'm happy to address it but our preference would be for it to be stood over. We will give some consideration to that matter, your Honour, further consideration.

PN1343

THE SENIOR DEPUTY PRESIDENT: Yes, you mean not give a direct answer at the present time?

PN1344

MR DOUGLAS: Yes.

PN1345

THE SENIOR DEPUTY PRESIDENT: Yes, I will do that. I might just mention something that has occurred to me as a result of this little matter. The matter appears to be one in which I would be assisted if the parties were to identify briefly, obviously, the issues which the Commission is called on to address in any decision it might make in the whole of these matters. That is not for now. That is for later but I just raise that with you as being something that I will be returning to at the appropriate time. Now, you have finished your housework?

PN1346

MR LAWRENCE: Yes. Well, perhaps I should say one thing in relation to the exceptional matters and move on. Mr Douglas is going to give consideration to the exceptional matters. It may be that the exceptional matters will be addressed tomorrow when I'm not here. I would expect that I wouldn't be saying anything that the FSU would not be advancing. I think we have a similar issue there. There are questions about section 89A(7) and the requirements, and the provisions of section 120A but, obviously, they can be put without me and probably just be duplicating what would be said on behalf of the union in that regard.

PN1347

One thing I would foreshadow and that is that under section 120A, there is a subsection which says that an exceptional matters order can't operate for more than 2 years. There is a question as to whether it can have retrospective operation anyway but on the basis that it can have retrospective operation, it would be my submission that it would be an order made by the Commission on a particular day with retrospective operation from that day. Now, obviously, it can't be for more than 2 years. You can't make something retrospective for more than 2 years.

PN1348

The critical events in this case are more than 2 years old. That is, it was 1 September 2000 which was transmission date. We are now, I think, 4 September 2002.

PN1349

THE SENIOR DEPUTY PRESIDENT: Yes, very convenient.

PN1350

MR LAWRENCE: Yes.

PN1351

THE SENIOR DEPUTY PRESIDENT: Nothing hangs on that it is just that it is a submission that can now be made.

PN1352

MR LAWRENCE: Yes.

PN1353

THE SENIOR DEPUTY PRESIDENT: It couldn't have been made last - not as pointedly as that last week.

PN1354

MR LAWRENCE: Yes, but there are some interesting questions.

PN1355

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1356

MR LAWRENCE: For example, could the Commission, limited to 2 years, make an order from, say, 31 August of 2000 through to 31 August 2002 and make that order in September 2002? That is, make an order that is wholly retrospective and not current?

PN1357

THE SENIOR DEPUTY PRESIDENT: The Coal Industry Tribunal could and did but those days are long gone. The Commission would have to consider what you putting, obviously.

PN1358

MR LAWRENCE: Yes, and the subsection says that you cannot renew - sorry, you cannot extend the order, that is, a Full Bench decision in which that is referred to, and I just mention that. I don't want to speak to it. In print R0005, one of the Gordonstone cases, a Full Bench looked at the question as to whether or not there had been a purported extension of an order. They decided that there wasn't. They have referred to the explanatory memorandum that accompanied section 120A, as it was going through the legislative process, and they quoted part of it which was:

PN1359

The purpose of limiting the life of an exceptional matters order is to encourage the parties to reach agreement on the matter concerned.

PN1360

The Full Bench said: well, clearly, you can't extend it but you can still have another application for another exceptional matters order. There are a number of questions about what the nature of an exceptional matters order is anyway. They would need to be addressed. On top of that, there would be the question as to what would happen if you had an exceptional matters order that operated on 1 September 2000 that ceased to operate on 1 September 2002. Would the rights that were temporarily overridden at that stage revive?

PN1361

So there are a number of questions, technical questions, that arise in relation to an exceptional matters order which would need to be dealt with, it seems to me, but as I said, I don't think that I would be able to add to what would be said on behalf of the union. I wouldn't want to be specifically heard on the matter so if it is to go ahead this week, then I would be quite happy to adopt the - - -

PN1362

THE SENIOR DEPUTY PRESIDENT: I see.

PN1363

MR LAWRENCE: - - - position adopted by the union on that matter. So that does bring me to those remaining matters.

PN1364

THE SENIOR DEPUTY PRESIDENT: Do the parties want me to give my decision on the claim for legal professional privilege now?

PN1365

MR LAWRENCE: I - - -

PN1366

MR DOUGLAS: Yes, your Honour.

PN1367

MR LAWRENCE: Yes, if it is convenient, your Honour.

PN1368

THE SENIOR DEPUTY PRESIDENT: Well, I have made it so I might as well give it. In these proceedings discovery has been made by the Colonial CBA Group of three documents for which legal professional privilege has been claimed. I have with the consent of the parties and in accordance with common practice, examined the documents for the purpose of making my ruling as to whether or not they have that protection. The claim arises in proceedings in which the Colonial CBA Group seeks variations to awards and amendments to certified agreements to remove any right that may or may not have existed or does exist in relation to redundancy pay in circumstances briefly described out outsourcing.

PN1369

As part of the process there were presentations to affected staff outlining and explaining the proposals and most relevant to the particular present issue, claims on behalf of some former employees that the group acted deceitfully in withholding certain views of those rights. The documents are described as follows: (1) E-mail from Milano Pellegrini to Irene Lyson dated 1 August 2000. Document marked "privileged and confidential" for the purposes of relaying legal advice. (2) E-mail from Russell Scrimshaw to Milano Pellegrini dated 28 July 2000. Document marked "privileged and confidential" for the purposes of relaying legal advice. (3) E-mail from Julie Crapis on behalf of Peter Hill to Milano Pellegrini dated 28 July 2000 regarding E-mails to Russell Scrimshaw.

PN1370

The group claims in respect of each document legal professional privilege on the ground that the document is prepared for the dominant purpose of the bank's lawyer or one or more of the lawyers providing legal advice to the bank. There are two issues to be determined, first whether the documents or more correctly the communications expressed in the documents are privileged. Second, if privileged has that privilege been waived. As to the first I summarised the principles I have garnered from the authorities referred to by Mr Lawrence in his submission.

PN1371

(1) The body claiming privilege bears the onus of establishing the privilege. (2) If in-house privilege is claimed and it is here, it must involve a solicitor admitted to practice. (3) The purpose involved must be acting as a legal adviser in a professional capacity and the communication arising from the relationship of lawyer and client. See generally Williams Judge of Appeal with whom McPherson Judge of Appeal and Ambrose J agreed in Equus Corp Proprietary Limited v another against Glengallan Investments Proprietary Limited Court of Appeal Queensland 2001 QCA11 115 of 30 March 2001.

PN1372

(4) The legal adviser must not be acting in another capacity. (5) The communication must have legal advice as its dominant purpose. There is not a great deal of evidence before me. On the basis of what is before me it is accepted that Mr Hill, the person on whom the claim is based is a solicitor admitted to practice. The later questions are approached in keeping with Beaumont J approach in Dick Smith Electronics Proprietary Limited v Westpac Bank Incorporation 2002 FCA 1040 who states that the views of the party in the present case, said the labels on communications 1 and 2 cannot be conclusive on the and I quote:

PN1373

Central question of characterising the dominant purpose of bringing the memorandum into existence. That is a question for the Court to decide by applying the relevant legal principles in all of the circumstances including not only Ms Bracken's evidence but also such inferences as should be drawn from the nature of the contents of the memorandum itself taken on the face of that document.

PN1374

The three documents all E-mailed, form a consecutive set, apart from the label there is nothing in the body of the text to establish a legal concern as the dominant purpose rather the contrary. The consecutive nature of the E-mails and their text suggests an administrative purpose is dominant. Further, the earliest E-mail refers to Mr Hill as Chief Adviser Employee Relations and Fair Treatment and claims no privilege. The statement that external legal advice has been taken in the drafting of the proposed reply is quite insufficient to support a claim of privilege if the principles I have extracted are applied.

PN1375

It rather supports a conclusion that the documents are part of an administrative process following the receipt of legal advice. That outside legal advice which is not disclosed in the documents may be privileged it is unable to say in the state of my knowledge as to whether it is or not. For these reasons I formally deny the claim for privilege in respect of all the three documents. They have already been disclosed as in existence, it is a matter simply if they haven't been handed over, to hand them over.

PN1376

MR LAWRENCE: Yes, if your Honour pleases. I just wonder what the best course for me to - whether I should continue with my submissions and then at the end of that have a look at the documents and see if there is anything else I want to put or alternatively - - -

PN1377

THE SENIOR DEPUTY PRESIDENT: Have a short adjournment now?

PN1378

MR LAWRENCE: - - - take a break before that.

PN1379

THE SENIOR DEPUTY PRESIDENT: I think the latter course is preferable.

PN1380

MR LAWRENCE: Yes.

PN1381

THE SENIOR DEPUTY PRESIDENT: It will assist you to be organised in your submission, Mr Lawrence, apart from anything else.

PN1382

MR LAWRENCE: Yes, thank you, your Honour.

PN1383

THE SENIOR DEPUTY PRESIDENT: I will adjourn for a quarter of an hour.

PN1384

MR LAWRENCE: Yes, thank you.

SHORT ADJOURNMENT [10.06am]

RESUMED [10.27am]

PN1385

THE SENIOR DEPUTY PRESIDENT: Yes, Mr Lawrence?

PN1386

MR LAWRENCE: Thank you for the time, your Honour, I had an opportunity to have a look at the documents and I will return to them in due course. If the Commission pleases, in each of 1996 and 1999 Colonial made a bargain, first for an award and in the second year for an agreement. The bargains included a redundancy clause in the form that is now before the Commission. The redundancy clause, that is similar in both instruments, is a clause that is clear and unambiguous in its terms. Furthermore there is a clear intent to depart from the standard TCR provisions in relation to redundancy.

PN1387

There is no hint of the adoption of the TCR case approved exemptions from the obligation to make severance payments where an employee obtains a job with another employer. In my submission, this was not an oversight, parties must have - it must be taken to have knowledge of the standard TCR clauses, at least no one from Colonial has said to the Commission that he or she was in ignorance of the TCR provisions. In both 1996 and 1999 Colonial did not make a bargain of the kind that Westpac did in about 1998 when it obtained provisions considered by your Honour in the Westpac decision of November 2000.

PN1388

Colonial must be taken to have known of this agreement made by one of its competitors when it made its agreement in 1999 and yet it agreed to a way of dealing with redundancy situations in a matter very different to that that Westpac was able to extract in its negotiations with the union. Indeed Colonial would have known of those other awards that Mr Douglas pointed to in the course of his opening. The Small Banks Awards if I can call them that, which is as he said, had standard TCR provisions, or for the most part had standard TCR provisions.

PN1389

Colonial would have known of that and would have known of all of those variations and Colonial would have also known that those sorts of provisions, standard TCR provisions did not apply in relation to the major banks, a startling omission one might say from the list of awards that Mr Douglas pointed to, having standard TCR provisions, where the awards regarding the major banks and the reason for that is that they had negotiated over a period of time provisions that are different to those in the TCR clauses and for some reason, perhaps the industrial representatives of those small banks capacity to extract a deal, those small banks had negotiated TCR.

PN1390

In any event, what we had with the major banks and regional banks and Colonial in particular in 1999, was something that was bargained and it must be assumed in the full knowledge of what TCR said and what happened in other places. So there couldn't have been an oversight, it couldn't have been carelessness and in both 1996 and 1999 Colonial made the same kind of deal that Amcor made with its employees and which was considered by Finkelstein J in the case to which I referred to yesterday.

PN1391

It is submitted that the same consequences ought to apply in relation to Colonial as applied in relation to the bargain that Finkelstein J considered. Of course, now Colonial wants to be relieved from the terms of its bargain. In particular, it wants to have removed the rights which were established for its employees in both 1996 and 1999. It is significant that it makes the application without any evidence or even any claim that Colonial intended, in 1996 and 1999, to have a redundancy clause which would operate in a way different to that which is advanced on behalf of the interveners and the FSU, that is, there is no evidence that it was intended that a comparable position might be found in another company.

PN1392

Furthermore, the claims which Colonial now makes would necessarily deny the kind or procedures which would have applied had Colonial secured, in 1996 and 1999, the standard TCR clauses. In particular, it would have the effect of denying the opportunity for the adequate alternative employment exemption process to take place and, of course, for the claim to be tested. Of course, that would have meant that in consequence of the standard TCR exemption process, the obligation would have been on the bank to show that there was adequate alternative employment, acceptable alternative employment, and it would have given the individuals a right to be heard.

PN1393

In substance, what is being sought here is a denial of natural justice in that these people who claim and, we say, are entitled to claim that they were put in a different position could be heard and determined, that is, they are being denied their day in Court, so to speak. Section 146(2) of the Act says that the Commission has to be satisfied that there are exceptional circumstances in order to make an award retrospective. Your Honour, the exceptional circumstances or the circumstances that are raised here in relation to fairness and equity go in the opposite direction to those that the bank claims.

PN1394

It is demonstrably unfair and unjust for the position of these people to be prejudiced by the operation of a retrospective variation to the award. Now, of course, what the order does seek is that the variation would - sorry, what the application does seek is that the variation would operate both prospectively and retrospectively. Leaving aside the retrospective operation, one should consider what the nature of the claim is. In my submission, it represents a fundamental change to the arbitrated TCR clauses. Indeed, it is my submission that it should not be arbitrated. It should not be introduced because it is inconsistent with the TCR provisions.

PN1395

The proposed clause is one of general application and it would apply generally, and be capable of being applied generally in the banking area. Indeed, if it is acceptable here, your Honour, if it is acceptable in relation to Colonial, in relation to CBA, it would be acceptable in other areas of employment. In my submission, it is not acceptable here because it is contrary to TCR and it is not acceptable because of the consequences that will follow.

PN1396

Your Honour, it would be bad policy. It would lead to consequences that are not anticipated and not addressed which are inconsistent with the objectives of the TCR case. It purports to introduce a new way of dealing with outsourcing and the transfer of employment and I want to say a few things about that but what it would mean - before doing that, perhaps I could say this. What it would mean is it would apply, if this sort of thing was acceptable - if the Commission said this sort of provision is acceptable and it could be introduced into other awards or into agreements, then it would mean that it wouldn't apply in just the outsourcing cases but it would apply in the case of any other transfer of employment.

PN1397

For example, where there was a proposal to establish an employment services company for a company that was in trading activities. That is, it would apply if it was decided, as a matter of policy, that the employees should not be employed by the operating company but by some service company. It would apply where an employer, in the clothing trades area, might one to move the responsibility for employees to a service company, a $2 service company or any other company outside the operating company. It is not just outsourcing.

PN1398

What it would mean is that if there was a resignation from the employment with the operating company to that other company, whether it be an outsourcing company or just a $2 company, it would mean that rights would be lost, redundancy rights would be lost and they would be lost because of the resignation and the acceptance of employment with another company. That raises some very serious questions. The first one is this, the obvious one, that it turns on resignation.

PN1399

It is a new concept to that which applies in the TCR, standard clause dealing with alternative employment. It would be the resignation that would be regarded as critical in the disentitlement to payments. At the present time, a resignation is not determinative of an entitlement because under the current arrangements, there can still be a retrenchment in circumstances where there is a resignation. That is, if the resignation comes about as a result of a desire by the employer to terminate employment and the employee takes a voluntary redundancy package by way of resignation, then there would be an entitlement, of course, to redundancy payments.

PN1400

THE SENIOR DEPUTY PRESIDENT: The voluntary redundancy is slightly different situation, is it not? It is an agreement between both parties, the employer and the employee whereas the concept of retrenchment is essentially where there is a termination by the employer on that ground.

PN1401

MR LAWRENCE: In my submission, the concept of retrenchment is based on the employer's desire to abolish the position that is occupied by the employee and whether that has occurred or not can easily be tested by reference to what happens after the employment finishes so if the position is not filled afterwards, then the position has been abolished and it does not matter whether the form or mechanism is a termination, which the employee implicitly or explicitly accepts, or by way of resignation which the employer asked the employee to give.

PN1402

The reason for the termination of the employment, the reason why the contract of employment comes to an end, is the desire of the employer to reduce the number of positions or to abolish that particular position and it is a termination at the initiative of the employer, if I can use that jargon we have become use to over a period of time.

PN1403

A retrenchment is a termination of employment, at the initiative of the employer, for the reason the employer desires to abolish a position. So under the current system, when we have a dispute about whether or not there was a retrenchment or a termination that gives rise to redundancy entitlements, the question is how did this come about, was this at the initiative of the employer and what happened after the contract of employment came to an end.

PN1404

It is on that basis that we say these people, that I represent, are entitle to redundancy pay because the termination of employment came about at the initiative of the employer, Colonial. They were the ones who took the initiative. They indicated, unambiguously, that they desired to abolish these positions. They wanted them abolished. They didn't want them filled, there was no doubt about that. The proof that is in what happened afterwards. They didn't fill the positions. The positions were abolished. There were no more positions of that kind in Colonial.

PN1405

So we say that, in this case, in Colonial - the Colonial EDS arrangements of 2000, there was, on the construction of the agreement, no comparable offer within the meaning of that term in the agreement and in the award and that the employment came to an end as a result of the desire of the employer to abolish the position, which it did, and we all now those positions were not filled or re-established. So that is how we put the argument. That is how we say the current system operates. What is proposed here is that the test or the entitlement to redundancy pay will depend upon the form - - -

PN1406

THE SENIOR DEPUTY PRESIDENT: The act of resignation.

PN1407

MR LAWRENCE: The act of resignation or the mode by which the contract comes to an end rather than the fact that it has come to an end and the position has not been filled. That raises the real vice and the risk that people will be pressured, seduced, induced, coerced, etcetera, into resigning and the issue of entitlement depends on that and it is a recipe for disputation, uncertainty and bad industrial relations. That really gets into the second point, the first being it turns on resignation.

PN1408

The second one is that it raises questions about the resignation being at the initiative of the employer. We say if it is at the initiative of the employer, then it shouldn't be a disentitling - as a matter of policy it should not be a disentitling event. One should not introduce a system that would have, almost inevitably, issues about whether or not there was a constructive dismissal, whether or not the ending of the employment relationship by resignation was by way of a free and genuine resignation a unaffected by duress, unaffected by inducement, unaffected by coercion, promises, conduct that might be misleading or not.

PN1409

The current system, in my submission, set up by the Commission in the TCR case avoided that. Obviously there will be questions under the current TCR or any other variation of TCR that would arise and have to be resolved but this is introducing a whole new set of problems which should not be countenanced, in my submission. The third point is the proposed clause, in referring to something more than resignation, that is taking up a position that is no less favourable in terms of the terms and conditions of employment in the other job, moves away from the broad objective test of adequate alternative employment that is currently in the system to something that is much more narrow because the test that is proposed focuses on terms and conditions of employment.

PN1410

In this regard, matters such as career considerations, the nature of work, the occupation, the industry in which the other company operates would be irrelevant. What this test is driving at is a mere dollars and cents exercise at the time of transfer and it would mean, for example, you would be able to look at the longer term prospects of employment with the other company. You would not be able to take into account the other company is a $2 company. You will not be able to take into account it may be the sort of company that Patricks might like to have in order to deal with some industrial disputation at some stage in the future.

PN1411

It is a narrow test. Of course, what would happen, is that the employer in the course of advancing this to the employee, would be saying, as the company did here, as Colonial did here, this is what we are going to do and this is a business decision we are making and unless you take up this employment, you will be prejudiced. So the fourth point is this. It would shift disputes to the Courts. That is, instead of a process that is capable of being pursued within the Commission, that is the determination of whether or not the position obtained by the company, for the employee, was adequate.

PN1412

It would mean that if there was any disputation about whether or not that position was appropriate, it would inevitably be in the Court and not in the Commission. The fifth point is it would remove the onus which is presently on the employer to show that there is adequate alternative employment. The next point is, that would focus on resignation and would cause employers to seek resignations. As I said before, it would be likely to foster coercion, duress, misleading conduct and so on.

PN1413

Finally, it is a clause which contains no protection against those matters such as coercion, duress, unfair dealing, obfuscation, etcetera. That is the sort of things we say have happened in this particular case in regard to the Colonial people. Indeed, what has happened in the Colonial case could, if this clause was approved by the Commission, be a template for what might happen in the future. So we say that what is being proposed is something of potential general application, should not be accepted and it is a provision which is not limited to outsourcing.

PN1414

Now, it is clear that it would promote the interests of employers, particularly in relation to outsourcing because, as the Commission has heard, not only from our witnesses but from the company itself in advancing the case, what the employers want and what these companies that provide outsourcing services want, is a seamless transition. They want to be able to have the same operation - exactly the same operation in place on the last day of one kind of employment, as it desires to have on the first day of the new kind of employment.

PN1415

What occurred here was - in the Colonial case, was the implementation of a strategy to ensure that that occurred. That there would be a seamless transition. It would - it is a strategy that is employer centred. It is a strategy which suits employers. Now, we know in this case that the company has been talking about employability. We want to keep people in jobs is a mantra here. It was not only mentioned to employees on the way through July/August/September period of 2000 but it was mentioned to the Commission.

PN1416

Employability. We really want people to keep - stay in their jobs. They didn't - that wasn't the driving consideration here. The driving consideration was to have a seamless operation. The driving consideration here was not the best interests of the employees because they wanted the employees to be put into a position where they could the EDS operation up and running and then in their own good time change those operations and make them operations that EDS wanted.

PN1417

Change was inevitable but they wanted to introduce the change at a time and over a period of time which suited their operational convenience. The witnesses, the Colonial witnesses, Mr Pellegrini and Mr Holland made it clear that the purpose of the outsourcing was not to leave things as they were but to make fundamental changes to the operations. Obviously, the only reason you have the outsourcing - or perhaps the major - I should say the major reason you have outsourcing is that it is thought the other company, in this case EDS, will do things differently and better.

PN1418

They will apply different ways of dealing with the operational requirements. They will apply a whole new way of thinking to this operation. I don't think that is in dispute. In this case the whole argument seems to be that it was so important that the bank have a whole new way of doing things through the outsourcing company. But the impact that that has, that change has, is on the individuals who don't know and this is obviously the case here, they don't know what they are going to be doing in the short term or the medium term.

PN1419

These people knew, Mr Pellegrini, the EDS people and the employees knew - or at least some of the employees knew, that there was going to be a shakedown. When EDS was asked about what would happen in the future they couldn't say, they couldn't commit themselves to these people having a particular position because there was no expectation that there be continuing status quo. The expectation was there would be fundamental change.

PN1420

That is why when they were made an offer, they were an offer that they would go over only on what their current job title was and there were no guarantees that they would go into a position that had any sense of continuity. The point of the comparable position provision in the redundancy clause in my submission, your Honour, is to give people the opportunity of going into another position where there is some degree of certainty or some ongoing role.

PN1421

In outsourcing it is quite the opposite because if they do go into that outsourcing employment the jobs will be changed, the way in which the services are provided to Colonial, in this case, will be under the microscope from day one. They will be changed as seen appropriate and indeed the people might even be sent off and do something else. Now, it has to be said that for some people that might be good. That might open up a whole new field for them but for others, Ms Calabrase, for example, who was in the bank and not in IT, the whole new world of EDS International IT is very different.

PN1422

Mr Dimidis, for example, he wasn't able to get any assurance about where his position would be, what his position would be over a period of time. Similarly, with the other witnesses, there was not that degree of confidence in - either on the part of EDS or on their part after hearing from EDS about what the position would be. So what this concern for outsourcing does is to change the balance, shift the balance that was established in TCR.

PN1423

Now, what was also recognised in TCR was that the entitlement to redundancy pay and the contingent rights that are identified in a redundancy package are important rights for individuals because that is their, what might be called, structural adjustment fund that they can call on for a rainy day. Now, it is sometimes the case that people make flippant comments about redundancy packages: they are always after redundancy packages, they are looking for redundancy packages so they can go to Bali or buy a four wheel drive and go to the Pilbara and so on.

PN1424

MR DOUGLAS: You wouldn't spend it going to the Pilbara.

PN1425

MR LAWRENCE: No, well, you would go to the Pilbara for a long time. Redundancy packages are often described in disparaging terms, your Honour, but if you go back to what the TCR case was all about it was a recognition that there would be change. In industry there would be change, inevitably there would be change. One of the things that is said very frequently these days is that people will change their careers many times. Our children will have different careers over a period of time and they will have to make an adjustment from career to the next.

PN1426

People, whether they are of Ms Calabrase's age, early motherhood times or Mr Beresford is a bit older, they are all looking at where their future - where their career will be going. It will be the case that they will have to - people will have to finance retraining and job search. They can re-finance that. They can carry themselves through those times by using up their accrued long service leave, if any. Using up their accrued annual leave, if any. Perhaps even dipping into some superannuation funds but in the way in which the industrial system is developed the way that they are meant to do it is by way of the redundancy payments.

PN1427

The redundancy payments are recognised as important because tax - there are tax concessions in respect of them. The reason why there are tax concessions is that it is good public policy to have redundancy entitlements so that when the time comes for an individual to move into another industry, to move into another job there is some support. What happened in this case was that - at least in a number of cases, in the case of my witnesses, they recognise that it was not in their interests and we say it was a proper conclusion, not in their interests to take up EDS employment.

PN1428

The decision by Colonial made it necessary for them to consider or reconsider their future, where they would go, what the best interests were for them and their families and they decided that EDS was not the best cause and they should have been - in my submission, they should have been given the opportunity of making a decision free of economic coercion to pursue what was in their interest. There is no suggestion these people are going to spend their money in Bali. These people were saying that they wanted to look at something else. Their careers were not in this other area of employment.

PN1429

What happened here was, they have all said this, that the prospect of losing their retrenchment package, being unemployed and not having this money was something they couldn't afford. The reason why they resigned, in my submission, and the reason perhaps it is a very significant the number of people who resigned from Colonial and took up the job was that they didn't want to be left without money, and this was the message loud and clear all the way through, one of the possibilities is: you will be retrenched without money, and it is just unfair, in my submission, for people to be put in that position.

PN1430

This is one of the biggest corporations in the country with a responsibility to ensure the people are being treated fairly, and instead of adopting a fair process they threatened these people and they got resignations which they now rely on to the detriment of those people. They called the bluff of most people. Some didn't give into the pressure and what happened, they go the entitlements which they were entitled to. Now, I say that, having in mind, your Honour, that there would have been a number of people who would have been happy to gain a ..... so I accept that, but we don't know what the proportion was. Even if it is only 10 per cent of the work-force, or 20 per cent who were unhappy and felt that they were treated badly by this process then that is good enough.

PN1431

It does not matter that I'm standing up here on behalf of only 10 per cent or a bit less than 10 per cent of the people affected, that does not matter one iota. Indeed, just consider that this is perhaps just less than 10 per cent, but there are 10 per cent who have been prepared to pay for representation and there would be many others who wouldn't have the money or would not be prepared to take the risk of getting locked into litigation where there might not be a certain economic end. In fact, what has happened to the 34 is that an action was brought into Federal Court and in order to cut out the ground for a Monday, those people in the Federal Court action, this application was brought. As your Honour knows a letter of demand was written by Phillips Fox to Colonial pointing out what the redundancy clause says, putting the construction argument, which I put to you yesterday, and the company then turned around and made this application.

PN1432

So these 34 have been locked into further expensive litigation in order to maintain their ability to argue before a judge that they were made redundant to make out the same sort of argument that the Amcor employees made out before a Federal Court judge. In the end, your Honour, what has happened here is that at the end of this long and expensive exercise the company does not even say: the real intention of the parties in 1996 and 1999 was to have the comparable position encompass a position outside Colonial. They don't argue that the real intention was to have an employment opportunity like EDS, a disentitling alternative.

PN1433

Now, in my submission, what should be taken into account here is that a significant number of employees have felt that they have been badly treated on an objective basis, there is real reason for that belief and that they are entitled to be heard and it is not relevant that they represent a minority of the employees who moved to EDS. Now, I got onto some of those comments about the policy by making some comments about the TCR case. It is the policy of redundancy payments to provide for people who are in a position where their jobs disappear and where the nature of the work that is available to them changes. It gives them the opportunity of moving somewhere else and what was denied here was the opportunity of doing that.

PN1434

Now, another one of the slights that are made against my clients is that they are double-dipping and they are greedy, a word that rhymes with needy, as Mr Douglas pointed out earlier on. Well, there seems to be two bases upon which that is set, one is that they are moving from one job to another and not a day's work is lost. First of all, it has be said that that is anticipated by the TCR case because the TCR case made it quite clear that people got that payment in circumstances where they are able to go out and get another job straight away. It wasn't reduced by the ability to obtain another job. Potentially it was reduced by the employer obtaining another job, but then, of course, was dealt with under the exemption procedure.

PN1435

So there's nothing wrong per se with employees getting other employment. Mr Dimidis was pretty confident that had he got his redundancy pay he would have got another job, because he said:

PN1436

I would have gone out and got some other job to fill in time until I found another job.

PN1437

But that wouldn't disentitle him to redundancy pay under ordinary provisions because he would be still entitled to that under ordinary TCR' provisions. It is also one of the objectives of the severance payments to make up for the loss of ongoing entitlements. In the TCR case the Commission said that there was certain factors that would justify severance payments, and one of them being ongoing entitlements. Now, as Mr Douglas says:

PN1438

Well, these people in EDS were getting the ongoing entitlements, they were promised the ongoing entitlements.

PN1439

Now, we say: well, the appropriate way - if that was to be taken into account, the appropriate way would be to test it through the adequate alternative employment exemption. The first point that I wanted to make is that: continuity in employment, and even the obtaining of better employment does not disentitle an employee. The second thing I wanted to say is in relation to this particular case, and that is: what does the EDS agreement say? This is relevant to the greedy question. As I understand it it was sort of floated to some of my witnesses in cross-examination that they would be double-dipping, that is: they not only have continuity of the employment but they would be having two gos at retrenchment pay.

PN1440

Now, it has to be remembered that the EDS agreement deals with this matter. There's the old EDS agreement and the current - or the one that is in - I'm not sure whether it has been certified or not, but Mr Douglas advised earlier on that there was a process of being undertaken for a new EDS agreement and that, I think he said a couple of months ago that the expectation would be supported, approved and would be certified in due course. Now, I don't know whether it has actually been certified but I have seen a copy of it and it has the same provisions as provisions that appear in part of exhibit C4 which is the EDS agreement. What it is - what exhibit C4 says in this regard is - this is clause 32.8:

PN1441

If you are an employee who prior to the day of certification transitioned to EDS from a customer during the implementation phase of an outsourcing contract EDS shall when calculating your severance payment entitlement pursuant to subclause 32.3 give credit to your continuous service with that customer according to the redundancy scheme if any in place and potentially available to you immediately before the transition.

PN1442

So what that part of the clause does is to accept prior service with Colonial, for example. This talks about the transition before the date of certification and it wouldn't in those terms apply to the Colonial people because they transitioned after the date of certification. So they wouldn't pick up the entitlements under this agreement but, as I understand, they will pick up the entitlements under the 2002 agreement because the 2002 agreement has the same terms but then straight after that it says:

PN1443

Any such credit will be discounted by the effect of any payment made to you by the customer on account of redundancy and/or employment cessation and/or employment transition including eligible termination payments or severance payments but excluding payments made to you on account of termination notice and/or accrued leave and/or superannuation.

PN1444

So it recognises past service but straightaway deducts any payment that has been received. So there is no double dipping there. There is no double dipping. It cancels out and in effect time starts running from the time at which one transitions to EDS. Now, it is interesting, your Honour, this is an agreement from EDS which obviously has some experience in outsourcing and the second part of clause 32.8 says:

PN1445

Any such credit will be discounted by the effect of any payment made to you by the customer on account of redundancy.

PN1446

Why would that be so? Well, the conclusion to draw from that, your Honour, is that in EDS experience when they took over operations in a seamless way people weren't being paid redundancy pay. It happened before. Colonial wasn't the first time it had happened. It was in there for a reason. This is just not a - the conclusion one could draw from that is that what happened with Colonial was not a one off and it was something that had occurred before.

PN1447

In any event it is significant that EDS, the outsourcing company, the specialist in outsourcing in this area, had recognised that people do, on transition, get paid redundancy payments and may in a particular case get them. Then it goes on to say this that:

PN1448

The limit of -

PN1449

this is 32.9:

PN1450

The limit of 40 weeks salary referred to in subclause 32.3 will not apply to you if you and EDS had a more beneficial arrangement as at the date of certification.

PN1451

Then it goes on:

PN1452

Your existing accrual rate will continue to the limit of the specified maximum in that more beneficial arrangement.

PN1453

Now, one thing that should be said about the EDS people agreement is that there - in regard to redundancy there is a difference between that EDS redundancy scheme and the Colonial redundancy scheme. There is a difference in the circumstance in which you get redundancy pay. It may or may not be significant in a particular case but it has got a higher - in terms of the maximum that you can get it has got a 40 week limit. What it says is that if you have got an agreement to the contrary then you would pick up that - the benefits of that agreement.

PN1454

That explains - your Honour, that explains why in the standard letters of offer you would - you do find the following and I am reading from one of them. They will all be in the same or similar form, your Honour. In the letter of offer it says:

PN1455

As a Colonial category A employee -

PN1456

and I interpolate it might be a category B or whatever - - -

PN1457

THE SENIOR DEPUTY PRESIDENT: Yes, a different category.

PN1458

MR LAWRENCE:

PN1459

...your redundancy entitlements will remain as...

PN1460

so many weeks notice, so many weeks per year of service pro rata in the final year, minimum payment of whatever weeks. Maximum payment of - in the case of a category A employee, 85 weeks including notice period. That is all it says in relation to redundancy. There was a question raised or alluded to in the course of cross-examination of my witnesses in the previous round about - on the question of double dipping and whether these people would have an entitlement. It was suggested to them that there was a double dipping possibility.

PN1461

That is they wanted money from Colonial and they were going to line up for the same sort of thing from EDS. What is clear is that under the EDS agreement you don't get - sorry, under the EDS agreement you will pick up the benefit of an agreement between you in regard to the maximum. All the letter does is to say what the maximum will be. It does not - in its terms it does not give an entitlement, a common law contractual based entitlement to the Colonial redundancy package.

PN1462

It simply states that they remain up to a maximum of whatever number of weeks. This is not the foundation of a contractual claim for a redundancy package and it is certainly not the basis upon which an employer - an employee could double dip. It does not purport to give those employees an entitlement to have the whole period of service including Colonial's service taken into account for the EDS entitlements when at the same time they have - when they have had the opportunity of collecting redundancy payments from Colonial.

PN1463

THE SENIOR DEPUTY PRESIDENT: Rather you say it fits in with the EDS agreement.

PN1464

MR LAWRENCE: That is right. It fits in with - - -

PN1465

THE SENIOR DEPUTY PRESIDENT: It identifies the other arrangement that the EDS agreement talks about.

PN1466

MR LAWRENCE: Yes. It fits in with 32.9 and it also - perhaps it does fit in with the rate at which you accrue because if there was a different accrual rate between the EDS agreement and this separate agreement in the letter of offer then you would pick that up but it does not give you a separate entitlement. Then in order to read 32.9 and understand the letter of offer you go back to the 32.8 and - I think it is clause 35 in the new agreement or the proposed new agreement.

PN1467

It gives with one hand and takes with the other, if you have already been paid out. So it gives the entitlement to or the recognition of service with the outsourcer but takes away the benefits that - - -

PN1468

THE SENIOR DEPUTY PRESIDENT: Have already been paid.

PN1469

MR LAWRENCE: - - - have already been paid them. So your Honour - - -

PN1470

THE SENIOR DEPUTY PRESIDENT: Does it take away the payments or does it take away the effect of the payments on the future accumulation?

PN1471

MR LAWRENCE: It actually takes away the money.

PN1472

THE SENIOR DEPUTY PRESIDENT: The money.

PN1473

MR LAWRENCE: Yes, because it says:

PN1474

Any such credit will be discounted by the effect of any payment made to you by...

PN1475

Well, there might be - - -

PN1476

THE SENIOR DEPUTY PRESIDENT: It was the effect.

PN1477

MR LAWRENCE: There might be a debate. I suppose if you have been paid out for 25.3 weeks - - -

PN1478

THE SENIOR DEPUTY PRESIDENT: That is what I thought it might mean.

PN1479

MR LAWRENCE: Yes, rather than the dollar amount.

PN1480

THE SENIOR DEPUTY PRESIDENT: Still you would say that it wouldn't matter if it worked that way, that still prevents double-dipping?

PN1481

MR LAWRENCE: Yes. Your Honour can be quite confident, in my submission, these people will not be double-dipping and that EDS are well alive to this and they have got in place an agreement which covers that and they have not compromised their rights under the agreement by making some unwise offer of employment which contractually binds them to something that would not be anticipated by the agreement. So double-dipping is a non issue here and these people, we say, who - the people who transferred over to EDS would be in the same position as the Amcor people who left - that is people who left Amcor and worked with another employer. The time would start - that is, they will not be double-dipping.

PN1482

The only question there is whether the fact these people picked up another job soon after is disentitlement. For the reasons I have mentioned before it is not a matter that should disentitle them to the entitlements that are already recognised in the TCR case and should not lead - there should not be a result, for these people, different to the result for the employees in Amcor, as an example.

PN1483

Now, I did make some comments before, in talking about the novelty of this provision and the policy implications, about coercion and duress and I indicated that there were real - there must be real concerns about what sort of conduct this sort of provision might encourage or sanction. In the present case, what is clear from the early days - perhaps I should say July, late July 2000 through to the end of August start of September, is there were three so called options to taking up EDS employment.

PN1484

One of them was the third option, been described as the third option more frequently than anything else, you may be terminated without retrenchment pay. Now, for reasons which I have mentioned before that was untrue and misleading. In my submission, it was also coercive because individuals didn't know where they stood. It was one of the three options which Colonial had, not which the employees had. The only option the employees had was to accept or reject the EDS offer.

PN1485

They couldn't chose between the three options that flowed from a rejection. The employees had to commit themselves to the basic question before Colonial was prepared to indicate which option it would exercise. Now, of course, we know, with the benefit of hindsight, they were always going to exercise the secondment option. That is, the corporation had committed itself to that position, even if Mr Pellegrini or somebody else might have been ignorant of that fact or ignorant of the letter at some stage, but in any event, the corporation knew.

PN1486

One might presume the head of industrial relations knew or somebody in group HR knew, the people who seemed to be at the nerve centre of the strategy but they knew what was going to happen. The letter of 11 August evidenced that, exhibit PF2. The employees didn't know. As far as they knew there were three alternatives. As I said, it was a decision that Colonial would make as between those three. Now, Mr Pellegrini's evidence, paragraphs 3013 to 3019, is the company would wait until after the rejection of the offer to decide what to do. That is which of the three options would be pursued.

PN1487

Now, that is how it would be presented to the employees because the message was, time and time again, we will talk to you in order to understand why you have rejected the offer. All of the Q&A material and that generally circulated material plus the individual communications a number of which I have tendered, indicate that. They weren't giving answers. The company wasn't giving answer. It was just saying, well, we will talk it through. Employees were saying, from time to time, well, look, can you tell me, am I going to be seconded or will I be terminated. They said: No, we will talk through.

PN1488

Mr Pritchard again gave evidence regarding that plan, at paragraph 2217. He said that they would talk - their proposal was to talk to the employees to hear their reason for rejection and then make a decision. So as I have said, the decision-making process was in their hands and in Mr Pritchard's words, they would be leaving it until we understood what the outcome of the offer and acceptance process was. So there was enormous pressure exercised and capable of being exercised on employees at this stage with substantial accrued contingent in benefits - contingent redundancy benefits at risk and the impact that would have on the individuals, of course, does not need to be laboured.

PN1489

This was particularly so because in some cases, people like Mr Beresford, built up those entitlements over many years of service. Mr Beresford was there for 19 years and 8 months and he was at an age where he would have to be concerned about what the future would hold. So they didn't know - the employees didn't know which of the three options the employer would take and they would, of course, have been especially fearful the third option would be taken, that is retrenchment without benefits. It really does not matter in this case, your Honour, whether Colonial ever said you will be retrenched without benefits of you may be retrenched without benefits. It does not matter.

PN1490

Now, the second option, as it has been described by Mr Pellegrini, was the secondment option. The first option, he pointed out, was redeployment within the CBA group and it was pretty clear, from all that was said, redeployment within the CBA group really wasn't a realistic option. It was more theoretical than real and if anyone was going to be re-employed it would be very limited, very limited opportunities and possibly even redeployment to Sydney for the Melbourne people.

PN1491

There might have been more - and there was evidence to this effect, there might have been more chance of that happening in Sydney, redeployment to the CBA group than was the case in Melbourne. Now, the second option: secondment, has given rise to a bit of a debate in this case because what some of my witnesses have said in specific detail is that: the company made it clear to them that there would be secondment to EDS and that they might be terminated at a subsequent stage without retrenchment benefits because they would lose the entitlement to retrenchment benefits by rejecting the EDS offer.

PN1492

Mr Beresford and Mrs Calabrase, I think I will check that in a moment, said that they heard Mr Marshall say that at the meeting in Melbourne on 16 August, but there were two witnesses who, in their statements, say that. Mr Marshall wasn't called to refute that, and indeed Mr Marshall had a statement in at one stage, which was withdrawn. He was never called, the statement didn't even address that issue raised by my two witnesses. Although I can't point to anything in writing which says that the secondees would lose their entitlement to retrenchment pay. It was certainly understood, as far as my witnesses are concerned, that that would be the consequence, because what they were saying was that: you would lose the entitlement to retrenchment benefits if you rejected the offer.

PN1493

Now, as I said yesterday, referring to Mr Pellegrini's evidence, he said: I thought it was understood - again, I forget the exact words he used, but he said that he believed everyone understood that if they were seconded they would still get their retrenchment pay and they would not be treated adversely. That is not what my people say was said, a lot of people say that they were told, "you will lose it." But what we can be sure of, what the Commission can be sure of, your Honour, is that they were never told that the secondment option would not disentitle them to retrenchment benefits if ultimately they were retrenched. Yet, as I pointed out yesterday, CBA knew, at about this time from legal advice, that they would be entitled to retrenchment pay.

PN1494

So it really does not matter whether they were told that the secondees wouldn't be paid retrenchment benefits or they were left in the dark, it was another way of putting pressure on them to accept the EDS offer. I suppose it really does not matter, if you are talking about cohesion, whether you are told that there are two bullets in the six chambers or one bullet, so the third option is enough to provide the cohesion, it does not matter if there's a second bullet in the gun. Now, could I just quickly give some references on the cohesion question. Ms Calabrase referred to this aspect, paragraphs 8, 12, 13 and 15 of the first statement, which is exhibit PF50, and at paragraph 10 of PF51.

PN1495

Mr Young, in his statement, said: one of the factors that he took into account was this possibility of being terminated, and he said:

PN1496

It seemed likely that if I did not accept I would be seconded to EDS for an unspecified period and then retrenched with no severance payments.

PN1497

That is exhibit PF52 at paragraph 8. Mr Dimidis said: one of the potential options, which was put to him if he didn't accept the offer was to:

PN1498

Be temporarily seconded to the EDS for a short unspecified period. Once that period was over to be terminated as positions become redundant without a redundancy package.

PN1499

And that is at exhibit PF54, paragraph 4. Colonial may have some argument if it could point to anything anywhere which would show that that was an incorrect conclusion, but there's nowhere Colonial can point to in this material which shows that that would be an improper and unfounded conclusion. Paragraph 6, he says - this is Mr Dimidis says:

PN1500

He was compelled to accept the offer because he could not afford to be terminated without redundancy pay.

PN1501

Mr Beresford referred to this aspect, paragraph 6 and 11, and as I pointed out before, he was 19 years and 8 months with Colonial. In cross-examination, at paragraph 48 - 2821, he said that: he couldn't have afforded to be retrenched without benefits, and he had $170,000, or thereabouts in redundancy pay at risk. That is put to him in cross-examination at 4959. Now, here is a man who is told by Colonial that: if he does not sign, one option which Colonial may take is to deprive him of 170,000. It is big money, your Honour, and it was unfair, to say the least, and it was unjust for Colonial, knowing what it knew about the secondment, to put him in that position.

PN1502

Alan Phillips actually resigned from EDS on 15 May 2001, so I suppose in a sense it couldn't be said that: he is a greedy man because he found that it was not in his best interest to stay at EDS and he made a career decision and he lost a substantial amount of money, if he had no entitlement - lost a substantial contingent right if he didn't have a substantive right, 109,000 was the figure, that was put to him in cross-examination. He says that: he resigned because he didn't get a comparable position. At paragraph 6 of exhibit PF58, he said:

PN1503

It was clear to me that if I did not accept the EDS offer I would not be paid my redundancy entitlements.

PN1504

Now, all of these people are people who have identified the cohesion and ..... that Colonial applied by talking about something that Colonial does not deny, that: they could be retrenched without pay and; secondly: that, we say, they might be seconded and lose their entitlement to retrenchment pay if subsequently retrenched. Now, in regard to that aspect, the secondment aspect, it was Ms Calabrase who referred to the meeting on 16 August, she said:

PN1505

Mr Marshall said that a staff member may be seconded if he or she rejected the offer from EDS and could later be dismissed without redundancy benefits.

PN1506

That is what she said, as I said before, Mr Marshall didn't come along and say otherwise. Her statement, at paragraphs 5, 6 and 12 deal with that. Mr Beresford refers to it in his statement and at PF56 he says in paragraph 6 that: Mr Marshall describes the options and he set them out in dot points here, and the first dot point is:

PN1507

Secondment to EDS for an indefinite period and then retrenchment without benefits.

PN1508

Second dot point:

PN1509

Retrenchment without redundancy payments.

PN1510

And the third dot point is:

PN1511

Employment by CBA.

PN1512

However, it reads:

PN1513

This is was highly unlikely as there was no IT team in Melbourne and the group IT team located in Sydney was a very small one which focussed on strategic issues only.

PN1514

So in my submission the Commission ought to conclude that on the secondment issue that at least the Melbourne employees were told on 16 August that if they were seconded they would lose the retrenchment entitlements. Of course, the reaction of the Melbourne employees to the payment of the - the retrenchment payments to the seconded employees does evidence that they believed this was the position because that gave them - quite clearly, that gave them another reason to feel as though they had been unfairly untreated when they found out that the people who held out against this pressure were paid.

PN1515

Now, one other thing about the meeting of 16 August, Mr Pritchard referred to the transmission of business aspect and again, there is a firm basis upon which the Commission could conclude that that was the case both in what my witnesses - or some of my witnesses have said, and what Mr Pritchard said in his cross-examination. As far as the question of comparability of position is concerned, your Honour, can I just say this, there are two questions.

PN1516

The first question is how can the position be comparable when it is not in the same industry and it is essentially different. That question has been dealt with by the witness that I called. The second question is - or the second point to be made rather than the second question, is that, as I said before, EDS promised, EDS promised uncertainty and change. What - although there was to be a seamless change it was for the purpose of reorganisation and reconstruction.

PN1517

There was to be a shake down period and this was for the purpose of bringing in change and that was the justification for outsourcing and the evidence in relation to this is Mr Holland, paragraph 1570 and following and again at 1662 and following and Mr Pellegrini at 3564. Indeed, the nature of the cross-examination of my witnesses indicated that there was to be a shake down and this was known and understood in August and early September.

PN1518

Obviously, what was happening here was that these operations were being integrated into a new multi-client business which had a new way of doing things and which had a particular model or approach to matters which was quite different at least as far as some of the employees were concerned to that which was adopted in Colonial. So there was - couldn't be any assurance of a real continuing position in that state of flux and uncertainty. As I said it wasn't in the business of banking.

PN1519

Now, they are general comments. The witnesses who I called dealt with their particular reaction and again I would accept that some people wouldn't have the same reaction. There would be some people who might be - would have very positive reaction but Ms Calabrase, at exhibit 50, paragraph 2, referred to how she came to be in information technology. She had only been transferred into the information technology area earlier in 2000 and, in fact, was there when the music stopped, so to speak. She said at paragraph 2:

PN1520

I have never been in IT.

PN1521

Making a reference to what had occurred before. Paragraph - in exhibit 51 which was a supplementary statement she dealt with at - in paragraphs 3 and 4. She said in her statement:

PN1522

My background was also systems accounting and business related and how could I compare this with a consulting company that mainly specialised in the technical side of things.

PN1523

That is paragraph PF51. So what she was confronted with was a very different career orientation which she complains she was forced into taking. Steve Young at PF51 refers to in paragraph 4A - - -

PN1524

THE SENIOR DEPUTY PRESIDENT: No, it wouldn't be PF51. Not for Mr Young. I think that is Ms Calabrase's supplementary.

PN1525

MR LAWRENCE: Sorry, it must be 52, I think, but - paragraph - - -

PN1526

THE SENIOR DEPUTY PRESIDENT: Yes, you mentioned it as PF52 when you referred to it earlier.

PN1527

MR LAWRENCE: Yes. It must be the second one which would be - yes, it is the second one. Sorry, your Honour, it is 53 not - - -

PN1528

THE SENIOR DEPUTY PRESIDENT: 53.

PN1529

MR LAWRENCE: Yes. Again, there is some more on that in paragraph 9 but also paragraph 17. Mr Dimidis, paragraph 13 of his first statement which is PF54. He develops that in paragraph - in the second - the supplementary statement, PF55, and there was cross-examination on paragraph 13 at transcript paragraph 4727 to 728. I just want to briefly refer to that. I am just picking up from part of 4727:

PN1530

In regards to the work that I do with EDS if I can break down my - the work that I was doing in Colonial to something like ten different components I probably only do ...(reads)... them delivery towers. So my actual - the work that I carry out on a day to day basis it is a very, very narrow view of the entire IT operations.

PN1531

The next question is:

PN1532

Yes, well, that is all about your work. You are saying in a sense that your work at EDS is much more specialised and in a narrower stream than what it was at Colonial apart from you have made a comment that you haven't received a salary increase.

PN1533

The answer is:

PN1534

Yes, and I consider that because it is so narrow it gives me limited opportunities to learn and grow within and expand my possibilities in the IT industry.

PN1535

Transcript often does not do justice to - or at least we hope so, your Honour, but it is a bit hard to read particularly in this case but - - -

PN1536

THE SENIOR DEPUTY PRESIDENT: Your interpretation of it is.

PN1537

MR LAWRENCE: Yes. He was saying that it was very different to what he was doing.

PN1538

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1539

MR LAWRENCE: He had a sound objective basis for his concern about the employment. He was elaborating on what he had put in his statement and what that demonstrates, in my submission, is that it wasn't subjective. These were the very real objective considerations that one would take into account if there was a process adopted within the Commission to determine whether there is an offer of alternative - adequate alternative employment.

PN1540

This would be the very thing you would be quite entitled to point to. So even if it were the case there was a standard TCR clause, these people, Mr Dimidis in particular, would be entitled to say to Colonial, well, the onus is on you to show this and this is what I say in relation to that matter. What, in effect, this application is trying to do is to deny Mr Dimidis an opportunity he would have had had there been a TCR clause in place. As I said yesterday, the egg has been scrambled. You can't unscramble the egg. You can't create now a TCR clause to apply in the situation and the Commission now finds itself dealing with.

PN1541

Now, Mr Beresford, exhibit 56, paragraph 12, he said:

PN1542

I did not want to work for EDS as it is a completely different organisation and environment to Colonial.

PN1543

In paragraph 57 - sorry, exhibit 57, paragraphs 2 and 5 he referred to the nature of EDS comparing it with Colonial. What he was dealing with basically was the difference between a specialist outsourcing company, specialist in IT and a business in which you have the IT integrated with other activities within the company.

PN1544

He made the comment, in cross-examination at 4859, that EDS is a very different organisation to Colonial and what he was saying there, in my submission, was that a specialist IT organisation is quite a different organisation to a company organisation which IT is in house. He referred to the shape-down in the course of evidence at 4964 to 4978. Now, Mr Phillips, exhibit PF58, paragraph 8 and exhibit PF59, paragraphs 3 and 4 also dealt with the coercive aspects.

PN1545

He was cross-examined about these matters, amongst others, paragraph 5191 where he said that the work wasn't comparable. He said he didn't want to work with an outsourcing company, that a point from cross-examination. Now, in my submission, what he was dealing with there was something that was objective not subjective because there is a real difference between the two categories. A final matter, save for comment on the documents that were disclosed earlier today following your ruling, your Honour - the final matter concerns the exhibits, a number of exhibits and I would just like to go through them quickly and draw your attention to some exhibits that we rely on.

PN1546

The first one is exhibit PF2 which is the one that I have mentioned before. It is the letter of 11 August and it starts off:

PN1547

I am writing to confirm our agreed understanding of how Colonial IT...

PN1548

etcetera. The point about that is it just didn't happen. There was a process which gave rise to an agreement or an understanding which is encapsulated in this letter and it states, in part - this is paragraph 3 - that there was - EDS had kicked off a comprehensive communication and transition exercise, which is set out there and then it states that - - -

PN1549

THE SENIOR DEPUTY PRESIDENT: Where is this?

PN1550

MR LAWRENCE: Sorry, it is page - - -

PN1551

THE SENIOR DEPUTY PRESIDENT: Page 3.

PN1552

MR LAWRENCE: It is page 3, sorry, under: Process.

PN1553

THE SENIOR DEPUTY PRESIDENT: Yes, I see it.

PN1554

MR LAWRENCE: Page 3 kicked off a comprehensive communication transition exercise and then at page 4, heading 4: Transition related - sorry, it is just not clear on my copy, your Honour.

PN1555

MR DOUGLAS: Reimbursements.

PN1556

MR LAWRENCE: Reimbursements, thank you. Under the heading: Redundancy costs, something else, and then some other details dealing with the process. Now, this didn't just happen. It was the product of a process within the banks. It was a letter sent to Mr Pritchard. It was also copied to Mr Smith who had prepared a statement but wasn't called because somebody else gave a very similar statement. It was countersigned by Mr Dawkins and also approved by somebody else whose signature can't be deciphered.

PN1557

This represents the collective knowledge or the corporate knowledge of Colonial in relation to the arrangements. It is very clear that there will be - there was a sophisticated arrangement, an organised approach to this matter, and it involved the secondment of employees. So that is by 11 August. So some people knew it before 11 August, the corporation must be taken to have known before 11 August but certainly by 11 August it was part of the corporate knowledge.

PN1558

Now, the next exhibit - of course, to state the obvious, secondment was then to take place for those who didn't sign. The next document is PF3, which is a reproduction of overheads which were said to have been produced at one of the meetings. I cross-examined Mr Holland about those overheads. You might recall, your Honour, that I put to him it was misleading and he found it very difficult to say, yes, it was misleading but in the end he said it was incorrect, which is probably as good as misleading.

PN1559

I will give you some paragraph references in case you want to check that, your Honour, to understand the context. Paragraph 1777 through to 1789 and 1795 through to 1804. I suppose it would have been easier to say 1777 through to 1804. The next exhibit is PF12 and this is the briefing notes for the presentations of 19 and 20 July. Perhaps it is appropriate to say something about the documents that were the subject of your ruling earlier today while I am dealing with this page.

PN1560

About a third of the way down it says:

PN1561

In terms of Colonial's EBA we have written legal advice -

PN1562

written legal advice -

PN1563

in relation to Colonial employees who do not accept comparable offers to CBA but will not have any entitlement to retrenchment and can then be terminated.

PN1564

Now, I would have thought that that written legal advice would have come within the terms of the subpoena. It has not been produced, so perhaps there is a conclusion that can be drawn from that and then it goes on:

PN1565

For IT purposes and moving to EDS we have the same initial advice. However, we are to have this advice confirmed.

PN1566

Etcetera. Now, as Mr Pellegrini said, that confirmation was received before or at about the time of those presentations. Now, the curious thing about this matter, your Honour, is that in response to the subpoena the company only produces three documents which it claims to be privileged and they were the subject of your ruling today. If that is correct, then the conclusion is that the company never had any written legal advice on this matter which would seem to be unusual. That is, given the importance of this matter, it would be, one would have thought, quite unusual not to have something written but what the company has said, by its compliance or response to the subpoena is that it didn't have anything other than what is produced. We can't take the matter any further at this stage, your Honour, but it seems contrary to what is there in PF12 and it seems contrary to common sense and it seems inconsistent with what was said from to time by the company or hinted at least, on a number of occasions by the company, that it had advice of its entitlements and its view of what comparable position means under the award.

PN1567

Of course it is obvious that you can have advice that is not recorded in writing but it just does not seem right, your Honour, that on an important matter like this that the company has not had legal advice on its legal position and its obligations. The question of whether the EDS offer was an offer of a comparable position and how that might impact on the way in which they wanted to reorganise the business you would have thought would have been a fairly serious matter that they would get advice on but if their response to the subpoena is correct, they didn't and therefore if that is correct then a conclusion that we can draw from that was that the company never had any advice in writing that the EDS offers would be offers of comparable position and that bears on the question of their bona fides in this matter.

PN1568

They can't, that is they can't say: we really believed, Colonial really believed at that time that EDS was - the offer of EDS employment was the offer of comparable employment and yet they were talking about the EDS offers being EDS offers of comparable employment. As I said yesterday, your Honour, they were being careful because they were sending out a message that it was comparable employment but when it came to the time to commit themselves in writing that that was the import of the award in the agreement they didn't do it, they pulled back.

PN1569

But PF12 also shows another thing and that is the minimalist approach to this issue, at the bottom of page 1, question - this is a question that is anticipated: if I elect not to take an EDS offer will there be forced secondments. Answer, again the focus here is on ongoing employability in terms of comparable offers with EDS. With that: I do not envisage there being secondments of any great degree. Well, false, misleading, not telling the employees what the real position would be. Exhibit PF15 is 11 August.

PN1570

It is the memo from Mr Pellegrini to Louise Denver and it is the one that starts off: final wording as discussed this afternoon, and okayed by group HR and again, group HR is obviously calling the shots for the general strategy of this matter and yet we haven't seen documents produced to the Commission which record what was happening within group HR. Again, at the end of that form of words and this was the form that was adopted from 11 August, we have those words at the end: to that end, if a comparable offer from EDS is declined no retrenchment payments will be payable.

PN1571

That was the form that was used in the Q&A and in individual responses and it was the form that replaced the earlier form of words which was in exhibit PF14 and it does not say of course, you will be - don't sign, or don't accept EDS offer you will be seconded. The next one is PF27 and that is just a little bit later. This is an example of the communication that was taking place in the period after the offers were made and at the bottom of the page, Mr Herbert has sent an E-mail, copied to a number of people because obviously this is a matter of some importance and the subject is: what happens if I decline, sent to Matthew Britten who subsequently sends it on to Mr Pellegrini and he says on the first page: could you please let me know exactly what would happen to my career if I were to decline the offer of employment at EDS and choose to remain with Colonial CBA?

PN1572

I don't need to read the rest except to point out that he thinks this matter - it is a pretty important matter to him, and the last sentence states: it is essential for me to know what I'm being asked to choose between otherwise my choice is a sham. The company is on notice, Mr Pellegrini is on notice. It is not as though there was a work force that didn't ask the question. Then Mr Pellegrini sends a letter to Matthew Britten and says, sorry an E-mail to Matthew Britten and says: Matthew, if you would like to make first contact with him on the basis that it is a comparable offer, etcetera, etcetera. I interpolate there, presumably Matthew Britten knew what the mantra was - continuing, and that he may, being made redundant without retrenchment moneys, etcetera.

PN1573

Now, of course, that is not true because the bank knew that he was not going to made redundant without retrenchment moneys because he was going to be seconded to EDS and knew at about that time or earlier that if people were seconded they would be regarded as being kept in their position, not being retrenched until such time as they were no longer needed at EDS, then they would be paid their retrenchment money and that was their position consistent with Macey. He goes on: please do not put too much emphasis on secondment or redeployment within CBA Group. Now, in that context "secondment" would seem to relate to secondment to EDS or would include secondment to EDS so he is compounding the deceit that is in the previous sentence, and the question is why take that approach, as he has set out there.

PN1574

Well, it is obvious because what Mr Pellegrini wants is the exertion of pressure on these people to accept the offer and reduce the number of seconders because Mr Pellegrini knew, from his experience, and other people knew from their experience, that secondment was not the best way to go. Then on 29 August another E-mail which - - -

PN1575

THE SENIOR DEPUTY PRESIDENT: Which exhibit is this?

PN1576

MR LAWRENCE: - - - is in PF28. PF28, your Honour. This is particularly good to illustrate what was happening, your Honour, and it is necessary to start at the third page, sorry, fourth page in this bundle. This is the instigator or one of the early documents and this is from Tony Todorovski to Mr Pellegrini, so he is really going to the top in terms of this project. It say:

PN1577

Milano, as Thursday is getting closer I would like to know where I stand with my position with CBA if I don't sign.

PN1578

And then he actually quotes a couple of paragraphs down the Q&A. He says:

PN1579

I don't want an answer like the one in Q&A number 2 which states, should your offer etcetera.

PN1580

And which concludes with these words:

PN1581

To that if a comparable offer from EDS is declined no retrenchment payments will be payable.

PN1582

He says:

PN1583

I would like an honest answer either way, what is my position if I don't sign, well, do you terminate my employment and if not do I become an CBA employee or what?

PN1584

And then Mr Pellegrini says on 28 August:

PN1585

An answer cannot be provided at this stage without understanding the reasons for your not deeming the offer to be comparable.

PN1586

That is quite wrong, misleading and deceitful and then closer to the front of the document we have got Mr Todorovski again sending off another E-mail and this is actually one a little bit earlier. This is at the bottom of the second page, it is from Mr Todorovski on 25 August to Peter Marshall and he says at the second to last paragraph on the page:

PN1587

Peter, I would also like to know where I stand if I decline the offer. Since I and the majority deem it not to be comparable.

PN1588

Then that is - that works it way through the chain and if we go to the front of the exhibits, your Honour, on 29 August, this is the third of the way or quarter of the way down the page. 29 August he sends an E-mail to Mr Pellegrini and says this in the third paragraph:

PN1589

So I want my position spelled out in plain English. Will I receive the 3 months notice in writing or payment in lieu if I don't sign or what will the CBA Colonial be doing with their staff in this position? Please I just want an honest answer and I will not be bothering you or anyone else in your department.

PN1590

I would have thought the most reasonable of requests, your Honour. And then Mr Pellegrini says later that day, this is 29 August, he says:

PN1591

Thanks for your note, however I cannot give you a definitive answer at this point in time.

PN1592

Remembering this is at the evening of 29 August and the deadline is fast approaching. He goes on:

PN1593

This will be assessed on an individual basis. I do not know the details of why you have deemed the offer non-comparable as every effort has been made to ensure this is the case. With that I ask that you continue to work through the issues via the hotline EDS.

PN1594

Well, of his comment there is if Mr Pellegrini can't answer the questions he is not going to get the answers from the hotline or at EDS. This is deceitful, your Honour, and it is not a one off it is part of a strategy that was adopted by Colonial. A strategy designed to put pressure on people and not tell them the truth and a strategy in my submission, that most probably came from somewhere in Group HR. It is not - probably not a personality feature of Mr Pellegrini. Mr Pellegrini knew about this process, he was the man involved in 1997 in the outsourcing to EDS.

PN1595

He was the man that was central to that, he was the man who, as I understand the judgment of Macey by Moore J central in the outsourcing, the implementation of the outsourcing. He knew what was done then, he knew what had to be done here from Colonial's point of view and he came in and did it and he was pursuing a strategy that had been worked out beforehand. He was doing a strategy, carrying out a strategy in conjunction with Group HR. It is quite obvious from the communications backwards and forwards that Group HR knew what he was doing and in my submission, this reflects very badly on Colonial.

PN1596

It is not proper ethics, it is not acceptable ethics and it shows a defect in governance in this area of Colonial's operations. Now that is PF28, the cry for help from Mr Todorovski and the response from Mr Pellegrini. I want to refer to PF36 which is the letter of the 5th of the 9th and this is Mr Pellegrini just a few days later circulating a letter that he had drafted in relation to secondment. Now, your Honour should be very confident in concluding that at the very time Mr Pellegrini was avoiding the issue with Mr Todorovski, he was in the process of drafting a letter for the next step in the process which was secondment and the letter of 5 September PF36 and its attachment show how sophisticated and how advanced that plan was.

PN1597

They knew exactly where they were going, your Honour. PF39 is another one that I want to refer to and that is the one where it becomes clear that Mr Pellegrini was well understood that they could not terminate a secondee without paying them retrenchment pay and again, he was cross-examined and this and he knew quite early in the piece when he was dissembling in this process that that would be the outcome and the inference to be drawn from that was that what they were doing here was adopting a strategy consistent with what they were in Macey.

PN1598

That is they were saying in Macey, their defence in Macey in relation to the secondment issues was: Well, this people are still in the same position, the position has been abolished and they will be paid redundancy pay if and when they are terminated and finally - - -

PN1599

THE SENIOR DEPUTY PRESIDENT: Where does that appear in the minutes?

PN1600

MR LAWRENCE: No, that is the inference that - yes, that is the inference that I asked your Honour to draw, that Mr Pellegrini was involved the Macey matter and the Macey had started - sorry, it had been filed. It was in the process of - the interlocutory steps had been taken and they knew what their defence was, they knew how they were going to deal with the matter by saying secondment does not equal retrenchment.

PN1601

THE SENIOR DEPUTY PRESIDENT: Loss.

PN1602

MR LAWRENCE: Yes, sorry, your Honour?

PN1603

THE SENIOR DEPUTY PRESIDENT: Does not equal loss of retrenchment.

PN1604

MR LAWRENCE: Yes, yes.

PN1605

THE SENIOR DEPUTY PRESIDENT: Which is what you say - - -

PN1606

MR LAWRENCE: Yes, loss of the benefits.

PN1607

THE SENIOR DEPUTY PRESIDENT: - - - was hinted at in all the lead up in the Colonial.

PN1608

MR LAWRENCE: Yes, and so there is a consistency between the two and there is evidence of that concern or the fact that this is what they say and what they don't say or how they deal with the matter in Colonial is driven by or affected Macey to some extent in PF41, which is the unmarked copy of that meeting in - I will just get the date in a moment - 17 November. This is after 17 November, a couple of months after. He has come back from the meeting with Freehills and he gives them a briefing on how they are going to deal with the seconde and what come through in this document and some other documents I have tendered in this series, is that they are really concerned about a class action and legal knock-ons and they want to make sure they avoid embarrassment so it has been driven, to some extent, by what has happened with Macey and the desire to avoid something that might cause them trouble and they are implementing a strategy based on their understanding of the issues following Macey or following in preparation of Macey.

PN1609

Now, the last exhibit that I want to refer to is exhibit PF47. This just goes back to the question of how significant the interveners are in terms of numbers and I have already dealt with it to some extent but for what it is worth, your Honour, if it matters at all how many there were - perhaps the first thing I can add to what I have said before is that the interveners are Melbourne people and so the total numbers include outside Melbourne. If you have a look at this document you will see 184 of the 345 are people with less than 5 years service.

PN1610

So that might be another aspect or another matter that might explain why some people were not prepared to commit themselves to significant amounts of money in litigation because they were at the bottom end of the range. As I said before, they are really not issues that bear on the principle that the Commission is dealing with and it really does not matter whether it is 90 per cent of people who were litigating the matter in the Federal Court and here or 10 per cent or 5 per cent, what matters is the principle and the way in which the Commission deals with these matters and, as I have said, in determining that matter - the principles that the company has observed in dealing with its employees.

PN1611

The outline of argument we filed, which is PF1, we referred to the company not having clean hands. We came into this litigation in the Commission believing that to be so and having, I think when we started these proceedings - started before the Commission we filed our statement of claim and we had asserted there was coercion and duress. We say what these proceedings demonstrate is that there was unfair treatment, coercion, duress and that the company has not got clean hands in this matter.

PN1612

We don't think as a question of fairness and equity, the company should be able to get the kind of provision that it seeks. Even apart from that, even if it had of gone about this in a more even-handed way, a more fair way, in an appropriate way, then there still would have been fundamental questions of merit and equity which still would have run against the company and in particular, we would point to these essential features, that the meaning of the clauses, the redundancy clause in the award in the agreement, are clear and unambiguous.

PN1613

They do contain rights for these people. They were the result of a bargain, a free bargain in both 1996 and a bargain in 1999. There is no reason to interfere with it. What happened in 2000, about September 2000 was that these people became redundant and they have got an entitlement. The entitlement should be pursued in the Federal Court and should not be taken away here. It would be quite wrong, in these circumstances, for the Commission to interfere with a right of this kind, so secure and so apparent and to cut the ground from under these people in the pursuit of their Federal Court case.

PN1614

If it turns out that the construction that we put on the redundancy clause is wrong, the Court says that is wrong, well then we fall. If it turns out that there is some loss of rights as a result of the resignations, well, that is a problem we will have as a result of the Court but we say that this is a matter appropriately dealt with in the Court. It is not a question for the Commission to step in, just as in the Amcor case, the Court dealt with it.

PN1615

It was not a question of the Commission dealing with it. As I understand it, there were not Commission proceedings. It was just a question for the Court. That is where it should be litigated and it would be quite wrong to exercise the power under section 146 to make a retrospective order to remove a right of this kind. It is not - it is a real right. That is the appropriate place to deal with it. As for the future, your Honour, what form of clause there should be, the interveners have no particular interest in that.

PN1616

I have made some comments today about the bad policy that underpins this clause. That is put on the basis that it would be bad policy to make that retrospective but whether it is bad policy prospectively is really not for us to buy into. We say bad policy and what can be made of that is not for us. They are the only submissions I wish to put. Unless there is anything else, that is it, your Honour.

PN1617

THE SENIOR DEPUTY PRESIDENT: Have you dealt with the documents that were produced this morning?

PN1618

MR LAWRENCE: That is right. I was going to say something about them. I covered them incidentally when I was referring to - - -

PN1619

THE SENIOR DEPUTY PRESIDENT: Yes, there were a couple of the exhibits.

PN1620

MR LAWRENCE: Yes, yes. A couple of points. First of all: there was no - it appears from this, as I mentioned before, there was no legal advice in writing, even that for which privilege is claimed. It is evident, from this documentation, that there was communication to Mr Hill, there's nothing about what Mr Hill decided, no record of his considerations of the matter for which privilege is claimed or not claimed and it just does not seem credible that, with this sort of involvement that Mr Hill had of people contacting him and him giving some consideration to the matter, that there would not be a record. We say: surely in group HR dealing with such an important matter Mr Hill would have put pencil to paper, so to speak, at some stage, a diary note, a memo, a report to his superiors, a report to the banks, executive management group, about what was happening.

PN1621

A report to Freehills or a request to Freehills for something, because some of those things could be privileged but what the response for the subpoena says: there was nothing like that, all of this was done: seat of the pants, it just does not make sense. But if it was the case, your Honour, it does reflect very badly on the governance aspects of this part of the operation and it does suggest that what they were doing was implementing the 1997 outsourcing in this area rather than hairy-chestedly, if I can put it that way, than had been the case in 1997. They were going well beyond the bounds of fair-dealing here. But that is all I wish to say in relation to those documents. I would like to tender them, if I might, your Honour, perhaps as a bundle, if that is at more convenient?

PN1622

THE SENIOR DEPUTY PRESIDENT: Yes, that would be convenient.

PN1623

MR LAWRENCE: And then perhaps in due course the parties could have copies of those documents?

PN1624

THE SENIOR DEPUTY PRESIDENT: That is the copy that was presented to the Commission before?

PN1625

MR LAWRENCE: Yes.

PN1626

THE SENIOR DEPUTY PRESIDENT: Yes, well, we will arrange for copies of that. The series of E-mails for which privilege was claimed and denied issuing in July 2000 I will mark collectively exhibit PF61.

EXHIBIT #PF61 SERIES OF E-MAILS ISSUED IN JULY 2000

PN1627

MR LAWRENCE: Your Honour, I think you know that I have a commitment in Melbourne tomorrow and another commitment on Friday, if that matter does go to Friday, if that is relevant, so Ms Mulkay will be representing the interveners tomorrow.

PN1628

THE SENIOR DEPUTY PRESIDENT: Thank you, Mr Lawrence.

PN1629

MR LAWRENCE: Thank you, your Honour.

PN1630

THE SENIOR DEPUTY PRESIDENT: Mr Ginters?

PN1631

MR GINTERS: Your Honour, we still have Ms Sanderson to do and the expectation is that will be done tomorrow morning.

PN1632

THE SENIOR DEPUTY PRESIDENT: Yes, that is right and you are not going until that has been done.

PN1633

MR GINTERS: My preference would be not to go until I had the opportunity to cross-examine her, your Honour, it will complete the evidence and then allow me to go straight into my submissions after that.

PN1634

THE SENIOR DEPUTY PRESIDENT: Yes, well, as long as it allows you to go straight into your submissions.

PN1635

MR GINTERS: Yes, I don't envisage my cross-examination will be very long, your Honour, but I would like the opportunity to at least elicit some answers before I make my final submissions. Can I just indicate one other matter? We sought a number of indulgences from your Honour in terms of timing and we are grateful for those. I have a commitment or a directions hearing in the 50 Phillips Street and State Commission at 9.30 tomorrow morning, so subject to the convenience of my friends, if we can have a 10.30 start tomorrow morning that would be greatly assisted.

PN1636

THE SENIOR DEPUTY PRESIDENT: Well, Mr Lawrence has no contribution to make on that.

PN1637

MR LAWRENCE: I'm easy.

PN1638

MR DOUGLAS: I have no problem with that, your Honour.

PN1639

THE SENIOR DEPUTY PRESIDENT: You have no problem, Mr Douglas, very well, then that is what we will do, I will adjourn now until 10.30 tomorrow morning.

PN1640

MR LAWRENCE: Thank you, your Honour.

PN1641

THE SENIOR DEPUTY PRESIDENT: I formally make that adjournment.

ADJOURNED UNTIL THURSDAY, 5 SEPTEMBER 2002 [12.36pm]

INDEX

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #PF61 SERIES OF E-MAILS ISSUED IN JULY 2000 PN1627