C2002/5289, Transcript of Proceedings [2002] AIRCTrans 4557 (15 November 2002)

AUSCRIPT PTY LTD
ABN 76 082 664 220

Level 4, 60-70 Elizabeth St SYDNEY NSW 2000
DX1344 Sydney Tel:[phone] Fax:[phone]

TRANSCRIPT OF PROCEEDINGS

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

COMMISSIONER CARGILL

C2002/5289

AGI REFRACTORY SERVICES PTY LIMITED
(RECEIVERS AND MANAGERS APPOINTED)

and

CONSTRUCTION, FORESTRY, MINING
AND ENERGY UNION

Notification pursuant to section 99 of the Act
of an industrial dispute re indefinite strike
by maintenance workers at Port Kembla

C2002/5301

AGI REFRACTORY SERVICES PTY LIMITED
(RECEIVERS AND MANAGERS APPOINTED)

and

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

Application under section 127(2) of the Act to
stop or prevent industrial action re indefinite
strike by maintenance workers at Port Kembla

SYDNEY

4.00 PM, THURSDAY, 31 OCTOBER 2002

PN1

THE COMMISSIONER: Could I have appearances, please?

PN2

MR D. CROSS: If it please the Commission, I seek leave as a solicitor to appear on behalf of the company in both of those matters. As you would have gathered from the title of my client, receivers and managers have been appointed to it. I am accompanied today by MR J. OUDEJANF, who is the Human Resources Manager of the company and also with me is MS L. PLANK, who is of the firm from which the joint receivers and managers come.

PN3

Leave is sought for my appearance on the basis that the company is in a somewhat unusual position, receivers and managers having been appointed and as, Commissioner, you would be aware, receivers and managers have the ultimate authority therefore in the conduct of the affairs of the company whilesoever the receivership lasts. I am beholden to their instructions. It is convenient that I deal with the matter, having been able to deal with the operational side and the receiver side so as to have a look at relevant information.

PN4

THE COMMISSIONER: Thank you, Mr Cross. Ms Plank, are you going to be making submissions?

PN5

MS PLANK: No, Commissioner.

PN6

THE COMMISSIONER: All right, thank you.

PN7

MR P. ZABOYAK: Commissioner, I appear on behalf of the union.

PN8

THE COMMISSIONER: Do you oppose Mr Cross being given leave, Mr Zaboyak?

PN9

MR ZABOYAK: I oppose on two bases, not in so far as the notification under section 99 which we were made aware of late last night, but I certainly do oppose the application under section 127(2) as it hasn't complied with rule 72 of the Act.

PN10

THE COMMISSIONER: This is just a question of Mr Cross being given leave.

PN11

MR ZABOYAK: We oppose leave on the basis of the section 127(2) application and rule 72.

PN12

THE COMMISSIONER: So you are not opposed to Mr Cross being given leave for section 99 but you are for the 127.

PN13

MR ZABOYAK: I don't know if there are restrictions under 99.

PN14

THE COMMISSIONER: There are restrictions for any matters if - - -

PN15

MR ZABOYAK: We would oppose on both grounds.

PN16

THE COMMISSIONER: On what basis?

PN17

MR ZABOYAK: Well, there is the preamble to the seriousness of the second application and unfairness, natural justice and notice to the union to defend the application. I am not a solicitor.

PN18

THE COMMISSIONER: Mr Cross, did you want to put anything?

PN19

MR CROSS: Yes, I did, Commissioner, and it is this. As I understand the objection to my appearance it is founded upon grounds concerning natural justice. In my submission those grounds are not made out. The reality of the situation, Commissioner, is that this is an urgent matter, the company being in receivership, the ordinary management structures no longer apply. It isn't as though there are now people within the management of the company who have the same unfettered authority they may once have had to appear and speak on behalf of that company. The reality is that the affairs of the company are managed by two liquidating accountants who have been appointed joint manager and receiver by an order of the Supreme Court.

PN20

THE COMMISSIONER: But you are not representing them, as I understand it, you are representing the company.

PN21

MR CROSS: They are the company.

PN22

THE COMMISSIONER: Who is instructing you?

PN23

MR CROSS: I am instructed by the joint receivers and managers who run the company pursuant to an order of the Supreme Court.

PN24

THE COMMISSIONER: So you are not being instructed by the company itself.

PN25

MR CROSS: I am, because the receivers and managers run the company.

PN26

THE COMMISSIONER: Mr Cross, perhaps you are not really assisting yourself in getting leave. I will give you leave provided that you don't try to become too legalistic in this matter, you are actually becoming very legalistic. I just want to know who is instructing you, is it the receivers and managers or is it in fact the company in some different guise. In other words, can Ms Plank in fact make the submissions that you could otherwise have made?

PN27

MR CROSS: The answer to that is no, Commissioner.

PN28

THE COMMISSIONER: So in fact the company can only be effectively represented by yourself, is that what you are saying>

PN29

MR CROSS: Yes, Commissioner, that is so.

PN30

THE COMMISSIONER: All right. Yes, Mr Zaboyak.

PN31

MR ZABOYAK: Commissioner, I received some correspondence on the Sims Lockwood letterhead at the same time as I received the notification for the appearance this afternoon, again at approximately 2.30. There seems to be some ambiguity in terms of who Sims Lockwood are actually representing in the form of the co-respondents and secondly on the introduction of the appearances before you earlier where Mr Oudejanf was introduced as the Human Resources Manager for the company, I don't know if it AIG Refractories, or was it AGI Holdings, or was it Rotaflow, or was it some other company, I am at a bit of a loss here as to who's who in the zoo in the first instance.

PN32

There is also some ambiguity into what is actually happening. In the correspondence I have received from Sims Lockwood there appears to be an initiation by a management buy-out of some of the management of the AGI group of companies. I am at a bit of a loss, perhaps if some clarification could be brought forward, so that I could at least get some clarity on what the hell am I doing here.

PN33

THE COMMISSIONER: Mr Cross.

PN34

MR CROSS: Commissioner, the identity of the company involved ion the present matters is clear, it is AGI Refractory Services Pty Limited, that's the name of the nominating company and that appears in the documentation and subsequent notice.

PN35

THE COMMISSIONER: Receivers and managers appointed.

PN36

MR CROSS: Yes.

PN37

THE COMMISSIONER: You are representing them, that entity?

PN38

MR CROSS: Yes, I am representing that entity.

PN39

THE COMMISSIONER: You are representing that entity and Mr Oudejanf is from - - -

PN40

MR CROSS: He is presently employed as the Human Resources Manager of that entity.

PN41

THE COMMISSIONER: And Ms Plank is from one of the receivers and managers, is that what you said earlier, Sims Lockwood.

PN42

MR CROSS: That is correct, Commissioner, yes.

PN43

THE COMMISSIONER: Does that clarify the situation, Mr Zaboyak?

PN44

MR ZABOYAK: Sort of.

PN45

THE COMMISSIONER: Well, Mr Cross, I will give you leave but, as I say, this is an industrial tribunal and it would be appreciated if perhaps you could put the matter and become not unduly legalistic, please.

PN46

MR CROSS: That was always my intention, Commissioner, it happens that I probably have the most complete grasp of the details of the circumstances which have occurred.

PN47

THE COMMISSIONER: Now, do you want to deal with both matters together or one before the other?

PN48

MR CROSS: Commissioner, it would be our wish to deal with the section 99 notification first. As I understand it, there have been some discussions earlier this afternoon involving Ms Plank and officials of the CFMEU, During those discussions some measures which might be taken to achieve a practical resolution of the dispute were aired and it might well be that those ideas can be further developed with the assistance of the Commission in such a way that would lead to a resolution of the dispute.

PN49

If I could perhaps just outline very briefly the nature of the dispute as we see it so that these things can be understood in context, the company for whom I act conducts business which involves at least in part the provision of maintenance and repair services for coke ovens and at present it has a contract with BHP Steel where it provides those services at Port Kembla. For that purpose my client employs certain people who are members of the CFMEU and the employment of those people is regulated by a certified agreement of this Commission which was made on 25 June this year and has a nominal term which expires on 1 October next year. On 25 October the receivers and managers were appointed to the company and upon that appointment they assumed responsibility for control and management of the business.

PN50

Mindful of concerns that employees might have about the security of entitlements in that context, the receivers and managers initiated meetings with unions who had members reflected in the workforce of the company. At this point it is important to add that there are certain related companies that have also been placed in receivership and they have a workforce among whom members of the AWU and the AMWU are found.

PN51

THE COMMISSIONER: When were these meetings held, Mr Cross?

PN52

MR CROSS: These discussions occurred on Monday in respect of the AWU and the AMWU, and in those discussions plans were outlined for securing workers entitlements which plans were received positively by those two unions and an indication was given that work would continue and there would be no difficulty at least from that quarter.

PN53

My client sought meetings with the CFMEU in order to provide the same level of reassurance to it as had been provided to the other unions, for one reason or another, largely because of the unavailability of people at key times there wasn't an opportunity for a direct face to face meeting, indeed, until the one that occurred this afternoon to which I've earlier referred.

PN54

Yesterday morning at 6am when work ought to have commenced by the employees who were members of the CFMEU an indefinite strike was called. At the time that that strike was called the workers were engaged in the repair and maintenance of certain coke ovens at BHP Steel.

PN55

THE COMMISSIONER: Sorry, Mr Cross, can I just clarify. In the application that actually says that the strike commenced on the 29th, you just said yesterday.

PN56

MR CROSS: That's an incorrect date, Commissioner.

PN57

THE COMMISSIONER: So it was actually the 30th?

PN58

MR CROSS: 6am on the 30th. The strike action commenced at a point when a particular repair and maintenance process in relation to an oven was about one-third completed. The result of that has been the leave that oven, in what I'm instructed is an unsafe condition, and also in a condition which is likely to cause emissions that constitute an environmental hazard. So far as my client is aware the indefinite strike has been caused by what is said to be anxiety on the part of the workforce about their entitlements in light of their receivership.

PN59

THE COMMISSIONER: Well, that's perhaps not unjustified in view of what's been happening. I'm not suggesting with your particular client, but is a very regular occurrence these days that people are having difficulties with entitlements.

PN60

MR CROSS: Commissioner, we recognise that an insolvency event of the kind that causes a receiver to be appointed justifiably causes concern by workers as to the security of their entitlements, with that we take no argument, where we perhaps part company with the CFMEU is the immediate resort to indefinite strike action in circumstances where an enterprise agreement is in place and it contains a dispute resolution provision which was not in the least but called upon in this instance and in circumstances where we have been seeking an opportunity to talk to the unions so as to lay out the plans that were afoot for securing entitlements.

PN61

Now as it happens, Commissioner, the entitlements of the particular workers who have taken this strike action are, with the singular exception of annual leave already secured by other mechanisms that are in place, for example, redundancy pay entitlements are secured by the fact that under the enterprise agreement my client is required to contribute a stated sum each month into an independent fund called ACIRT.

PN62

THE COMMISSIONER: Yes, I'm aware of that, it is a regular thing, but sometimes though there are difficulties with companies actually paying into those funds, there may be a requirement that companies do but frequently they don't even though there may be an obligation. Have you provided some sort of assurance to the union that that money has in fact has gone into ACIRT.

PN63

MR CROSS: I'm instructed that investigations have established that the company is properly and fully paid up to ACIRT. One the matters which emerged in this afternoon's discussion, I'm instructed is that my client might provide a letter to the union which is a kind of list of, if you like, matters that can be ticked off and checked that all ACIRT payments are up date, checked that superannuation contributions are up to date, check that payments to the portable long leave service leave scheme fund are also up to date because that's another entitlement which is protected we say by a pre-existing mechanism.

PN64

As I indicated, Commissioner, the one outstanding element is annual leave in respect of which we have said to the union these things, firstly, that the level of book debts owed by other parties to the company is such that it exceeds many times over the annual leave obligation and the annual leave obligation is an amount that has a priority under the Corporations Act so that that's a very real protection.

PN65

But also that we would very much look towards considering another arrangement, perhaps, sequestering some money in some form, if that were to give comfort to the union, and if that were to resolve in a commitment that people would return to work immediately because the situation with the ovens is becoming quite critical and BHP have indicated to my client in fairly clear terms that unless the repair and maintenance work can be completed promptly BHP will cancel its contract with my client which will deprive it of the revenue that might otherwise have been available to do the sorts of things which the CFMEU would wish us to do.

PN66

THE COMMISSIONER: Any wages outstanding, Mr Cross?

PN67

MR CROSS: On my instructions, no. So that in as brief a terms as I'm able to is the circumference of the dispute, and you will see, Commissioner, from that recitation of events that there is some practical plans which have at least been half discussed and half formed which can be put into place. But we would very much like that to be coupled with a commitment of an immediate return to work otherwise the consequences for this company and quite possibly for BHP as well would be very serious indeed.

PN68

I don't wish to labour the point but the industrial action, apart from occurring in circumstances where the dispute resolution procedures are not being utilised, is also taking place in a setting where the enterprise agreement is well within its nominal term it is not just protected action on any view of it and it hasn't occurred in circumstances where the receivers and managers have been sitting on their hands they have been trying to engage with the union for some days now and the opportunity has really just been made available in most recent times.

PN69

THE COMMISSIONER: Were those discussions with Mr Zaboyak or with the other - - -

PN70

MR CROSS: Yes, Mr Zaboyak was involved in those discussions this afternoon.

PN71

THE COMMISSIONER: Thank you. Mr Zaboyak, do you wish to put anything?

PN72

MR ZABOYAK: If the Commission bears with me, we're still on 99, I take it.

PN73

THE COMMISSIONER: Yes.

PN74

MR ZABOYAK: The unfortunate thing with this particular company and the current proceedings that we're currently in before you is most unfortunate, the matters relating to this particular dispute and the alarm bells that were ringing have been before Commissioner Harrison and this Commission earlier this year, several months ago, there was an emphatic denial that the company was in financial difficulty. I think it was done under the auspices of representations from the Master Builders Association, Mr Daniel Murray, I can dig out the pertinent matter numbers.

PN75

Prior to that this company I think it was circa after Christmas past was involved in a dispute with this union in relation to the establishment of an enterprise agreement to which has been referred to here and the subsequent negotiation of where again the issue of the company's financial liquidity was a point of discussion and a serious topic for our members, again, that was rebutted and further dismissed by the company then.

PN76

We have had since then a further dispute notification before again heard by Commissioner Harrison re that the obligations and conditions outlined in the enterprise agreement being adhered to by the company in terms of a particular section referring to CTAS or top up insurance to which the company had not adhered to by taking out that insurance, and as a consequence one of our members suffered from a heart attack and died and subsequently the company which had not taken insurance claiming that it was self insured and that was the subject of some discussion before the Commission. As a consequence that widow didn't get any money at all, so the company indicated that it had no obligation because it was arguing the merits of the application of that clause which upset our members even more which brings us to where we are here today.

PN77

I bring back to where the subject of these disputes were subsequently produced to the Coal Royal Commission with an attempt to belt the union around the ears indicating that it was spreading scurrilous rumours, was causing the company lots of damage, the allegations of its liquidity were hogwash, that it had several million dollars in the bank with assets, everything was fine and dandy, and again the union had contacted BHP expressing its concerns and made references to myself as trying to undermine the company.

PN78

I was fabricating lies and innuendos and I was making threats against BHP in relation to BHP not being able to meet its legal and lawful obligations under the enterprise agreement, which brings us here today, when in fact it is reported in the press that the company has obligations and outstanding debts to the tune of $40 million owing to various small businesses who have been inundating the union with, how the hell are we going to get paid, some are going to go out of business, whilst in some documentation which I only received earlier today, on a letterhead from Sims Lockwood, it is indicated that the company has been engaged in negotiations with the ANZ investment bank for an excess of 12 months in order to enter into some form of scheme of arrangement by which they would sell and also negotiate a management buy-out of the particular business.

PN79

We have a scenario here where we have the management of AGI Refractories, knowing it has a huge debt, denying it in various hearings and tribunals, going to a Royal Commission and making submissions before Commissioner Cole stating that the union, this big bad CFMEU, is out there spreading lies about our company, when in fact the opposite is happening.

PN80

The company has a debt of $40 million and, well, the audacity of the workers to actually cease work, not on indefinite strike as has been put here by my friend Mr Cross, they went out on a 24-hour stoppage with a view to try and secure a scheme of arrangement whereby moneys which would be outstanding to them, be it in the form of wages, annual leave loadings, redundancy, superannuation, public holidays, top-up insurance as required under the EBA which they still haven't got, as well as other entitlements, would be made secure into a trust fund, because of this shonky arrangement which seems to have been manifesting for over of 18 months, and I dare say some investigation by Companies and Securities watchdogs would be in order because the thing pongs of criminality,

PN81

The employees reported back to work this morning at 6am to find out if there was some form of progress in the establishment of a trust fund which would secure their entitlements. There was not an indefinite strike as has been handed up here by my friend. We did have a meeting late last night with a representative of Sims Lockwood or a subcontractor of Sims Lockwood. We didn't get anywhere but we certainly let them know what we wanted.

PN82

Further, we had a scheduled meeting for 1 o'clock today, which we had with Mr Kelly and myself and Sims Lockwood representatives. We again put to them the setting-up of a trust fund which would guarantee the entitlements of all our members working for the AGI group of companies. The response from Sims Lockwood was that they only had $200,000 in their bank account but debts outstanding to the tune of $2 million and they were pinning their hopes on realising the $2 million from debtors to this company, and I am sure the debtors know that when someone is about to fall over they are all going to rush to their aid and pay the money, of course, like good corporate citizens.

PN83

We have asked for a ledger to indicate to us what is actually owed, evidence of payments being made to superannuation, redundancy; my friend I think is a little bit confused in terms of long service leave, there are no contributions required to the long service leave corporation, it is done by certificates of service within 30 days of termination or at the conclusion of each financial year. However, needless to say, there is still a provision under the 1955 State Act that if an employee qualifies within the range of service requirements can claim it directly from the company or companies and they can seek reimbursement from the corporation.

PN84

There are also approximately half a dozen staff working in the office of AGI. There is close contact between those clerical workers and members of our union and our members have also indicated that they would seek to have included in the trust fund the wages and conditions and outstanding entitlements also into the trust fund. We have received some direction from the staff as clerical workers but they are fearful of ramifications to themselves directly if they are seen or perceived to be talking to the union.

PN85

Some of the staff of clerical workers have worked for this company or a number of companies which are now AGI for in excess of 20 years and are fearful that they will not get any of their entitlements, so there is a genuine concern there and we will be seeking some further instructions from those people over the next 24 hour, but Sims Lockwood's view is, well, don't worry about it because the Federal Government's got a safety net there so if AGI falls over you can just go to the Government and they'll cough up, the good old taxpayer, the good old safety net.

PN86

Our friends from AGI who have been engaged in some sort of business arrangement to run the company down and then buy it for a song or just merrily go on. Then they come to this Commission and ask for a section 127 because those damned workers have got the audacity to stop working because they are not sure whether they are going to get their entitlements protected or not. I think it's just absolutely outrageous, to say the least.

PN87

I am happy to pursue this and enter into any form or scheme of arrangement by which the workers are happy to return to work. They are not seeking to damage anybody. I take great offence at my friend here suggesting that great damage is going to be done to the environment from BHP, he obviously hasn't driven past it lately. In terms of damage direct to the coke ovens, there is no damage or perceived damage, our members would never ever take action which would do or create harm to the customer who some of them have worked for in excess of 20 years in that one location.

PN88

I have been instructed by our members that whatever action they have taken and stopped work in those particular coke ovens, no damage at all has been created by them ceasing work. They have been returning at 6am every morning, they have been seeking updates from us. The company has refused to recognise the union as the face of the workers as late as late last night. They had a couple of Sims employees, probably feasting themselves at the expense of AGI, stayed overnight, sought to drag people out of their beds yesterday after a 12-hour shift to drag them in and try to cut some sort of a deal. They stayed overnight on their $200 an hour budget or whatever they're getting and then subsequently when they found out that the workers didn't particularly want to talk to them or trust them they decided to come to us.

PN89

The company is endeavouring to do everything it possibly can, not to protect AGI, but to protect some form of shonky management arrangement to buy what's left of the company at a bargain basement, and probably empty a few closets and some of the gear they have stashed away, thinking in some sense that these workers will gladly run back into their arms and continue working on as if nothing happened, well, the answer is they don't trust them, we want a trust account, we want the monies protected, we want the evidence that we've asked for of all the contributions as required under the enterprise agreement to be made good as well as the insurances.

PN90

My understanding is also, and I'll stop very shortly, and I hope I'm not boring this Commission with this but I don't get many opportunities nowadays to have a free kick. But my understanding is there are liabilities in group tax which are significant. We understand there is evasion of payroll tax which hasn't been made good, prima facia. We understand there may be difficulties with the group of companies in terms of workers comp evasion and payment of premiums as well because I believe not all the companies had workers comp policies and there may have been some underestimates but we still obviously need to pursue that some further.

PN91

So there seems to be prima facie alleged fraud and conspiracy under the various acts so far today, and obviously, I'm glad that they have done this because it gives me the opportunity to put on record the corporate structure and the shonkiness of this company that has been brought here before you today, thank you, Commissioner.

PN92

THE COMMISSIONER: Mr Zaboyak, I haven't actually asked Mr Cross but I took from what he was saying that we perhaps might go into conference, are you happy with that course of action?

PN93

MR ZABOYAK: I've got no objections.

PN94

THE COMMISSIONER: Thank you. Mr Cross, first of all, perhaps if you wanted to reply to what Mr Zaboyak said and then perhaps you can confirm whether I mistook what you were earlier indicating and perhaps we could go into conference.

PN95

MR CROSS: We would be keen to go into conference so that we can try and get a handle on the sorts of practical issues that are at stake and the difficulty we've had so far apart from being denied the opportunity to meet and having meetings postponed, if and when we do have a discussion we have to listen to the sort of offensive, groundless defamatory rhetoric that we've just heard and it doesn't assist in the resolution of the dispute because what can the receivers and managers do about an allegation that the company structures have been devised to facilitate fraud at least in the context of the present dispute. All we want to do is identify the list of practical measures that the members require reassurance about so that work can commence.

PN96

These other sorts of wider issues about putative tax fraud and so on we're never going to be in a position to deal with those in the context of this dispute as the receiver and manager works through the affairs of the company no doubt aspects of it will be scrutinised and what falls from that will fall from it. But we'd like to go into conference, but we'd like some indication that where that's going to head is a discussion of some practical steps and we're not going to be sitting listening to repetitious allegations of broad fraud that are offensive to people like the human resources manager sitting here who is part of the management structure of the company.

PN97

THE COMMISSIONER: Well, perhaps we'll see where we go in conference and we will go off the record into conference.

NO FURTHER PROCEEDINGS RECORDED