AG2002/4814, Transcript of Proceedings [2002] AIRCTrans 4725 (25 November 2002)

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TRANSCRIPT OF PROCEEDINGS

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

DEPUTY PRESIDENT HAMPTON

AG2002/4814

APPLICATION FOR CERTIFICATION
OF AGREEMENT

Application under section 170LJ of the Act
by the Shop, Distributive and Allied
Employees Association and Another re
certification of the Drake Foodmarkets
Retail Agreement 2002

ADELAIDE

2.04 PM, TUESDAY, 12 NOVEMBER 2002

PN1

THE DEPUTY PRESIDENT: Yes, good afternoon all. I will take the appearances.

PN2

MR B. DUFFY: I appear on behalf of the Shop Distributive and Allied Employees Association and with me is MR B. FINNIGAN, also from the same Association.

PN3

THE DEPUTY PRESIDENT: Good, thank you, Mr Duffy.

PN4

MS L. FRASER: I appear for Drake Foodmarkets.

PN5

THE DEPUTY PRESIDENT: Thank you, Ms Fraser. Yes, Mr Duffy.

PN6

MR DUFFY: Yes, Mr Deputy President, both parties are in consent to move this application for certification of the Drake Foodmarkets Retail Agreement 2002. It is our submission, that all the legislative requirements of this proposed application are met and satisfied. The agreement is between the SDA and Drake Foodmarkets. The application is accompanied by statutory declarations from Mr Don Farrell on behalf of the SDA and also Mr Bob Soang on behalf of Drake Foodmarkets as well.

PN7

Just on a couple of points of legislative aspects of the application. With respect to section 170XA of the Act, Workplace Relations Act, the award that has been used for comparative purposes is the Retail South Australian Industry Award, and it is our submission that there is no disadvantage to employees with respect to their wages and working conditions under this proposed Certified Agreement under section 170LJ. The proposed agreement contains a clause for settling disputes and this is found in Clause 42 of the proposed agreement.

PN8

Furthermore, the expiry date for the proposed agreement is within the time frame limits of the Workplace Relations Act. It is set at 1 August 2004 and that is found in clause 5 of the proposed agreement. In regards to the process of notification to the relevant employees of this proposed agreement, both Drake Foodmarkets and the SDA conducted a series of meetings with employees and went through the proposed agreement, provided documentations of comparative issues of this proposed agreement and the relevant award.

PN9

THE DEPUTY PRESIDENT: Including that, I take it, that is appended to the application?

PN10

MR DUFFY: Included?

PN11

THE DEPUTY PRESIDENT: Including that comparison document which is appended to the application?

PN12

MR DUFFY: Yes, that is my understanding, Deputy President, yes, that is correct. In regards to the time frame, after the union and Drake Foodmarkets went through the proposed agreement, at least 14 days was allowed before a ballot was taken, a valid majority of employees voted on the agreement and the approval was given on 8 October 2002. Within 21 days of that date, 29th in fact, the application was made here at the Commission for the agreement to be certified. Deputy President, in conclusion our position is that the agreement meets the relevant requirements of the legislation and we put it forward for certification today.

PN13

THE DEPUTY PRESIDENT: Well, look, I've got a number of issues which relate primarily to the identity of the employer, or employers, as the case may be.

PN14

MR DUFFY: Sure.

PN15

THE DEPUTY PRESIDENT: And some of the issues arising from that. Perhaps I will raise them generally and whoever wishes to speak to that may do so.

PN16

MR DUFFY: Sure. May it please the Commission, yes.

PN17

THE DEPUTY PRESIDENT: The statutory declaration - well, I will start with the agreement - the agreement is binding upon Drake Foodmarkets which, I presume, is a trading name rather than a - - -

PN18

MS FRASER: Yes, that is right.

PN19

THE DEPUTY PRESIDENT: - - - an incorporated entity?

PN20

MS FRASER: It is a trading name.

PN21

THE DEPUTY PRESIDENT: Am I correct in assuming therefore that the actual employers are those that are named in both statutory declarations under the questions to 3.4? Ipswich Properties Pty Ltd, the Fourth Force Pty Ltd, Kalbarri Pty Ltd and Kentani Pty Ltd?

PN22

MS FRASER: Yes, that is right, that is correct, they are all trading as Drake Foodmarkets.

PN23

THE DEPUTY PRESIDENT: Well, then, in that context I obviously need to be satisfied that the agreement is made with a group of employees that are together conducting a single business.

PN24

MS FRASER: They are.

PN25

THE DEPUTY PRESIDENT: All right. Perhaps, Ms Fraser, you might tell me a little bit about the nature of those companies and their relationship?

PN26

MS FRASER: Okay. This is my understanding of it. Ipswich Properties Pty Ltd was the initial company set up by Roger Drake to run his supermarket businesses. Subsequently, when he purchased businesses - other businesses - for example, some from David's - he took the company name of the Fourth Force Pty Ltd, because of his concern that he wanted to make sure that he had different entities that could trade, and if financially there were any problems with one entity, then, he had another entity. This is my understanding. The same applied with Kalbarri Pty Ltd and Kentani Pty Ltd, that they were - Kalbarri for example is one supermarket, it is Woodcroft Foodland, that was a business that was established by Roger Drake from the ground up and, therefore, he wanted to keep it in that time frame when he built it, as a separate entity to his initial entity. That is my understanding.

PN27

THE DEPUTY PRESIDENT: Do I understand that the four corporations are treated as related employers, for the purposes of the Corporations Law?

PN28

MS FRASER: I don't know.

PN29

MR DUFFY: Deputy President, I'm not aware of the situation there myself. I discussed with my friend beforehand the provisions of section 170LB(2)(b) and, I guess, my understanding is that they would fit in there, but my friend might not be too sure at this stage.

PN30

THE DEPUTY PRESIDENT: Yes. Well, it is likely, given the history but obviously I need to be satisfied that they are in fact a single business for present purposes.

PN31

MR DUFFY: Could I just briefly just run through that provision again, just with my friend?

PN32

THE DEPUTY PRESIDENT: Certainly.

PN33

MS FRASER: They do trade as a single business so that, yes, having read this that is my understanding. The only concern I had was that I would imagine that you would have to say that they are two or more corporations. I was only hesitant because that is my understanding that they are separately incorporated and that is primarily for tax purposes and for protection of the businesses, but they actually all trade as Drake Foodmarkets. All the employees are regarded as the single entity employees. They are all paid, I think, under Ipswich Properties, so it just trades as a single entity.

PN34

THE DEPUTY PRESIDENT: They all have their registered address at the same address?

PN35

MS FRASER: That is my understanding, yes.

PN36

THE DEPUTY PRESIDENT: You understand that their directors are in common, that is, the directors of the companies are in common?

PN37

MS FRASER: Yes, I believe that they are. My understanding is that there are different directors for the different companies, but the prime directors being Roger Drake and his wife, Wendy, would be directors across all the companies.

PN38

THE DEPUTY PRESIDENT: I note the statutory declaration which uses the trading name, Drake Foodmarkets, does specify each of the companies as falling under that umbrella and, presumably, the title of SA General Manager, for Mr Soang, S-o-a-n-g.

PN39

MS FRASER: He pronounces it "Song".

PN40

THE DEPUTY PRESIDENT: "Song". Then, that would also tend to confirm that the four employers are in fact trading for all practical purposes as if they were the one entity.

PN41

MS FRASER: Yes.

PN42

THE DEPUTY PRESIDENT: All right. Look, in that context I have two further questions then. The agreement therefore names Drake Foodmarkets, but does not define any of the legal entities in terms of the scope and persons bound. I don't think there is any difficulty, per se, in having them signed by someone on behalf of the four companies, but I think this is potentially a very powerful legal document and it shouldn't be left uncertain as to who it actually applies to, particularly given the operation of the Act and the transmission of business provisions, amongst others.

PN43

It would seem to me at the very least the scope and persons bound clause would need to be amended to include each of the four legal entities trading as Drake Foodmarkets. Now, I know the Full Bench of the Commission has expressed some reservations about amending agreements after they have been to the ballot. However, it is my understanding of the relevant authority that that was a concern about a substantive amendment to an agreement, rather than a technical amendment.

PN44

The statutory declaration, in my view, is sufficient to establish that the agreement is made with the four employers trading as that, but that is not reflected in the agreement itself and, in my view, tat is not the sort of variation that the Full Bench had any concerns with. Indeed, I think they used the term "substantive amendment" which in my view leads to the implication, at least, that a non-substantive amendment such as this is capable of being dealt with and that is certainly the view that I have formed as to the operation of the Act. The other matter that arises is the agreement is expressed to apply throughout Australia. Do the four entities, in fact, trade throughout Australia?

PN45

MS FRASER: No. No, and we did have a legal opinion on this, that there is a possibility in the future that we may be able to trade in other States, that other - particularly Foodland, or IGA stores - may become available in other States, so it was decided to make it broad like that and, my understanding was that, you would still have had to make sure that in each State, if you actually had stores in each State, that you would actually have to then ensure that the document was registered, or whatever in those States, or something to that effect but, certainly, we could amend that if that is a problem because currently we don't trade anywhere except South Australia.

PN46

THE DEPUTY PRESIDENT: Mr Duffy, I raise this because, of course, the negotiations have all been conducted against the Retail Industry Award SA. If the agreement is to apply outside of South Australia, then, there may be issues about whether or not it should be tested against other safety net awards. I've got no concluded view about that. I think in general terms the Retail Industry South Australia Award is an appropriate safety net. You would know, as well as well I do, that there are variations between the States and Territories. In general terms, however, they are reasonably consistently. I don't know there would be any major difficulties, but I think the intention of the parties is important here, particularly, given the safety net that has been chosen to conduct the negotiations in and against which the application has been made.

PN47

MR DUFFY: Yes, Deputy President. Look, I don't have any submissions on that. I mean, certainly, the Association had not really canvassed the broader aspects of its application in the rest of Australia and, therefore, our view was the Retail Industry Award was the appropriate one. I don't know whether my friend knows whether the company are going to be looking at that in the next 2 years, because it is only until August 2004 so, yes.

PN48

THE DEPUTY PRESIDENT: Well, there would be nothing to prevent a variation of a Certified Agreement to include any other States or Territories that fall within the scope - by that I mean, the scope of the agreement in terms of the employer - and I think in the circumstances that may be the preferable course of action because, if it is to apply as broadly as announced in the locality here then, obviously, I would need to consider a whole raft of safety net instruments that obviously haven't been contemplated by the parties. Whether that would create a difficulty, I don't know, but I think it sounds as if the agreement has actually been negotiated in that particular context, which is the South Australian operations. As I said, there would be nothing to prevent an agreement being varied during its lifetime to embrace a broader scope.

PN49

MR DUFFY: So in other words, sir, there wouldn't require to be any adjustments until that event actually arose, if it does down the track some time.

PN50

THE DEPUTY PRESIDENT: Well, if the locality were modified to, say, South Australia.

PN51

MR DUFFY: Yes.

PN52

THE DEPUTY PRESIDENT: Then, in the event that the employer took over, or bought, or established operations in either the Northern Territory, or one of the States then, clearly, an application could be made following the process in the Act, to vary the agreement to extend its locality to include those employees. Or, alternatively, a new agreement made. It just seemed to me that as currently drafted, it raises a whole raft of issues that haven't been contemplated by the parties and would have to be considered by the Commission if the agreement is to apply that broadly.

PN53

MR DUFFY: Correct. So for the time being are you saying that that clause 3 would need to be changed immediately just to assist - to South Australia?

PN54

THE DEPUTY PRESIDENT: Well, I think that would be the shortest way home.

PN55

MR DUFFY: Yes.

PN56

THE DEPUTY PRESIDENT: Certainly, I'm not ruling out the prospect of certifying this agreement with its current scope, but if that were the case, I would need to be satisfied about the no disadvantage test applied against the whole raft of awards against which it could possibly applied.

PN57

MR DUFFY: Sure. Sir, look, we have had a discussion. I think it would be simpler if we amend that clause 3 to reflect South Australia just for convenience sake for the time being.

PN58

THE DEPUTY PRESIDENT: Very well. The last question I've got may relate to sort of the genesis of the company - and I take it from the agreement that one of the businesses that has been acquired by one or more of the four employers are shops previously run by Franklins Ltd. Now, there is reference in the wages schedules which - or the clauses, clause 19 - to rates for butchers and bakers with the reference being that:

PN59

Those rates apply to the ex-Franklin Ltd butchers and bakers employed for nominated stores.

PN60

What is the situation with respect to other butchers and bakers, or aren't there any?

PN61

MS FRASER: They would - the Meat Awards for the - the Federal and the State Meat Awards currently apply to those and they will continue to apply. With the bakery, the in-store Bakehouse Award applies, but we actually don't have any qualified bakers an longer.

PN62

THE DEPUTY PRESIDENT: So the only qualified butchers and bakers are those that you have inherited - and I use that term loosely - - -

PN63

MS FRASER: No, butchers, certainly, we have butchers, and the butchers would continue to come under the SA Meat Award, or the Federal Meat Award. Because of the historical nature of the takeover of some of the stores, some of them come under the Federal Award. I don't know why, and then the rest of them come under the SA Meat Award.

PN64

THE DEPUTY PRESIDENT: So the scope of the agreement is to be read, such, that it does apply to butchers and bakers, but only those who are inherited from Franklins? Other than that, it is not intended to apply to them?

PN65

MS FRASER: No.

PN66

THE DEPUTY PRESIDENT: All right. Mr Duffy, are you happy with that explanation?

PN67

MR DUFFY: Yes, it applies to people who were previously employed under the Franklins agreement.

PN68

MR FINNIGAN: Yes, that applies to those previously at Franklins under that agreement.

PN69

THE DEPUTY PRESIDENT: All right. Very well, I think that is the end of my questions. Anything further from the parties?

PN70

MR DUFFY: No, sir.

PN71

THE DEPUTY PRESIDENT: Ms Fraser, did you want to say anything generally about the agreement in the process?

PN72

MS FRASER: No, no, I don't think so.

PN73

THE DEPUTY PRESIDENT: Very well.

PN74

MS FRASER: I've been very happy with it.

PN75

THE DEPUTY PRESIDENT: Good. All right, well, look, what I will do then is I will give you a view, subject to receiving an amended agreement, those amendments being to the locality and to the scope and persons bound. I don't propose to repeat the date of that, I'm sure the parties are across that. I confirm in that respect that I am satisfied that I have the power to permit the parties to supply an amended agreement to deal with those matters and that it is appropriate that I do so in the circumstances of this application.

PN76

Secondly, I indicate that subject only to receiving those amendments from an agreements with those amendments in it, it would be my intention to certify the agreement pursuant to the Act. In reaching that conclusion, I indicate that I am satisfied that the four employers are a single business for the purposes of the Act and for the reasons that have been canvassed with the Commission via the parties. I'm also satisfied that the process leading to the agreement is fully in accordance with the legislation. In that respect, I note the statutory declarations have been filled out, effectively, in the name of the trading identity, but they do cite the four employers as of course does Mr Farrell's and, indeed, the application that is filed by the union, confirms that the application was made, or the agreement was made between the union and the four employers.

PN77

In terms of the agreement itself, I'm satisfied that it clearly meets the no disadvantage requirement. In my view, it is a beneficial arrangement. It can and should be certified by the Commission in that respect. As I have done in previous matters, I commend the union and the employer on the documentation supplied both to the employees to enable them to make an informed judgment, but also to assist the Commission in the exercise of its discretion in terms of the no disadvantage requirement.

PN78

So as soon as I have received that amended document, or indeed, an amended page I will consolidate the same and issue a certificate under the Act. That certificate, of course, will apply on and from the date that it is issued and the nominal date in the order will confirm that, which is set out in clause 5, being that the agreement will operate until 1 August 2004. Notwithstanding the issues that I have raised I think it is a commendable agreement. I understand there is a good and constructive relationship between the parties and I wish you the best in that respect. Unless there is anything further.

PN79

MR DUFFY: Thank you.

PN80

THE DEPUTY PRESIDENT: The Commission will be adjourned.

ADJOURNED INDEFINITELY [2.25pm]