C2006/1066, Transcript of Proceedings [2006] AIRCTrans 1009 (28 August 2006)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 15573-1

VICE PRESIDENT LAWLER

C2006/1066

APPLICATION BY OHIWA PTY LTD ACN 068 923 900
s.552 - Application for variation of award (general)
(C2006/1066)

PERTH

12.07PM, MONDAY, 14 AUGUST 2006

PN1

THE VICE PRESIDENT: Ms Briggs, you're appearing for the applicant and you're going to have Mr Maguire?

PN2

MS W BRIGGS: No, MR P MANGINI.

PN3

THE VICE PRESIDENT: Mr Mangini, he will be here very shortly.

PN4

MS BRIGGS: I am the applicant and Mr Mangini is here - - -

PN5

THE VICE PRESIDENT: Your company is the applicant.

PN6

MS BRIGGS: Sorry.

PN7

THE VICE PRESIDENT: Mr Mangini will be here shortly, I understand, and I'll adjourn to give you an opportunity to speak with him when he turns up. Mr Hudson, you're for the employees?

PN8

MR J HUDSON: Your Honour, yes. I'm potentially a witness. I'm here to assist the employees and to help them conduct the hearing.

PN9

THE VICE PRESIDENT: Fine. There are issues of leave but I'll come back to that in a moment if it's necessary. Ms Briggs, I have had a chance to have a quick look at this matter just in the last day or two and I'm concerned that you face an insurmountable problem which has got nothing to do with the merits of the application. I understand from the material that you have filed that you are contending on a merit basis that the company shouldn't have to pay redundancy entitlements because you say you facilitated, whatever word you choose, the employment of your staff when you were forced to close the child care centre because the landlord cancelled the lease and you have a perception that it's unjust for redundancy entitlements to be paid in that circumstance where there's been no effective loss by the employees.

PN10

Now the employees challenge that but let's just assume that you're correct for a moment in what you say. The problem that I see you facing is that the Commission just doesn't have the power or jurisdiction to grant you the relief you seek, or grant the company the relief it seeks. Prior to 27 March 2006, there is no doubt that the Commission had the power to do what you seek if it was persuaded that it was appropriate to do so. But the Work Choices reforms have stripped the Commission of most of its compulsory arbitral powers. We're a creature of statute. We can only exercise the powers that the statute gives to us, and most of those powers have been taken away. The power to amend an award or vary an award is now contained in section 552 of the Workplace Relations Act. I don't know whether you have a copy of the Act with you?

PN11

MS BRIGGS: Well, Mr Mangini has got everything.

PN12

THE VICE PRESIDENT: It's okay. When he turns up I'll adjourn so you can have an opportunity to see him. I'll just give you my copy for the moment.

PN13

MS BRIGGS: May I just ask when the new Act came in?

PN14

THE VICE PRESIDENT: 27 March 2006. But the relevant time is when the application is made. Even if it had been made before 27 March 2006, I would then have been dependent upon there being transitional provisions that would have preserved the earlier powers and there aren't any of those in relation to awards. I can go over this with Mr Mangini but I just thought it was desirable to outline this to you so that you could raise it with him when he turns up so he's not coming in, as it were, cold. But if you look at section 552 you will see that the Commission is directed, commanded, not to make an order varying an award except - and then it sets out a number of alternative circumstances where an award variation can be ordered - (a) and (b) are irrelevant because this is not an award rationalisation or simplification process.

PN15

Put aside (c) for a moment. Section 554 is concerned with the removal of ambiguity and referral to the Commission pursuant to the Human Rights and Equal Opportunity Act change of name and the removal of names of entities that have ceased to exist. Section 812 is concerned with prohibited content - so that paragraphs (d), (f) and (g) have no application and there's been no regulations made. That only leaves (c) if the variation is essential to the maintenance of a minimum safety net entitlements, taking away - Mr Mangini has arrived - so that taking away benefits that people already have seems to be can't involve maintenance of the safety net. Maintenance is about preservation rather than reduction.

PN16

Then there's another problem, that the Commission, even if it did have the power, has dealt with these applications on a number of occasions in the past. There's a reasonably clear jurisprudence that has developed. In the past these applications have only been allowed where there's a transfer of business and where the accrued entitlements of employees are preserved and maintained, so that when the business is sold from one entity to another, but there's continuity of employment, there's no case that I can find where an order like this has ever been made, where there has been no continuity of employment and no preservation of employment.

PN17

I should say in that context that the law is reasonably clear that redundancy pay is not seen as unemployment pay. It is designed to compensate a range of factors including a mark of long service and the notion of the loss of the benefits that inure to having had continuity of employment for a period so that, to the extent that you're just concerned about the assertion that the employees have got another job, I have difficulty fitting it in to that particular framework.

PN18

Finally and critically, section 572 of the Act is concerned with the date when orders take effect and subsection (2) commands the Commission not to make an order with retrospective effect unless there are exceptional circumstances. For you to succeed effectively you would need an order with retrospective effect because the entitlement to redundancy is already accrued under the award because the employment has already terminated. In order to take it away there would be no point in making an order today varying the award because the entitlement would have accrued at the time the employment finished, so it would have to have retrospective effect. It would have to be an order that took effect before today. Section 572 says I can't do that unless there are exceptional circumstances. It's hard to see at the moment how there are going to be exceptional circumstances.

PN19

Mr Mangini, do you seek leave to appear on behalf of the applicant Ohiwa Pty Ltd?

PN20

MR MANGINI: I'm a friend of Wendy's who is the director.

PN21

THE VICE PRESIDENT: Yes. You're allowed to seek leave to appear but I have to give you leave before you can be heard.

PN22

MR MANGINI: All right, yes.

PN23

THE VICE PRESIDENT: Do you seek leave to appear? I take it there's no objection, Mr Hudson?

PN24

MR HUDSON: No objection on the basis that I - - -

PN25

THE VICE PRESIDENT: Yes. You also have leave. I take it there's no objection for Mr Hudson having leave, Mr Mangini?

PN26

MR MANGINI: Yes, I mean do you want to discuss this - - -

PN27

THE VICE PRESIDENT: I'll adjourn for a few minutes but can I just deal with the question of leave. I take it - Mr Hudson has no objection to you being granted leave to appear for the applicant, provided there's no objection to him appearing for the employees as representative. Do you have any objection to Mr Hudson appearing for the employees?

PN28

MR MANGINI: No.

PN29

THE VICE PRESIDENT: Fine, okay. I grant leave in each instance. What I was saying to Ms Briggs, Mr Mangini, first up, is that having had a look at this just recently in the last day or two, it seems to me that the application is doomed to fail. I'll obviously give you an opportunity to argue to the contrary but the fundamental problem is section 552 of the Act. As a result of the Work Choices legislation the Commission has had most of its arbitral powers, compulsory arbitral powers stripped away. Whereas it certainly would have had the power to grant this variation prior to 27 March 2006, it no longer has that power, it seems to me, because of section 552 which commands that the Commission must not make an order varying an award except - and it sets out a series of circumstances where that occur.

PN30

It seems to me that this case simply doesn't fit within any of those categories of circumstances. It's not an award rationalisation process. It's not an award simplification process. It can't be said that it's essential to maintain a minimum safety net, and there are other requirements in section 553 as well that would generally give rise to difficulties. Section 554 is concerned with a range of grounds that, it seems to me, have no - referral from the Human Rights and Equal Opportunity Commission change of name and removal of names of entities that have ceased to exist. Section 812 is concerned with the removal of prohibited content and there have been no relevant regulations prescribed.

PN31

So I can't see how this application, even if the merit of what Ms Briggs is asserting is accepted, I understand it's contested by the employees, but let's just for the moment, for the purposes of argument, assume that at the end of the day the factual findings are consistent with what Ms Briggs asserts as to the circumstances, even if that's accepted I just don't see how I have the power to grant the application because of the changes that Work Choices have affected.

PN32

What I'll do is just adjourn for five minutes so you can go into a conference room and have a chat but parties are entitled to - Mr Mangini, just one moment, before you go.

PN33

MR MANGINI: Yes, sir.

PN34

THE VICE PRESIDENT: I'll adjourn in a minute.

PN35

MS BRIGGS: I'm sorry.

PN36

THE VICE PRESIDENT: Parties are entitled to have an opportunity to put their case. So what I'm doing is raising a problem that I see and the issue is whether or not you want an opportunity to put further submissions.

PN37

MS BRIGGS: Yes.

PN38

MR MANGINI: All right, okay. Well, we'll adjourn.

PN39

THE VICE PRESIDENT: And what I have done is I have articulated the first problem is section 552, which seems to be the end of it. Then there's the second problem which is the developed jurisprudence about these sorts of variations, which only are granted in circumstances where there's continuity of employment, and that's linked to notions that redundancy pay is not unemployment pay, it's there to compensate a variety of factors, critically the loss of - - -

PN40

MR MANGINI: Yes, I heard that part of it, your Honour, thank you.

PN41

THE VICE PRESIDENT: Okay. And then finally there's this exceptional circumstances requirement for a retrospective operation. The way forward is for you to either decide you don't want to press on with the application, in which case it's dismissed and it's finished today; or, if you want to go away and think about it and put in a written submission within a short timeframe, you can do that because I assume you're not going to feel comfortable about dealing with the range of issues that I have articulated on the spot.

PN42

MR MANGINI: Okay.

PN43

THE VICE PRESIDENT: Okay? So I'll adjourn for five minutes and Alicia will come and get me when you're ready.

<SHORT ADJOURNMENT [12.19PM]
<RESUMED [12.31PM]

PN44

THE VICE PRESIDENT: Yes, Mr Mangini?

PN45

MR MANGINI: How long would be reasonable for a follow-up submission?

PN46

THE VICE PRESIDENT: I don't want to bring Mr Hudson and the employees back again unless it's necessary to do so, but how long would you like? A week? Two weeks?

PN47

MR MANGINI: Well, two weeks maximum and if - I suppose it's - - -

PN48

THE VICE PRESIDENT: Mr Hudson, what I would have in mind doing is this: giving Mr Mangini the two weeks that he's asked for to put in a written submission. Obviously a copy of that will need to go to you and I won't trouble you further for any submissions or further input at all unless Mr Mangini's raises issues that I think overcome the objections that I have raised as the prima facie problems that the application faces, in which case I'll just proceed to deliver a decision. If it is necessary to get something from you then I'll make sure that Alicia has your contact numbers and give you an opportunity to put something in as well.

PN49

MR HUDSON: Your Honour, would you anticipate either dismissing the application or then giving us an opportunity to respond?

PN50

THE VICE PRESIDENT: That's what I'm saying. The application will either be dismissed or you'll get an opportunity to respond, but I don't want to put you and your clients to further trouble and expense unless it's necessary to do so.

PN51

MR HUDSON: Your Honour, in the circumstances it seems that that is the course of action you're minded to adopt.

PN52

THE VICE PRESIDENT: Yes.

PN53

MR HUDSON: What I would say is that the company has chosen to bring an application, they're bringing it, it is subject to the legislation.

PN54

THE VICE PRESIDENT: Mr Hudson, I understand that. Yes, I understand that. Sorry, you were going to say - - -

PN55

MR HUDSON: Well, it seems that this is tantamount to an application to vary their - this is in fact giving them leave to vary their application.

PN56

THE VICE PRESIDENT: No. The application is still to vary the award and that remains extant. The question is whether or not the Commission has the power to do so and then, if it does have the power to do so, whether or not there's any prospect of success, whatever, because of the retrospective effect that's required and therefore the requirement for exceptional circumstances, and also because of the jurisprudence that surrounds the granting of these applications. I don't think they're seeking to amend their application. The application is still pressed.

PN57

MR HUDSON: In the circumstances, I don't think I can - unless I can persuade you that it should be dismissed today - - -

PN58

THE VICE PRESIDENT: I don't think it's fair to Mr Mangini or the company to dismiss it today when I have raised issues that are coming out of the blue, as it were, to the applicant. The entitlement - the employees have an existing entitlement to the redundancy payments. That's not something the Commission has the power to order the payment of because that's an exercise of judicial power. That has to be done in the appropriate tribunal which I think is the West Australian Industrial Relations Commission under its powers to make monetary awards, as it's not subject to the judicial power constraints that the federal Commission is for obscure constitutional reasons.

PN59

But that order will follow as night follows day if this application is unsuccessful because the entitlement is very unambiguous and the entitlement is not going to be avoided unless this application is successful, and for the reasons I have articulated at the moment I have great difficulty seeing how I can do anything about it even if I'm persuaded that the applicant's factual and moral position, for want of a better description, is correct. You should not infer from anything I have said that I accept that but there's no point in descending into arguments about evidence if it's a complete waste of time.

PN60

MR HUDSON: I understand. Your Honour, obviously we would all be grateful not to have to come back but if we do we would obviously have to come back to Perth.

PN61

THE VICE PRESIDENT: Sorry?

PN62

MR HUDSON: If we do have to come back I assume that we would be coming back to Perth, not to New South Wales.

PN63

THE VICE PRESIDENT: Absolutely. I'm certainly not going to - no, I endeavour to accommodate the convenience of the parties and it wouldn't necessarily mean that I come back to Perth but it can be done by video link if it's necessary. But I don't think it's fair to you or your clients to be dragged in here until there is some proper foundation for it, which is what Mr Mangini is going to try and establish, if he can. At the moment I don't see how he is going to do it, but he may be able to come up with something that I have overlooked.

PN64

Yes, Mr Mangini?

PN65

MR MANGINI: Just one, I suppose, question. We initially put the application to the WA Commission after trying to find out where the appropriate place was, so it's a bit of a mystery as to how the application got streamed through here.

PN66

THE VICE PRESIDENT: Well, it's a federal award and the state Commission has no power to vary a federal award, and up until 27 March we did have a very broad power to vary awards that we, the federal Commission, had made, but the federal government has seen fit to take most of those powers away and to leave us with a rump that is found in section 552.

PN67

MR MANGINI: Another question that we had is questions about the implications of this award should be directed to whom? Work Choices, the AIRC or - - -

PN68

THE VICE PRESIDENT: Questions about the implications of it?

PN69

MR MANGINI: Well, you know, how it - - -

PN70

THE VICE PRESIDENT: Have a whinge, for want of a better word, about its operation?

PN71

MR MANGINI: - - - applies in particular circumstances.

PN72

THE VICE PRESIDENT: Well, that depends upon the context in which it arises. To the extent that you want to make a complaint about the way it operates, that's really a matter that's best directed to the government, the department - - -

PN73

MR MANGINI: No, well, it was more practical.

PN74

THE VICE PRESIDENT: The Department of Employment and Workplace Relations, to the extent that you're raising issues about the way it applies, those issues arise in the context of an application, like an application that you have made here today. They might also arise in the context of enforcement proceedings that Mr Hudson or the employees bring in the appropriate tribunal which I believe is the Western Australian Industrial Relation Commission.

PN75

MR MANGINI: Right.

PN76

THE VICE PRESIDENT: But again, I'm not here to give you legal advice but at the moment these employees have a legal entitlement to be paid redundancy pay. It's a very straightforward issue: how long have you been working for - and you apply the formula in the award. I can't immediately think of any basis upon which it could be defended in the Western Australian Industrial Relations Commission, that is the recovery claim. At the end of the day, whether you bother going down that route is a matter for you. At the moment my duty is to deal with the application that you brought, which is what I'm endeavouring to do.

PN77

MR MANGINI: Yes, okay. And, you know, I know you said you're not here to give legal advice but the jurisprudence - access to the jurisprudence about this - what - - -

PN78

THE VICE PRESIDENT: Let me refer you to re Clerks (State) Award - - -

PN79

MR MANGINI: Sorry. Sorry, what?

PN80

THE VICE PRESIDENT: Re Clerks - - -

PN81

MR MANGINI: Re Clerk's, as in - - -

PN82

THE VICE PRESIDENT: C-l-e-r-k, as in the people - clerical type of people - (State) Award (1976) AR NSW 417, at page 431 which says this - it's a reasonably high-powered Bench of the New South Wales State Industrial Relations Commission:

PN83

It can fairly be said that in industrial circles the term "redundancy payment" has come to mean compensation for losses of various kinds suffered by employees who have given substantial service to an employer and whose services are terminated because, for one reason or another, the employer no longer needs them.

PN84

That's an authority for the proposition that there are a variety of losses which have been compensated by redundancy payments. There's another case, Lloyd v Brassey (1969) 1 All ER 382, at page 383, where Lord Denning, the Master of the Rolls, said of the English statute, which is relevantly analogous because it carries statutory force as the federal awards do, and where redundancy is not defined in the English statute, he says this:

PN85

As I read the Act, a worker of long standing is now recognised as having an accrued right in his job and his right gains in value with the years, so much so that if the job is shut down he is entitled to compensation for the loss of the job, just as a director gets compensation for loss of office. The director gets a golden handshake; the worker gets a redundancy payment. It is not unemployment pay - I repeat not. Even if he gets another job straight away he nevertheless is entitled to full redundancy payment, it is in a real sense compensation for long service.

PN86

There may be arguments as to whether or not that statement of principle is properly applicable in Australia; it's certainly been applied in this Commission or adverted to with approval in this Commission in the past. And what I haven't checked, and I would also check, is the termination change in redundancy test cases in the federal Commission, the so-called TCR cases. There was one in 2005 and an earlier one, I think, in - I can't remember the precise year but if you go to the Commission's website, airc.gov.au, and search the cases - there's a capacity to search cases - you'll be able to track down the termination change in redundancy cases very quickly and they'll also, I expect, contain a statement which will indicate, consistent with those other cases I have referred to, that redundancy pay is designed as something more than mere unemployment pay, and that the entitlement to it flows unless some of the other cases would say there is a complete continuity of employment in a transfer of business context.

PN87

So I direct the applicant to file and serve any written submission that it wishes to make by the close of business on Monday, 28 August 2006, and I note that I will only call upon the respondents in the event that it's necessary to do so. It will be necessary to do so only if I'm persuaded by any submissions that are filed that there is some prospect of success in the application, otherwise I'll dismiss the application and give reasons for doing so if I'm not so persuaded.

PN88

Then what happens at that point is for a different venue, not for here but I apprehend that claims will be brought in the Western Australian State Commission for payment of the outstanding redundancy, which is an existing accrued entitlement and that those claims are likely to be successful on what I understand of the jurisprudence, but that's a matter for other people in another place. Anything further? Yes, Mr Hudson?

PN89

MR HUDSON: Just a point of clarification on that direction. The submissions are to be served, is that right?

PN90

THE VICE PRESIDENT: Yes. Well, you need to see a copy.

PN91

MR HUDSON: Yes. I was just going to clarify if we give - - -

PN92

THE VICE PRESIDENT: If you just give an email address or a facsimile number to Mr Mangini or to my associate, I'll make sure my associate forwards it to you. I vary my direction to withdraw the requirement to serve the submissions on the respondents. I will have my associate forward those submissions to you when they're received from Mr Mangini. Mr Mangini, if you come to the view upon considering it that you think my provisional views are correct and you don't wish to make any further submissions, if you could just let me know.

PN93

MR MANGINI: Through your associate?

PN94

THE VICE PRESIDENT: Yes. And could I ask you too to return those copies of the Act. One of them I need to put in my bag, the other one needs to go back to another member. Fine, the Commission is adjourned.

<ADJOURNED ACCORDINGLY [12.45PM]