C2006/3262, Transcript of Proceedings [2006] AIRCTrans 1226 (17 November 2006)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 16040-1

SENIOR DEPUTY PRESIDENT WATSON

C2006/3262

FELTEX AUSTRALIA PTY LTD
AND
TEXTILE, CLOTHING AND FOOTWEAR UNION OF AUSTRALIA
s.170LW pre-reform Act - Appl’n for settlement of dispute (certified agreement)
(C2006/3262)

MELBOURNE

1.06AM, WEDNESDAY, 01 NOVEMBER 2006

PN1

MR F PARRY: If your Honour pleases, I seek leave to appear for the applicant.

PN2

MS V WILES: Your Honour, I appear on behalf of the TCFUA, with me at the bar table, MS M O'NEIL, the state secretary of the union, MS K FAWCETT who is the national industrial officer of the TCFUA, MS R DE PAZ from the AMWU and Mr G BORENSTEIN from the AMWU.

PN3

MR D ANDREWS: If your Honour pleases, I appear on behalf of Messes Humphris and Fitzgerald, the administrators of the applicant.

PN4

THE SENIOR DEPUTY PRESIDENT: Yes. Thank you. Is there any issue about leave?

PN5

MS WILES: There is, your Honour, and the TCFUA does object to leave being granted to Mr Parry on behalf of the receiver. Our objection is both in a
general - - -

PN6

THE SENIOR DEPUTY PRESIDENT: Well, perhaps we had better have Mr Parry address us first before you respond. Mr Parry?

PN7

MR PARRY: It is spelt with an "a", if your Honour pleases. I think my application for leave has to be dealt with under section 100 of the amended Act. Does your Honour have a copy of section 100?

PN8

THE SENIOR DEPUTY PRESIDENT: I do. Thank you.

PN9

MR PARRY: That provides, in subsection (3), that a party may be represented by counsel with consent and if you grant leave, or otherwise as in subsection (4), if you grant leave. We make such application. The considerations that come to bear on that are those set out in paragraph 5. That is:

PN10

(a) whether being represented by counsel will assist the party concerned to bring the best case possible.

PN11

Your Honour, that would appear to suggest an objective assessment of whether counsel, and in this case senior counsel, is going to be able to bring the best case to bear with regard to the section 170LW application. My submission, on an objective test, that should be satisfied. The next criterion is the capacity of the particular counsel concerned. That raises your Honour's objective assessment as to whether I am suitable and whether I'm here to assist the Commission or not. I am an experienced advocate in this Tribunal. Hopefully, your Honour doesn't knock me out on that basis. The third concerns the capacity of the particular counsel to assist the Commission in performing the Commission's functions under the Act. Again, I simply repeat my earlier submission.

PN12

The next item, subsection (6), deals with those factors and also the complexity of the factual and legal issues relating to the proceeding. Your Honour, this proceeding is proceeding under section 170LW, as preserved by the amendments. It will deal with fairly convoluted questions of which redundancy provisions and which dispute resolutions apply. They are going to involve fairly detailed legal and factual debate and in our submission, it's appropriate that leave be granted. If the Commission pleases.

PN13

THE SENIOR DEPUTY PRESIDENT: Thank you. Ms Wiles?

PN14

MS WILES: Your Honour, I intend to deal with what we say is a conflict of interest issue first and then deal with the general provisions. In terms of our conflict of interest argument, we say that there is a real and serious conflict of interest in having Clayton Utz act for Caltex Australia Pty Ltd, which is subject to the appointment of a receiver/manager and also subject to - - -

PN15

THE SENIOR DEPUTY PRESIDENT: Well, I am dealing at this stage with leave for Mr Parry to appear as counsel rather than any issue of the ability, desirability or otherwise of Clayton Utz representing the company as a solicitor. I'm not sure that I have any powers in that respect.

PN16

MS WILES: Well, in terms of Mr Parry, he obviously is instructed by Clayton Utz and in that sense, takes his instructions from those solicitors and those solicitors have been acting for Godfrey Hurst, who is the purchaser in relation to the company. Just for a little bit of background, your Honour, Godfrey Hurst and Feltex Australia, or the receiver, entered into a contract of sale for the sale of the Feltex business on 22 October 2006. A term of that contract of sale is that the purchaser makes offers of employment to the current 500 employees who are employed by the Australian subsidiary, being Feltex Australia. The basis of those offers is that the offers of employment are on substantially the same terms of conditions of employment and that redundancy payments won't be triggered as part of that process.

PN17

Now, in terms of whether Clayton Utz acting for Godfrey Hurst and Clayton Utz acting for the receiver have the same or identical interests, we say that really their only similar interest is their mutual desire not to have any liability to pay redundancy payments arising from the sale of the business and the transmission of the business. Whilst the union has not been privy to discussions between the receiver and Godfrey Hurst, in our view, Godfrey Hurst is seeking to subvert their lack of standing in this matter and automatic representation in the matter, by having Feltex Australia and the receiver represent them, in effect, run their case for them. It is important to know that Clayton Utz have been acting for Godfrey Hurst in negotiations with the TCFUA about the terms and conditions of employment which will apply to the transferring production employees.

PN18

That included a private mediation held before Commissioner Whelan some weeks ago. The presence of Clayton Utz in instructing Mr Parry in this matter does raise serious issues about the confidentiality of those negotiations. The TCFUA put the receiver on notice about what we say is the conflict of interest in two pieces of correspondence that we sent on 30 October and 31 October, and I seek to tender copies of those correspondence.

PN19

THE SENIOR DEPUTY PRESIDENT: Yes. What is the issue about the confidentiality of negotiations? Nothing that was the subject of confidential discussions between the parties presumably would be admitted in evidence in this matter, or you have a different view to that?

PN20

MS WILES: Well, our understanding was that the union participated in private mediation on the basis that those discussions were on a without prejudice and confidential basis.

PN21

THE SENIOR DEPUTY PRESIDENT: Do you have any understanding that that basis of the discussions wasn't shared by either employer and they would seek - - -

PN22

MS WILES: No, we didn't, but we entered that arrangement and those negotiations in good faith on that basis.

PN23

THE SENIOR DEPUTY PRESIDENT: Yes.

EXHIBIT #TCFUA1 - LETTER FROM MS O'NEIL TO MR ANDERSON

PN24

MS WILES: And the 31 October letter?

PN25

THE SENIOR DEPUTY PRESIDENT: I'm sorry, there are a series of letters. You're right.

EXHIBIT #TCFUA2 - LETTER DATED 31/10/06

PN26

THE SENIOR DEPUTY PRESIDENT: You have given me two letters, I think? That might be where the missing one has gone.

PN27

MS WILES: Your Honour, we received a response to that correspondence this morning, from Andrew Heany. Well, the email is from Andrew Heany, from the receiver, and also that the letter is actually from Peter Anderson, who is one of the receiver/managers, and I seek to tender a copy of that correspondence.

EXHIBIT #TCFUA3 - EMAIL FROM ANDREW HEANY TO MS O'NEIL DATED 01/11/06 WITH ATTACHED LETTER

PN28

MS WILES: You will see there, your Honour, that the correspondence states variously that - well, the receiver denies that there is a conflict of interest in respect to these proceedings, that he is satisfied, in the next paragraph, that there is currently no conflict of interest between the interests of Feltex Australia and Godfrey Hurst in relation to these proceedings, that Godfrey Hurst and Feltex Australia share a common interest in relation to the proceedings and in particular:

PN29

- in relation to ensuring that offers of employment to employees of Feltex Australia constitute acceptable alternative employment, and that in light of that common interest and given that the matters which are the subject of the proceedings are questions of fact, I will continue to instruct Clayton Utz in relation to the proceedings.

PN30

In our submission, your Honour, the correspondence conflicts within its own terms. On the one hand, it says there is no conflict, but on the other, it says that thee is currently no conflict between the interests of Feltex and Godfrey Hurst, which would seem to open up the door that potentially there may be conflicts of interest in the future. In respect to the claim that there is a common interest in relation to ensuring that the offers of employment to employees of Feltex constitute acceptable alternative employment, we say that with respect the receiver, other than initiating these proceedings, has done nothing to ensure that the offers of employment given by Godfrey Hurst to the employees constitute acceptable alternative employment.

PN31

The receiver has not been involved in the negotiations to date between the TCFUA and Godfrey Hurst; on the contrary, he has expressly excluded himself from those negotiations. Rather than the receiver seek to - for himself to determine whether the test of acceptable alternative employment has been met, he has simply allowed Godfrey Hurst to issue draft AWAs to the employees without appearing to do any analysis himself of whether the test has been met. We say that the receiver of Feltex Australia has an obligation to do that before coming to this Commission, represented by Clayton Utz and now counsel. So we say that the interests between Godfrey Hurst and the receiver, whilst they have an interest in not having any liability to pay redundancy as part of the sale of the business and the transfer of employees, we say that on the face of it, there is no identical common interest between them.

PN32

We say that Godfrey Hurst simply - because they aren't a party to this proceeding and they're not a party to the current Feltex agreement, that they're simply using the opportunity of the receiver to run their case for them. In terms of the general issues relating to application for leave, in our view, Mr Parry incorrectly refers to the current Post-Reform Act as being the applicable provisions relating to leave. In our view, the terms of the Pre-Reform Act are the applicable provisions. We say that that is - - -

PN33

THE SENIOR DEPUTY PRESIDENT: Why is that, Ms Wiles? Are they specifically preserved in the transitional schedule?

PN34

MS WILES: In our submission, they are, your Honour. We say that the effect of schedule 7 Part II of the Post-Reform Act, Division 1.2.1, which provides:

PN35

Subject to this schedule, the following provisions of the Pre-Reform Act continue to apply in relation to approved forms of certified agreement despite the repeals and amendments made by the Workplace Relations Amendment (Work Choices) Act 2005.

PN36

Then subsection (e), so it preserves section 170LW, and then subsection (r):

PN37

Any other provisions relating to the operation of the provisions mentioned in the preceding paragraphs.

PN38

Then subsection (2):

PN39

In relation to any regulations.

PN40

THE SENIOR DEPUTY PRESIDENT: Yes.

PN41

MS WILES: We say that the powers under section 170LW is implied that these include the general powers of the Commission under the Pre-Reform section 89(2). So in our submission, we say that the provisions of the Pre-Reform Act do apply to this matter and they are the provisions relating to leave, section 42, are the applicable provisions under which the application should be determined. On that basis, we say that under section 42(3) that having regard to the subject matter of the proceedings, that these are not special circumstances that make it desirable that the applicant be represented by counsel. We understand from the application before you that Feltex Australia has sought conciliation in the matter and our view would be that, at a very minimum, it's not appropriate to have counsel participate, or have leave to be able to participate in those conciliations.

PN42

THE SENIOR DEPUTY PRESIDENT: Well, am I dealing with leave to appear in conciliation?

PN43

MS WILES: Well, you're dealing with an application to hear generally. It's not clear from Mr Parry as to the extent of his intention to participate in the proceedings.

PN44

THE SENIOR DEPUTY PRESIDENT: Yes.

PN45

MS WILES: If the Commission pleases.

PN46

THE SENIOR DEPUTY PRESIDENT: Yes. Mr Parry?

PN47

MR PARRY: Your Honour pleases. In this application, the interests of the receiver are consistent with the interests of Godfrey Hurst. I am satisfied, as senior counsel, if there is not a conflict, my client - the receiver - as your Honour may note from TCFUA3, has also taken a similar view. That is really the end of the matter. Having said that, I'm instructed to seek leave to appear. In a normal course, I should be taken as ethically and properly representing my client. So I say that with regard to the conflict of interest matters. With regard to the appropriate section, in our submission, the appropriate section is as per the new Act. The schedule 7, Division 2, section 13 does not preserve expressly or by any implication the provisions of the earlier Act dealing with representation. If your Honour forms that view in any event, we would submit that there are special circumstances, as I submitted earlier.

PN48

There is a complex mix of fact and law as to the obligations. There are a number of interlocking agreements and the obligations of the parties are by no means simple or easy to work out. So for those reasons, I maintain my application for leave. If your Honour pleases.

PN49

THE SENIOR DEPUTY PRESIDENT: Yes. Very well. I will grant leave. In my view, whether pursuant to the current section 100 or section 42 of the Pre-Reform Act, there are special circumstances in the latter case and the complexity of factual and legal issues in respect to the issue of the obligations in question, and I'm satisfied in those circumstances that leave should be granted to counsel to appear. I'm not satisfied there is a conflict of interest as put by the TCFUA. There is not sufficient material before me to go behind the instructions and briefing of Mr Parry on the matter. Could I indicate, Ms Wiles mentioned conciliation, and certainly the - I'm sorry, you were - - -

PN50

MR R WATTS: I am sorry, your Honour. I am seeking leave to intervene, belatedly. I apologise for that. From the ACTU. Your Honour, the ACTU sees that this is an important, if not audacious application, and will be seeking leave to intervene to put, if need be, substantial submissions in relation to this matter.

PN51

THE SENIOR DEPUTY PRESIDENT: Is there any issue from anyone else at the bar table about the application for leave?

PN52

MR PARRY: If your Honour pleases, there are issues about that, but they are issues that also concern the announcement of representation by Ms Wiles, who got up and said she appeared for the TCFUA, who I understand she is an officer of. But she also announced at the bar table were representatives from the AMWU and the CEPU. I'm not sure if they are seeking to intervene or not, or whether they're just announced and sitting at the bar table.

PN53

THE SENIOR DEPUTY PRESIDENT: Yes.

PN54

MR PARRY: If they are seeking to intervene, we would want to hear the basis of that and have something to say about it. So perhaps, before dealing with Mr Watts' application, if we could deal with if there are other applications for intervention as well.

PN55

THE SENIOR DEPUTY PRESIDENT: Yes. Mr Borenstein?

PN56

MR BORENSTEIN: Yes, your Honour. We do seek to intervene. I suppose there is some separation between the maintenance union and the production workers, but the issues concerning them are very similar and the same. The maintenance unions do have separate agreements to the TCFUA, however, the clauses are substantially - and the clauses that we dispute in this proceeding are almost the same as the clauses in the relevant maintenance union's certified agreements with Feltex.

PN57

THE SENIOR DEPUTY PRESIDENT: I'm sorry, you keep referring to the maintenance unions. Are you seeking to intervene for CEPU or - - -

PN58

MR BORENSTEIN: I am only seek to intervene for the CEPU, and I suppose my submissions are covering the AMWU and the MTU - - -

PN59

THE SENIOR DEPUTY PRESIDENT: Yes. Very well.

PN60

MR BORENSTEIN: The offers of AWAs which have been made to the TCFUA members have not yet been made, on my instructions, to ETU and AMWU members. However, we see that as an expected event in the not too distant future and therefore, the same terms and conditions which will be examined in this matter will be happily examined in the other matter concerning the CEPU and AMWU. Therefore, to not have duplicity of these matters, we say that we have direct interest in the result of this matter and the hearing of this matter and because any result from this matter will directly flow on to the CEPU and the AMWU. So rather than doubling up, we should be heard in this matter and basically have a direct interest in this matter.

PN61

THE SENIOR DEPUTY PRESIDENT: Yes.

PN62

MR BORENSTEIN: The relevant sections are section 101 and section 43, depending on the application of the transitional provisions.

PN63

THE SENIOR DEPUTY PRESIDENT: Yes. Very well. Ms De Paz, are you seeking to intervene?

PN64

MS DE PAZ: We foreshadow that we might intervene in these proceedings.

PN65

THE SENIOR DEPUTY PRESIDENT: Well, if you're only foreshadowing, then we'll note that and when you do seek to intervene, we'll deal with you then.

PN66

MS DE PAZ: Yes. Pursuant to section 101, the employer did offer the AMWU collective agreements and we welcome it and have indicated our willingness to negotiate with them. However, we are fairly concerned with the members for the TCFUA and would like to put it on the record that we strongly support them, and as a matter of principle, that we strongly support the collective agreements.

PN67

THE SENIOR DEPUTY PRESIDENT: Very well. Having said that, at this point you're not formally seeking leave, but foreshadowing it?

PN68

MS DE PAZ: We do formally seek the leave.

PN69

THE SENIOR DEPUTY PRESIDENT: You do? Okay. Yes, Mr Parry?

PN70

MR ANDREWS: Your Honour, I wonder whether this might be an appropriate time for me to get to my feet? I represent the administrators of Feltex Australia Pty Ltd. I'm not seeking leave. But I think it's important that I explain why I'm here. Your Honour, my clients were given notice of this application by one of the members of the committee of creditors. The brief, recent corporate history of this entity is that administrators were appointed on 21 September, the receivers and managers were appointed by the ANZ Bank, the secured creditor, on 22 September. The original administrators were replaced at the first meeting of creditors by my clients, Messrs Humphris and Fitzgerald.

PN71

A committee of creditors was formed at that meeting, your Honour, and that committee includes Ms O'Neil as representative of the employees and it also includes a representative of the ANZ Bank as well as other creditors.

PN72

THE SENIOR DEPUTY PRESIDENT: That doesn't raise a conflict of interest for Ms O'Neil, does it?

PN73

MR ANDREWS: Well, we don't believe it does at all, your Honour, because the role of the administrators, as your Honour is probably well-aware, is to - it's a statutory responsibility to ensure that the interests of all creditors are taken care of. The people who Ms Wiles is here representing represent a significant number of those creditors and the receivers and managers, of course as the appointees of the ANZ Bank, the ANZ Bank is a very significant creditor indeed. So, your Honour, I would simply like to point out that the administrators have an interest in the outcome, but an interest that ensures that the interests of all creditors are taken care of. As I said, your Honour, we only received notice of this application, we weren't formally received with it, we received notice of it from Ms O'Neil in her capacity as a member of the committee of creditors.

PN74

We would like to be informed of such applications in the future and we would like to be kept apprised of developments of this application, but other than that, your Honour, I don't seek leave to intervene, and indeed, I would seek leave to be excused from the bar table.

PN75

THE SENIOR DEPUTY PRESIDENT: Yes. Very well. Is there any issue about that? Very well, you're excused and at the appropriate time, you may depart.
Mr Parry?

PN76

MR PARRY: Your Honour, the applications to intervene are opposed. To go back one step, this is an LW application, arising out of the Feltex agreement. The CEPU and the AMWU are not parties to that agreement. They have separate industrial instruments. There are separate talks going on with the maintenance unions at Feltex and they have been provided with another document, and they're meant to be coming back to us, which doesn't bear a relationship to the document that is in debate at present. Now, the argument that Mr Borenstein says that they're the same claims, that's simply not the case. It is going to be dealing with different claims arising under the Feltex TCFUA Agreement which links in with the Textile Award.

PN77

His concerns arise through the maintenance agreements which link into the Metal Industry Award, firstly. Secondly, he says offers of AWAs have been made. He is misinformed. No offers have been made. He says that he expects the same terms and conditions as concern him to be examined. Untrue. Really, his intervention, both presumably at the hearing and if he so seeks, in any conference that's called, is only going to have the risk of delaying the proceedings and the conference discussions with irrelevancies. So we oppose the intervention of the CEPU. We oppose the intervention of the AMWU - - -

PN78

THE SENIOR DEPUTY PRESIDENT: Do you say there's no issue arising out of the application of the TCR provisions which might have implications for the other unions in respect to the operation of their separate awards?

PN79

MR PARRY: Ultimately, your Honour, we will be going to the Textile Award as it stood in 1998 which contained within it then the standard TCR prescription about suitable alternative employment. I will take your Honour through how that mechanism comes about. But then, ultimately, if conciliation is unsuccessful, your Honour, we will be making submissions about whether what is proposed or developed after conciliation meets the test of being suitable alternative employment. That will be the same test, but will be a different set of terms and conditions that will be relevant for the maintenance workers than will be relevant to the TCFUA. The conditions obviously, as your Honour well appreciates, between maintenance workers and textile workers, obviously there's different sets of terms and conditions.

PN80

So we just see a potential for delay on irrelevancies by the intervention, both at the hearing level and if so sought, at the conference. With regard to Mr Watts from the ACTU, describing this as an audacious application, can I simply say the application we are making is identical to applications that have been made since 1986 arising under the TCR provisions. It is the application of the standard test as to suitable alternative employment, as measured against the terms and conditions that are developed. To describe that as audacious must be to describe every time this application comes to the Commission in the last 20 years as somehow unique, and the ACTU don't turn up on all of them. Why they're here today, again, they won't be adding anything to the debate, they will be simply extending and delaying the proceedings on irrelevancies. So we oppose the interventions. If your Honour pleases.

PN81

THE SENIOR DEPUTY PRESIDENT: Yes. Anything in reply?

PN82

MR WATTS: Well, your Honour, we do think that the application is audacious. It's not just the nature of the application, the way in which it's been made, and the context in which it's been made. I don't think that our intervention does anything to delay these proceedings. Indeed, it's our desire to assist if we can in any way to resolve these matters. Certainly, we believe that the protections that are incorporated within the Act in relation to transmission of business arrangements, how they operate, the new arrangements that are replaced, certainly we think in the context - in particular in the context of Australian Workplace Agreements being offered, raise serious and interesting questions which we think have broader implications for all workers throughout the country.

PN83

As a result, we believe that this is a - could well, we hope in a practical sense doesn't, but could well develop into a very serious test of those provisions in terms of transmission, particularly in the context of Australian Workplace Agreements being offered. Our interest is primarily to resolve these issues, but certainly assist in that resolution, but if we go past that point, it would be the intention of the ACTU to put some relevant submissions to the Commission, whatever way the Commission deems appropriate, in order to - the implications for employees generally, not just implications in this particular instance. If the Commission pleases.

PN84

THE SENIOR DEPUTY PRESIDENT: Thank you. Mr Borenstein?

PN85

MR BORENSTEIN: If your Honour pleases, my friend, Mr Parry I'd say, has got the facts wrong. In respect of these matters being separate talks, I can certainly say I myself was present at the last meeting of the receivers. I can also say that the organiser, Mr Glover, was at those talks with Mr Parry's client, as well as being in a number of discussions with Mr Parry's client previous to that, as well as negotiations with Godfrey Hurst. So in respect to these matters being separate, that's an artificial submission by Mr Parry. The clear indication by Mr Glover has been formed to Godfrey Hurst, is that the negotiations with Godfrey Hurst for a new collective agreement are to be a single bargaining unit between the unions, and that is the intention that has been communicated to the new receiver and Godfrey Hurst.

PN86

In respect of the provisions that are going to be in dispute in this application, these are redundancy provisions and those redundancy provisions, on my instructions, are exactly the same. If they're not exactly the same, they're substantially the same, will deal with exactly the same issues, ie. is this a suitable alternative employment offer? That's going to be a test, but those issues that arise here will arise in any matter in the CEPU's industrial instruments. We therefore say that we do have an interest in this matter and we should be heard, have been involved along with the TCFUA all along in this respect. If your Honour pleases.

PN87

THE SENIOR DEPUTY PRESIDENT: Yes. Thank you. Ms De Paz?

PN88

MS DE PAZ: We would confirm Mr Borenstein's submission, your Honour, although I'm not pressing that our union organiser is actually the one who has been negotiating with the company and gave me instructions in regards to the similarity of the redundancy provisions in the collective agreements and as we stated earlier on, that should be indicated or said to the employer that we are interested in a collective agreement and we support the TCFUA.

PN89

THE SENIOR DEPUTY PRESIDENT: Yes. Thank you. Very well. I'm of a view that the determination of this application, if arbitration is ultimately required, may well affect the interests of the CEPU, AFMEPKIU and its members, and the broader constitutency of the ACTU. Accordingly, I grant leave to intervene to each organisation. Can I say that I think now, Ms Wiles and Mr Parry have mentioned conciliation, and Mr Watts has talked about resolution of the matter, and the disputes procedure, perhaps the application refers to conciliation and/or arbitration, which is usually approached in that order. Can I advise the parties that Commissioner Whelan did, prior to the hearing, contact me and appraised me of the fact that she has previously been involved in discussions between the parties in relation to what she understood the issues, or at least some of the issues, arising out of this application.

PN90

Commissioner Whelan is available to assist with further conciliation and indeed has been available since 1.30 today to do so. So I just bring that to the attention of the parties and I'll invite you to put what you want now on the record, but will be seeking from each of you a view as to whether further conciliation is the appropriate next step in these proceedings. Mr Parry? And if anyone needs an opportunity to reach a view in respect to how you proceed - - -

PN91

MR PARRY: If your Honour is saying whatever I should say should be fairly short, and I'm happy to go along with that, but there are a few things I just want to put on the record.

PN92

THE SENIOR DEPUTY PRESIDENT: Yes. Certainly.

PN93

MR PARRY: Perhaps to explain to your Honour the context of this application. There were receivers and managers appointed on 22 September. Thereafter, the receiver - and that was to the business of Feltex Australia that had been placed in receivership, as is well-known. Thereafter, the receiver sought expressions of interest for the sale or re-capitalisation of Feltex as a going concern. The aim of the receiver was to continue the business. The Godfrey Hurst Group, being a large and substantial company involved in carpet manufacture, tendered an offer in late September 2006, which offer was accepted on 2 October. Up to mid-October, there were negotiations between the receiver and Godfrey Hurst to finalise a formal agreement and on around 22 October, the receivers entered into a sale and purchase agreement of the business of Feltex.

PN94

It was agreed that offers of employment would be made to employees of Feltex on substantially the same terms and on condition that no redundancy or severance payments would be payable upon the termination of their employment with Feltex Australia. It was understood by the receiver that Godfrey Hurst wanted an ongoing business that could be invested in, and the employment by the purchasers of the employees was part of that plan. The unions, and in particular the TCFUA, have been kept informed and involved from virtually the day after the acceptance of the tender, at the beginning of October. There were meetings involving the unions, the receiver and Godfrey Hurst on 4 October. That meeting discussed offers of employment. A concern of the TCFUA expressed at that time was the security of entitlements of the employees with their new employer.

PN95

TCFUA accordingly sought a guarantee from Godfrey Hurst and then there were negotiations in early October about the terms of that guarantee regarding entitlements. They broke down briefly, those negotiations, but ultimately the purchasers agreed a form of guarantee with the receiver on 12 October, and on 13 October, the TCFUA indicated that that guarantee was acceptable. So that concerns the entitlements on into the future. Thereafter, negotiations commenced as to a collective agreement to apply to the operations of the purchaser. Discussions took place involving Godfrey Hurst and the TCFUA, and on occasions some of the maintenance unions, up until 22 October 2006. As your Honour has noted, Commissioner Whelan of the Commission has been involved. Draft collective workplace agreements were prepared and discussed and evolved in those discussions with the unions.

PN96

The TCFUA sought a certified agreement and a deed which essentially simply adopted all the previous instruments and that proposal was seen by Godfrey Hurst as unworkable.

PN97

There's been further correspondence which I won't burden your Honour with at this stage. On 25 October the receiver was provided with a draft AWA which was based on the draft collective agreement that had been developed in negotiations. An offer was made by Godfrey Hirst to meet the TCFUA to discuss the terms of the proposed AWA and to treat the union as bargaining agents. Since that offer has been made, the TCFUA have asked for and been provided with a range of documents, including policies and procedures. The receiver has asked the TCFUA whether the offer as it currently stands is an offer of suitable alternative employment. There's been no direct response received to that.

PN98

The actions of the TCFUA public and media wise would suggest they don't agree. Perhaps briefly, that brings us through the industrial, where we are and why the application has been made. Perhaps more complicated, I might try and explain where the redundancy entitlements come from in a brief way, but just to outline why we think they're here. Does your Honour have a copy of the Feltex agreement? I have a folder which I can hand up which has the Feltex agreement in it and some extracts from the certified agreements and the award.

PN99

THE SENIOR DEPUTY PRESIDENT: Yes, perhaps you could hand it up because I don't have the agreement.

PN100

MR PARRY: Perhaps I won't follow that course. What I might do is firstly hand up a copy of the Feltex agreement and assuming the parties at the bar table have a copy, but I'm sure I can rustle up a spare one if they don't.

PN101

THE SENIOR DEPUTY PRESIDENT: I won't mark it. It's a document of the Commission, AG838522 certified by Deputy President Ives, 31 January 2005.

PN102

MR PARRY: Your Honour will note that this is an agreement binding on Feltex Australia and on the TCFUA. That's in clause 4 and your Honour will see clause 3, relationship to other awards and other agreements and I'll return to that because obviously the contents therein alter the construction of the document going forward, but in clause 26 there is a provision which says redundancy and that says:

PN103

As per the terms of Capital Carpets Industries Pty Ltd Enterprise Agreement Redundancy 1996, attachment F or its successor -

PN104

Now, I have an extract - I am sorry, I have the whole of the Capital Carpets Industries Pty Ltd Enterprise Agreement Redundancy 1996, if I could hand that to your Honour.

PN105

THE SENIOR DEPUTY PRESIDENT: Thank you, and I won't mark a document of the Commission, document M0442, which records the certification of the agreement by Commissioner Merriman on 1 April 1996.

PN106

MR PARRY: Yes, your Honour. You will note the attachment is headed redundancy agreement Capital Carpets, various parties. It then goes down to application and it says in 2(b):

PN107

This agreement specified the termination of entitlements of workers engaged under the Textile Industry Award 1994 and the Metal Industry Award 1984 on a weekly or part-time basis.

PN108

Now, I take it from that that when we are referring to the TCFUA, we're dealing with the terms of the Textile Industry Award and then we're dealing with the Metalworkers and the CEPU are dealing with the Metal Industry Award. The next provision, your Honour, is (c):

PN109

The provisions of the Textile Industry Award 1994 and the Metal Industry Award 1984 apply where this agreement is silent.

PN110

And, your Honour, this agreement does not deal with the option of alternative employment offered in a transmission situation. It doesn't deal with alternative employment. It has within it a provision about alternative positions being offered by the employer, but it doesn't deal with alternative employment, so therefore we have formed the view that it is silent as to those circumstances.

PN111

THE SENIOR DEPUTY PRESIDENT: You're saying despite the heading in clause 6, it doesn't actually deal with alternative employment in the conventional way?

PN112

MR PARRY: No, your Honour. If you go through clause 6, it says, (a) provide information, (b) they can go off and seek other work, they can have interviews or they can go to the CES. It doesn't reflect the provisions often found of the option of suitable alternative employment or alternative employment, so we would say that the agreement is silent as to the circumstances currently facing Feltex. Therefore, given that we are dealing with textile workers, the provisions of the Textile Industry Award 1994 would apply.

PN113

Now, your Honour would be familiar with the approach to the incorporation of awards in industrial instruments, that is you don't freeze them in time, you treat them as instruments alive and evolving and amended and I appreciate there's arguments both ways, but one view is you treat them as documents, expecting them to be amended. Now, that would be a normal presumption in a case like that that refers to the Textile Industry Award, but in this case, your Honour, there's some guidance that can be given from the original Feltex agreement. It gets worse than this, your Honour, but this is the easy bit up to date. Your Honour, it says the relationship to other awards and other agreements. Your Honour will note 3.1 says:

PN114

This agreement will be read in conjunction with the Textile Industry Award 2000. In the event of any inconsistency, the terms of this agreement will prevail over the award to the extent of any inconsistency.

PN115

Now, your Honour, the words read in conjunction with don't incorporate in our view, so you just read it in conjunction with the Textile Industry Award. However, 3.2 says:

PN116

It is agreed that the existing award provisions as they stood at 30 June 1998 under the Textile Industry Award will be the minimum conditions to apply to all employees.

PN117

And your Honour will note 3.4 - I am sorry, your Honour will see in 3.2 there's a definition of the Textile Industry Award as it stood in 1998 as attachment A, 3.4 says:

PN118

Attachment A will form part of this agreement and will operate in conjunction with other provisions of this agreement.

PN119

So you have this agreement, you have the 1998 Textile Industry Award and that's to be read in conjunction with the Textile Industry Award 2000. That's broadly summarising how you're meant to approach this, but our take on it is that when the redundancy agreement speaks of the Textile Industry Award 1994, the logical construction when one reads the fact that that is incorporated in this instrument is that it is the Textile Industry Award 1994 as it stood at 30 June 1998 where we find our redundancy obligations. Now, I'll deal with the alternative argument hopefully briefly shortly, so that if I could then on that assumption and appreciating that it's an argument we put, if I could hand up the extract from the Textile Industry Award 1994 as it stood in 1998.

PN120

THE SENIOR DEPUTY PRESIDENT: Thank you. Because it's an extract, I'll mark it.

EXHIBIT #F1 EXTRACT FROM TEXTILE INDUSTRY AWARD 1994

PN121

MR PARRY: Now, your Honour will note clause 48, 149 of 197, because the agreement incorporates the whole of this document, but I'll tender that if we need to at some later stage, your Honour, redundancy we have clause 48(e), alternative employment and I quote:

PN122

An employer in a particular redundancy case may make application to the Commission to have the general severance pay prescription varied if he or she obtains acceptable alternative employment for an employee.

PN123

So our position is and we believe it to be a good legal position is that the parties under the Feltex Agreement agreed that provision in respect of redundancy and they contemplated by so doing, that if there was a dispute, that the Commission would be the one to deal with that. We're following that course and our application is one to have the general severance pay prescription so varied and the grounds are consistent with (e). Now, your Honour, that basically - there is an alternative argument, that is we treat the Textile Industry Award 2000 as the relevant instrument and that then leads to a slightly different course.

PN124

THE SENIOR DEPUTY PRESIDENT: By Textile Industry Award 2000, that's in its present form?

PN125

MR PARRY: Yes.

PN126

THE SENIOR DEPUTY PRESIDENT: Thank you.

PN127

MR PARRY: Now, we don't believe that that's the proper construction, but I'm just showing the alternative argument, your Honour.

PN128

THE SENIOR DEPUTY PRESIDENT: Yes, I understand.

PN129

MR PARRY: There's a severance pay prescription. The Commission will note that in 22.3.5, application may be made for variance of the severance pay provided for in this clause in particular a redundancy situation and your Honour will also note at 22.7 transmission of business and that deals specifically with a circumstance where there is an offer of employment made by the transmittee company, in this case analogously Godfrey Hirst and the circumstance is in 22.7.1(b) where it says:

PN130

Where the employee rejects an offer of employment with the transmittee in which the terms and conditions are substantially similar and no less favourable considered on an overall basis and the terms and conditions applicable to the employee at the time of ceasing employment with the transmitter and which recognises a period of continuous service -

PN131

I am paraphrasing slightly, in those circumstances, if one goes back, the provisions of the redundancy clause and the severance payments aren't applicable, so that's the alternative argument, your Honour, just for the sake of completeness.

PN132

THE SENIOR DEPUTY PRESIDENT: Very well, I will mark the extract from the Textile Industry Award 2000.

EXHIBIT #F2 EXTRACT TEXTILE INDUSTRY AWARD 2000

PN133

MR PARRY: Now, as to a disputes procedure, your Honour, there is the disputes procedure in clause 24 of the Feltex Agreement. The last stage of that, if there's a dispute, leads to conciliation or arbitration, so this Commission we would contend has fairly clear powers of conciliation and arbitration. Another complication, your Honour, is that if one - there is a specific disputes procedure dealing with redundancy and that comes from - your Honour, I handed up the Capital Carpets Agreement and clause 16 of that says:

PN134

In the event of a dispute arising out a redundancy, the parties will adopt the procedure as detailed in appendix C in the Capital Carpet Industries Pty Ltd Enterprise Agreement 1994, C number 38336 of 1995.

PN135

THE SENIOR DEPUTY PRESIDENT: Which you're about to hand me.

PN136

MR PARRY: I'm just about to hand you that, your Honour. There is about three folders. I am handing up extracts because the amount of documents - - -

PN137

THE SENIOR DEPUTY PRESIDENT: This is an extract only. I will mark it.

EXHIBIT #F3 EXTRACT CAPITAL CARPETS ENTERPRISE AGREEMENT 1994

PN138

MR PARRY: Now, your Honour, it is a procedure which allows for - it's called a grievance procedure. It ultimately leads through to in (d) the matter being notified to the industrial registrar in accordance with section 99 of the Australian Industrial Relations Act 1904.

PN139

THE SENIOR DEPUTY PRESIDENT: That's a long time ago.

PN140

MR PARRY: Sorry, your Honour?

PN141

THE SENIOR DEPUTY PRESIDENT: That's a long time ago.

PN142

MR PARRY: Yes, we go back a long time here. Now, firstly we say that procedure would normally be read consistently with the procedure in the certified agreement, that you have powers of conciliation and arbitration. If there be a debate about that, we would say notified a dispute at that time under that Act to the Commission, those were the powers available to the Commission in any event, so we say there's no dispute that this Commission has powers to conciliate and arbitrate. Now, your Honour has raised the issue of conciliation. In our application we have sought the matter move to conciliation. Given that the interests that the receiver has in this application as I've submitted earlier is the same as that which Godfrey Hirst has, Godfrey Hirst will be participating in that conciliation and we make clear that we will seek to resolve the dispute about whether the offers are to be collective or to be an AWA and we will deal with the contents of those offers, but we also make clear, your Honour, that this process cannot be open ended or extended. The business is operating under a receivership at present which is an undesirable way for a business to operate. The employees need certainty as do the customers, the suppliers and the financiers, so having said those matters, your Honour, we would seek that the matter go to conciliation, as your Honour pleases.

PN143

THE SENIOR DEPUTY PRESIDENT: Thank you, Mr Parry. Yes, Ms Wiles.

PN144

MS WILES: Your Honour, I might deal with the issue of Godfrey Hirst's conciliation. Godfrey Hirst is not a party to the Feltex Australia Agreement. They're also not a party to this dispute, so I'll be interested to know the basis upon which Godfrey Hirst believe they have power to participate in that conciliation.

PN145

THE SENIOR DEPUTY PRESIDENT: They see their participation as having some potential benefit.

PN146

MS WILES: We understand that, your Honour, but we believe it's an assumption on their part and they should put matters to you as to why that's relevant.

PN147

THE SENIOR DEPUTY PRESIDENT: Well, if the matters are referred to Commissioner Whelan, on the basis she has some prior knowledge, I would propose letting her work that out, but from what I understand, you see some benefit in Godfrey Hirst being involved, you're really objecting to the assertion by Mr Parry that they should be.

PN148

MS WILES: That's correct, your Honour.

PN149

THE SENIOR DEPUTY PRESIDENT: Well, why don't we deal with the practicality and go ahead with the conference on the most productive way, which seems not to be an issue of disagreement.

PN150

MS WILES: Your Honour, I'll deal with the other matters in response.

PN151

THE SENIOR DEPUTY PRESIDENT: Yes, anything you want to put on the record at this stage, please do so.

PN152

MS WILES: I should put on the record that in the body of the court were a number of Feltex workers who actually work on afternoon shift, who commence I think at 3.30 or 3 o'clock and they've had to leave these proceedings.

PN153

THE SENIOR DEPUTY PRESIDENT: To attend for work, yes.

PN154

MS WILES: I wanted to put that on the record, their interest in the outcome of the matter. Your Honour, in terms of our position in relation to this application, in our strong view, the application is premature on a number of grounds and I will address you on those grounds. Firstly, we say that the proposed AWA that's been provided to employees is not complete and is not finalised. Your Honour, I'm not sure if you have a copy of the proposed AWA.

PN155

THE SENIOR DEPUTY PRESIDENT: No. I'm not sure I need it at this stage. I understood the company in conciliation was prepared to discuss both the form of any industrial instrument to apply and its contents, so if that's the case, that would be a matter best addressed in conciliation between the parties.

PN156

MS WILES: Can I just address you, though?

PN157

THE SENIOR DEPUTY PRESIDENT: Yes.

PN158

MS WILES: There's some key issues in relation to that. It's not clear to us that the proposed draft AWA is the same offer that's been provided to all employees. That hasn't been confirmed to the union by either the receiver or Godfrey Hirst and we would be seeking clarification in relation to that matter. The draft AWA importantly and crucially does not contain an identified hourly rate for each employee who has been offered the AWA. The AWA also incorporates or seeks to incorporate and makes reference to a range of Godfrey Hirst policies documents and those documents we understand have not been provided to the employees as part of the AWA, although they have been in the recent times provided to the union, so we say that the application is premature because in terms of the task before you which is in terms of assessing the terms of one industrial instrument as against current terms and conditions, we say that task at this point, that's impossible to do given the lack of various information in the AWA that's been proposed.

PN159

Your Honour, our second basis is that the TCFUA filed proceedings in the Federal Court this morning in relation to matters related to this matter. Those proceedings fundamentally go to what we say are contraventions of part 16, freedom of association of the Workplace Relations Act. Your Honour, we have copies of that application and documents to provide to the Commission and the receiver's counsel.

PN160

THE SENIOR DEPUTY PRESIDENT: I will mark - they're all documents relating to the Federal Court proceedings, are they? I will mark them as a bundle.

EXHIBIT #TCFUA4 FEDERAL COURT PROCEEDINGS BUNDLE OF DOCUMENTS

PN161

MS WILES: Your Honour, I understand that the applicant already has received copies of those documents.

PN162

THE SENIOR DEPUTY PRESIDENT: Very well. Is there anything else you wish to place on the record at this stage?

PN163

MS FAWCETT: Your Honour, if I might just briefly address you on the nature of the Federal Court proceedings and how they relate to the matter before you.

PN164

THE SENIOR DEPUTY PRESIDENT: Yes, Ms Fawcett.

PN165

MS FAWCETT: The starting point is to say that the Workplace Relations Act as amended on 27 March 2006 sets out a regime of what happens to industrial instruments in a transmission of business circumstance and to paraphrase, in our submission absent any other Act, the existing industrial instruments transmit and continue to apply to any transmitting - transferring employees for a period of 12 months. Despite what's obviously the distaste of Godfrey Hirst towards the existing industrial conditions, that's what we say the starting point should be. What Godfrey Hirst does is put to the workers of Feltex and to the union two options, neither of which are that option. One is to accept a new collective union agreement which substantially reduces conditions, the other on a take it or leave it basis, I should say and the other is to offer AWAs as a requirement to take up employment with the new entity. The case in the Federal Court is based on an allegation that Godfrey Hirst and its subsidiary, Feltex Carpets, have refused to employ or threatened to refuse to employ the Feltex workers on the basis that they are entitled to the benefit of their current industrial instruments. That application was filed this morning, along with a notice of motion requesting that the court make a final determination in that matter on an expedited basis and that notice of motion is listed by the court I am told at 10.15 next Wednesday, so, your Honour, in our submission it is premature for the Commission to make any assessment about the appropriateness of the offer contained in the AWA at a time when before the court is a question of whether the offering of any or the requirement of any other conditions being accepted is lawful in these circumstances.

PN166

THE SENIOR DEPUTY PRESIDENT: Thank you. I was hoping I wouldn't hear from you, but go ahead, Mr Watts.

PN167

MR WATTS: Your Honour, just an issue that has arisen I think in terms of the progression of the matter and its speedy progression through conciliation. It would be interesting to hear from the applicant what their view is in terms of how they overcome provisions within the Act in relation to AWAs and divulging the content of the AWAs including the persons that are subject to the AWAs particularly in relation to section 165, how we collectively can be assured that the contents are in fact acceptable alternative employment or in fact are prohibited under the Act, if in fact the vehicle is an AWA, from that content being divulged, so there might be an issue there in terms of how we actually Feltex or other parties overcome that issue without breaching the Act, so whilst I understand that this is a matter for discussion, it may well be that Feltex has a view on that can enlighten us.

PN168

THE SENIOR DEPUTY PRESIDENT: Well, I will leave that question open to Mr Parry and he may or may not respond to it at this stage.

PN169

MR PARRY: It's not worth responding to at this stage. It doesn't seem to be designed to help or facilitate the conciliation. We are here, prepared as I've said to discuss both the form of the instrument and its content and we're here to do that and we'll engage in it. Well, I won't engage in it, but somebody else will.

PN170

THE SENIOR DEPUTY PRESIDENT: And in addressing the form of any agreement, you might - - -

PN171

MR PARRY: Sorry, your Honour.

PN172

THE SENIOR DEPUTY PRESIDENT: In addressing the form of the agreement, there is the possibility that question may never need to be answered.

PN173

MR PARRY: That's correct, your Honour.

PN174

THE SENIOR DEPUTY PRESIDENT: Very well.

PN175

MS WILES: Your Honour, just one further matter. I think it's appropriate to bring to the Commission's attention that it's our understanding that this matter has been referred by the federal government to the Office of Workplace Services for investigation and I'll just leave it at that.

PN176

THE SENIOR DEPUTY PRESIDENT: I will read the Daily Telegraph with interest. Very well, it appears to me quite frankly, given I am now apprised of proceedings in the court and - - -

PN177

MS WILES: Your Honour, I apologise, there is one further matter and it's probably appropriate for the union to respond to the substance of the applicant's argument that have been put on record. Ms Fawcett will do that briefly.

PN178

THE SENIOR DEPUTY PRESIDENT: Well, I would urge brevity at this stage, because frankly the fact of the court proceedings and the nature of the instruments which will arise in any arbitration on this matter suggests to me that conciliation at the earliest possible time would be desirable.

PN179

MS FAWCETT: Your Honour, of course we just thought it was important to put on the record that we do not agree with the substance of the applicant's submissions in relation to the interaction of the various provisions of the industrial instrument in question, Feltex Australia Enterprise Agreement 2004. In our submission, the only provision that you need to look at, your Honour, in these circumstances is contained within attachment F to that agreement which is the Capital Carpets redundancy agreement which deals comprehensively with the offering of alternative employment both by the employer and by another entity and it does that at clause 5, transfers and reclassifications and, your Honour, what it provides is that where an employee is notified of his or her impending retrenchment and an alternative position is available which offers either a reduced rate of pay or materially different conditions of employment, then that employee has a choice. They can either accept the alternation position or they can elect to take redundancy and that choice pursuant to section 5(b) remains open to the employee for a period of three months. Now, in our submission, the draft AWA that's being considered comprehensively and clearly contains materially different conditions of employment and in those circumstances, the Commission would not have any jurisdiction to make an order that redundancy payments not flow, because that decision, the decision whether to accept the position or to take a redundancy payment lies with the employee concerned. That's the substance of our interpretation and submission, your Honour.

PN180

THE SENIOR DEPUTY PRESIDENT: Thank you for that. I note that and may have to hear more about it at some point. Unless there's anything further, I say reluctantly, unless there's anything further, I will now adjourn this matter on the basis that the matter will be referred to Commissioner Whelan for conciliation. She is available immediately. Could I just say that I hope that the parties are able to come to an outcome which satisfies both each of the companies, the union and he employees or unions and the employees. I will say, however, if the position arises where a determination is required, I would request the parties to have some discussion about program and draft directions and advise those to me if a programming hearing were required that would occur, but if that eventuality arises, I would ask the parties to have some prior discussion and seek to settle something in relation to that at least. However, let's be optimistic at this point. I wish the parties well in the conciliation process and hope that a satisfactory resolution can be achieved between the parties through that process. I will now adjourn these proceedings.

<ADJOURNED ACCORDINGLY [2.17PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #TCFUA1 - LETTER FROM MS O'NEIL TO MR ANDERSON PN23
EXHIBIT #TCFUA2 - LETTER DATED 31/10/06 PN25
EXHIBIT #TCFUA3 - EMAIL FROM ANDREW HEANY TO MS O'NEIL DATED 01/11/06 WITH ATTACHED LETTER PN27
EXHIBIT #F1 EXTRACT FROM TEXTILE INDUSTRY AWARD 1994 PN120
EXHIBIT #F2 EXTRACT TEXTILE INDUSTRY AWARD 2000 PN132
EXHIBIT #F3 EXTRACT CAPITAL CARPETS ENTERPRISE AGREEMENT 1994 PN137
EXHIBIT #TCFUA4 FEDERAL COURT PROCEEDINGS BUNDLE OF DOCUMENTS PN160