C2006/2251, Transcript of Proceedings [2006] AIRCTrans 837 (28 June 2006)

TRANSCRIPT OF PROCEEDINGS

---

Workplace Relations Act 1996 15231-1

JUSTICE GIUDICE, PRESIDENT
SENIOR DEPUTY PRESIDENT LACY
COMMISSIONER LARKIN

C2006/2251

APPEAL BY CSL AUSTRALIA PTY LTD
s.45 - Appeal to Full Bench
(C2006/2251)

SYDNEY

10.02AM, THURSDAY, 15 JUNE 2006

Reserved for Decision

PN1

MR G HATCHER SC: I appear on behalf of the appellant with MR CROSS.

PN2

MR W MCNALLY: I appear on behalf of the respondent.

PN3

JUSTICE GIUDICE: Mr Hatcher.

PN4

MR HATCHER: If it please the Commission, it may assist if I put some historical background to our claim and some commercial context to the claim. My client, CSL Australia Pty Ltd is one of a group of companies operating under the banner CSL International which specialises in bulk haulage by sea. It, in particular, specialises by utilising self-unloading vessels for bulk haulage by sea.

PN5

Some years ago CSL Australia Pty Ltd was formed to purchase certain assets previously owned by ANL, Australian National Shipping Line owned in part by all of us in court. When CSL Australia Pty Ltd purchased the assets of ANL, it purchased two vessels, the Yarra and the River Torrens. Those vessels are now known as the Stadacona and the CSL Pacific. They are self-unloading bulk vessels principally engaged in the haulage of cement and cement products.

PN6

Over time there have been a number of changes in the commercial complexion of the Australian shipping industry, over a relatively short period of time, that have impacted upon the operations of those vessels in the domestic shipping market. Firstly, the Trans-Tasman Accord was entered into which had an impact on certain contracts that were available to CSL Australia by virtue of its purchase of the ANL interests. In short, it lost a good deal of work shortly after it purchased the two vessels and the assets of ANL by reason of a change in the economic complexion of our relationships with New Zealand. That was international work happening between Australia and New Zealand.

PN7

Then, some short time after that a policy that the Australian government had had in place for many years of cabotage, which is a maritime term for protection, was altered. Cabotage is a system of protection afforded in the maritime industry where a domestic nation affords preferential treatment to ships flying under its own flag. In Australia it doesn't operate by reference to the flag but rather by reference to a licence to trade on the Australian coast. It has been there since the first Navigation Act back in 1916. This history is largely uncontentious and has been traversed in much litigation both in this Commission and elsewhere. Ultimately, CSL Australia was unable to operate commercially efficiently with the vessels licensed and having the benefit of cabotage because cabotage no longer provided the benefits it once had. It didn't guarantee work on the Australian coast.

PN8

Accordingly, CSL Australia sold the vessels. They were purchased by another company in the CSL group, they were reflagged. This happened over a period of years and it wasn't one decision, it occurred in stages as the dictates of trade required. Originally one ship went offshore and was involved in operating overseas for some years before it came back and they are both now working on the Australian coast as are a number of other vessels flying foreign flags operating under permits granted under the Navigation Act. Permits can be either for a single voyage or for a continuing period not exceeding three months.

PN9

The nature of the permits is such that there is no requirement under the Navigation Act for vessels operating under permits to afford to the crews of those vessels Australian wages and conditions and indeed, customary international law would suggest that the internal economy rule would apply. The internal economy rule is a rule applied in international shipping where the internal economy of the ship is regulated by the domestic law of the flagged state and so these ships flying the flag of the Bahamas, the conditions of the crew would be regulated by Bahamian law.

PN10

In fact, what occurs on the two ships I've referred to and the other vessels in large part operating on the Australian coast under flags other than the Australian flag, is that international agreements are arrived at under the auspices ultimately of the International Labour Organisation. They are arrived at between an international organisation of employers and the International Transport Workers Federation.
By and large, the shipping industry is regulated internationally pursuant to agreements. That is certainly the case for the Stadacona and the CSL Pacific.

PN11

Having sold the vessels CSL Australia Pty Ltd continued to have an interest in Australian shipping as effectively a manager of shipping services. It enters into contracts with its customers, the cement companies, to procure shipping services for them for a period. It will use ships that are made available to it from the CSL international fleet to the extent it can. Where it can't it remains commercially obliged to provide shipping services and needs to charter vessels elsewhere. That, of course, has an impact on its capacity to enter into long term contracts. If it had shipping it could rely being available all the time, it can enter more secure contracts with the cement companies and others involved in bulk haulage by sea. In the present Australian circumstances it can't.

PN12

There have been proceedings before this Commission concerning the appropriate employment arrangements to apply on the CSL Pacific and the Stadacona and indeed in relation to other vessels operating on the Australian coast under foreign flags. Those proceedings went forward before the learned Commissioner who heard these proceedings at first instance and he ultimately determined that it was inappropriate to apply Australian conditions to the crews employed on those vessels.

PN13

Part of the reasoning for his decision was that the Maritime Industry Seagoing Award, the award of this Commission, was inappropriate and the learned Commissioner's findings have since been taken up by inquiries into the Australian shipping industry. This is an industry that's been inquired into more than most because it's an industry that is by and large disappearing as an Australian industry. The number of vessels operating under the Australian flag has diminished dramatically and those vessels that do operate under the Australian flag tend to be old and unlikely to be replaced. They also tend to be engaged in work within vertically integrated operations. To take the cement industry as an example, a cement company may choose to operate its own vessel rather than engage the services of someone such as our client to provide the services for them, in which case the costs of operating a vessel are part of the overall operations of the company and are separately identified.

PN14

After the learned Commissioner found in respect to the proceedings involving a related company, CSL Pacific Shipping Inc, an employer of the crew on the Stadacona and the CSL Pacific, that MISA was an inappropriate award, our client CSL Australia Pty Ltd saw a potential commercial advantage. Our client has committed itself to the Australian economy and wishes to participate in the Australian maritime industry. It has purchased another vessel which it owns itself, the Iron Chieftain, which vessel is engaged in work which is quite distinct to the work of the other vessels. It has a dedicated contract for Blue Scope carting iron ore in one direction and coal in the other direction between Whyalla and Port Kembla as a commercially attractive benefit of having loads in both directions.

PN15

Our client sees further commercial opportunities in Australia operating Australian vessels if it could obtain award conditions or conditions of employment not regulated by award, that were reflective of Australian conditions but not reflective of Australian maritime conditions. All of the reasons that the learned Commissioner found made MISA inappropriate.

PN16

JUSTICE GIUDICE: Mr Hatcher, what's the basis of CSL Australia's respondency to MISA?

PN17

MR HATCHER: The way in which CSL Australia came into the ANL operations, your Honour, was to purchase the shares of a company known as AUSCAN which was already a respondent to MISA, A-U-S-C-A-N.

PN18

JUSTICE GIUDICE: How does that make it a respondent?

PN19

MR HATCHER: Because it was simply a change of name so the respondency continued.

PN20

JUSTICE GIUDICE: Change of name?

PN21

MR HATCHER: Yes. CSL Australia Pty Ltd was previously the corporate entity AUSCAN which was a respondent to MISA.

PN22

JUSTICE GIUDICE: I see. Currently, what is the connection between
CSL Australia and the industry carried on which is governed by MISA, put it that way?

PN23

MR HATCHER: CSL Australia Pty Ltd does not presently employ any maritime employees. It would wish to. It is presently a respondent to the award.

PN24

JUSTICE GIUDICE: How does that happen? How can it be a respondent? I understand that there was a change of company name. It may be a respondent but are you saying the award has in fact no legal operation in relation to that company?

PN25

MR HATCHER: Whilst ever it doesn't employ maritime employees. If tomorrow it were to employ directly, for instance, the crew on the Iron Chieftain the award would have application to it.

PN26

MR MCNALLY: Can I correct something that my friend - - -

PN27

JUSTICE GIUDICE: As long as we don't end up in a major diversion,
Mr McNally.

PN28

MR MCNALLY: I'll resume my seat. ..... was only a respondent in relation to marine engineers in the award, not the other two unions or the other lots of unions in those days, but it wasn't automated by Commissioner Raffaelli on
15 March 2002, which I've shown my friend. I've only got one copy. I didn't anticipate - it's number 11 in the our book. It adds at the end of schedule 1; adds as a respondent that is, CSL Australia Pty Ltd in relation to its employees employed on the vessel CSL Yarra. That restriction was made on the application of Mr Meehan who then appeared for CSL Australia.

PN29

JUSTICE GIUDICE: That's still the way in which CSL appears in the schedule, is it?

PN30

MR MCNALLY: Yes.

PN31

JUSTICE GIUDICE: On the face of it, not a respondent, is it?

PN32

MR HATCHER: Your Honour, as I understand the situation, certainly that took place and CSL Australia was nominated specifically. As I recall it AUSCAN is still referred to as a respondent and CSL Australia is still a respondent through that means as well. I think that's why there is no opposition to the joinder because a view was taken that they were respondent in any event.

PN33

SENIOR DEPUTY PRESIDENT LACY: But is it only in relation to marine engineers?

PN34

MR HATCHER: My recollection is it's a respondent generally as AUSCAN but we'll have that checked.

PN35

MR MCNALLY: Can I comment again. AUSCAN has been removed as a respondent from my - the name AUSCAN.

PN36

JUSTICE GIUDICE: Mr Hatcher, these things can be looked at and I don't want to delay your submission now, but the reason I asked the question was I couldn't see any immediate connection on your history of the events between CSL Australia and the operation of the award.

PN37

MR HATCHER: I'm sorry, your Honour, I did omit one or two steps. One was the way in which the corporation came to be involved and the fact that CSL Australia Pty Ltd for that period that I identified, after it had first purchased the vessels, it attempted to operate the two vessels as Australian licensed vessels under the terms of MISA. In any event, we will address that detail.

PN38

I should say that in order to ensure that there was satisfactory jurisdictional scope for the proceedings, our clients press not only a section 113 application for variation but also a section 99 notification of industrial issue. Both proceedings sought the same relief.

PN39

The substance of the relief that was sought was to ensure that our clients, and I should make it clear that we act not only for CSL Australia Pty Ltd but also Inco Shipping. Inco Shipping is a provider of services in the domestic maritime industry. It has some vessels it operates itself and it has some vessels it operates on behalf of others. Where it operates on behalf of others it employs the crew in some circumstances. In other circumstances it provides a lesser range of services but it is an employer of crew. It's put against us in these proceedings that where it does employ crew their conditions of employment are regulated either by agreements, that is subject to the Maritime Industry Seagoing Award, but comprehensive certified agreements that go beyond which is a matter that we'll address.

PN40

JUSTICE GIUDICE: Mr McNally's submissions set out a table. Have you seen that table?

PN41

MR HATCHER: Yes, your Honour.

PN42

JUSTICE GIUDICE: Can we rely on that or are you in disagreement about it? It's on page 10 in paragraph 33. If it's uncontentious - - -

PN43

MR HATCHER: It's uncontentious, your Honour.

PN44

JUSTICE GIUDICE: It is? Thank you.

PN45

MR HATCHER: When I say it's uncontentious, I should make this qualification and I should do it immediately. If one has regard to the agreement applying to the Portland, I believe it is. It's document 50 in the appeal book, binding the MUA. My learned friend has put in their submission that Mr Ives in his evidence accepted that it was likely that a new agreement would be entered and it was likely that a new agreement would be entered in the same terms as the existing agreement. We accept that that is the effect of Mr Ives' evidence, but Mr Ives' evidence also said there are classifications that are not covered by this agreement that he would utilise if the award were made, such as juniors, deck boys and so forth, and also tradespeople.

PN46

If one has regard to the MUA agreement it's an agreement that is restricted to people engaged in the classifications referred to and so were our client, Inco, successful in its award application the award could have application in respect to those vessels, or persons employed in classifications that aren't listed or aren't the subject of the agreement.

PN47

JUSTICE GIUDICE: Which vessels are they?

PN48

MR HATCHER: The Accolade and the Portland, your Honour.

PN49

JUSTICE GIUDICE: The Accolade?

PN50

MR HATCHER: I'm sorry, the Lindsay Clarke and the Portland. Sir, if I can put the context in which our clients advanced their claim before the Commissioner, as both our clients participate in the Australian maritime industry, they both seek to extend their participation in the Australian maritime industry. They would wish, if the commercial circumstances made it appropriate so to do, to offer the services of their own employees on vessels licensed to operate on the Australian coast. Part of the commercial circumstances, naturally enough, are dictated by the terms of the award. The evidence before the Commissioner was that a vessel of about 30,000 tonnes deadweight capacity, operating on the Australian coast under MISA, would cost about $2,000,000 more per annum to operate than a vessel operating under ITF conditions.

PN51

Our client's approach was, the Commissioner has found that the present award is inappropriate. Our client accepted that. An award that applied appropriate Australian standards would put its costs at a significantly higher level than if it operated under the ITF agreements but at a significantly lower level than the costs imposed on MISA and it acknowledged that there was a commercial attractiveness that its customers may be content to pay for in operating Australian licensed vessels. For a start, one could with certainty say that the vessel would be available for an extended period rather than being subject to the permit system and needing to establish that there was no other licensed vessel available.

PN52

Can I then turn to the application that my client advanced and rather than subject the Commission to the electronic appeal book, they've attempted to provide a bundle of documents that we propose going directly to. Unfortunately there was some glitch in the photocopying arrangements, and we cannot provide our learned friends with a copy of it and we apologise for that. In fact we only had two copies so my learned junior's copy is being handed up, which will inconvenience him to some extent and may have some marks in it. If it does we ask the Commission to disregard them completely.

PN53

JUSTICE GIUDICE: Yes. Thanks.

PN54

MR HATCHER: At tab 3 of the bundle - will the Commission bear with me just one moment. I'm sorry, if it please the Commission, there was an adjustment to the bundle yesterday and I don't have the benefit of it, but at tab 3 the Commission will see the application and whether it was supported by - as I said earlier, the application was supported both by a section 99 notification and a section 113 application to vary, but it sought in substance the insertion of a provision into the award that would exempt from the provisions of the award our clients, subject only to the clause exempting them and clauses 5 and 6 which were clearly simply consequential. It instead provided that they should apply the provisions that were sought in the attached schedule.

PN55

The application was pressed on the basis that the award in its current form is inconsistent with the Commission's statement of principles, the objects of the Act, particular provisions of the Act, including sections 89A and 89B, that the award discouraged productivity, that the award was unsuited to the efficient performance of work according to the needs of the applicants and the award makes provision for classifications, hours of work, work rosters, leave and other practices which prevent the applicants from effectively competing with other companies operating on the Australian coast, with crew conditions regulated by agreements with the International Transport Workers Federation and so forth. It was an application, the substance of which was to say MISA is inappropriate to our clients' operations, we don't wish to be bound by it.

PN56

There was a consequence that flowed, if they were successful in that application, our clients would cease to be regulated by award and our clients certainly said to the Commission, "We would concede that it would be appropriate that some form of award regulation apply" and a form of award regulation was proposed. It wasn't a case of our clients saying, "Vary MISA to provide these conditions for our client." Our clients were clearing saying to the Commission, "MISA is inappropriate to our operations. Exempt us from it. If we have made good that case, then consider whether an award should be made to regulate our operations."

PN57

In our respectful submission, that fundamental difference in approach, whilst it was appreciated by our learned friends in the way they approached the case, and whilst the Commissioner seemed to understand that was the case when it was advanced before him, it's not the way he addressed the case in his decision.

PN58

JUSTICE GIUDICE: Was he obliged to?

PN59

MR HATCHER: In our respectful submission, he was, your Honour. That was the application that was advanced, he was obliged to consider it. He wasn't obliged to give us the relief. He was certainly entitled to say, "I decline to exempt you from MISA. You haven't made good your case," but that's not what he said. He said, "You've made good your case. MISA is singularly inappropriate for your operations but I'm not happy with the form of award regulation you propose so I'm not going to exempt you."

PN60

JUSTICE GIUDICE: Wouldn't it be reasonable for the Commissioner within the area of his discretion, just simply say, "Well, you may have convinced me on the unsuitability of MISA, but I'm unconvinced by your alternative proposal in terms of coverage or what the award coverage ought to be." In other words it seemed to me if he was with you on the first point, it doesn't automatically follow that he would grant exemption regardless of the coverage or absence of coverage that might follow.

PN61

MR HATCHER: If it please the Commission, we put that not only ought he to have, on the basis of his findings he was bound to. It's one thing to say, "I'm satisfied that there are some difficulties with this award," but once one finds that the award is simply inappropriate, it doesn't comply with the Commission's obligations under the Act. In our respectful submission, the Commissioner's duty is to cease to apply that award to the complaining party.

PN62

JUSTICE GIUDICE: If you're right about that, the obligation would be to cease to apply it to anybody.

PN63

MR HATCHER: It may be and indeed the Commissioner raised that very possibility in his decision but one couldn't proceed to do that without hearing all the affected parties, even though they were on notice of it and they had appeared in the proceedings - - -

PN64

JUSTICE GIUDICE: Most of them had consented to it.

PN65

MR HATCHER: They hadn't consented, no.

PN66

JUSTICE GIUDICE: No, most of them had consented to the award in its current form.

PN67

MR HATCHER: At previous times. They haven't had the opportunity to reconsider it in the face of the Commissioner's more recent decision.

PN68

Can I put the position by way of analogy and it's not that far removed from the factual circumstances of this case. If the Commission had 30, 40, 50 years ago made an award regulating retail shops at duty free airports, and in that award in accordance with retail awards throughout the country at that time had set different rates for male shop assistants to female shop assistants and the award stayed there, it was updated by national wage cases and so forth, but it didn't have much practical impact because all the participants in that industry entered into agreements. They did their own arrangements and there were only a handful of participants and they had their own arrangements and so there was no need to revisit it.

PN69

Then someone, in the face of a new airport being developed, wanted to enter the industry and they came before the Commission and said, "We want to start operating at a duty free airport. We think this award is inappropriate. We invite the Commission to exclude us from the operation of this award because it has discriminatory rates for male and female shop assistants and we say that's a bad thing." In our respectful submission, the Commission on hearing that application would exclude that company from the operation of the award, it would be bound to.

PN70

It may also consider, the matter having been drawn to the Commission's attention, whether the award should continue and would no doubt in the future list proceedings where the other parties affected by the award could be heard, but it would not in the interim continue to bind the prospective entrant into the industry with an award that was singularly inappropriate. Whether or not it proceeded to determine appropriate conditions would be a subsequent step. The first step is, this is the award which would affect this company's operations if it were to open a duty free shop at this new airport. It is an inappropriate award, it should not apply.

PN71

That was the case that our clients advanced and in our respectful submission, properly understood the Commission was bound to, on the basis of the factual findings made, grant the primary relief that was sought.

PN72

Can I take the Commission to the written submissions that we've filed in these proceedings. Does the Commission propose marking those?

PN73

JUSTICE GIUDICE: Do you want them marked?

PN74

MR HATCHER: Not particularly, your Honour.

PN75

JUSTICE GIUDICE: I don't usually mark submissions unless somebody wants them marked for a particular reason.

PN76

MR HATCHER: We don't have any particular reason, your Honour. The Commission sees that the way in which I've couched the proceedings is essentially the way we've dealt with them in our written submissions in section A, apart from in paragraph 3 a random if in the first line.

PN77

Can I then take the Commission to the bundle of materials we've handed up and appeals document 20 within that bundle of materials, which is found at tab 5. That document were the submissions that we put in the initial proceedings before the learned Commissioner. I think at a directions hearing in this case I suggested to the Full Bench that the case was already the subject of rather extensive written submissions and accordingly it was a case that could be dealt with in a relatively short compass because the parties had already committed themselves in writing in large part to their approach. This rather intimidating document were the written submissions that we relied on at first instance as setting forth our case but we rely on them on appeal as dealing with the detail of the award application that was pressed and I'll come to that in due course. Could I go to page 6 of the document. At paragraph 13 we put this to the Commissioner:

PN78

There are essentially two elements to the case of the applicant, these are firstly, that it is inappropriate to continue to bind the applicants ...(reads)... a proscription of the industry rather than a prescription for industry.

PN79

I inform the Commission that the leave that's referred to is the leave provided by the Maritime Industry Seagoing Award of .926 days of leave for every day worked, essentially one day for every day worked. It's a provision that was inserted by consent at a much lower level and increased over time. It's a provision that is set in the award to be in respect of such things as bereavement leave, a 35 hour week and other matters, unspecified, and it's a provision that has been commented on in the inquiries that have been undertaken into the apparent inefficiency of the Australian maritime industry as being the source of most complaint among people involved in that industry and it was one of the matters that the learned Commissioner found was a basis for finding that MISA was simply inappropriate.

PN80

Can I then travel to tab 8 of the materials, which is document 16 in the appeal book and is the transcript of address before the Commissioner on Monday,
27 February 2006. If I can invite the Commission to turn to paragraph
number 2895 where we put our case orally before the Commission. The fourth last line in that paragraph starts:

PN81

The case that our clients have put and have put consistently in these proceedings commences with a proposition ...(reads)... put forward an award application which we say reflects that.

PN82

Then we proceed to deal with the submissions.

PN83

I then ask the Commission to turn to PN2908 over the page. In that paragraph in responding to the Commissioner we say this:

PN84

The case that we put needs to be understood and with all due respect to our friends we really apprehend from their approach ...(reads)... that was evidence that we led that was referred to in our written submissions.

PN85

There's references to that and the Commission sees that much of what I opened on was also dealt with there.

PN86

COMMISSIONER LARKIN: Mr Hatcher, from the material you've taken us to, it appears to me the two issues were linked and put to the Commissioner in that manner, "Exempt my clients", "Exempt us from the provisions of the award", "We don't want to be award free", "We're putting forward to you what we say is an inappropriate award". When you opened your submission you said that the first issue the Commissioner should have dealt with was the exemption.

PN87

MR HATCHER: Yes.

PN88

COMMISSIONER LARKIN: Once you found out MISA was not appropriate, you should have been exempted?

PN89

MR HATCHER: Yes.

PN90

COMMISSIONER LARKIN: Forget about the schedule, the award, that's the first thing that should have been done, regardless of whether he accepted your schedule as being appropriate. In doing that you clients would have been award free.

PN91

MR HATCHER: Right.

PN92

COMMISSIONER LARKIN: Yes, but the submissions that have been put to the Commissioner in the material that you've taken us to, quite clearly the position put to the Commissioner is, "MISA is inappropriate, but we don't want to be award free. We don't want to be award free, we want you to make this award," and at 27 and 28 of the Commissioner's decision, isn't that what he said:

PN93

Well, all right, I don't think MISA is appropriate but I'm not satisfied with the proposal you're putting to me as an award.

PN94

And then, of course, he goes on to say:

PN95

Given time, circumstances and what have you, a futile quest to sit down with the parties over possibly months.

PN96

And where you would know, Mr Hatcher, in trying to design an award tends to take years, if award simplification was any example of building a new award.

PN97

What you've just put to me is what the Commissioner actually did. That's what was put to him, "We don't want to be award free. Exempt us. We're not going to be award free. Make that award."

PN98

MR HATCHER: If it please the Commission that - - -

PN99

COMMISSIONER LARKIN: That's rather longwinded, Mr Hatcher, but I think you get the gist.

PN100

MR HATCHER: We accept that that is a fair summary of the Commissioner's approach. The difficulty that we say arises, we don't for a minute resile from the proposition that we put that it was appropriate for our clients to be regulated by an appropriate award. What we say is, once the Commissioner determined, as he did, that MISA was inappropriate, and based on the findings that he made in coming to that, it was inappropriate to continue to bind us. Once we became award free, it would be appropriate then to consider whether and what type of award would apply and we were certainly urging a particular award.

PN101

The decision in the first matter wasn't dependent on the decision in the second. It wasn't a "Substitute these conditions for these." That wasn't the way we put our case at all. Our case was, "These conditions are simply inappropriate." To take the analogy I offered earlier of the duty free shop, it's not a case of saying, "We would propose you make an award that has equal pay for equal work," that the shop would be saying, they would simply be coming to the Commission saying, "Your award provides that we should pay women differently to men and that is simply inappropriate. You should remove us from the scope of that award, and if there's another award that should be made, well, we'll deal with that." Certainly our client was saying there is another award that should be made and we do want to deal with that. We never for a moment resiled from the proposition that MISA was inappropriate and should not be applied to our clients.

PN102

COMMISSIONER LARKIN: But your submission was, "But we don't want to be award free."

PN103

MR HATCHER: Quite, quite, and let's be candid about it, our clients saw a commercial advantage in being able to say to potential customers, "We have an award of the Australian Commission that regulates what we offer our seafarers."

PN104

SENIOR DEPUTY PRESIDENT LACY: What was the source of the duty you say that the Commissioner was bound to exempt you from the award, having made the finding that it was inappropriate?

PN105

MR HATCHER: If it please the Commission, the objects of the Act, the principal objects, section 3A, encouraging the pursuit of high employment and improved living standards, low inflation and international competitiveness through higher productivity in a flexible and fair labour market and protecting the competitive position of young people. The Commission is to provide a framework which promotes the economic prosperity and welfare by doing that. The Commission's obligation is to do that. If the Commission finds that its award doesn't do that, it's obligation is to remove that award, but more particularly, if one goes to 88B - perhaps one starts at 88A:

PN106

The objects of this part are to ensure that wages and conditions of employment are protected by a system of enforceable awards ...(reads)... work according to the needs of particular workplaces or enterprises.

PN107

When one then goes to 88B:

PN108

In performing its functions under this part the Commission must have regard to the following: the need for any alterations to wage relativities to be based on skill and responsibility, the need to support training arrangements, the need to protect the competitive position of youth.

PN109

Then one goes to 89B(2):

PN110

In performing its functions under this part, the Commission must ensure that a safety net of fair minimum wages and conditions of employment is established and maintained, having regard to -

PN111

and the factors are there set out. Once the Commission found, as the Commissioner did find and we'll go to in some detail to his findings, that this award didn't represent a fair safety net minimum so far as it affected our clients and that's all we need concern ourselves with, in our respectful submission he was obliged, given his obligation to maintain a fair safety net minimum, to remove the application of that award from our clients' operations. It was contrary to the objects of the Act on the basis of the Commission's findings.

PN112

There could be a lesser level of findings that would permit the approach that the Commissioner took. The Commissioner may, for instance, have found that he wasn’t satisfied that the rate for the chief integrated rating was set that had an appropriate level compared to the fitters' rate. For that reason he thought that our client was entitled to have a different scale of rates, but he wasn't satisfied with the scale of rates we put forward.

PN113

There could be cases that are at a lesser extreme but, in our respectful submission, when one attends upon the Commissioner's findings as to the inappropriateness of the award, it led to an obligation on the Commissioner to do something about that inappropriateness to comply with his obligations under the Act.

PN114

SENIOR DEPUTY PRESIDENT LACY: But was the Commissioner entitled to have regard to the fact that there was a new regime to be introduced in the short term that would perhaps provide the basis for a review of the award?

PN115

MR HATCHER: In our respectful submission, not in the circumstances again, your Honour. Certainly the fact that there was new legislation pending was always something that everyone at the bar table was looking over their shoulder at. At a point in time, the Commissioner said, "Well, you know this new legislation is coming, is there any point in continuing the case?" He in fact asked that we go and get instructions on that and the response was, "Our clients have invested substantial funds in this litigation and we don't know what in fact will occur until we see what comes from the regulations," and at the time this case was being argued, no one knew what would be in the regulations. Our instructions are to press it for so long as the legislation permits us to press it.

PN116

The Commissioner could have said, "Well, as a matter of discretion at that point, I'm not satisfied that it's in the public interest that the Commission devote the time that's necessary to this case, given that it may all change. I will adjourn and we'll revisit it when we know the scope of the legislation."

PN117

SENIOR DEPUTY PRESIDENT LACY: It appears the Commissioner came to that conclusion in any event, because in paragraph 20 of his reasons for decision the Commissioner says:

PN118

In any case, the imminence of the wide ranging Work Choices legislation changes tells against any fresh review of MISA by the Commission for the time being.

PN119

MR HATCHER: It may have told at that stage about ..... fresh review of MISA and the learned Commissioner was at that stage talking about bringing the parties to MISA before him to consider whether MISA should continue in view of ..... but it couldn't tell against our clients, given that the Commissioner had dealt with in December the discretionary consideration as to whether the case should proceed, given the pendency of the new legislation. He had heard the parties on it and he had determined to proceed. The parties had committed to the expenditure of proceeding. The case was heard. The Workplace Relations Act 1996, unamended by Work Choices, was still in place when the Commissioner handed down his decision. As it turned out, the regulations entitled us to invite this Commission as presently constituted to make the award that we invited the learned Commissioner to make under the Workplace Relations Act 1996 unamended, something that I think no one at the bar table anticipated at the time the case was being conducted.

PN120

Clearly, with prospective legislation, no one - well, perhaps some people know what's going on when one reads the legislation, one seriously doubts that, but you cannot say with certainty what is going to be in the legislation until it's finally come down. The Commissioner pointed to the uncertainty created by the pendency of the legislation and he dealt with it as a procedural matter as he ought properly to have done. To then determine to proceed under the legislation as it applied and hear the case under the legislation as it applied, in our respectful submission, he was bound to determine it under the legislation as it applied.

PN121

JUSTICE GIUDICE: Mr Hatcher, the Work Choices had been passed by parliament.

PN122

MR HATCHER: The legislation had been passed, your Honour.

PN123

JUSTICE GIUDICE: There was only the question of the proclamation and possibly transitional arrangements or other arrangements that might be in the regulations that people hadn't seen, but the Act itself had been passed.

PN124

MR HATCHER: Yes, but the regulations had a big part to play in the - - -

PN125

JUSTICE GIUDICE: I know, but there was a fair degree of certainty that it was going to be in the legislation.

PN126

MR HATCHER: Ironically enough, I think everyone was quite certain that there would be no capacity to deal with part heard matters. As it turned out, there was, but your Honour, the President is quite right. All that was known at the time the - and that's why no doubt the Commissioner said, "Is it worth the parties and the Commission involving themselves in the great expense of continuing this case?" and he did it at an early stage.

PN127

JUSTICE GIUDICE: Mr Hatcher, if your client - this may not be a matter within your instructions, or it may not be a matter that you would be inclined to discuss in any event, but has your client made any submissions in relation to the award review process?

PN128

MR HATCHER: Not to my knowledge. Your Honour.

PN129

JUSTICE GIUDICE: I'm talking in particular about the task force but I assume the award review ask force is the official channel, as it were, for submissions about what should happen to the award system.

PN130

MR HATCHER: Will your Honour bear with me one minute and I will take instructions?

PN131

JUSTICE GIUDICE: Yes.

PN132

MR HATCHER: My instructions are, your Honour, that they have not as yet made any submissions, which is not to say that they do not propose making submissions.

PN133

JUSTICE GIUDICE: Thank you.

PN134

MR MCNALLY: The union - - -

PN135

JUSTICE GIUDICE: I'll ask you the same questions subsequently, Mr McNally.

PN136

SENIOR DEPUTY PRESIDENT LACY: See, the Commissioner had regard to the fact that there was going to be a change in the legislation and the possibility of a review of the award system and then it appears that the submission that was made by your client that it did not want to be award free weighed on his mind. The Commissioner then turned his mind to consideration of whether the submissions and the material that had been put forward to make an award for your client was satisfactory and found that it wasn't and then concluded in those circumstances that the award should still apply.

PN137

MR HATCHER: I accept that's what he did, your Honour, but that's where we say he fell into error.

PN138

SENIOR DEPUTY PRESIDENT LACY: He was entitled to take into account the fact that your client submitted that it did not wish to be award free.

PN139

MR HATCHER: Not to the extent that he would put that at a higher premium than having an award of this Commission that he found to be singularly inappropriate continue to apply over the protests of our client. Our client's case was put, as I would like to think, with some clarity. We were saying MISA is inappropriate. It is wrong to bind our client to this award. Yes, we would like an award, but it certainly isn't this award. We say you can't do it by just fiddling around the edges of this award, you've got to remove it. You've got to start again.

PN140

If I could then take the Commission to the tests that we acknowledged had to be met and it's to be found most usefully set out in the submissions of the Australian Maritime Officers Union, which is to be found at tab 7 of the bundle of materials and it is document 22 in the appeal book.

PN141

JUSTICE GIUDICE: Mr Hatcher, just before you take us to that, I'm interested in the particularisation of the areas in which you say the MISA is deficient or inconsistent with standards or is in some way inappropriate as a matter - inappropriate is too weak a word, I think - is inconsistent with principle or standard. You've mentioned certainly the leave issue. Is there somewhere conveniently where in your submissions to the Commission you set out the matters that you saw as being in the same category as leave?

PN142

MR HATCHER: I think, your Honour, it was a more fundamental problem than that. If one looks at leave, because leave encapsulates hours of work and overtime, and wages and I think in fact the Commissioner in his decision says if one looks at the issue of leave, it's so fundamental to the operation of MISA that if it's inappropriate, then MISA is inappropriate.

PN143

JUSTICE GIUDICE: Yes, very well.

PN144

MR HATCHER: I'll take the Commission to a particular passage of the evidence where I think the Commissioner's conclusions can be readily derived. It points to exactly the fundamental basis upon which the challenge to the award went forward. At the moment I'm inviting the Commission to have regard to the submissions of the AMOU only as a convenient point for acknowledging the tests and the strident tests that our client had to meet to satisfy the Commission that the award was inappropriate. At paragraph 14 on page 7 of the AMOU's submission they say this - my learned friend, Mr Crawshaw, put this submission:

PN145

Where the Commission is dealing with an application to alter or reduce existing award safety net conditions, the Commission ought proceed with considerable caution.

PN146

And authority is put for that and in the award simplification decision:

PN147

The Full Bench accepted the following submissions, if existing award provisions were fair they should only be altered ...(reads)... justifying departure from existing and longstanding industry standards.

PN148

We accepted that there was quite an onus on us in satisfying the Commission that MISA was singularly inappropriate. We said as much to the Commissioner. We said we had to satisfy him that that award simply couldn't apply but once he was satisfied of that, in our submission, he was obliged to remove the incidence of that award on our client.

PN149

If we then turn to the learned Commissioner's decision, which is at tab 4 of the bundle of materials and ought to have been at document 2 in the appeal book. I think in fact we have produced the wrong decision in the appeal book, for which we apologise. If I can invite the Commission to turn to paragraph 13 of the learned Commissioner's conclusions on page 4 of his decision, he says:

PN150

On 13 February 2006 the Commission issued its decision in the CSL case. These were, in short, applications by the MUA and AIMPE for the making of MISA type awards to cover foreign seamen working aboard foreign flagged vessels.

PN151

He noted the relationship between the companies who were participating in those proceedings:

PN152

The evidence in the CSL case was in large part similar to the matter at hand with similar if not identical statements or affidavits from several witnesses who appeared in both proceedings. In its decision in the CSL case the Commission declined to make any award for a number of reasons.

PN153

He then set out or extracted part of his findings from that earlier case. If I could draw particular attention to clause 30.2 of MISA which the learned Commissioner extracted:

PN154

The leave entitlement in 30.1 gives effect to, amongst other things, leave with pay for weekends and public holidays worked, annual leave with pay at five weeks per annum, sick leave, carer's leave, bereavement leave, a 35 hour working week.

PN155

And he proceeded to, in that earlier decision, deal with the provisions of MISA and ultimately, at paragraph 17 on page 7 of his decision says this:

PN156

Given that the evidence in these proceedings was relevantly the same, I also here conclude that MISA provisions going to leave ...(reads)... therefore it may be that there a case for a review of MISA.

PN157

Can I pause there to say that was the matter that your Honour, the President raised with me earlier. If the Commissioner came to a conclusion that MISA was inappropriate, wasn't be obliged to do something else. Well, the Commissioner said, "Yes, I'm convinced that MISA is inappropriate and I ought do something about it." However he concluded:

PN158

However that is a matter which would necessitate thorough ongoing examination of award provisions, including with the participation of other employer respondents.

PN159

He continued:

PN160

On the other hand, the argument from the unions that MISA having been subjected to the simplification process is now ...(reads)... against any fresh review of MISA by the Commission for the time being.

PN161

Then critically at 21:

PN162

As to CSL-A and Inco, at the very least their excision from MISA type conditions has some prima facie basis ...(reads)... make the proposed award notwithstanding the Work Choices legislation.

PN163

That, in our respectful submission, is where he falls into error. If CSL-A and Inco had made out a case for excision from MISA because MISA was simply inappropriate and did not accord with Commission principles or standards, then he ought to have excised them whether or not there was another award that ought be made. It is inappropriate to continue to bind them.

PN164

Our learned friends say, "Well, nothing turned on whether they were exempt or not." We say the evidence is that something did turn on it. Our clients Inco had a specific purpose in mind immediately of engaging people and our client
CSL Australia wanted to offer commercial services based upon some different award prescription. It was involved in negotiations to that end at that time, but to take the union's case to task, they assumed no one would be affected. Is that a reason not to remove the incidence of an award that is found not to accord with the Commission's principles and standards? In our respectful submission, anything but.

PN165

JUSTICE GIUDICE: Mr Hatcher, did your clients submit that if the Commissioner had any difficulty with what you were proposing by way of award regulation, that he should give effect to such other regulations as he thought fit?

PN166

MR HATCHER: Yes, your Honour. At one point, and I'll take the Commission to it, we were dealing with the question of the appropriate standard on overtime and the appropriate standard on Saturday and Sunday work. The Commission said, "Well, you can't say they're the Commission's standards," and we said, "Well, no, we don't say they're the Commission's standards." We say that the Commission would distinguish for this industry, but the area of debate isn't large. We do say we're approaching the Commission to make an award in standard terms and I think we dealt specifically with annual leave loading where it was pointed out there was an omission from our application.

PN167

There was no reference to annual leave loading in our application. We acknowledged the omission. We said the award should have annual leave loading, not because we say annual leave loading is a good thing. In fact we say quite to the contrary. We say it's a great shame that in an industry that wants to compete internationally, we would impose this anachronistic provision. Given that what we're saying is, only distinguish from this Commission's standards where there is a reason in the maritime industry that has been acknowledged, to depart from this Commission's standards. There's no particular magic to the maritime industry in relation to annual leave loading, so put it in. That was clearly the approach that was enunciated before the Commission.

PN168

JUSTICE GIUDICE: Is there any recognition in the Maritime Industry Award of a particular disability related to the nature of the work, the environment in which it's carried out?

PN169

MR HATCHER: In the decisions in the past, your Honour, where wages were determined, there was an industry component included in grossing up the wage rates. I think when one goes through all of the decisions, and I think everyone at the bar table has had that misfortune at some point or other in the course of this litigation, one sees that there are references to what extent that should be and there are references, I think, in the judgment of His Honour Foster J, to what increased amenity there was now on Australian vessels and how perhaps the disadvantages weren't as great as they had once been.

PN170

JUSTICE GIUDICE: Foster J?

PN171

MR HATCHER: Foster J, yes. It's an intriguing industry and if one goes right back to the Royal Commission in 1908 where parliament was inquiring into the draft Navigation - or the Navigation Bill, there's reference to blackbirding in the port of Newcastle, even in 1908.

PN172

Just before I leave the Commissioner's decision, can I go to paragraph 27 of his decision where he says:

PN173

Consequently, I have decided that while a case has been made out that MISA does not provide an appropriate award for CSL-A ...(reads)... and therefore will suffer no prejudice for the time being.

PN174

I've said what I would about that. I now turn to tab 16 in the bundle of materials which is appeal document 13 and is the transcript from 16 December 2005. In this transcript, Mr Albert Umansky is being cross-examined. He was called by our clients. Mr Umansky was at an earlier time an employee of the Australian Shipowners Association. He was the industrial officer and he had been involved in the most recent review of the award and had prepared some documents that the Commission relied upon in putting in the rates in that instrument.

PN175

He was called by our client and gave fairly, how could one put it, fairly, well, putting it gently, bland evidence about the process but he thought that the process ought be before the Commission. He simply said, "This is what was done. This is the document that was handed up and it was an agreed document." He was provided for cross-examination and at paragraph number 1768 the Commissioner asked him a number of questions. The Commissioner says:

PN176

Can I take you to paragraph 50. It says there that the parties developed - well, you did calculations and then you - it says with the additional 18 hours, those between 38 and 56 -

PN177

and he deals with that. Then he says:

PN178

However, following a claim by the MUA the loading rate was amended to double time by consent. My question is this, why would you have just agreed to increase a penalty so sharply?

PN179

Mr Umansky answers:

PN180

Well, it's answered in the following sentence. The rate of double time was consistent with the rates of pay applicable to shift workers in the Metals Award.

PN181

He continues:

PN182

To my mind, to my knowledge the principles surrounding shift work had been incorporated historically in the work ...(reads)... rather than an overtime component of time and a half.

PN183

The Commissioner says:

PN184

Now, the employers were unaware of past decisions of the Commission which said that overtime on ships should in fact be less than the community and shore standard. You don't know? No, I don't believe so.

PN185

The Commissioner then takes him to another appendix which deals with that and at paragraph number 1784 he says:

PN186

I must say, I've never seen overtime concluded like that. It usually stands per day, doesn't it? If people work two hours overtime they get two hours at time and a half and two hours at time and a half. I've never seen this.

PN187

The answer:

PN188

The problem is, Commissioner, that the award and the rates within it were all being looked at on an annual basis rather than on a daily basis. Yes.

PN189

Next is this question:

PN190

It's in a number of your attachments that it basically existed. You say in calculations you've got a 38 hour week at time ...(reads)... 38 hours every week and another 36 hours every week that they're on board.

PN191

Over the page:

PN192

That would have been the value, I suppose but I don't recall it that way.

PN193

Then at 1791 the Commissioner continues:

PN194

38 hours, 36 hours multiplied by 1.07 and so forth.

PN195

Mr Umansky answers:

PN196

Going back a step, Commissioner, those overtime hours weren't transformed into additional notional hours of overtime ...(reads)... value for the ordinary working day to give you an annual salary.

PN197

Then that's dealt with and the Commissioner continues to test him on that. Then at paragraph number 1800:

PN198

And at 33.2.1 it says that payment is leave with pay for weekends and public holiday. Certainly my understanding is that ...(reads)... Full Benches of this Commission were disregarded when it came to weight.

PN199

Mr McNally wasn't allowed to say something and then Mr Umansky answered:

PN200

Commissioner, I would express it that there was a methodology arrived at that may or may not have been correct ...(reads)... rates of pay at that point were determined by enterprise agreements.

PN201

If the Commission recalls the hypothetical I posed earlier that the award had just sat there because there were only a few employers in the industry, they had gone off and done enterprise agreements over time and no one ever turned their mind to the award. That really what we have in this industry. We have an award that has no relevance to the industrial relationships of the participants in the industry.

PN202

When it comes to a new principle coming in that needs to be implemented in the award, the parties sit down and try as best they can to put something before the Commission which satisfies the principle, but it has no practical application and when a new participant comes into the industry, when someone who used to be in the industry wants to return, someone who is usually an employer for jurisdictional purposes, says, "I would like to offer a competitive service. I don't want to have a certified agreement, I want to operate under an award," and they come to look at this award. Is this an award that reflects the standards, the safety net minimum? The Commissioner says no and he says no with good reason.

PN203

If it doesn't reflect the principles of this Commission, if it isn't an appropriate safety net minimum, does it accord with the operation of the Workplace Relations Act 1996 either as amended or unamended, to maintain that award in force? In our respectful submission, no. Whether or not you put another award in place is another question but the first and principal question must be, what is the obligation once you've reached a finding that this award is inappropriate, that it's being abused? I don't say that pejoratively but simply the processes that have been applied have resulted in it ceasing to have any practical application. Mythical figures are utilised to try and justify an outcome because it's only a paper outcome. It has no impact on any individual.

PN204

Of course, if close attention had been paid to award, how it could survive simplification as a safety net minimum award with paid leave .926 days per week, reflecting a 35 hour week and other unspecified things, how it can be said that employees are entitled to leave every year for bereavement and sickness, whether or not they suffer such matters - - -

PN205

COMMISSIONER LARKIN: The award simplification, Mr Hatcher, on my understanding wasn't arbitrated, was it?

PN206

MR HATCHER: No. it wasn't.

PN207

COMMISSIONER LARKIN: So it was by consent.

PN208

MR HATCHER: It was largely by consent, Commissioner. I think there were some matters that Commissioner Wilkes wanted to be particularly addressed on but he was faced with the parties handing out documents saying, "We've been through the exercise and - - -"

PN209

COMMISSIONER LARKIN: "This is what it is."

PN210

MR HATCHER: Yes.

PN211

COMMISSIONER LARKIN: Evidently the parties must have satisfied him that he was reviewing the award in accordance with the legislation.

PN212

MR HATCHER: Quite, and as I say I think there were even some matters where he wasn't satisfied with what he had from them.

PN213

COMMISSIONER LARKIN: Yes. Thank you.

PN214

MR HATCHER: In our respectful submission it's there where the Commissioner falls into error in not taking the appropriate steps and made those findings.

PN215

JUSTICE GIUDICE: Mr Hatcher, just so that I might approach a better understanding of how the award operates, the evidence that you've just taken us to was discussion about the components or the method by which the annual salaries were derived. Is that right?

PN216

MR HATCHER: It is, your Honour. It was how the annual salaries were derived for the minimum rates translation process.

PN217

COMMISSIONER LARKIN: Because the award had to be dissected, if my memory serves me correctly. The industry had already had - they had had annualised salaries and I'm unsure whether it was a paid rates award, you don't even need to go there, but because of the requirements of the legislation, the Commission had to express awards as a first offers base minimum and any residual components but I think in this industry you have both so you had to dissect it, then you had to build it back up again for your annualised salaries.

PN218

MR HATCHER: Yes. The exercise was to try and get a figure, presumably as high as could be justified as the award rate from an annual salary and so there was an exercise of trying to convert the hours that were compensated within the annualised salary. I don't want to delve too much into the detail of the case, but one of the major complaints that our clients advanced through their evidence was, even in the annualised salary there was a degree of miscounting in the sense that whilst at the time the salaries were annualised, there was a level of overtime that was being worked because people were receiving an additional incentive to work overtime. On the implementation of annualised salaries, people simply stopped working overtime and I shouldn't use the broad scope of people because the evidence did differentiate between different witnesses and different classes of people. I think it was uniformly accepted that the officers did whatever work was necessary to keep the ship running properly. There was some divergence of view about the engineers, but I think the preponderance of the evidence was that engineers tended to still do work that was necessary.

PN219

SENIOR DEPUTY PRESIDENT LACY: Sometimes that was two hours extra a day.

PN220

MR HATCHER: Sometimes more, your Honour, yes. But the evidence was almost uniformly that the seamen did not and resisted doing additional overtime. There was evidence that the union actually supported the employers in trying to have the overtime performed but I think there was a witness called by the AMOU, Captain Khosa, who gave evidence that he ended up doing the work himself because he couldn't find the integrated ratings to come and do the work, or they simply refused to. Certainly Mr Sorensen had some graphic evidence of examples where he had had difficulty having work performed that was already paid for under the annualised salary.

PN221

Can I then come to deal with the submission that's put against us as to the utility of granting our clients an exemption and/or making a separate award determination. The evidence that we rely on flows from the evidence of Mr Sorensen. His affidavit is to be found at appeal document 54 and we've extracted from his affidavit in the bundle of materials at tab 20. In paragraph 30 of his affidavit he deals with an attempt to improve the labour conditions on the CSL Yarra by negotiation with the unions and he says that there was an unwillingness to reduce labour costs or remove restrictive practices.

PN222

The next heading we extract is the sources of business for our clients and
Mr Sorensen gives evidence - I should explain Mr Sorensen is the chief executive of CSL Australia Pty Ltd and has had extensive experience in the industry. He was previously the chief executive of Inco and prior to that had been employed by ANL. He has been employed in the Australian shipping industry for many, many years. In identifying the sources of business he says:

PN223

In the Australian shipping industry there are two main sources of business, contract work and spot work ...(reads)... and the arrangement is confirmed by a fixture note.

PN224

He details how that's performed. He notes that ..... seeks quotes for each voyage, even though CSL Australia usually does the work. Then he gives evidence in relation to the Iron Chieftain and its operations with One Steel. I'm sorry, I may previously have said Blue Scope, it's One Steel that that vessel is exclusively engaged on work for. Over the page he continues to give evidence as to that. Then over the page again he details the CSL business strategy:

PN225

CSL Australia is part of the CSL group and the three vessels operated by CSL Australia are part of a fleet of vessels operated ...(reads)... maximise utilisation and minimise spare capacity and flexibility.

PN226

He continues:

PN227

As noted above the international business strategy has been to enter into long term contracts with customers for the provision ...(reads)... than contracts existing in the remainder of the CSL International fleet.

PN228

He then gives evidence about that. I'm sorry, I note the time. Is the Commission proposing to take a morning break?

PN229

JUSTICE GIUDICE: Yes, we might take a short break actually, Mr Hatcher. We'll adjourn for 10 minutes.

<SHORT ADJOURNMENT [11.33AM]
<RESUMED [11.50AM]

PN230

MR HATCHER: If it please the Commission I was dealing with Mr Sorensen's evidence in the context of the submissions that we put that there is utility in granting the relief that our clients seek. I had got up to, I think, paragraph 85 and I don't read it all, other than noting that Mr Sorensen is here giving evidence about the way in which our clients operations are managed. At 91 he's dealing with the vertically integrated companies, that is where the bulk of Australian shipping is presently engaged and he goes on to give evidence of his experience of how that's led to some difficulties in the way in which the wages and conditions have been arrived at.

PN231

He then in paragraph 239 under the heading The Proposed Award, says:

PN232

In my view, one of the principal reasons for the decline of the Australian shipping industry has been the highly uncompetitive ...(reads)... building new ships and to recruit and train new seafarers.

PN233

He then gives evidence about having discussions with the principals of Inco and in 241 says:

PN234

Inco Ships and CSL Australia decided that a key factor which could motivate greater investment and growth in the Australian ...(reads)... with foreign flagged vessel operating on the Australian coast.

PN235

We then extract from the transcript at appeal document 12 his cross-examination and at paragraph number 1220 this is put to him:

PN236

I'm sorry, I'm told I said the wrong company. Let me withdraw that and be clear. Is there any likelihood that CSL Australia ...(reads)... there is certainly a piece of business that we are -

PN237

and it's noted that this is confidential and Mr Gibian continues:

PN238

You are required to answer the question in any event. It doesn't breach your confidentiality agreement and will be kept confidential ...(reads)... we've been looking at -

PN239

and he then deals with the purchase of the ANL business by analogy and continues:

PN240

The reason that we don't employ the crew on the Chieftain was the fact that it was an arrangement that came about through the agreement ...(reads)... it is likely that we will employ the crew.

PN241

That's clarified. There's some questions about that and then in paragraph 1230:

PN242

We are not saying that we won't do it, that is employ the crew, and in fact, you know, the business that we looked at in some cases ...(reads)... ongoing negotiation at the moment? Yes.

PN243

At paragraph 1483 the Commissioner is I think asking - yes, it may be Mr Gibian. I thought it was the Commissioner asking these questions at paragraph 1483:

PN244

You then just pick up your two ships from your associated company and you just use them to carry but you are the one that goes out ...(reads)... charter another ship and we have in fact done that..

PN245

That was the point I was making in opening the case earlier. The advantage in our client being able to actually own and operate its own vessel, rather than having to bring in foreign flagged vessels on permits.

PN246

Can I then move to tab 21 which is an extract of the evidence of Mr Ives which is also to be found on the same day's transcript, appeal document 12. Earlier in, paragraph 627 - perhaps 626 Mr McNally is cross-examining Captain Ives and I should say Captain Ives is one of the principals of Inco Shipping. Inco Shipping provides labour on a number of vessels and he's asked this:

PN247

What do you see as the practical effect? Let's assume that an award is made in terms of the way you've applied for it before ...(reads)... and that's our problem, they're not provided for anywhere.

PN248

Then 630:

PN249

What about trainees? Only as trainee integrated ratings. I see that as a fairly big impediment to the future of the industry.

PN250

After the adjournment it resumes at 637:

PN251

So the main object of getting this award to apply to the Accolade, the Iron Chieftain and the Bass Trader or whatever other ship ...(reads)... and the application for the Stadacona and the CSL Pacific -

PN252

and there's a reference to an all other classification -

PN253

- is there any comment on that? Well, it was the same wage rate I believe as everyone else. So you've got a 16 year old kid ...(reads)... at the moment because of the flat wage structure.

PN254

In our respectful submission there was a utility in an award being made. It wasn't a situation of our clients saying just make it for the hell of making it. Our clients were saying, "We can use this. We want to use this. Either we want to use this because we want to compete in the market, with an award that allows us to compete or because even on the work we're doing presently, removing the incidence of this award from us and allowing us to employ other classifications of employees will allow us to do something for the industry and for our own operations and we propose doing it."

PN255

As I earlier put, even if it was open to the Commissioner to find that the award wasn't going to be used, that can hardly be a reason not to remove the incidence of an award that the Commission finds to be inappropriate, as not applying to the Commission's principles and standards.

PN256

JUSTICE GIUDICE: In relation to that issue of apprentices and the employment of young people and so on, I rather had the impression that these were things that the Fair Pay Commission were going to be looking at very shortly.

PN257

MR HATCHER: Yes, your Honour. It looks at them in the context of the existing industrial regulation. It may have been at the penultimate hour of the existing industrial regulation that our clients came before the Commission and said, "Well, let's fix this up," but it was under that industrial regulation. Our clients say, "We want to go into the new world with an appropriate instrument, not with an inappropriate instrument that simply doesn't have application to our circumstances."

PN258

JUSTICE GIUDICE: Yes, but there's some basis to the Commissioner's concern about the Work Choices environment which he referred to overtaking and perhaps supplanting any thorough review of the rates and the other provisions in MISA. For example, we read from the press that the award review taskforce has delivered reports to the government on the issue of classifications. We know that pay and classification scales are no longer the responsibility of the Commission in the sense that, although they will continue to exist, they're in some - - -

PN259

MR HATCHER: Nether regions.

PN260

JUSTICE GIUDICE: - - - some other world which is the province of the Fair Pay Commission. For all any of us know, there might be recommendations already made in relation to what should happen to pay and classification scales in the maritime industry on the basis of the existing award. I suppose I'm just voicing the potential I see for some confusion perhaps, some overlapping functions if the Commission were now at this particular point to say, "Well, we'll pick up this award and we'll start some kind of an exercise which goes somewhere between what MISA currently is and what, for example, your client proposed," if we were not happy with exactly what your client proposed.

PN261

MR HATCHER: Your Honour, can I approach that question in several steps. Firstly, we acknowledge and I think have acknowledged that it would have been legitimate for the Commissioner as an exercise of discretion, perhaps pursuant to 111(1)(g) at the point where he considered it to say, "Well, notwithstanding your client has spent all this money and wants to continue to prosecute this application, Work Choices is around the corner and I just don't think it's in the public interest that this Commission's resources be utilised any further. I'm going to dismiss or refrain from further hearing these proceedings," and he was asked to do that. He declined to do that.

PN262

So our client proceeds to engage in the expense, to put the material before the Commission and the Commission comes to a conclusion that we say, with respect, doesn't reflect the materials, doesn't reflect his findings. The Act then operates to say we're entitled to appeal, to prosecute the appeal and to have the appeal determined under the Workplace Relations Act as it existed pre the amendments. In our respectful submission, it does that to preserve a position that our client can go into the new world saying, "Well, we've had the Commission look at our particular situation and this is what the Commission found appropriate."

PN263

Certainly the Fair Pay Commission is going to have to do its own task but it has a starting point. That's recognised under the legislation. It looks to the awards of the Commission. We say that if you look at MISA and determining as a starting point, indeed as any point of reference so far as the operations of our client are concerned, you do us a disservice.

PN264

JUSTICE GIUDICE: It's not envisaged, is it, that there would be a number of pay and classification scales for the maritime industry. Surely there can only be one.

PN265

MR HATCHER: The answer, your Honour, is we just don't know. The legislation appears to contemplate that there will be common classification scales.

PN266

JUSTICE GIUDICE: Yes, but I think it's a fair assessment of the parliamentary intent to say that there should be fewer awards rather than more.

PN267

MR HATCHER: I accept that, your Honour, but - - -

PN268

JUSTICE GIUDICE: The word "rationalisation" seems to push us towards that conclusion. Anyway, I accept what you say about it, Mr Hatcher. I suppose I'm just giving voice to what seemed to me to be considerations that are certainly articulated by the Commissioner, admittedly before 27 March, and you rightly say he projected a suggestion he should not determine the matter, but on the other hand, when he did determine it, obviously Work Choices was part of the environment he took into account.

PN269

MR HATCHER: Nothing new had taken place since he'd determined to proceed to hear, other that our clients had committed to significant expenditure.

PN270

JUSTICE GIUDICE: Well, a lot of people have spent a lot of money on awards over the last five or six years and it might be said - - -

PN271

MR HATCHER: I don't suggest it hasn't gone to a very good cause, your Honour.

PN272

JUSTICE GIUDICE: Life is about timing. It's about cut-off points.

PN273

MR HATCHER: Yes, and that's why, your Honour, we say it clearly was open to the learned Commissioner at the time he raised it, to determine it in that way.

PN274

When it comes to then the four criticisms that the Commissioner had of the award application that our clients proposed, and I do want to impress upon the Commission again, with respect, the submission that we put that the fundamental point here is that the Commissioner having found MISA was inappropriate, should have excluded us. Whether he was satisfied with the award we proposed or whether an award should be made, he ought to have excluded us from the operation of MISA.

PN275

If he were to consider the award that was proposed, part of the difficulty was that the case that our clients were dealing with, that was put up against our clients, wasn't a case, "You've proposed that rate and it should be this rate. You've proposed this amount of leave and it should be that amount of leave," the union's approach was essentially an all or nothing. It was, "MISA is the appropriate award. You should not depart from MISA." So we were anticipating the Commissioner's concerns rather than necessarily anything that was being put against us.

PN276

When our clients sought to deal with the question of wages they went to, not surprisingly, someone from the Australian Industry Group who had been involved in the minimum rates adjustment process to find out how that process had been effected throughout industry and asked him to effectively engage on the same process in our clients' operations, gave him the classification scale and asked him to assess it against the fitters' rate, the appropriate classifications in the Metal Industry Award. He did that. he gave evidence. His name was David Tiller.

PN277

JUSTICE GIUDICE: Very appropriate name for somebody involved in the maritime industry.

PN278

MR HATCHER: We would have liked the direction he charted to have been followed by the Commission.

PN279

JUSTICE GIUDICE: I am looking at 23.1 of the Commissioner's decision where he talks about the classifications. Is that what you're about to deal with?

PN280

MR HATCHER: Yes, your Honour.

PN281

JUSTICE GIUDICE: Very well, you proceed.

PN282

MR HATCHER: While the Commission is attending on 23.1, can I firstly deal with the learned Commissioner's references to:

PN283

How employees work when they are graded on some foreign vessels is not sufficient given that the issue is a point of controversy between the parties.

PN284

And he says that against the context of identifying defects in the MISA classification. What our clients were saying is we don't like the classification structure in MISA and there was a good deal of evidence about the way in which that classification structure came into place. It actually arose from one of the many inquiries into the industry and two separate streams of seafarer were merged into one with the effect of allowing for reduced manning in vessels. It was meant to make the industry more efficient.

PN285

Our client's case was rather than making the industry more efficient, it made it more inefficient because it raised everyone to a higher minimum and didn't in a realistic sense introduce greater flexibility and that was in part what Mr Ives was giving evidence of earlier when he said, well, it's all well and good to have everyone as an integrated rating, but you really need deck boys who don't have as much responsibility, that nonetheless can do the simpler tasks at a cheaper rate and the evidence was the way in which the Maritime Industry Award or awards used to be structured was exactly the same as the way in which the ITF agreement is structured.

PN286

It's a classification structure that's been known in the maritime industry since Adam was a boy is perhaps the expression and it's still used everywhere else in the world, well, so far as near to and it's still appropriate. It still on some of the evidence applies on Australian ships in that whilst everyone is an integrated rating, some people prefer working in the engine room, some people prefer working on deck and you tend to have deck integrated ratings and engineering integrated ratings which is hardly surprising and our client said, well, we just don't want the classification structure that's in MISA, we want the traditional seafaring classification structure that's still acknowledged to be appropriate in the Australian Maritime Safety Authority's requirements for crewing a vessel and we think it's more efficient and suited to our purposes and evidence was led from the captain, the master of the Stadacona that he had been on a number of different types of vessels operating around the world, container ships, roll on roll off vessels, liquid haulage vessels and the bulk vessels and the crew structure was pretty much the same.

PN287

There were some differing requirements in accordance with the different types of vessels, but the crewing structure tended to be pretty much the same and Captain Khosa, the witness called by the Australian Maritime Officers' Union, gave similar evidence. He'd worked on a number of international vessels out of Singapore and different categories of vessel tended to have the same crewing arrangements. While the duties may change, the crewing structure didn't and our client was saying, well, we think that's an appropriate crewing structure, now let's set about setting wage rates for that crewing structure and that was the task that Mr Tiller was engaged to perform.

PN288

We've included in our bundle of documents his evidence and his affidavit is to be found at tab 9 of the materials and that just sets out his rather extensive industry history in doing this and at paragraph 10 - I am sorry, at tab 10 which is appeal book document 219, we see his report. As with an appropriate expert report, he identifies what his task was and that was to align the work of the crew members on the Stadacona with the classifications under the Metal, Engineering and Associated Industry Award 1998. He sets out what materials he had regard to. He sets out his methodology and he sets out his findings.

PN289

JUSTICE GIUDICE: Is Mr Tiller's CV somewhere?

PN290

MR HATCHER: I think he sets it out in the body of his affidavit, your Honour. Yes, at tab 9, employed by the AIG, been employed for nine years, involved in classification issues for eight years, including providing advice on the classification determinations for members of the AIG and he sets out all that he's done there, direction in the engineering and related services industry training body, he sets out what he's done there and then he sets out his qualifications in paragraph 4.

PN291

JUSTICE GIUDICE: Yes, thanks.

PN292

MR HATCHER: Basically he says where there's a fitter, I can tell you where a fitter equates, I can look then at the engineering stream where whilst they don't fall within the metal classifications directory, I can look by reference to their qualifications that are necessary to do the work that they do and find out by reference to the AQF principles where they would fit under the relevant engineering awards and he deals with how he's come about that. He annexes to his report all the material that he's had regard to in coming to his conclusions.

PN293

We reproduce his cross-examination at tab 18 of the bundle and appeal book document 15 and transcript of 20 December. At paragraph number 2595 on page 4 of the transcript - - -

PN294

COMMISSIONER LARKIN: Sorry, Mr Hatcher, which page?

PN295

MR HATCHER: Page 4 of the transcript behind tab 18 in the bundle, Commissioner.

PN296

COMMISSIONER LARKIN: Thank you.

PN297

MR HATCHER: Paragraph 2595:

PN298

You were asked by ABL -

PN299

this is cross-examination by Mr McNally:

PN300

Perhaps you could tell us, what did ABL ask you to do in relation to this matter on the Stadacona?---To look at a particular job and to the extent that it could actually match to a classification under the Metal Industry Award.

PN301

Why do you say to the extent that it could?---Because at the very beginning, I didn't know whether it would or wouldn't.

PN302

And did it?---In some cases it did, in some cases it didn't. Catering areas and those types of things purely fell out of the Metal Industry Award.

PN303

What other ones fell out of the Metal Industry Award?

PN304

And he goes back to that and deals with what is in his affidavit or his report and then at page 6, paragraph 2611:

PN305

We're talking about which of the classifications you analysed and which squarely fell within the competency standards of metal engineering competency standards?---As far as the competency standards were concerned, it was the ones under (b) and the ones under (c) and I made comment about the ones under (a) regarding qualifications in the award, because the competency standards don't go up to that level, that's the engineering level, but I made comment on them regarding a qualification and pinning that qualification back to the Metal Industry Award

PN306

Is that a qualification applicable to marine engineers?---I looked at that as a qualification as far as engineering was concerned.

PN307

Over the page, 2624:

PN308

But there was no consultation process between you and any of the employees whose classifications you were evaluating?---That's correct.

PN309

Is that normal?---Well, yes and no. When I had collected the appropriate units of competency, I actually got to a level where there was no other units to actually select. Take for example welding, I selected all the units of competency.

PN310

Yes, well, what did you do with the tasks that were performed by some of the classifications, employees in the classifications such as watch-keeping, safety drills?---I picked them up under a unit of competency called 724, operate and monitor a process.

PN311

And he describes that:

PN312

Have you read the report of Mr Jenkins?---Yes, I have.

PN313

Do you have any general comment before we go through it in relation to that?
---The general comment with Richards was focusing very much on the process in the implementation. As I mentioned earlier, that process is, you know, if an organisation is implementing competency standards, it should be done in consultation. I wasn't implementing competency standards. I was looking at a job and using the competency standards as a tool to work out a classification for it.

PN314

I think the other issue he raised is the one we've already raised:

PN315

Do you have a copy of his report?---No.

PN316

He referred to the skills that are particularly seafaring skills and indicated that there's no real way in the metal and engineering competency standards for evaluating the skills involved in it:

PN317

We find out when we actually go to lots of organisations. For example, you go to an organisation and there might be a little bit of concreting, driving a ute and all those types of things. They're often incidental to the primary task and that's actually maintenance or manufacturing.

PN318

And there's then a reference to the 724, operate and monitor a process and at 2365:

PN319

That's the title of the unit of competency. When I did the analysis, I was looking for high level technical skills because it's the high level technical skills that are going to have an impact on a classification. The way that the Metal Industry Award is, we have units that are called A band units and B band units and the B band units are the high technical ones.

PN320

So a lot of those tasks that you're talking about would fall into a trade level?
---I was looking for skills that were being carried out at that high level, to see whether the person would go beyond the C8 and get to a C7 and the only ones identified were high level electrical units where there was a possibility of someone getting to C7 in the electrical area, the electrical engineering. All the others were all those tasks that you're talking about, they would be A level units and the more and more A units you actually put in would never impact on a classification. It's only those high technical ones. It would only become a question if I was looking for classifications below C10, but I was looking if there were classifications above C8.

PN321

You didn't do any of the processes in relation to the engineers, did you?---No. We don't have competency standards for the engineers, so I was mapping the engineers back to an appropriate qualification, either a certificate IV, the old associate diploma or diploma and then bringing that across to the award and looking at the C classification in the Metal Industry Award for that qualification.

PN322

And then Mr Gibian who appeared for the AMOU cross-examines from 2645 and over the page in re-examination he's asked about Mr Jenkins and I should say there was evidence called by the AIMPE and the MUA from Mr Jenkins. That evidence was opposed by our client. We said it was inadmissible because it was essentially a report on methodology rather than a report on outcome. Mr Jenkins said I don't have anything to say about the conclusions Mr Tiller reached, but I say in going about his task, he should have had access to the employees and discussed the results with the employees.

PN323

SENIOR DEPUTY PRESIDENT LACY: So he conducted no examination at all, inspections on board the vessels or did not consult with the employees themselves?

PN324

MR HATCHER: That's so, didn't consult at all. That's clearly his evidence. He said he's presented with the classifications. Where he had any doubts about it, he was given access to the master of the vessel to discuss what it meant, but essentially he was asked to value the tasks that were provided in the annexure and he did them in a fairly non-contentious way, I should say. It's not where someone was saying but how could you value this task at that rate? What he said was a fitter is a C10, not too difficult to translate. Even if the fitter is working at sea, his skill is still the skill of a fitter. Now, it's acknowledged in the seafaring industry, whether it's in Australia or whether it's overseas, that the fitter is about the same as a bo'sun and so you start then comparing the rates as they go from there.

PN325

JUSTICE GIUDICE: Well, the Commissioner says there's an insufficient basis for equating the bo'sun with the tradesperson.

PN326

MR HATCHER: Well, the evidence was that that was the rate that was in the RTF agreement.

PN327

JUSTICE GIUDICE: What does that say about work value?

PN328

MR HATCHER: Well, what it says is that's the way the industry by agreement with unions to which the unions participating in the proceedings are affiliated has valued the work.

PN329

JUSTICE GIUDICE: But it's not the way the parties to the award have valued the work.

PN330

MR HATCHER: Well, they haven't valued the work, your Honour. If we go back far enough, I say this - - -

PN331

JUSTICE GIUDICE: There's as much evidence that they've valued the work as there is that the ITF and somebody else has valued the work.

PN332

MR HATCHER: I accept that, but - well, no, I withdraw that. What the parties to the award have valued so far as the present award is concerned is the work of a chief integrated rating and an integrated rating and when those classifications were introduced, there was a substantial increase on the rate for the able bodied seaman, the greaser, all the other classifications that are still recognised in the ITF agreement but are not recognised in MISA. There was a premium paid so we're not saying that a bo'sun is the same as a chief integrated rating. A bo'sun doesn't go in the engine room. A chief integrated rating is expected to take responsibility for the engine room.

PN333

JUSTICE GIUDICE: Well, what is the Commissioner referring to in the first couple of lines of 23.1?

PN334

MR HATCHER: He's referring to a submission that was put to him by the union that you shouldn't depart from MISA and you shouldn't do it by reference to what is happening on the Stadacona.

PN335

JUSTICE GIUDICE: Yes, but is he referring to equating the bo'sun with a tradesperson in the metal industry or is he referring to equating the bo'sun with a tradesperson at sea? This must be the best question I've asked.

PN336

MR HATCHER: It's got me. I'll keep stuttering for a while and see if your Honour is not distracted.

PN337

JUSTICE GIUDICE: Well, did your proposal equate the bo'sun with the - - -

PN338

MR HATCHER: The tradesperson at sea.

PN339

JUSTICE GIUDICE: The tradesperson at sea? It did?

PN340

MR HATCHER: Yes.

PN341

JUSTICE GIUDICE: Well, that's probably the answer.

PN342

MR HATCHER: I think the Commissioner's only criticism was the criticism that was being advanced by the unions, you've just taken the Stadacona and applied those classifications and we say, yes, that's exactly what we did, because those classifications are recognised world-wide and they used to be recognised in Australia and we think they're convenient to the way we would wish to operate our business.

PN343

JUSTICE GIUDICE: And the grade 7 and grade 8 would be new classifications below the trade level, if you could call it that?

PN344

MR HATCHER: Yes. We in address before the Commissioner conceded I think appropriately that it's difficult to say that assessing wage relativities as a science. I mean, how does anyone ever say what a boilermaker is worth compared to an electrician compared to a nurse? Many people would say on that important day in their life when they need a nurse that she's worth more than the Prime Minister, but we've had to do it in awards of this Commission and our client set out the basis upon which they went about doing it.

PN345

They looked at traditional relativities. The ITF relativities couldn't be put into an award of the Commission. The fact is when one looks at the Australian maritime industry, there is still a fairly thriving industry for Australian masters if we could train them because the wages that are paid in the international maritime industry for masters and the conditions that are afforded are more generous than those applying under MISA, but at the other end, the deck boy through to the able seaman, wages applying internationally are considerably lower than would be found in an Australian award and so what's been sought to do is to compress the relativities and the way the Australian system of wage determination has tended to operate historically and come up with some way of testing the rates that emerged from that process against the Metal Industry Award.

PN346

To the extent that it's a science, that's the science that was adopted and our client was quite candid in disclosing how it was arrived at. Ms Gower, whose affidavit appears as Ms Willmot, gave the evidence of how she'd derived the award and we've included in the bundle of materials her affidavit and her cross-examination. Can I perhaps then go to the way in which the process of preparing the award was dealt with before the Commissioner and that appears again in transcript, the transcript of 27 February 2006 which is at tab 8 of the bundle of materials, appeal book document 16.

PN347

If I could invite the Commission to turn to paragraph number 3280 which is about two-thirds of the way through the bundle and I apologise, it's not page numbered. The Commission sees that I am there addressing the Commissioner:

PN348

There is a commitment to attempt to provide employment on Australian flagged vessels on the Australian coast ...(reads)... evidence. It's interesting that our friends rely on one proposition, but stop before the oral evidence flows.

PN349

And then there's a reference to the evidence that I've taken the Commission to, then at 3282:

PN350

Much has been said in this case by our learned friends about it being no role of the Commission to concern itself with international competitiveness. That, with respect, is not correct. It doesn't flow from -

PN351

it should read there the contract call centre case:

PN352

Can I remind the Commission of the objects of section 3? The principal object is to provide a framework for ...(reads)... and a flexible and fair labour market. The very first step along the path, recognition of international competitiveness.

PN353

Now, the contract call centre case certainly acknowledged that there's a tension between that and paragraph (d) of the objects which refers to ensuring the maintenance of an effective award safety net, a fair and enforceable minimum, wages and conditions of employment and that's a tightrope that we have attempted to walk with our application. There's some criticism of it and we would concede that we have drafted a safety net award with some conservatism.

PN354

We're not actually promoting the highest level of costs. We are trying and unashamedly trying to achieve a safety net award which will still enable our clients to be internationally competitive, but that's the task we've embarked upon. We acknowledge that the Commission's role is to set under the Workplace Relations Act a fair safety award. We say MISA simply isn't such an award. If there were any need for further support of that, one only need go to the cases that Mr McNally has taken the Commission to. There's reference to those cases and in the next paragraph we say:

PN355

They've gone off, they've done their deal. Now we're putting it through the industry. That's the way salaries were fixed. One looks at the way the leave factor was fixed.

PN356

And there's a reference to the way that went through. Now, in our respectful submission, the Commission will have no difficulty accepting the submissions we put that this award is inappropriate to regulate our client's operations for the future. If the client accepts that, the appropriate step for the Commission to take in our respectful submission is to exempt our clients from the award. We are the applicant in that application. We need to satisfy the onus as applicant. The Commission has to be satisfied on the balance of probabilities that this award is an inappropriate instrument for the operations of our client for the future. Once we satisfy that onus, the Commission would move to exempt our client from the operation of this award. The Commissioner:

PN357

You're not seeking that, are you? You're actually seeking something in its place?

PN358

Well, Commissioner, it's a two step process. If the Commission doesn't exempt us from the award, there's no need to replace it.

PN359

Yes, but it can't exempt you from an award unless it gives you something else, because otherwise it would be running foul of the obligation to set minimum standards.

PN360

Well, the Commission has a number of obligations and it meets them as best it can. If the Commission is satisfied that this is not for our client's operations a fair safety net condition, then it's not meeting its obligations by maintaining our client's coverage under that award.

PN361

Yes, but then we go to the next step and I've already indicated that I've some concerns going as far down as you think we should all go, overtime, weekend penalties, et cetera, but there might be some - the Commission might be able to create an award which better suits - that reflects better, more acceptable provisions. I say more acceptable in terms of the Commission's standards.

PN362

And he goes on:

PN363

But then we run up against the very arguments the other side makes, that is quite apart from time, why the hell would you want to do that and the Commission would be looking or some task force would be looking as classifications which will be translated into out agreements. It's quite possible that MISA may not survive.

PN364

And so forth:

PN365

Commissioner, with all due respect to Mr Crawshaw, that was a subject that was canvassed previously. Everyone knew back when this case was set down for hearing and again at the time of the question of whether it can proceed was referred to -

PN366

And the Commissioner interrupts:

PN367

Yes, and you decide to proceed and so the Commission says, yes, you're the applicant, you run it. I'm here, I'll listen to anything.

PN368

And we continue:

PN369

Now that we're here and we've run it, we have either satisfied the onus of persuading the Commission on ...(reads)...we haven't satisfied the Commission as to that, but the boundaries of the argument aren't that great, with respect.

PN370

And we then go on to deal with the specifics. We continue:

PN371

If it please the Commission, there is no basis upon which the Commission would continue to bind us to this award. We have identified a prospective future award, or we have identified that it would have limited effect in the sense -

PN372

And so forth and then we deal with that proposition. Can I then ask the Commission to turn to paragraph number 3350 which is about five pages further into the transcript where we say this:

PN373

We are not here inviting the Commission to resimplify MISA, expressly not. I think I've said enough about the task ...(reads)...We further acknowledge that there is no facility for payment in lieu of annual leave in the base award.

PN374

Can I pause there to interpose the base award was the Technical Services Award. It was a recent award of a Full Bench of the Commission. It was selected on the evidence simply as being the most recent Full Bench award that we could identify that sought to incorporate the minimum or the safety net of fair minimum standards and conditions. It was the source, for instance, of the junior rates that are criticised by the Commission and it was our best effort at putting together an Australian award that reflected Australian safety net minimum standards and we departed from that in the areas we identified where we thought it was justified to depart because of the particular history of circumstances of the maritime industry. To return then to the transcript:

PN375

In our respectful submission, there's no basis to suggest that a facility for payment in lieu is inferior to ...(reads)... between the present standard and the previous standard, but the award ought reflect the present standard.

PN376

So if it please the Commission, we were saying here is an award, here is how we set about drafting it. We set about drafting it by taking what we understand to be the most recent Full Bench consideration of a safety net minimum award applying standards set by the Full Bench, so to the extent that it is necessary to vary that award to reflect maritime conditions, we've done that. We've said where we've done that. We've said why we've done that. Now, there may be room for debate and in the transcript there's a fascinating exchange about Saturday and Sunday work where this appears from paragraph 2991 through to 3024, where we've said we've not included any penalties for Saturday work and Sunday work because it's just an ordinary incident of employment in a ship.

PN377

The Commissioner said, well, how can you remove Saturday and Sunday penalties? They're something that's a standard in the Commission and we said, well, this is an area where we say the maritime industry is different, always has been different. When there was an award that reflected penalty rates, it was at a lesser rate than the community standard and there's an exchange between the Commissioner and myself about what the present standard is. I relied on the Retail and Wholesale Shop Employees ACT Award which provides for time and a quarter Saturday, time and a half Sunday. The Commissioner referred to the more recent General Shops determination in Victoria.

PN378

I responded that that only applies to general shops, not all shops. One needed to look to the difference in circumstances between general shops and other shops and the history of the Retail and Wholesale Shop Employees Award, but the point that we put is that the scope of the debate is not great. There's an acceptance that the standard should apply subject to us persuading the Commission, but it's the Australian standard, not MISA because with an Australian standard, our client said whatever that might be. It's certainly not MISA and we may be able to compete with it. We may be able to deliver a ship to a customer on a basis that's not as cheap as the foreign flagged vessel, but we can offer certainty of the ship being available, we can offer less controversy with the union movement.

PN379

We can offer a lot of things if we've got an award that allows us to compete and MISA simply doesn't, so in our respectful submission, the scope of debate wasn't great before the Commissioner. It was entirely unassisted by the respondent unions. They weren't saying if you are minded to do this, this is the appropriate rate. They simply said MISA is appropriate, bind them to that, keep them on that, don't let them out of that. The Commissioner found and we say he did find and we've taken the Commission to the passages where he did that MISA was simply inappropriate, it didn't meet the Commission's statutory obligations, then in our respectful submission our clients were entitled to be released from the obligation to apply MISA.

PN380

Now, can I pause there to say as our friends raised the question of us not having separately addressed the question of leave to appeal, in our respectful submission, that is the issue as they correctly identify in their submissions, that either attracts leave or does not. In our respectful submission it clearly does, because we are here talking about the Commission's obligations under the Act and determining an application where it is contended and accepted that the relevant industry award does not reflect the Commission's obligations under the objects of the Act in exercising the powers under the relevant part of it.

PN381

That must be a question that in the public interest gives leave to appeal. If we be right as to that, then our clients were entitled to be exempt from the provisions of MISA. Now, as to whether the Commissioner was bound to go on and make the award in the terms we sought, we accept that that's in a different category. We had a discretion. We say the way the discretion ought to have been exercised was to proceed to make an award in standard terms, except where we had justified a departure from the standard and we say that there was any amount of material before the Commissioner to enable him to do that.

PN382

We had put on submissions, some 40 pages of which go through in detail every provision that was sought, where it came from, why it came from there and what evidence was relied upon, but the Commission wasn't bound to accept that. It could reject it, it could be unsatisfied, it could have gone part of the way. As it turned out when the regulations came down, it may be that it had done as we at one stage suggested. If he wasn't satisfied with what we had put on, he could re-list it for further hearing on having exempted us from the award, what appropriate future award regulation would be.

PN383

If he had done that, then as it turned out under the Regulations, it probably would have gone nowhere. All that our clients could achieve is an exemption. He didn't do that. He dealt with the matter as we've taken the Commission to in his decision. That entitled us to appeal and in determining the appeal, this Full Bench is entitled to act as if Work Choices had not been introduced. It is entitled to proceed under the Workplace Relations Act 1996 unamended. In our respectful submission, it has the material necessary before it to make an appropriate award. We would invite the Commission to do that. May it please.

PN384

JUSTICE GIUDICE: Thanks, Mr Hatcher. On the issue of wage rates and classifications, I understand your submission that we should not pay any regard to the fact the Act has been amended, but I would appreciate it if you could, perhaps over lunch, but if you don't have that opportunity, at some other time, if you could have a look at the Commission's decision in December last year on the safety net application made by a number of unions. The Commission gave a decision on 21 December and the reference is PR966840 in which the relationship between the Commission's minimum wage fixing functions and the Fair Pay Commission was discussed and some conclusions were reached about that. I understand it's not contemplated in your submissions that we should look at that issue, but we may need to, so if you've got anything to submit about it at a convenient time, we would like to hear it either orally or in writing, if it's not practical to do it today.

PN385

MR HATCHER: Perhaps if I could deal with the practicability of it after lunch.

PN386

JUSTICE GIUDICE: Yes, of course. This seems like a convenient time to adjourn. Mr McNally, could you give us any indication of how long your submissions might be?

PN387

MR MCNALLY: Subject to that last matter that your Honour raised, we would be relying upon the written submissions we've made which we'll develop only marginally - 40 minutes.

PN388

JUSTICE GIUDICE: So at this stage there's no danger that we might not finish the submissions by say 4.15?

PN389

MR MCNALLY: Subject to my friend getting a second wind - - -

PN390

JUSTICE GIUDICE: Well, in that event, we will adjourn until two.

<LUNCHEON ADJOURNMENT [12.52PM]
<RESUMED [1.58PM]

PN391

MR HATCHER: If it please the Commission, we're now in a position to deal with the matter that your Honour the President raised with me and it's perhaps better that I do it before my friend rises, so there's less opportunity for me to develop a second wind.

PN392

JUSTICE GIUDICE: Very considerate.

PN393

MR HATCHER: In our respectful submission, if one has regard to what the Commission said at paragraph 11, it's clear what moved the Full Bench to act as it did and take what we would respectfully submit was an appropriate course in that case. That case is very different to this case. In this case, the Commission considered at a time not dissimilar to the time the Full Bench was considering in that case whether to bring its proceedings forward, the learned Commissioner at first instance in this case at a similar time considered whether it was appropriate to continue the proceedings or not. He determined to continue the proceedings and let the legislation do what it would do. Prior to the legislation being amended, he delivered a decision. In the decision he delivered, he determined that MISA was simply inappropriate to apply to our client that MISA did not satisfy the Commission's obligations, principles and standards in terms of setting an appropriate fair safety net of conditions for our clients.

PN394

SENIOR DEPUTY PRESIDENT LACY: I thought you took us to a point in the transcript this morning where the Commissioner noted that the applicant wanted to proceed with the matter. Is that right?

PN395

MR HATCHER: Yes. Certainly, the Commissioner said does everyone really want to go ahead? Is there practical utility in this? He asked that we go away and get instructions on it, so it was something that was taken quite seriously by all parties. We came back and we said, well, we acknowledge that there is legislation around the corner, our instructions are to proceed. Our client would like to go into the new world with an appropriate base and when one looks at what was concerning the Full Bench in this case, one sees just how important it is for our client and how important the relief that our client seeks in these proceedings is, because one has now in MISA a rate.

PN396

If one is to have regard to that rate for the purposes of determining the base hourly rate of pay for the purposes of the Australian pay and conditions standard affecting our client and any people it chooses to employ in the maritime industry, one will presumably go back to MISA and one will presumably go back to that exercise that was dealt with in the evidence of Mr Umansky, an entirely artificial exercise and our client says, well, we don't want to be there. We would prefer to be exempt from the award. We would prefer even more to have an appropriate rate fixed to be the basis upon which we start in this new world. May it please the Commission.

PN397

JUSTICE GIUDICE: Mr McNally.

PN398

MR MCNALLY: Could I hand the Commission a copy of MISA, the Maritime Industry Seagoing Award, on the issue of the position of CSL Australia in relation to the award.

PN399

JUSTICE GIUDICE: Yes.

PN400

MR MCNALLY: The schedule to the award lists CSL Australia as a respondent to the award, but only in respect to the ship Stadacona or it's referred to as the CSL Yarra as it was known at that time. Could I hand to the Commission a copy of the award of 23 July 1999 when AUSCAN Self Unloading Pty Ltd became respondents to the award, but only in respect to engineers. AUSCAN at that time was owned by CSL and ISM, well, ISM which is now known as INCO, but INCO dropped out of the arrangement.

PN401

The document handed to the Commission indicates that AUSCAN, now CSL Australia, is a respondent, but only in respect to engineers. If you look at the schedule of the Maritime Industry Seagoing Award that I handed to you prior to this document, the Commission will see that AUSCAN doesn't rate a mention in the schedule of respondents, so that CSL Australia Pty Ltd is a respondent to MISA only in respect of a ship and in respect to which it no longer employs the crew. In respect to INCO, I draw the attention of the Commission to AB75 at page 21. I will read it. It's only in electronic form before the Commission. This is directed at the point that when MISA was simplified by Commissioner Wilkes and when the paid rates were converted to minimum rates by Commissioner Wilkes, INCO was party to those proceedings and a consenting party.

PN402

JUSTICE GIUDICE: Where is INCO listed, incidentally?

PN403

MR MCNALLY: It's listed as ISM.

PN404

JUSTICE GIUDICE: ISM?

PN405

MR MCNALLY: Yes. It changed its name for reasons I did know, but I've forgotten. It had something to do with overseas confusion. It was called ISM. It's now called INCO.

PN406

JUSTICE GIUDICE: That's right, Mr Hatcher, is it?

PN407

MR HATCHER: Yes, your Honour.

PN408

SENIOR DEPUTY PRESIDENT LACY: Is that Intercontinental Ship Management? Is that the same body?

PN409

MR MCNALLY: No. Intercontinental Ship Management is - yes, your Honour. In the simplification proceedings on 1 February 1999, on 8 December 1998 before Commissioner Wilkes, Mr Brecht appeared on behalf of ISM and Adelaide Brighton Cement Ltd. At reference appeal books 64 at paragraph 11 which is the affidavit of Mr Umansky who we've heard of, he has this to say:

PN410

The negotiations for the making of MISA 1998 took place throughout the latter half of 1998. The negotiations ...(reads)...Brighton Cement and I formed an employers' working group which participated in the award negotiations.

PN411

At paragraph 15:

PN412

I participated in discussions with the Maritime Union to develop a simplified Maritime Industry Award. The ...(reads)... maritime unions. Regular reports of the progress of discussions were made to Commissioner Wilkes.

PN413

And at paragraph 26 Mr Umansky had this to say:

PN414

I participated in the paid rate conversion process on behalf of ASA members who were party to MISA 1998. At various times I recall discussing the applications of the paid rate review with Mr Lowe and Mr Brecht who participated in the employer working group that was set up to implement the simplification MIMSA -

PN415

That's the forerunner of MISA -

PN416

in 1989. I recall reporting to ASA members on the requirements of the paid rates review and Commissioner Wilkes' requirement for MISA 1998 -

PN417

so the starting point is that we have an award, the Maritime Industry Seagoing Award, in respect to one of the appellants who's not really involved and the other appellant who's involved in the process of creating. It was a dissenting party to the process that was consented to which in the circumstances - - -

PN418

JUSTICE GIUDICE: Can you just repeat the document number for Mr Umansky's affidavit, please?

PN419

MR MCNALLY: It's AB75 at page - I am sorry, his affidavit is AB64, I am sorry, at paragraphs 11, 15 and 26 and the part of the transcript I quoted was AB75 at page 21.

PN420

JUSTICE GIUDICE: Thank you.

PN421

MR MCNALLY: The second preliminary point that I would refer to before going to the submissions, the written submissions, which I don't propose reading, the Commission will be happy to know, is this, that there was an application to vary MISA by these two appellants, being the respondent to an award and having every right to do that, but side by side with that, of course, is the notification under section 99 of an industrial issue dispute served by an employer. Of course, any award that would be made based upon that notification of dispute couldn't have effect upon any non-member of the union upon which it was served and for that reason, we've included in our bundle of documents at 21 the graziers' case, R v The Graziers' Association, whatever it is, of many years ago.

PN422

Where that leads us I am not sure. I don't intend to read the decision. It's often referred to and seldom read, so what the Commissioner was confronted with in the sense that there was a lot of material gone through, we were all in a bit of a hurry to get it finished, was this. He knew and recognised that the pre-reform Workplace Relations Act or the Workplace Relations Act in pre-reform condition contemplated in several areas, but overall contemplated that safety net awards would be put in place upon which would be built agreements of sorts and kinds selected by those participating in a place of employment or part of a place of employment.

PN423

That's the starting point of the exercise that the Commission was asked to undertake and at paragraph 22, the Commissioner recognised that. At paragraph 22 of the decision he points out that the applicants for the award recognised that, that there had to be an award in place and let there be no doubt that the application that was before the Commissioner was an application to be exempted from the provision of MISA and to have substituted in the place of MISA an award which they based upon - to a large extent based upon an award that was a consent award in an unrelated industry. The real decision of the Commission is to be found at 27 and 28 of his decision or a summary of it in any event. At 27:

PN424

Consequently, I have decided that while a case has been made out that MISA does not provide an appropriate award for CSL Australia and INCO and possibly the rest of the industry, there's been insufficient case made out for the making of the proposed award or annexures to MISA.

PN425

The Commissioner recognised that he had an obligation to put in place an award if he was to vary MISA or exclude MISA. He goes on:

PN426

Given Work Choices, I do not propose to now proceed on a futile quest to develop an appropriate alternative instrument. In so doing, I have been reinforced by the fact that the evidence from the respondents is that there is no immediate desire to utilise such new award and therefore will suffer no prejudice for the time being.

PN427

Now, all of those matters that he decides, that is that MISA is an inappropriate award for those two companies and possibly the industry, that the award proposed is inappropriate for the industry and that he did not have sufficient time or otherwise because of Work Choices, he could not commence the exercise of putting in place an alternative award instrument. All of those decisions, all of those decisions, each of those decisions is a discretionary decision and, of course, we have devoted some time, quoted the usual authorities for the proposition of leave to appeal and the granting of appeals and the restrictions referred to in the various authorities that we refer to in the case of discretionary decisions.

PN428

Now, to give an example, someone may have decided to endeavour, despite what the Full Bench has said in the National Wage decision, to attempt to put in place an award in the hope that Work Choices didn't come in to defeat the exercise, but in his discretion, that's the decision he arrived at. Now, what's happened since that, of course, is there's an appeal on. As I understand it, the only grounds for the granting of leave relied upon is the fact that the Commissioner found an award to be inappropriate and then didn't proceed to revoke it in relation at least to those respondents.

PN429

There's no specific power in the Act or the Regulations as they then exist dealing with those Regulations. That was a discretionary decision that the Commissioner made and at the forefront of the exercise of his discretion in that way was the facts that the award had no real application to one applicant now or probably never and to the other applicant down the track some time. The submissions that we made to the Commissioner are contained in the bundle of documents at tab 26, if I could just briefly go to those without reading too much of them. There's two bundles in 26. It's the second document. The first one is the AMOU.

PN430

In the first four or five pages, we outline to the Commissioner and relied heavily upon the suggestion that he shouldn't proceed to deal with the matter because of the forthcoming introduction, almost immediate introduction of Work Choices, so that was very much in his mind following upon those submissions and the submissions then go on, attaching two schedules, one of which deals with general matters and the other deals with the comment in schedule B on each clause of the application that was made and we produced for the Commission's convenience and pursuant to directions written submissions.

PN431

The first few paragraphs deal with the leave to appeal issue and it is our submission that leave to appeal should not be granted and in paragraph 12 we deal with the appeal itself, 12 through to 21. I have dealt with 12 and 13 already. At 14 we draw to the attention of the Commission that the award relied upon, the Telco award I've called it, the base award if you like, was largely based upon consent and it was entirely a consent award except in respect of redundancy, the operative date, whether two awards should be made or not and that the discretionary decision to reject it had that starting point and the Commission was being asked to replace an award which had a long history of development and I will come to that and application to the Australian maritime industry with a consent award recently made in respect to the totally unrelated industry.

PN432

He found that proposition had serious shortcomings and in his discretion, he rejected it. He concluded that the imminent introduction of Work Choices prevented the Commission from an industry view of MISA and to proceed to invite a more thorough process of wages and conditions setting for the applicants. There could be no doubt that this conclusion is correct, as the Work Choices legislation became operative 14 days later. We refer to the principles in House v The King and then at page 8 of the submissions at clause 22, we deal specifically with the position of ISM and CSL in relation to the way they engage the maritime employees.

PN433

We point out that CSL - the point has already been made, hasn't got any employees, is not respondent to the award, except the Stadacona. We refer to evidence of Mr Sorensen at footnote 18. I won't go to it, but he didn't really have much to say about the way MISA would be implemented and at 28 we commence to deal with INCO. It does employ maritime employees on the Iron Chieftain and the ANL Bass Trader, both of which are involved in the constitutional trade and commerce covered by the then Workplace Relations Act section 5 which has disappeared from the scene and as my friend pointed out this morning, the Iron Chieftain was owned by BHP Ltd and for many years was used to transport iron ore from Whyalla to Port Kembla and coal from Port Kembla to Whyalla.

PN434

In conjunction with BHPs enterprise, it was sold to One Steel or after One Steel, it was hived off from BHP, the ship was sold to CSL and there's a long-term contract with One Steel to continue the transportation of coal and iron ore product. Bass Trader is owned by ANL which is now an overseas enterprise and is engaged in the Bass Strait trade. The crews of both ships have worked under Australian Maritime Industry Award conditions for many years and since 1999 under MISA.

PN435

INCO employ the crews on the Portland the Lindsay Clark pursuant to ship management contract with Alcoa, the mining company, which owns the ships. INCO is about to lose that management contract. A new ship management agreement was to be signed today, I understand, but the hiccup came as to the owner of the ship, registered owner of the ship. The new ship management, ASP Ship Management Pty Ltd, is now in the process of being appointed to replace INCO and a new manager is a respondent to MISA.

PN436

The other ship mentioned, the Walner, is not engaged in the trade and commerce. It delivers the product in the Gulf of Carpentaria area from shore to ships, but has too deep a keel to come into shore and then we set out this morning the various certified agreements that are in place involving the three maritime unions. There was one recently cancelled by Commissioner Lawson which involved the Australian Institute of Marine and Power Engineers. That was cancelled as part of the process of entering into a new certified agreement with the new ship managers of Portland and the Lindsay Clark.

PN437

A reference is given to the transcript where Mr Ives indicated that the AWAs would be reviewed when the existing ones expired and the conclusion that we invite the Commission to come to is that it's more probable than not, paragraph 37, more probable than not that maritime employees who are employed by INCO will not be required to work under award conditions, at least not before MISA is rationalised as required by the WRA. The condition will be regulated by existing pre-reform certified agreements and pre-reform AWAs until 2008 in the Bass Strait and the end of 2006 on the Iron Chieftain when those arrangements will be replaced by workplace agreements measured against the Australian Fair Pay Commission standards and we conclude that the award - we submit that the award is really of academic relevance to INCO and the maritime employees.

PN438

Now, we're able to say that the Maritime Union and the Australian Institute of Marine and Power Engineers did make written submissions to the task force and did appear before the chairman of the task force at his invitation in Sydney and outlined and supported a strong submission and we now have some confidence that it will be accepted and recommended, that this maritime industry so far as award review, the award review process, should be dealt with as a separate entity, not in conjunction with the transport industry or the New Zealand groups as it was suggested would be relevant and that's in our submission the appropriate vehicle that MISA should be reviewed having regard to the 15 allowable matters where we will attempt to persuade whatever Full Bench of the Commission presides that our leave provisions - there's not much chance I would imagine of saving the salaries because they have to be stressed as an hourly rate, but, of course, penalty rates will be matters that will be dealt with at that time.

PN439

Since the Commission commenced making awards in the maritime industry after the second world war, back in 1955, which I will come to, the maritime industry has always gone its own way in terms of award regulation. Over a period of years, salaries have been introduced and built up and the leave factor has been introduced and built up. They work side by side, no double counting involved.

PN440

SENIOR DEPUTY PRESIDENT LACY: Is there any other area of industry where you have the same sort of leave arrangements?

PN441

MR MCNALLY: Well, generally in the maritime area, for example, your Honour will be aware in the oil area, there's these provisions. I'm not involved in industries that have similar provisions, so I can't really say no, but - - -

PN442

SENIOR DEPUTY PRESIDENT LACY: But oil and gas exploration?

PN443

MR MCNALLY: Yes.

PN444

JUSTICE GIUDICE: Presumably there'd be supply vessels?

PN445

MR MCNALLY: Yes.

PN446

JUSTICE GIUDICE: How are they governed? Do you know?

PN447

MR MCNALLY: They're governed by award and certified agreement.

PN448

JUSTICE GIUDICE: Do they follow similar arrangements to MISA?

PN449

MR MCNALLY: Yes, your Honour. There's a list of this information, if I could just identify where it is.

PN450

JUSTICE GIUDICE: Yes.

PN451

MR MCNALLY: Some of the leave factors are bigger, some smaller. We can give that reference a little later on.

PN452

JUSTICE GIUDICE: Yes. Thank you.

PN453

MR MCNALLY: It's in one of the written submissions. If that's needed, we could deliver a note to - we've just discovered it's in the other appeal that was knocked out on a technicality, if you like. We could supply that information.

PN454

JUSTICE GIUDICE: I am not sure we really want new information. If it's somewhere in these proceedings, it would be useful to have, but otherwise probably what you've said is sufficient. We've got some indication. I suppose the fact that there are even time rosters in offshore operations and some mining operations is pretty well known. Exactly what the relevant comparisons are is a different issue.

PN455

MR MCNALLY: Yes. The reference that I was thinking of was in the MUA/AIMPE submissions in their application to cover the Stadacona and the CSL Pacific and it's in paragraph 22.2 of those submissions and I'm able to say that there's leave factors in 10 other awards. Sorry, they are in these proceedings. It's tab 26 which are our written submissions below at paragraph 22.2. The Commission will see there the various awards, the sea pilot area, the rescue vessel area, tugboat industry area, self propelled, et cetera, the leave factor that is involved and the relevant clause to the award, so there are leave factors in other awards in other parts of the industry.

PN456

JUSTICE GIUDICE: Thank you.

PN457

MR MCNALLY: If I could return to the submissions, at 39, commence to deal with the application made on behalf of - the application for an award made on behalf of the appellants. At 40 we point out that the appellants were well aware that it was not the case that all they needed to do was to demonstrate that MISA was inappropriate. That position was made clear to the representatives by the Commissioner during the hearing. It was there referred to transcript of the hearing of 20 December 2005 where the Commissioner had to say what is set out in the submissions and in the second paragraph he points out:

PN458

The onus is upon you and I'm sure you know, Mr Hatcher, that it's not sufficient to rely on other awards of the Commission.

PN459

And Mr Hatcher accepted that position. In short, what the Commissioner is saying is it's not sufficient to point to deficiencies in MISA, to point to another award and say this is what we want and in the exercise of the Commissioner's decision at the end of the day, he concluded that that onus hadn't been discharged. I don't propose to read to the Commission what we have to say in paragraphs 41 through to 61, but leave it for the Commission's consideration of those paragraphs.

PN460

They deal with the finding of the Commissioner that the award as applied to it had shortcomings and he gave as an example of those shortcomings and they weren't the only shortcomings four areas that he dealt with in his decision, but then I wanted to come to paragraph 62 and the Commission will be well aware that the Commission as presently constituted found that by reason of the operation of Chapter 7, Regulation 4.4, the appeal by the union, this is against the decision of the Commissioner where he found that MISA was inappropriate, was never dealt with on its merits because the opportunity to do so was defeated by the Work Choices legislation, but nevertheless, we have some comments to make in view of the comments that my friend made relating to the inappropriateness of MISA in paragraphs 63 to 70 of his written submissions.

PN461

It's been said and I say it again that MISA was a paid rates award up until the minimum rates adjustments took place and that process has been outlined today and is outlined in the affidavit of Mr Umansky which is referred to in the footnote and then in 65 we set out the process that was undertaken to convert the paid rates in MISA to minimum rates required by the Full Bench decision and as required by the WROLA Act.

PN462

The first step that was taken, 65.1, is that a key classification was selected. The classification was that of the integrated rating which is the seaman in the smaller of the vessels and it was argued that that classification would be awarded at 107.5 per cent of the C10 engineer technician level 1 fitter of the Metal, Engineering and Associated Industries Award 1998. The hourly rate for the fitter than was $12.24. The relativity of the integrated rating of the C10 could be split into two components, 97.5 per cent for skill and competency and 10 per cent for the nature of the industry.

PN463

The Commission accepted that maritime employees work 27 weeks of the year and the quantum of annual salary was the amount earned in that period spread over a 12 month period. In other words, what you earned in the 27 weeks is divided into if paid weekly, 52 units, if paid fortnightly, 26, and that was what you were paid during the course of the year, so looked at in the concept of a minimum rates award, there was no pay on leave and as someone said this morning, the exercise was undertaken because of the requirements to strip back, if you like, awards to minimum rates.

PN464

What had happened prior to that is, of course, there were salaries in place which I'll come to since 1976. They were reviewed from time to time, the annual salaries were reviewed from time to time having regard to whatever exercise had then been undertaken, but because of the requirements of the WROLA Act, the Full Bench decision, they were stripped back by this process. The Commission accepted further that as the award had no overtime provision, that there should be an assigned value of overtime and that was the two hours that Mr Hatcher referred to this morning, worked during the 27 week period and that overtime should be paid at double time, as Mr Hatcher pointed out. That was the seven day shift worker overtime penalty rate in the metal award and then pre-existing relativities were maintained for all the other classifications. The development of the leave factor goes back to 1995 in a decision by his Honour, Foster J.

PN465

SENIOR DEPUTY PRESIDENT LACY: 1955, is it, or 1995?

PN466

MR MCNALLY: 1955, paragraph 67, and that was over at page 19, the judge points out that:

PN467

The then existing award was made in 1955 which was the first award since the Dethridge award of 1935 and in that 1955 award -

PN468

in the second paragraph -

PN469

important changes were made.

PN470

What the judge there did was that he provided for high penalty rates for weekends when a ship was in port with the object of the seafarers enjoying time off the ship. He says in his decision that was an experiment and his Honour concluded that the experiment failed because those owning the ship or operating the ship elected to pay the overtime rather than to give the time off. In the final paragraph on page 19:

PN471

Since the above indirect approach failed to secure Seaman's Union members the actual leave to which they felt entitled -

PN472

and we would say strongly pressed for -

PN473

The present award proceeds in a completely direct manner and by specific provision declares the leave entitlement of each seaman and clause 34 works out the method and procedure by which it is to be achieved. My approach has following the decision of the Full Bench and the eight principles set out above -

PN474

they're not set out in that decision, but if you go to the decision in tab 15, you'll see that the matter had been referred to the Full Bench and eight principles were set out as to how his Honour was to deal - the principles to be applied by his Honour in dealing with it:

PN475

My approach has, following the decision of the Full Bench in its eight principles set out above, been to ...(reads)... he will be able to now enjoy the leave, he cannot and should not expect to be also paid for it.

PN476

So that when the concept of leave for seafarers was introduced in 1955, it was contemplated that it wouldn't be paid for and nothing has happened since to change that circumstance. Those periods of leave, of course, were made when standards hours were longer, there was less public holidays and annual leave was two weeks per year. In 1972/73 there was extensive conferences and hearings, a combination of conferences and hearings conducted by his Honour, Ludeke J, aimed at producing the first industry award.

PN477

The unions had certain claims that they were pressing during the course of those negotiations. They wanted to increase the period of leave. They were claiming a 35 hour week. They were claiming a two crew system, one on, one off and they were claiming 26 weeks leave a year. The employees had other concerns set out in 72 and in 72 we point out that after extensive negotiations, with considerable assistance from his Honour, agreement was finally reached on all the employer's claims it should be, were met and the leave factor at point 7.3.3 was agreed to.

PN478

The decision also sets out additional weeks' leave to accrue on the first anniversary of the award and the second week of leave to accrue on the second anniversary. The third and fourth weeks' leave was to be introduced subject to contingencies, namely the introduction generally of a 35 hour working week, which never happened and the addition of the fourth week of annual leave in the industry generally which did happen.

PN479

There's been an industry award in place ever since then, 1973, and the footnote sets out the references to decisions. An important process was undertaken by Deputy President McKenzie in 1981 and that's dealt with in paragraph 75. He endorsed a consent agreement of the parties for a leave factor of point 857 from the date of making the award and point 926 from 4 May 1982. The conditions referred to are set out in the settlement document which is found at AB111 in the appeal book and the terms of settlement commenced by pointing out that the terms of settlement are in full satisfaction, settlement of all claims by employers against the Maritime Union and each of them and by the Maritime Union against the employers in the industry.

PN480

They are in full settlement of all union claims for a 35 hour week for increases in leave, including the two crew system, a leave accrual rate of one day of leave for each day of duty and/or one day on and one day off system, sick leave, compassionate leave, maternity leave, paternity leave and all other claims made by the union in these disputes unless otherwise indicated within the terms, so that what transpired was that all those outstanding claims that the unions had been pressing were put aside, not granted, but not to be further claimed in exchange for the settlement that is set out in those terms of settlement and part of that settlement, of course, was the leave factor which was to become the current leave factor as from 4 May 1982, so leave was granted in the first place as unpaid leave, leave was extended or increased by agreement in the proceedings before his Honour, Ludeke J, and by agreement in the proceedings before Deputy President McKenzie, when on that occasion it was increased to point 926 because a lot of other claims as listed in the terms of settlement were abandoned.

PN481

Now, we had some difficulty in the decision of the Commissioner, in our application to cover the Stadacona and the CSL Pacific and we appeal for it. I don't want to go any further into the reasons that we would have advanced in that appeal, but we say this in 77:

PN482

The industry leave provisions should not be interfered with. Over a period of nearly 30 years of arbitration and ...(reads)... crews. That has always been the case and there's been no change in that circumstance.

PN483

Nevertheless, the Commissioner for the purposes of this appeal did conclude that the leave provisions among other provisions, the salary provisions, were inappropriate for these two companies. That was a discretionary decision he arrived at which we don't support, but for the purposes of this appeal, it was arrived at. In his discretion, the Commissioner dismissed the application for the award provision and in his discretion, he found that he had insufficient time to do a more detailed study of the industry to put in place a more appropriate award.

PN484

Of course, had he undertaken that process, we would have had a lot more to say about MISA and the way it was developed. If the Commission pleases, we submit that leave to appeal should not be granted. If leave to appeal is granted, it should be dismissed at least on the basis that these discretionary decisions were properly arrived at and the Commission should not substitute its discretionary decision on that basis. If the Commission pleases.

PN485

JUSTICE GIUDICE: Thank you, Mr McNally. Mr Hatcher.

PN486

MR HATCHER: May it please the Commission. I don't want to put it too highly, but he's referred at the start of his submissions to a proposition that CSL is not a respondent to the award except in relation to the Stadacona and ISM consented at some historical point as a party to the Maritime Industry Seagoing Award. Can I firstly point out that the way in which the proceedings commenced, that is the capacity of our clients to bring the proceedings that were brought was the subject of a decision by the Commission, Commissioner Raffaelli, from which there was no appeal.

PN487

It might be accepted that that decision merges in this decision, but if it's put against us that we lack standing to prosecute the award, in our respectful submission, involving as it inevitably does a direct challenge to the Commissioner's decision, we would at the very least have been entitled to be put on notice by way of a notice of contention that that was to be argued. I am not even sure it is argued, but there just seemed to be that hint to our friend's submissions. We say it's not open to them to launch a direct challenge on the Commissioner's decision without facing up to that which they do.

PN488

JUSTICE GIUDICE: I may have provoked it, Mr Hatcher, by asking about CSLs status or relationship to the award, but, anyway, I understand the submission.

PN489

MR HATCHER: I simply seek to overcome the suggestion.

PN490

JUSTICE GIUDICE: Yes.

PN491

MR HATCHER: To the extent that there is some reliance upon what is said to be ISMs consent and can I say that on my instructions, ISM at the relevant time in respect to those proceedings didn't in the ultimate consent, but acquiesced. I don't know that a great deal turns on that, but they are my instructions.

PN492

JUSTICE GIUDICE: Was this something that was ventilated or discussed or the subject of submissions before the Commissioner?

PN493

MR HATCHER: There was a consent position put by Mr Umansky, that is Mr Umansky prepared a schedule that was agreed in by the union and that was put before Commissioner Wilkes.

PN494

JUSTICE GIUDICE: No, but was the - was ISMs position something that was the subject of submissions before Commissioner Raffaelli?

PN495

MR HATCHER: No, it wasn't, your Honour. In any event, to the extent that anything could be drawn from that, I would have thought in our respectful submission that the submissions we put earlier today about the history cast a particular light on everything that went before. At a point in time, this was a very cosy little industry to practice in. It was protected.

PN496

JUSTICE GIUDICE: It wasn't the only one.

PN497

MR HATCHER: It wasn't the only one, quite, your Honour, it wasn't the only one at all, but it lasted a lot longer than most and by the end of its period, the economic realities that were starting to bite weren't just the overall realities of global trade in relation to providing seagoing services, but the impact on those people who would trade in the area and there was a good deal of evidence about this before Commissioner Raffaelli as well.

PN498

One of the principal products our client carries is cement. Now, the economics of carrying large quantities of cement around the country are such that it is so marginal that it becomes cheaper if the shipping costs are sufficient to simply purchase the cement in Indonesia and put it on an international vessel in Indonesia and land it direct into Sydney than to cart it around the Australian coast, so our client's customers are exposed to direct import competition.

PN499

That's one of the factors that impacts on the pricing and the costs of the industry and was impacting more at the time cabotage opened up, yet if one is to have regard to the express reasons for opening up cabotage, that again were the subject of evidence before the Commission is one of the things that moved the government to ease up on the cabotage, to relax the rules, so whatever may have been the results of consent previously, they clearly don't apply any more.

PN500

JUSTICE GIUDICE: Before you go to your next point, Mr Hatcher, something I should have asked earlier, but I didn't and this is in the context where the Commissioner was it seems at some points to have been contemplating an industry wide examination, does the evidence indicate how many vessels are actually covered by MISA?

PN501

MR HATCHER: Your Honour, I think the evidence was it was something like 20. I am hearing 35 from my right. Their recollection is different. It's certainly in the materials before the Commission. There was some discussion.

PN502

JUSTICE GIUDICE: Yes. Thank you.

PN503

MR HATCHER: And I think the evidence disclosed that only a matter of 20 years ago, it was in excess of 100 which is the genesis of my earlier submission that this is a rapidly diminishing industry. Can I before I come to conclude go to paragraph 76 of my learned friend's submissions, page 21? It really highlights exactly what the Commissioner found. In particular, this is dealing with the leave factor, it is in settlement of all union claims for a 35 hour week for increases in leave, including the two crew system, a leave accrual rate of one day of leave for each day of duty and a one on or one off duty system, sick leave, compassionate leave, maternity leave, paternity leave, so seafarers don't get paternity leave? I can understand why they may have given away maternity leave, although less so these days.

PN504

The fact is they get parental leave as they must. It's one of those Full Bench test case standards. They get sick leave. If they're sick, they're released, but this gives it to them whether they're sick or not. It gives them an additional day of leave. It gives them an additional day of leave, an additional three days presumably, but leave for bereavement, whether anyone has died or not. That is one of - it betrays its history as an agreement, rather than an award and if one has regard to the evidence of Ms Jewell, the number of times this award was reviewed in the context of industrial action, there's a lot to say about the genesis of provisions such as that, but the most important point in our respectful submission and the greatest cause for our complaint is that these submissions that our friends put in these proceedings on appeal about how MISA is appropriate and it's something that ought continue to bind our client simply belie the learned Commissioner's findings.

PN505

Our friend says as a matter of discretion, the Commissioner may have found that MISA was appropriate. Of course he could have. He didn't. He made express findings, he came to express conclusions. One of those is that MISA provisions going to leave and annualised salaries are not provisions that accord with Commission principles or standards. Given the intrinsic nature of the leave and annualised salary to MISA, the entire application of that instrument must be brought into question. That is the finding. There's no discretion thereafter in our respectful submission. When he concludes at paragraph 27:

PN506

I have decided that while a case has been made out that MISA does not provide an appropriate award for CSL and INCO and possibly the rest of the industry -

PN507

he's indicating a conclusion and it's a conclusion in our respectful submission that leads to legal results, not discretionary results. It results in a duty to exclude our client from the operation of the award. Now, a discretionary question certainly arises as to what the next step we say in the proper exercise of discretion, the next step was to proceed to make an award and we've put the submissions about the propriety of the award that he urged, but at that point, when the Commissioner found as he did that MISA was inappropriate in that it did not accord with Commission standards and principles, in our respectful submission, there was a duty on him to exclude our client from its operation and there was a duty that he fully comprehended to consider whether anyone else should continue to be bound by that instrument. May it please the Commission, we urge that leave to appeal be granted, that the appeal be granted and that the Commission proceed to exempt our clients from the operation of MISA and proceed to make a new instrument to regulate the operations of our client.

PN508

MR MCNALLY: Your Honour, might I deal with your Honour's question?

PN509

JUSTICE GIUDICE: Yes.

PN510

MR MCNALLY: Might I remind my friend and inform your Honours and Commissioner that the question of the consent of ISM was raised in the proceedings before Commissioner Raffaelli. It's in the transcript, but the most convenient way to refer to it is tab 26 contains the submissions of the AMOU and the submissions on behalf of Mr Crawshaw and the submissions by myself and Mr Keats on behalf of the MUA and AIMPE. At 42 of the written submissions of the AMOU, it's stated:

PN511

Mr Umansky gave evidence that Mr Brecht of ISM participated in the employer working group for the proceedings before Commissioner Wilkes, exhibit INCO4, paragraph 11 and 26 -

PN512

to which I referred and in the submissions on behalf of my clients at paragraph 20, the terms and conditions had been endorsed by the Commissioner. Alternatively, INCO were separately represented before the Commissioner in proceedings C00107 of 1998 and did not appeal the decision of the Commissioner to endorse the consent position of the parties and then a reference is given and it's submitted that the Commission should not now countenance an application by INCO that MISA does not contain properly set provisions. That was an issue.

PN513

MR HATCHER: We rely on exactly those passages that my friend has just gone to to support the proposition that there is no evidence that INCO ever consented, neither was it an issue before the Commission.

PN514

JUSTICE GIUDICE: But it did acquiesce.

PN515

MR HATCHER: We conceded that.

PN516

JUSTICE GIUDICE: But, anyway, you say things have changed since 1991 or whenever it was.

PN517

MR HATCHER: Yes. Well, 55 if one goes back.

PN518

JUSTICE GIUDICE: But Commissioner Wilkes - 98.

PN519

MR HATCHER: The danger of sitting down is that one's learned junior is able to remind one of something that ought to have fallen from me before my friend rose again. That is simply this. The last thing my learned friend said when he sat down was there's a lot more we would have to say about the award if it were to come to that. In our respectful submission, the submissions we earlier put remain apt. We had put before the Commission comprehensive application for award provisions. The unions chose to run a case that said MISA or nothing and an all or nothing submission has its consequences.

PN520

JUSTICE GIUDICE: Very well, thank you for your submissions, gentlemen. They've been very helpful and concise and we shall reserve our decision.

<ADJOURNED INDEFINITELY [3.09PM]