C2006/4034, Transcript of Proceedings [2007] AIRCTrans 106 (13 March 2007)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 16565-1

JUSTICE GIUDICE, PRESIDENT
SENIOR DEPUTY PRESIDENT LACY
COMMISSIONER GAY

C2006/4034 C2006/4065

APPEAL BY TELSTRA CORPORATION LIMITED
s.120 - Appeal to Full Bench
(C2006/4034)

APPEAL BY THE CEPU
s.120 - Appeal to Full Bench
(C2006/4065)

MELBOURNE

10.05AM, WEDNESDAY, 28 FEBRUARY 2007

Hearing continuing

PN1

MR J WEST: I appear with my learned friend, MR S WOOD, for the Telstra Corporation Limited.

PN2

MR R REITANO: I seek leave to appear for the CEPU.

PN3

MR WEST: Your Honour, this is an application for leave to appeal and appeal by the Telstra Corporation Limited with respect to a decision and order made by Commissioner Smith.

PN4

JUSTICE GIUDICE: Why do you say they're orders?

PN5

MR WEST: They would be orders at common law no matter what, a directive that Telstra reinstate a number of people and on the authority of The Queen v Director of Brasnose College they would be - - -

PN6

JUSTICE GIUDICE: Are we going to come to that point?

PN7

MR WEST: I'm going go cover the point in any event.

PN8

JUSTICE GIUDICE: Yes. Well, deal with it in due course.

PN9

MR WEST: What I would like to do, your Honour, is to briefly explain how we want to present this appeal and then go to briefly, if I can, some of the factual material, not too much, because we have in written submissions attempted to set out in what we submit is a fairly uncontroversial way the relevant factual material which led to Commissioner Smith coming to this matter as we contend a private arbitrator exercising a function which has been described by the High Court in very careful terms.

PN10

Now, your Honours, what we submit would be useful is if firstly I can hand your Honours, at the risk of increasing the amount of paper on that side of the bar table, a chronology which highlights the key dates and which I would just like to use as an aid memoire. Your Honours, what we've attempted to do here is to highlight the key dates in these events. This chronology really is a somewhat shortened version of what appears in the recounting of the chronological facts in the written submissions and with the aid of a few brief references to the appeal books which I would ask your Honours, if your Honours would be so kind, just to note in the right hand column or right hand space of the chronology, to act as a quick way through the material so as to indicate what was happening and why and it presages a submission which we'll be putting at the end of this case that if one thing is clear here, there was consultation here by the bucket load and that what has happened, for reasons which are not readily apparent, is that the Commissioner has instructed himself in a way in which the factual material do not permit so as to come to the view that Telstra's consultation process miscarried because of some apparent structural deficiencies inherent in the way Telstra's corporate business is conducted with the corporation.

PN11

We say that not only was he simply wrong to have gone and considered such matters, but even if he did, the consideration he gave, as is apparent from the reasoning process, is flawed quite fatally and the conclusions which he reached simply do not flow from any of the premises that he set out and that what the Commissioner then did was impermissibly, in our respectful submission, to make orders changing the legal relationships of the parties from what they were to something that they weren't. Namely, he ordered reinstatement of three of the four ex employees and in our respectful submission, for reasons which we'll come to in some detail, the Commissioner did not have that jurisdiction.

PN12

Now, your Honours, what briefly this appeal concerns, so far as the facts are involved, is a change within Telstra's administrative and functional structure concerning certain designers who carried out a function between the - in the link of telephonic communications - between the customer and the networks as a result of a review which Telstra had conducted which found that this function was in fact not required. That resulted in some 90-odd persons employed by Telstra who were so affected and whose jobs were to disappear. Of the 92 only four caused proceedings to be brought in the Commission, and three of the four were ordered to be reinstated. Everybody else has been accommodated one way or the other, either gone or been found other employment.

PN13

Now, the detail of what was involved in the work is in the written submissions at page 16 and following. In the section headed number 9 Telstra, Telstra Operations, Telstra Services and Service Delivery East.

PN14

JUSTICE GIUDICE: Is this the recently filed submissions?

PN15

MR WEST: Yes, your Honour, it is. I take the Commission to 9.4, the functional operation of Service Delivery East within which the four ex employees were to be found is set out. It's a division within Telstra which installs and maintains a network for Queensland and New South Wales and each of the four was located within New South Wales. In section 10, the nature of what's called CAN Provisioning, which is the functional area within Telstra where this particular work task was located, is explained and I won't read that out. There are two paragraphs dealing with that.

PN16

If I can take the Commission down then to paragraph 11 or section 11, at 11.2 it's explained prior to the changes the number of employees employed in Canned Provisioning in Service Delivery East, and then at 11.3 is a reference to the point I made a little moment ago, 92, what we'll call the designer functions, were to go, and briefly that was because the work function which was carried out was found to be unnecessary. Now, in 11.4 and 11.5 is identified precisely where the designers were, not only in New South Wales, but also those in Queensland and particulars are given of the four, the subject of these proceedings, two having worked previously in Coffs Harbour at a place called Toormina, one in Albury and one in Leighton.

PN17

Just pause there. In summary our case was and, as will be apparent to the Commission on reading this material, remains that what had happened here was that once Telstra had completed the study in which the recommendations for reformation were made clear, informed the union within days, within two or three days. Consequently the union sought to have discussions with Telstra and Telstra met with the union on numerous occasions detailed in the written submissions. It emerged after Telstra had commenced this process that it was found that in respect of Coffs Harbour, where two of these employees were located, one other aspect of Telstra's operations where persons of similar ilk were employed, the number was being increased. So that they were hiring more people and in fact had, by the time of this review, virtually completed that process. It started before anything to do with this review.

PN18

That sparked off a further round of engagement and discussions with Telstra that how could it be that at the one location they were reducing certain numbers of hands but increasing others. That led to a claim by the union, wrong as it turned out, that the notifications given to the employees, the form As, which informed them of the forthcoming redundancies were in accurate and the union sought to have them withdrawn. The company said, well, we'll talk to you anyway. Further negotiations were offered by the company with the union and that offer was not taken up.

PN19

The employees then lodged standard form complaints about consultation, and I'll take you to those, and after some discussion and before the agreements consultation phases had been completely worked through, there was no further mention by anybody of the position of these four men and as a result we make the point that even before the consultation period had come to its end under the agreement, this issue about the four men had gone away. In any event, they were terminated on or about 19 October in accordance with the notices that they had been given.

PN20

By the time this matter came before Commissioner Smith, those persons were no longer employees of the company which grounds a further submission that there was no jurisdiction on that basis because they were persons then covered by the agreement and that submission is aided by the contention that the decision in ING, which is referred to, is wrong, and the information which we included in the submissions that ING is now the subject of prerogative relief in the Federal Court having been taken to the High Court and then remitted.

PN21

So that that one probably lives to fight another day, and accordingly we wish to only put submissions formally in relation to ING, accepting that this Commission would take the view of the recent Full Bench decision on similar facts which would be treated similarly. Now, in section 12 of the written submission we said - - -

PN22

JUSTICE GIUDICE: I don't know if this is an appropriate time to ask this question, Mr West, but was there a form of order specified or a form of relief specified by the union in the proceedings?

PN23

MR WEST: Yes, there was.

PN24

JUSTICE GIUDICE: I know that there was certainly draft orders in relation to the interim relief that was sought.

PN25

MR WEST: Yes. Subsequently the orders were truncated and very substantially so, and I'll take your Honours to that now.

PN26

JUSTICE GIUDICE: Thank you.

PN27

MR WEST: Appeal book 891, 895 of the draft orders. Your Honour, annexure to the outline of contentions of the CEPU of final - and they seek reinstatement.

PN28

JUSTICE GIUDICE: That's volume 2 of the appeal book, is it?

PN29

MR WEST: I'm sorry, it's 1 and 2 of the appeal book, your Honour, yes, page 895.

PN30

JUSTICE GIUDICE: Thanks.

PN31

MR WEST: That's the relief that was sought, your Honour.

PN32

JUSTICE GIUDICE: Yes. Elegant simplicity.

PN33

MR WEST: I'm sorry, your Honour?

PN34

JUSTICE GIUDICE: Elegant simplicity.

PN35

MR WEST: Elegant simplicity, powerful in its core, and in our respectful submission it should have pressed red lights. So, your Honours, that's the relief that was sought by the union for final relief from the Commissioner and the Commissioner awarded it with respect to three of the four. Mr Griffith was not successful. Now, your Honours, may I just then go to - stay with the appeal book, I'm sorry for its bulk, but I will be predominantly, if not entirely, yes, almost entirely referring to volume 2 of the appeal book and what I'd like to do is give your Honours a somewhat, I hope, efficient trip through the papers.

PN36

Just so that your Honours see the context of this, and it will help flesh out what might not necessarily be perceived on the first reading of what was going on here. Page 585 of volume 2 of the appeal book is relevant for these facts. Evidence is given, and this is not controversial, by Ms Wagner who was the senior human resources adviser of Telstra. In paragraph 18:

PN37

But I was aware that the review was completed on or about 18 August 2006.

PN38

So 18 August 2006 is a date which strictly should be written into that chronology just ahead of the 22nd because it really grounds the actions that thereafter happen.

PN39

She said that on 22 August she received two emails from Ms Ahearn, who is a senior HR, human relations officer of Telstra. In fact she was the manager of human relations, and in that role she had responsibility for human relations across, not only the Service Delivery East provision structure of Telstra, but also for Delivery Management, which was the other relevant section of Telstra which was the subject of attention because of the hiring going on in Toormina that I referred to a moment ago. So she had responsibility in both vertical columns.

PN40

So the email sets out at JW2, which appears at page 217. She's copied in on an email passing between Ms Ahearn and Mr Brown of - - -

PN41

JUSTICE GIUDICE: Just give a moment, Mr West. I've got a mechanical problem here. I seem to have a collapsed folder. I think it's going to be rather difficult. If there is another one, I'd appreciate it.

PN42

MR WEST: Yes. We'll raid our solicitor's copy, your Honour.

PN43

JUSTICE GIUDICE: I'll return this. It may be salvageable.

PN44

MR WEST: Usually, once they're damaged, they've had it.

PN45

JUSTICE GIUDICE: 601, was it?

PN46

MR WEST: 601. This is how she became aware of what was happening. She is copied in on to an email between Ms Ahearn and Mr Brown. Mr Brown was the manager of CAN Provisioning.

PN47

I've advised Colin Cooper of the CEPU of the outcomes of the CAN Provisioning review and advised him of the number of roles impacted nationally.

PN48

So that's the information to the union. That's the start of the union being consulted:

PN49

He will not communicate this information to State delegates until he's had a further discussion with you. I trust that there will be no communication, media provided no information from the other CEPU delegates prior to employee briefings at 2 to 3 today. ...(reads)... I'll provide Col with your direct number so he can liaise with you directly. I left a message -

PN50

et cetera, et cetera. So that's the start of her information and then she got an email at 8.37 pm which is the next one, Subject: FW - forward, rather, "CAN Provisioning review outcomes", which was forwarding an email Ms Ahearn received from Mr Brown formally announcing the outcomes of the review. Again, from Ahearn and sent here to officers of the union and to Judith Wagner, copying in the information about what has happened. Now, there's no issue about any of this. That's how the consultations kicked off.

PN51

At 755 in the appeal book volume 2 - - -

PN52

JUSTICE GIUDICE: When you say "union officials", workplace delegates, were they, or - - -

PN53

MR WEST: No, your Honour. They were included on that email - I'm sorry, that's not so. That's an internal one, I don't have to worry about that. The next step is at 755, here we have an affidavit of Rhonda Lee Taylor who was Manager, Newcastle in the State of New South Wales. She is the Customer Access Network CAN Provisioning Manager New South Wales. She says she was responsible for communicating the outcome of the review, that's the one that had completed on 22 August or 18 August, in the CAN Provisioning Group:

PN54

I conducted two face to face meetings in Newcastle with approximately 30 of the affected staff at that location on or about 22 August. On 22 August I also conducted a meeting of around 48 of the New South Wales out-posted employees by way of telephone hook-up and a net meeting ...(reads).... new structure of the CAN Provisioning business within the Service Delivery East and the employees that would be affected by the resume. A copy of the presentation slides is annexed and marked RT1.

PN55

And RT1 begins at appeal book page 762. I don't propose to track through all of this, but simply to show, if you go to 770, what was happening was that there was a consolidation of the areas from responsibility for the carrying out of this CAN Provisioning which would be reduced to five, being Toowoomba, Brisbane, Newcastle, Sydney and Launceston. We don't have to worry about Launceston. It was dealt with by the Service Delivery South which picked up Victoria, Tasmania, South Australia and Western Australia.

PN56

If one then goes over the page to 771, by 17 November Telstra was moving to put in place a new structure for these in the CAN Provisioning and relevantly that appears in the boxes across the bottom of the page, particularly the middle one and the right hand one as one looks at the page, one sees that the staff which are going to be - within which this, the CAN Provisioning work is done, called multi function staff, there'll be 67 of them in New South Wales, 42 of them in Newcastle, 25 in Sydney and in Brisbane there'd be 46, Toowoomba 23 and Launceston 24.

PN57

That was the way in which it was proposed. In order to get to that stage the 92 that I mentioned earlier, were to go and the functions would be no longer performed as a separate function. The CAN Provisioning operation would be, as it were, then dealt with by the non function staff at these five locations rather than the many locations which have hitherto carried out that work. Now, on 24 August the form As were sent out to the employees. Now, that one gets from page 802 of the appeal book - I'm sorry, to the union, I'm sorry. Form A identification, 802, the business unit concerned is Service Delivery East, CAN Provisioning.

PN58

The classification which applied to these designers was CFW5. The job title was Designer and the location of the positions which were going to be affected, and you see a total of 48 in New South Wales. Albury there were three and Mr Griffiths was part of that. Leeton, there was to be one. That was Mr Hammer, Godfried Hammer, and Toormina there were to be six and of the six two were relevantly Mr Commisari and Mr Burgess. So they're the four people, that's where they were located.

PN59

The first consultation meeting with the CEPU was at Parramatta and on 25 August, not the 26th as this printed document shows. Your Honours have a corrected one. Mine's the old one. 648, paragraph 35, this is an statement of Mr Brown who was then the manager of National Customer Access Network Provisioning within SDE and he tells us that on 25 August he had a meeting with representatives of the CEPU, including Mr Cooper, four New South Wales CEPU branch officials.

PN60

During the meeting he took them through the outcomes of the review and advised them that redundancies were pending, he did not most of the talking and talked him through a presentation pack at annexure BB2 and that's in the appeal book. The presentation pack is the same as the document that I took your Honours to a moment ago which had been the subject of the audio visual presentation.

PN61

Then in 36 he sets out what was said to him by one of the CEPU representatives. They had concerns with the 49 designs leading the business and the concern was expressed to be that Telstra wouldn't be able to provide good customer service and then there a reference to informing the media by one of the other officials and then there's a statement by Mr Chalker who was an official, about letting six people go at Coffs Harbour, "but your data centre in the same building is higher externally. Why can't they get those jobs?"

PN62

Now, this is the raising of this Toormina question, that it was claimed that at Toormina Telstra was hiring some people in a different part of the operation but letting the other six go and there was a claim that they should transfer across and Telstra said it wasn't going to do that, that the hiring arrangements had already been completed with respect to the hiring of those people they needed in the different division, and in any event, as one sees in an issue that was later raised about whether or not they were the right classifications, that the work being done in the other division was at a slightly higher level than was being done in the division in which the six were being let go.

PN63

But be that as it may, the hiring was something which was already taking place and the manager responsible for that operation was not prepared to do other than continue with what he'd set about doing. Now, at 649 - - -

PN64

COMMISSIONER GAY: Mr West, can I ask you, have all those positions that you've been referring to been filled at that time? You said the hirings were taking place?

PN65

MR WEST: Yes, they had taken place and there was a consultation within Telstra where the responsible officer for the delivery management section and it was discovered that in fact he'd started his own hiring within his own division before this other review had even been completed and the evidence was that by the time that this issue arose he already made arrangements to hire other people and that was that.

PN66

COMMISSIONER GAY: Yes. So is it right that all the positions that that person - you're referring to, Mr West, that the employment that he had in train had all been - the positions had been filled and people had been engaged?

PN67

MR WEST: I believe so. Can I take you to 588 of the appeal book in the statement of Ms Wagner. 588 is the completion of the description of what was happening in the Data Management Centre, the DM Centre and it emerges there that a number of candidates for the DM roles in paragraph (e), about the middle of the page, were interviewed on 4 August 2006:

PN68

(f) verbal offers of employment had been made to fill the nine roles in DM in Coffs Harbour on about 23 August 2006. The persons to whom offers had been made were currently working for external contractors that were performing work for Telstra in DM so that they were not off the street, there were no available roles because the nine roles had been filled.

PN69

SENIOR DEPUTY PRESIDENT LACY: Does the evidence show that they accepted the offers?

PN70

MR WEST: It doesn't go that far.

PN71

COMMISSIONER GAY: So there's no issue taken, Mr West, with the finding or the position, taken by the Commissioner at paragraph 43 of the decision? It says offers had been made for some positions and in some cases acceptance had taken place.

PN72

MR WEST: Yes. The offers were out, the offers were out and the employees and they were prepared to withdraw them. That's the logical consequence of it. They made offers to employ people. Some were accepted. Some obviously did later, but having made the offers to those people there were no other offers to make to anybody else. Now, when this matter was raised, that is the Toormina issue was raised, Mr Brown told Mr Chalker that he'd look into the issues and get back to him, which he did. He, Mr Brown, says on page 650 of the appeal book:

PN73

On about 6 October 2006 a meeting took place at the CEPU offices in Parramatta and Ms Wagner attended the meeting via telephone and I met with Mr Chalker, Mr Cooper, Mr Dodd and Mr Dwyer. During the meeting the union indicated that the meeting was a consultation...(reads)... The dispute process is not yet at that stage in relation to any of the employees who failed the dispute and we're happy to talk to you about any issues that you have.

PN74

Now, that raised the second issue in this case which is, how the individual employees became involved in this, how the four got involved. One can see from 649 that Telstra is made aware of the issue from Mr Chalker about what was happening with the people at Coffs Harbour, and on 1 September 2006 there's a communication from Telstra to the CEPU, which is at 572. It's probably convenient at this point to answer the Commissioner's question to me in perhaps a little more detail before we actually see what happened next.

PN75

At 30 and 31 August the chronology indicates that there were deliberations by Telstra re the Coffs Harbour question and I took you to 649. At 571 to 572 of the appeal book, in the statement of Ms Ahearn she explains what happened about this Coffs Harbour question when she was informed about it. She does that, tells of how she first becomes advised, in paragraph 15, and in 16 is where there were several other issues raised and then 17 she says that following that meeting:

PN76

I gathered information in an attempt to understand the work undertaken in the DM data centre, the capabilities of the designers to undertake a role in Data Centre and whether the designers would be interested in such roles. ...(reads)... and assess whether the people being made redundant could do the roles in DM. At 3.30 on 30 August I attended an internal meeting with a number of people from Telstra -

PN77

and she identifies who they were:

PN78

- including Mr Hatton, the Manager of the DM section. The issues raised by Mr Cooper at the meeting in particular options for mitigating the retrenchments were discussed and considered. ...(reads)... six designers to the data centre, the decision was not based on the fact that the designers might have been entitled to salary and maintenance in the new roles.

PN79

That is in fact because the people in the data centre doing this work were in fact being paid at a lower rate than were the designers and if they transferred over they would maintain their higher rate if that were available, so that wasn't an issue.

PN80

On the morning of 1 September -

PN81

paragraph 22:

PN82

- I telephoned Mr Cooper of the union to inform him of the decision and reasons outlined in the email of annexure JA3. I recall that he said words to the following effect ...(reads)... It's probably not the last you'll hear from Laurie Chalker.

PN83

Then she goes on to deal with what was thereafter said, but there's no doubt but that once it was raised with Telstra they examined the question of whether or not it was practicable, feasible to do anything else than what they were doing and the answer came back, no, it wasn't. So that the union is then told of that. 572 we've done. 579 - - -

PN84

JUSTICE GIUDICE: Just a moment, Mr West. Could I just ask you to explain something?

PN85

MR WEST: Yes.

PN86

JUSTICE GIUDICE: Paragraph 23 on 573, which is part of the discussion with Mr Cooper, I don't quite understand what the reference is to losing the 4500.

PN87

MR WEST: Right. For that, your Honours, I have to take you to the provisions of the Telstra agreement.

PN88

JUSTICE GIUDICE: Yes. I understand the salary maintenance issue. Is that what it is?

PN89

MR WEST: No, no, no.

PN90

JUSTICE GIUDICE: It's something else.

PN91

MR WEST: What happens is that under the Telstra agreement, when notification of redundancy is given there is a time line within which persons are given a training program for life after Telstra and the 4500 is a cash amount which persons leaving are given in order to carry out their own job preparation.

PN92

JUSTICE GIUDICE: Yes, I follow.

PN93

MR WEST: That's how it works.

PN94

JUSTICE GIUDICE: Yes. I thought that was a reference to salary maintenance.

PN95

MR WEST: No, your Honour, and in this case I can indicate this to the Commission, that each of the four people got their $4500 and left and no claim has made to be recover it or anything like that.

PN96

JUSTICE GIUDICE: Yes.

PN97

MR WEST: Yes, that's right. At page 872 of your Honours' appeal book there's a copy of the actual agreement, clause 7, the site function closures. This is the provision which was being initiated here by the information to the union of the functions which were to disappear. We start at 7.3:

PN98

Concurrent with the notification under clause 7.2 being given -

PN99

that's the form A about which I've already spoken:

PN100

- Telstra will give the union entitled to represent the employees information about the proposed retrenchments and the reason for them an opportunity to consult with Telstra on -

PN101

and there are two issues:

PN102

- measures to avert the proposed retrenchments and measures to mitigate the adverse effects of proposed retrenchments. Any consultation around these issues will conclude two weeks after the information under clause 7.3 has been given. During the first two weeks after notification ...(reads)... to participate in the Telstra Jobs Program under clause 8 -

PN103

and then there's a time for its commencement:

PN104

- or not participate in the Telstra Jobs Program and be retrenched at the date of the closure of the site function and in that event, and will be paid upon retrenchment ...(reads)...to allow the employee to conduct their own jobs search program.

PN105

That's what the 4500 is about.

PN106

JUSTICE GIUDICE: Yes. Yes, the Commissioner refers to that.

PN107

MR WEST: He does, yes. Now, your Honours there is a document in the appeal book which deals with what happened to each of those four employees in detail. It was a document which was put in after the main hearing, but it was anticipated in the main hearing that such a document would be prepared to show discreetly what happened to them in how Telstra dealt with them. It was prepared by our side and it's in volume 2 of the appeal book and it's found at page 907 and following and actually occupies, the text occupies from 909 to 916.

PN108

The importance of this document is that it identifies each stage by phase in the consultation process which was given to each of the four employees before they were each of them terminated. Take Mr Griffiths, for example, on 909. Mr Griffiths commences the dispute resolution process with the standard form letter and this is a reference back to the transcript and so on, but the first phase of the consultation process which they are required to go through under the agreement took place on 25 September 2006. Mr Garth is a Telstra man and Mr Griffiths, that's the first phase.

PN109

The second phase is with Taylor. Taylor is the next senior Telstra person consulted in the phases of consultation. And the third phase is with Mr Wood, who is the most senior of all, as the requirements for consultation under the agreement are worked through. Those requirements are found in clause 17 of the dispute settlement procedure at page 879 of the appeal book. 17.1(a) is the first phase, so called. 17.1(b) is not relevant to this particular case but 17.1(c) is and for this case 17.1(c) is the second phase and 17.1(d) is the third phase.

PN110

Now, as is pointed out in this separate document at 909 and following, in Mr Griffiths' case when he met under the third phase of operation 17.1, page 910 at the end of the first paragraph, end of 1.4, Mr Griffiths does not raise as an issue any failure to consult with the CEPU at the third phase. So whatever had been said in the individual notifications which those four caused to be given to Telstra, whatever be the form of that complaint, there was no complaint about failure to consult by the third phase.

PN111

Then similar, Mr Burgess is then dealt with on page 911 to 913 and again one can highlight in 2.3 Mr Garth is the company man, in the second phase Mr Taylor is the company man. In 2.4 Mr Wood is the company man in the third phase. I'm sorry, your Honours, he's a company employee. By the third phase there is no raising the bar on Mr Burgess' behalf of a failure to consult the CEPU. Mr Commisari is then dealt with at 913. Mr Commisari did not give evidence in the case and again he wasn't presented for cross-examination.

PN112

Mr Commisari similarly does not raise failure to consult with the CEPU in the third phase. It's the second last line of 3.6. And finally Mr Hammer at page 915 through to 916, in the first phase there where they meet with Ms Taylor from the company, a union official accompanies Mr Hammer and Mr Murphy and Mr Murphy does so again on the second phase where two company people are involved, both Brown and Wagner. And in the third phase again meets with the company and he gave no evidence before the Commissioner regarding any failure to consult with the union.

PN113

So that so far as these four ex employees were concerned, there was no issue by the time of the third phase consultation about any failure to consult with the CEPU and we say, with great respect, that' perfectly understandable because, in consultation, really by the bucket load. Now, if I can just return to the chronology. Given that on 1 September 2006 Telstra had communicated with the CEPU, the outcome of its deliberations, which I have taken the Commission to, by 7 September the two week consultation period required under clause 7 of the agreement came to an end and the CEPU filed section 170LW application and a section 668 application, the 668 was not pressed.

PN114

Now, the matter came before Senior Deputy President Drake on a conciliation on 12 September 2006 and despite the fact that there had been some prior issue raised by the CEPU about the form As and whether or not they'd correctly identified the categories of people, that is, the classifications. That was not raised as an issue before Senior Deputy President Drake, and what happened before her relevantly to that can be found at appeal book volume 1, pages 23 to 24 and I won't stay to weary the Commission with that.

PN115

Between 15 and 29 September the second consultation period runs its course without the CEPU taking any advantage of that opportunity to raise any matters with the company. Now, what happened here, your Honours, can be seen firstly at 631 of the appeal book. It's a letter from the CEPU, 15 September, referring to the form A notices issued in respect of the designers and pointing out the CEPU believes that there were defects in that notice and they set out against bullet points a number of particulars which rather indicate that they hadn't been able to identify certain persons and they make allegations there might be up to 20 defects in the alleged redundancies and then they point out that given the position that the redundancy consultation process be strictly followed, they submit that the notices are flawed and they say that Telstra hasn't followed the process outlined in the agreement and they ask for the form As to be withdrawn.

PN116

Telstra responds to that on the next page, 632, 633. Telstra informs the union that they will not be withdrawing the form As, for the designers:

PN117

It's Telstra's position that any errors in the form A is issued in relation to the provisioning roles are of an administrative not substantive nature. The CEPU can be in no doubt that in consultations ...(reads)... Importantly our employees have been thoroughly briefed about the changes at affected locations and continue to communicate directly with our people about the proposed retrenchments.

PN118

Then they deal with Telstra's approach to dispute resolution:

PN119

Your facsimile refers to Telstra's position in the IRC hearing on 12 September about compliance with the Telstra Redundancy Agreement. Telstra's preference is as a result of any issues arising from ...(reads)... Given that there have been administrative errors in relation to the form As -

PN120

Although no admission is made that there were any, but:

PN121

- given that there have been Telstra is willing to extend the consultation under 7.4 of the agreement which would have ended about 7 September up to 29 September 2006. ...(reads)... and/or measures to mitigate any adverse effects, contact Ms Ahearn.

PN122

And they didn't. I can just give your Honours some references to pages of the statements which deal with the fact that there can't be any dispute about it. There was no communication. At 573, 632, 647, 759 and 815. Then contemporaneously with, in part, the running of the second consultation period each of the four employees goes through the dispute settlement process and that's the documents I've taken your Honours to at 909 to 916 which deals with the four discrete people.

PN123

At page 680 we see that on 4 October, after the lapse of this extended consultation period, some six, seven days afterwards, the CEPU request another opportunity to consult. That's at page 680. It's a letter to Mr Brown signed by - it's over Mr Metcher's capacity, it looks like it's actually signed by Mr Chalker on his behalf:

PN124

We refer to our telephone conversation today seeking meeting with you in the above matter. You've responded seeking we put the request in writing. Therefore in line with the letter of 19 September -

PN125

which is at page 632 of the appeal book:

PN126

- and clause 17.1(d) of the Telstra Redundancy Agreement 2002 we wish to meet with you and/or your General Manager to consult about the proposed above retrenchments.

PN127

So that goes off and on 6 October the third consultation meeting takes place with the CEPU and it's at paragraph 50 on page 650 of this book that this happened, in the statement of Mr Brown, he says that:

PN128

On or about 6 October a meeting took place at the CEPU office in Parramatta. Ms Wagner attended the meeting via telephone hook up. I met with Mr Chalker, Messrs Cooper, Dodd and Dwyer. I recall during the meeting the CEPU indicated that their view was that the meeting was a consultation as far as the third stage of the dispute resolution process ...(reads)... about what's going on and following that we didn't meet again.

PN129

The next thing that happens is, Senior Deputy President Drake conciliates a section 170LW proceeding. That point, the 668, was still with it. That's at pages 21 to 42 of the appeal book and I don't need to go there. On 13 October Vice President Lawler gave some directions about what was to happen in this matter and those directions are not replicated in the appeal book and nothing turns on them.

PN130

On 17 October Vice President Lawler disqualified himself from taking any further part in the proceedings and Commissioner Smith heard an application for interim relief. That's at appeal book pages 45 to 107 and I don't need to go there. On 19 October Commissioner Smith refused interim relief and that refusal is also not in the appeal book and nothing turns on that. On 6 and 7 November Commissioner Smith heard the applications for final relief, in the form of the final relief I've taken the Commission to. The transcript is at 110 to 264 and I don't need to go there for the time being.

PN131

Then there were some contemporaneous events, the Full Bench decision in ING v Jajoo which I've referred to. Commissioner Smith makes his decision and order on the 13th and then there was a stay granted by the Honourable President that the matter is up here. I'm sorry, I put this entry in twice. I'm sorry, your Honours, I said on 9 and 10 October that Senior Deputy President Drake conciliated and that the transcript was there, it’s not there, obviously. The transcript I was referring to is actually at 12 September, 23 and 24, to there, which I refer to only for the purposes of seeing what the issue wasn't according to the union and there wasn't an issue raised before the Deputy President as to failure to consult.

PN132

So that if I could then return to the written submissions. In that perhaps somewhat shorthand way we've travelled from what is dealt with from page 16 right through to the end of the submissions save only for those parts of them which take issue in detail with some of the reasoning of the Commissioner and that really commences at paragraph 15.6 on page 25 and concludes on page 30 where section 15 concludes. Those paragraphs, I don't wish to repeat what we say there. Those submissions stand on their own two feet, but really what the Commissioner was doing in our respectful submission was engaging in some idiosyncratic examination and appreciation of how a company should be structured for purposes of being able to give effect to a dispute resolution procedure.

PN133

Now, in our respectful submission, the reasoning demonstrates that there is, at least in the Commissioner's mind, the idea that this structure that Telstra should have is one where there is, as it were, one decision maker and that one decision maker is able, as it were, to stop a process, a commercial process put in place even involving human relations aspects of the business and of its structure, and that that one decision maker should be able to, as it were, take control of this decision making process, as it were, as a whole and the criticism that we level of that sort of analysis is, (1) it doesn't arise in the case at all, (2) it misconceives the nature of the way in which the management function in the corporation is carried out, and (3) it assumes that the decision maker - there should be one person who will make a decision, as it were, from start to finish in relation to the dispute resolution procedure and it simply, in our respectful submission, is insupportable and it wasn't a matter which the Commissioner has to decide, but it seems to be the rationale which lies behind his conclusion that the consultation process required under the agreement had miscarried, which is really the conclusion he arrives at in paragraph 69 on page 18 of the appeal book:

PN134

I've reached the conclusion that because of the organisational structure of Telstra there is no authority reposed in any officer to implement the agreement. Then clause 7.3 of the agreement has not been given proper effect. To properly apply the agreement ...(reads)... by the administrative structure chosen for either financial or other business reasons.

PN135

Now, it's not entirely clear, with great respect to the Commissioner, what he's saying. The business lines are within Telstra. The HR function was within Telstra. The manager, Ms Ahearn, straddled both of the relevant business lines in this case and was involved from the very start in the process of consultation with the union and the fact that Ms Ahearn may not have final responsibility is simply not to the point. In our respectful submission it's not for the Commissioner to, as it were, redesign the reporting lines within Telstra. It proceeds upon this assumption that there has to be one person who has total authority right from the very start of the consultation process. In our respectful submission nothing can be further from the truth. "Consultation", he says in paragraph 70:

PN136

has not occurred in relation to clause 7.3 because there's no relevant decision maker that can influence or effectively implement action on behalf of Telstra in accordance with its obligation under the agreement.

PN137

Now, it's not entirely clear again what the Commissioner is saying. If he's saying that in some way there was no relevant decision maker who could counteract the decision by Telstra to proceed with the hiring of people to whom offers had been made in the DM line of business, it's not a valid criticism. The consultation took place within Telstra, we know that because I've taken the Commission to it. And an evaluation was made as to what was the appropriate course to take about the hiring process in part of the business at Toormina, and that decision, having been taken, it was communicated to the union.

PN138

What the Commissioner seems to be saying is that there was, in those circumstances, an obligation on someone in HR to step in and say no, it won't happen. Now, he doesn't say it specifically, but that's the implication of this. In our respectful submission, it's just without any warrant whatsoever, and I can move from that quite directly to what it was the Commissioner should have been doing and which - - -

PN139

JUSTICE GIUDICE: Can you just remind me what Ms Ahearn's position was and her responsibilities?

PN140

MR WEST: Yes, your Honour. Ms Ahearn's title was Manager HR. Now, I can take you to her affidavit where she describes - - -

PN141

JUSTICE GIUDICE: The Commissioner set something out in paragraph 37. Is that sufficient or is that a truncation?

PN142

MR WEST: "My role is to act as business partner, providing them with human resources support and allow them to achieve their individual business plans and goals." Let it be assumed that that's what you said. It doesn't follow from that that she is not performing a proper HR role.

PN143

JUSTICE GIUDICE: No, no. I was really just asking a question of explanation as to what the role is.

PN144

MR WEST: Your Honours, at 568 of the appeal book, Ms Ahearn sets out what she does and her report line, 568.

PN145

JUSTICE GIUDICE: Yes.

PN146

MR WEST: Paragraph 2 is what the Commissioner has quoted. She goes on to say:

PN147

I report to John Wood, who is the Executive Director of Telstra Operations HR. I have a team of nine HR advisers reporting to me.

PN148

Now, in our respectful submission, why is that not a proper or adequate function for a person in her position? She has responsibility in both the Service Delivery East and the DM sections, the two relevant issues here that both operated at Toormina. She was across both of them, across the HR responsibility for both of them.

PN149

JUSTICE GIUDICE: But isn't the - and I'm not drawing any conclusions here, but wasn't the factual situation that the decision in relation to the new employees was made by the responsible manager in that area and that in that respect he was independent, he had to be asked to review his decision and ultimately it was his decision?

PN150

MR WEST: And, your Honour, he took a decision within his area of responsibility.

PN151

JUSTICE GIUDICE: Yes, I’m not criticising. I'm just trying to get clear how it works.

PN152

MR WEST: Your Honour's is valid with respect, yes.

PN153

JUSTICE GIUDICE: Yes.

PN154

MR WEST: Ms Ahearn didn't now about it until it was raised by Mr Chalker, but once it was raised, she went into action and Telstra then conducted an appreciation as to what was going on and it was as a result of that that they considered that, well, the decision to proceed is the right decision and that's what the union is going to be told. In our respectful submission that really can't be gainsaid as a proper exercise of the HR function. It's not the function of HR to go along to the board and say, "We know you're going to spend a few million dollars reforming the business, but we're actually going to white ant that by preventing it." That's not their function.

PN155

Their function is to consider and give such advice as may be asked for from time to time or they feel they should give. But again, the question then is well, what is the failure of Telstra as the respondent to comply with the terms of the consultation process in clause 7? Where have they failed? And in our respectful submission, you can't find where they've failed. What the Commissioner did was attack them systemically in a way which wasn't called for and which proceeds upon assumptions or idiosyncratic notions that simply do not lead to the conclusions at which he arrived. That's what's wrong with the reasoning process that led to the finding, if that's what it truly is, in paragraphs 69 and 70.

PN156

JUSTICE GIUDICE: Well, I must say I've found it a little surprising that there was a recruitment exercise going on in the same location where for some it had been known that there would be people who were surplus to requirements because of the re-organisation. One might have expected that it was known within the organisation generally that this was to occur.

PN157

MR WEST: Well, the results of the examination, of the inquiry into reorganisation were not known until 18 August and by that stage the process which DM had been implementing in Toormina had started back in July and so it wasn't the situation that your Honour is presently positing, that there was, as it were, we're going to go ahead and do this and we're not going to tell anybody. That sort of thing.

PN158

JUSTICE GIUDICE: The left hand not knowing what the right hand was doing.

PN159

MR WEST: Yes, that's exactly so.

PN160

JUSTICE GIUDICE: Thank you.

PN161

MR WEST: The positions at Coffs Harbour in Delivery Management were advertised on 7 and 8 July and the review which - I mean, those advertisements for new positions had in fact resulted from a review which the delivery management responsible staff had conducted themselves of their own operation.

PN162

JUSTICE GIUDICE: Yes. What I just said may be a distraction. It may not even be relevant to the issue of whether there was proper consultation, but it was something that struck me.

PN163

MR WEST: Your Honour, we answer that in two ways. The first way we would submit is, well, strictly, it isn't relevant, but at the same time, let me put it this way, one can understand why your Honour raises it, but when one looks at the process, the question which has to be asked and answered is, was the process that was followed compliance with the terms of the agreement and in our respectful submission, it was. One can get to the next stage, of course, if in looking at the process one concludes well, they actually strictly fell down here and here, and make no admission, but assume one did, that doesn't mean that the process itself or the result of the process is invalid, otherwise you have a triumph of form over substance.

PN164

The question is whether or not there was proper adequate consultation within the clause in the agreement, and if there was, then that's that.

PN165

JUSTICE GIUDICE: Yes.

PN166

MR WEST: And here the Commissioner, with respect to him, having given Telstra a substantial whack, decided that he would then reinstate. Now, can I come then to what we respectfully submit the Commissioner should have been doing. What he should have been doing is what we've referred to in written submissions in the pages up to page 16 in particular and we return to further legal argument in the last two pages and I've referred in brief to what they are, but may we address the fundamental legal problem in this case, and that is, in a nutshell, that the Commissioner was acting as a private arbitrator.

PN167

As a private arbitrator he could not, given the structure of the instrument which empowered him together with section 134H of the old Act and section 62 of the current Act, that was his jurisdictional basis, could not have empowered him to reinstate. No term of the agreement empowered reinstatement and unless the Commissioner got that power from the agreement, he didn't get it from anywhere. Now, in section 1 we put the argument in the synopsis form, that it's really 1.4 that is expanded in the first part of the submissions. It's not clear, the Commissioner doesn't make it clear where he gets the power to reinstate from. He doesn't reveal it.

PN168

But if he thought that something in what we call in the CEUP v Telstra decision, which is the Full Bench case on which your Honour, the President, sat, that that case - - -

PN169

JUSTICE GIUDICE: I'm tempted to say which one, but - - -

PN170

MR WEST: Yes. It's rich reading.

PN171

JUSTICE GIUDICE: The most recent.

PN172

MR WEST: There's so many. This one is found in a golden volume of the Industrial Reports, 128, and in that case the Commissioner may have thought it empowered him to do it. But, your Honour, the Full Bench in the second Telstra case, if I may call it that, that was the appeal that came up from Vice President Lawler who had granted interim relief which the Full Bench said, and in our respectful submission, correctly, was not available. The Full Bench in the second Telstra case was very careful, your Honour, if I may put it that way, not to pass upon the nature of final relief that might be given, in that case or any other.

PN173

In our respectful submission the reason for that really is that one now is able to start this question of examination of what private arbitration is. By looking at what the High Court had to say in what's become known as the private arbitration case. Now, in order to save a bit of time, we have extracted in the written submissions what is involved in acting as a private arbitrator and that occurs in section 5 and section 6. Clause 17 of the industrial agreement is what we call in the submissions the section 134H provision.

PN174

It's in classic form. 134H kept alive in various successions of the Act and now, because of the operations of the WROLA Act and the provisions in section 62 of the present Act, which used to be section 89(b), keeps alive jurisdiction in the Commission to act as a private arbitrator. That jurisdiction comes and comes only from section 134H. It's trite that the Commission can't be given jurisdiction by consent to determine matters which otherwise it would have no jurisdiction to determine. But what 134H did, so the High Court explained, was to enable the Commission to enliven a power in an instrument which it was required to certify. A power which would be used to, so far as it could, ensure the continuing settlement of a dispute resolved by the exercise of the Commission's power given it by the statute. That is, the exercise of what we might call its constitutional functions, settling ultimately by arbitration a dispute extending along any one State.

PN175

The Commission was empowered, the High Court said the Parliament had acted correctly, to certify an agreement with a provision in it which enabled the Commission to determine a dispute about the application of the agreement. Those words, the application of the agreement, are the gateway to jurisdiction. If a dispute which a party purports to bring before the Commission is not about that, then the 134H power jurisdiction is never enlivened. Had it not been for section 89(b) of the preceding Act, the Commission wouldn't have been able to operate under those 134H clauses at all. But 89(b) provided a window and it enabled the Commission to operate with respect to jurisdiction it got from another Act and operate under this Act. 62 is the successor to 89(b) and it continues the chain of jurisdiction.

PN176

Now, what is it then we pose rhetorically that the Commission does where it acts as a private arbitrator? In section 7 of the written submissions we come to deal with this and I would like - I trust without wearying your Honours to just take a moment and go to the decision of Heerey, J, which is in the bundles of cases which your Honours either have or are about to receive - - -

PN177

JUSTICE GIUDICE: Yes, I don't think we have them, do we? No.

PN178

MR WEST: There are some bundles of cases - yes, I'm sorry.

PN179

JUSTICE GIUDICE: Thank you.

PN180

MR WEST: It's behind tab 6 in your Honour's copy. The National Union of Workers v Pacific Dunlop Tyres Pty Ltd.

PN181

JUSTICE GIUDICE: I remember something about this case.

PN182

MR WEST: Yes, indeed, your Honour. I wasn't going to point that out, but your Honour it no doubt will bring back memories. But what happened here was that the NUW moved in the Federal Court for penalties for breach of an award and also for damages against Pacific Dunlop arising out of the termination by Pacific Dunlop of the employment of two employees. Pacific Dunlop, by a motion, brought an application for an order that the application of the union be dismissed or stayed on the grounds that the applicants were estopped from making the allegations which founded their case and that the proceedings were, in any event, an abuse of process.

PN183

That was based upon that application for a finding of estoppel and abuse was based upon the fact that a little time prior to this, the parties had come before Munro J and whilst neither party took any objection to jurisdiction, allowed his Honour to deal with the dispute about the termination of these employees as a private arbitrator, in effect a private arbitrator, and it was argued, on behalf of Pacific Dunlop that that determination by his Honour constituted an estoppel because there had been a determination of the rights of the parties and accordingly it could not be a matter revisited in the court.

PN184

Now, that caused Heerey J to embark upon what has become and still remains in our respectful submission the high water mark of analysis of just what industrial arbitration and what private arbitration is all about. At page 423 of 37 FCR, Heerey J continues to examine what happened before Munro J, and he records this, that:

PN185

In his decision Munro J commenced by noting that the union and the employer have agreed that the Commission should arbitrate -

PN186

And he emphasises those words:

PN187

- upon the merits of a claim by the union for the reinstatement of four former employees. In the course of his reasoning Munro J noted that he accepted Mr Richardson's submissions that the term of the 309 agreement should be taken into account.

PN188

And his Honour said:

PN189

It's not necessary for me to consider whether as a matter of law each contract of employment was extended to include the terms of such agreements. It's sufficient for the purposes of this case that the over award agreement is regarded by both parties as so fundamental to the four employees' employment relationship ...(reads)... takes into account so much of the extrinsic evidence as I consider should be given weight in my determination.

PN190

His Honour then proceeded to analyse the competing arguments, concluded that he should treat the guarantee of employment as meaning substantially what the employer argued. In essence, the interpretation that the undertaking not to terminate applied only for certain reasons.

PN191

So that's what Munro J was doing and it's crucial in our respectful submission to recognise at once that at the time that Munro J was conducting this matter before him there was no equivalent for section 134(h) in the Industrial Relations Act. The statute was devoid of that power so that what was happening here was that absent a dispute settling provision which tracked as a matter of statute authorisation into the Commission to say, when a dispute reaches this point the Commission may determine it. In the absence of that the parties came along and said, we have a dispute and the issue of jurisdiction was discussed and the point wasn't taken for obvious reasons. It happened regularly.

PN192

But nevertheless that submission to jurisdiction was equivalent to saying to the Commission, you don't have jurisdiction to do this, we're not going to mention it, but the result will abide and that was - as Heerey J points out - that's not what's involved in the Commission - or not involved in private arbitration. Indeed, his Honour makes the point, and I'll come to it in just a moment, that the absence of statutory authorisation for what his Honour was doing was a very important factor, it was crucial to it. Now, with the 134(h) clause, the Commission doesn't have that problem. It's got jurisdiction.

PN193

The question is, what sort of jurisdiction is it? And that, we've submitted in our written argument, is something which has received various treatments over the years, not necessarily satisfactory, and that's not a criticism of anybody or any party or the Commission, but it's a matter which really doesn't seem to have been focused upon in the way the High Court focused on it, and when one does that, and you look at the terms of the agreement and the terms of the statute that's being used to facilitate this process, and one realises one's dealing with private arbitration, not industrial arbitration, then you get to a different result.

PN194

A private arbitration clause does not enable the Commission to do privately what it does publicly. That's the fundamental problem with the conceptions in the cases to this point so far as we, with respect, submit. That's not what it's doing. That's not what the High Court is doing and there are statements in the judgments, particularly, your Honour, Senior Deputy President Lacy, in a number of your Honour's judgments where your Honour has, with respect, been very careful to determine the parties' legal rights and then leave it to the parties to work out what sort of order might be made.

PN195

Now, that's what we respectfully submit Commissioner Smith should have done, but he didn't, because there would be an immediate argument about reinstatement because that's beyond his jurisdiction. It's one thing to declare parties' legal rights, to decide them as a matter of law. It's another thing to change the legal rights by order. That's what the Commission can't do acting as a private arbitrator. Now, may I just attempt to make this good by reference to what Heerey J had to say. At page 424, second paragraph on the page, his Honour says:

PN196

Counsel argued that the union had advanced a case in respect of each of those issues before Munro J. His Honour, having reached a conclusion adverse to the applicants, it was said they were estopped from relying on them ...(reads)... Munro J, it was said, was acting as a private arbitrator in the common law sense.

PN197

And then there's a reference to how the doctrine of estoppel then arises and it's plain there that he wasn't acting under a 134(h) clause. Then his Honour says this, under the heading, Private and Industrial Arbitration Distinguished:

PN198

The term arbitration in Australia may apply to one or other of two fundamentally different procedures. Arbitration may connote the determination by an arbitrator of disputes submitted by agreement of the parties ...(reads)... derives jurisdiction and power from the agreement of the parties.

PN199

We stop there. Absent any other statute which may give him power, for example, the Commercial Arbitration Act, for example, or any other statute, and one says, well, absent any jurisdiction he might get from the Industrial Relations Act or the Workplace Relations Act:

PN200

In appearance and practical effect the process is very like that of litigation. The arbitrator hears evidence and argument, finds facts and applies the law to those facts. ...(reads)... Industrial arbitration on the other hand is a procedure under statute. In the Federal sphere the head of powers 155 -

PN201

and then his Honour deals with that. I don't need to continue with that paragraph. But over 425, the first full paragraph on the page:

PN202

It was recognised at an early stage in Australia that arbitration in an industrial setting in contrast to private arbitration necessarily involved quite different processing of terms and effect ...(reads)... their existing entitlement under their contracts, whether that be the full amount of their claim or some lesser amount exceeded that by that offered by the employer.

PN203

And pausing there, ergo reinstatement, because that involves not declaring their legal rights in accordance with law, but changing them. Thus in Wybrow, Isaacs J observed:

PN204

We're so accustomed to regard arbitration amid surroundings of ordinary legal procedure, to enforce rights already existing that there's a real danger of attributing to it an innate characteristic what are in truth nothing more than the usual ...(reads)... and not to the elemental nature of arbitration itself.

PN205

And there's a reference then to what Barton J had to say and you drop down to the bottom of 425, the last five lines:

PN206

Since private arbitration is, as has been noted, in practical respects very similar to the exercise of a judicial function by courts it might be expected that judicial exposition ...(reads)... might also illuminate the difference in function between industrial and private arbitration.

PN207

In reference to Alexander's case, and I might just read a couple of small parts of that:

PN208

That, that is conciliation and arbitration, is essentially different from the judicial power. Both of them rest for their ultimate validity and efficacy on the legislative power, both ...(reads)... of the arbitrator ought to be the respective rights and liabilities of the parties in relation to each other.

PN209

Now, this is where, in our respectful submission, one needs to bear in mind what the High Court has said in the private arbitration case. Clearly, that when the Commission is exercising jurisdiction under a 134H clause, it is acting as a private arbitrator. It can give the remedies which are caught could give. It is not acting as an industrial arbitrator is accustomed to act. It determines the rights of the parties to the dispute finally and as the High Court said, very clearly, ordinarily this Commission could not exercise judicial power because it's not a chapter 3 court. But a private arbitrator exercises what is in fact judicial power except it's not technically judicial power because he draws his authority from the parties, not by force of statute.

PN210

But otherwise, what the private arbitrator is doing is exercising what is for all intents and purposes judicial power. That is, determining the rights of the parties in accordance with law.

PN211

JUSTICE GIUDICE: You'll probably come to this, Mr West, but in an arbitration of the kind we're concerned with here, are the powers and procedures that are set out in division 4 of part 3 applicable or available?

PN212

MR WEST: I'm coming to that, your Honour.

PN213

JUSTICE GIUDICE: Yes.

PN214

MR WEST: May I take that in the course of which I - - -

PN215

JUSTICE GIUDICE: Yes, yes.

PN216

MR WEST: His Honour says a little lower down in that quote:

PN217

An industrial dispute is a claim by one of the disputants that existing relations should be altered and by the other the claim should not be conceded. It's therefore a claim for new rights and the duty of the arbitrator ...(reads)... and stamps his decision with the character of a legal right or obligation.

PN218

And then there's a quote from Boilermakers which I won't this day deal with. Then his Honour dealt with the functions exercised by Munro J. First point:

PN219

The Act contains no indication that members of the Commission are required or permitted as part of their official function to act as private arbitrators.

PN220

So plainly there was no equivalent of 134H. Dropping down a little, last sentence on that penultimate paragraph:

PN221

Since private arbitration and industrial arbitration under the Act are markedly different functions, in carrying out the former he would doubtless be at pains to make it clear that he was not carrying out the latter which of course was his usual work.

PN222

Now that is a very important observation in our respectful submission. What the parties invited Munro J to do was to act as a private arbitrator and his Honour is saying he's not, when he's doing that, he's not acting as he would ordinarily do as a Judge of the Commission by reference to the morays of the Commission. The problem was, he wasn't authorised to do it:

PN223

The evidence however contains no hint that Munro J was asked to act in this dispute in the usual role of private arbitrator, still less than he consented to so act in. Nor is there any suggestion that he was offered or received payment for his services or that the consent of the Minister was sought under 25(1).

PN224

Last paragraph above the heading, Agreement with the Parties:

PN225

What his Honour in fact did seems only consistent with him exercising his industrial arbitration function under the Act. During ordinary working hours ...(reads)... In substance the employers rely upon an implied term to that effect.

PN226

And then a reference to, well, that sort of implied term fails to meet Codelfa.

PN227

I'm inclined to think that there was no relevant agreement in the sense of contractual relationship at all into which a term might be implied.

PN228

And dropping down a little further:

PN229

As I've already noted, when Munro J asked the parties in specific terms whether there was some agreement as to his having jurisdiction, neither party asserted that there was and neither party reproached the other for their conspicuous failure to answer his Honour's inquiry in the affirmative. ...(reads)... there could be no binding contract to confer jurisdiction.

PN230

Then over the page, "accordingly there was no estoppel."

PN231

Now, the defect which his Honour, Heerey J points to in the legislative framework that then existed was cured by 134H and its success and its repetition in different numbers thereafter and the High Court then picks that up in the private arbitration case and may I just go to that for a moment. It's number 5 in your Honour's bundle. This is in 203, CLR, starting at 645 and at 651 the Full High Court unanimously sets out the relevant legislative provisions which had by this stage become 170MH. In the middle of the page:

PN232

Procedures and agreement for preventing and settling disputes between employers and employees covered by the agreement may, if the Commission so approves, empower ...(reads)... settle disputes over the application of the agreement or a point of order reference.

PN233

The High Court goes on over the page to refer to the operation of 89(b). They say in paragraph 6:

PN234

Section 170MH of the IR Act, in the form set out above, was repealed by the WROLA Act but 170MH of the IR Act continues to have effect with respect to agreements certified under that Act. ...(reads)... Thus the WR Act authorises the Commission to exercise those functions that it derives from 170MH of the IR Act.

PN235

That's the function the Commission is exercising. The Commission's powers are also found in the WR Act, 89(a), and then the High Court deals with a proposition put that 89(a), the allowable matters provisions, qualified what the Commission could do when exercising section 170MH power and the High Court found that they did not.

PN236

Now, so far, so good. Go right through to their Honours then deal with other arguments put because this point is sort of held in suspension while the court then deals with other arguments including whether or not the certified agreement provisions were valid and they return to the key question about arbitral power and the like at paragraph 25 on page 656:

PN237

The distinction between arbitral power on the one hand and on the other, the Commission's award making powers, is important because the question of whether the Parliament will authorise the Commission to participate ...(reads)... The dispute resolution provisions constituted the settlement of an interstate dispute and the procedures and machinery were designed to ensure that the settlement of that dispute is effective and enduring.

PN238

And that last expression has become a sort of mantra that accompanies the justification for the Parliament being able to approve and make it legislation which contains the power of a kind which we find at 134H and subsequently kept alive.

PN239

What was said in Hegarty applies but with some modification to an agreement by parties to an industrial dispute. As already indicated it is incidental to the conciliation and arbitration power for the Parliament to permit parties to an industrial situation ...(reads)... To the extent that 170MH of the IR Act operates in conjunction with an agreed dispute resolution procedure to authorise the Commission to make decisions as to the legal rights and liabilities of parties to the agreement -

PN240

and I emphasise those words, if the Commission pleases:

PN241

- it merely authorises the Commission to exercise a power of private arbitration and procedures for the resolution of disputes over the application of an agreement made by parties to an industrial situation ...(reads)... Parliament may legislate to authorise the Commission to participate in procedures of that kind. Accordingly 170MH is valid.

PN242

Now, just pausing there. The characterisation which the High Court is giving to the nature of the Commission's function given it by a 134H clause is very important, in our respectful submission. That is, it is an agreement by the parties to submit disputes to the Commission as to their legal rights and liabilities for their resolution and for nothing else and it is that resolution of their legal rights and liabilities in that way that the High Court can see as an aid to ensuring, so far as the Commission can do it, that the dispute resolution in place will remain in place.

PN243

But it is not what is being given to the Commission by this process, is not a back door method of conducting what the Commission does publicly in settling industrial disputes to be done in private, that's not what it's doing. It's not there to change legal rights. It's there to declare them. Now, so understood - - -

PN244

JUSTICE GIUDICE: How does this fit with Hegarty? The nature of the decision in Hegarty I think was to assign particular employees to particular classifications - I think it was a classification dispute, was it not?

PN245

MR WEST: I think it was. Well, your Honour - - -

PN246

JUSTICE GIUDICE: Yes. Was the nature of the power being exercised there relevantly different to the power in question here?

PN247

MR WEST: Your Honour, the position in Hegarty was different in this sense, and perhaps I should bring Hegarty along, I should get it out I think for this one.

PN248

JUSTICE GIUDICE: Yes. I'm really going from memory, yes.

PN249

MR WEST: Yes, I think because of the way this arises it's best if I do that and I'll come back to it.

PN250

JUSTICE GIUDICE: Yes.

PN251

MR WEST: But the High Court then proceeds to say that, in paragraph 33:

PN252

Although it's by no means clear, it may be assumed for present purposes that the two dispute resolution clauses are designed to ensure more than maintenance of agreement. That however does not have the consequence that those clauses are wholly valid.

PN253

Now, this then goes into an area which I don't have to worry about, namely, if by those dispute resolution clauses the parties sought to give the Commission a power which it never had, then it does not operate and it doesn't have the effect of an award under the statute.

PN254

Then the High Court says this:

PN255

After moving through section 89A and determining that it doesn't qualify, the exercise of the Commission's power under a dispute resolution clause, 89(b) of the WR Act authorises the Commission to exercise those functions. ...(reads)... and accordingly the Full Federal Court erred.

PN256

But what the High Court is saying there is, well, 89(a) is not directed to the nature of the power. 89(a) is directed to the subject matter. You can't make orders or awards with respect to certain restrictive matters. They are taken off the table, so you can't deal with that. That doesn't apply when you are looking at the power which the Commission is exercising under a dispute resolution clause because the scope of the Commission's jurisdiction there is governed by the terms of the clause itself.

PN257

What the Commission can do in a 134H clause is to be found in the terms of 134H itself. That's the provision which is built in to the instrument.

PN258

JUSTICE GIUDICE: Well, why was it necessary for the court to examine whether 89(a) applied at all in terms?

PN259

MR WEST: Because it was argued.

PN260

JUSTICE GIUDICE: It was argued, I know, but the examination in paragraph 38 suggests that it was only because the terms of 89(a) didn't cover this situation, that rather raising the suggestion that 89(a) was simply not excluded because the powers were contained in the clause itself.

PN261

MR WEST: Well, no doubt the continuity of 89(a) and 89(b) will have suggested itself to counsel as being a way of saying to the Commission, well, listen, one thing you can't do is to make any determination of legal rights or obligations about any of these reserve matters. You can't do that. And so they operate together, and the High Court is simply putting that argument to bed once and for all.

PN262

JUSTICE GIUDICE: I see.

PN263

MR WEST: But, your Honour, what the High Court is saying is that what the Commission gets the power to do by this route from 134H and 89(b) is to act as a private arbitrator. Now, it is that conception which then informs what it is that the Commission can do. It is there to determine the legal rights of the parties which arise for determination by the nature of the dispute about the application of the agreement. Either the agreement applies to this person or that person, or this conduct is permitted under the agreement or it isn't. It's that sort of inquiry.

PN264

Now, the precise variety of disputes that you could have about the application of the agreement is probably as varied as there are people's minds to think of them, but this Commission has in a number of cases had no difficulty in discerning whether or not in truth a particular matter which is said to be brought under a 134H clause is truly a 134H matter at all because it doesn't concern the application of the agreement. For example, like whether or not proper facilities are made available for a union official who might want to use facilities where he's visiting the plant, that sort of thing. But again, that's just an example, but there are many others that one can think of.

PN265

But the real, the essential question is, well, what is private arbitration, what is it the Commission then does, given that it's an aid to ensuring, so far as the Commission can, the integrity of the continuation of the award or agreement that's been put in place by exercise of its arbitral power? And for that purpose one looks at what the High Court has had to say about the nature of private arbitration and we do that by going, in section 7.4 to look at what came from the majority in the High Court in the GIO case, an Atkinson-Leighton Joint Venture. It's behind tab 7.

PN266

Now, this case, if I may indicate where I'm going so your Honours see where I'm coming from, a little later on we note that Vice President Lawler in the Telstra case from which the Full Bench heard the second Telstra appeal, described the power of private arbitration as somewhat wider than determining the parties' legal rights in accordance with the law. We actually extract what Vice President Lawler had to say on page 13 in section 8.7. This is where it was heads and we extracted there what his Honour said, namely that the powers of private arbitration will have implied into it a term that as between the parties the arbitrator can exercise all such powers as are necessary to fairly and effectively determine the dispute.

PN267

Vice President Lawler in his decision didn't acknowledge where he got that form or orders from. I don't say that critically, but he didn't feel that he needed - he may not have got it from anywhere, but it seems likely, given the structure of his Honour's judgment that it's his Honour's appreciation of what the High Court said in Atkinson-Leighton Joint Venture and if that's where his Honour got it from, in our respectful submission, it's not difficult to show that he erred. Now, when the matter came before the Full Bench, the Full Bench did not pass upon that observation by Vice President Lawler, presumably it thought it didn't have to because it had other work to do, namely remove the interim orders which he'd made.

PN268

But the point arises this way. In the GIO v Atkinson-Leighton there was a commercial dispute which gave rise to an insurance claim concerning the construction of the sea wall around Port Botany in Sydney. Under the contractor's All Risks insurance policy there was provision for arbitration of the dispute and the matter went off to arbitration. The arbitrator came up with an award by way of sum of money and he awarded interest. Now, at the time that the arbitrator heard that case, in the Commercial Arbitration Act, or the Arbitration Act, as it then was, was in the old Imperial kind, and it didn't include a power to award interest.

PN269

And the issue in the High Court was, well, where did the arbitrator get this power from and the High Court, by majority, where Chief Justice Barwick said he didn't have it at all, and in quite a brief judgment, the majority of us said no, they've got power to award interest because even where the arbitrator is determining the dispute as he must in accordance with the law of the land, he's doing what the court does. The court's got power to award interest, even though it gets it under statute, it's got power to award interest, because it's necessary to ensure that the value of the award has kept pace with the change in the value of money and therefore it's fair and proper that it could be done, and it could be done in England, there was no doubt about that, even thought the English arbitrators didn't have power to award interest either, at least not under the statute. But in England it had been established, for years they had power to award interest.

PN270

This was the first case that took it up to our High Court and the High Court determined that it did, and the reasoning for it, and this is what's crucial about it, the reasoning is that he's got the power because the private arbitrator is acting in the way a court would act to determine legal rights of the parties and the court can award interest, so can the arbitrator, and Stephen J, and we quote from his judgment and with respect it's not necessary to go any further in the case other than what we've extracted with the introduction I've just given, he says at the bottom of 7.5:

PN271

The principle to be extracted from this line of authority -

PN272

which was looking at all of the authority in England and Australia:

PN273

- subject to such qualifications as relevant statute law may require an arbitrator may award interest where interest would have been recoverable and the matter been determined in a court of law …(reads)... It was always considered that he had power to do so by virtue of his implied authority to follow the ordinary rules of law.

PN274

And a little later:

PN275

In those circumstances I would affirm the view expressed by the New South Wales Court of Appeal concerning arbitrators' powers regarding award of interest. Not only is it in conformity ...(reads)... This is a power the need for which is the greater in times of dear money reflected in prevailing high interest rates.

PN276

And then Mason J with whom Murphy J agreed says, in the underlying section:

PN277

The real question as it seems to me as to whether it is to be applied in the parties' submission to arbitration of term that the arbitrator is to have authority to give the claimant such relief ...(reads)... having jurisdiction with respect to the subject matter.

PN278

And then there's a much longer quote which I won't stay to read. But the reasoning is clear and that is, if you act as an arbitrator, that is what you are doing and that is what the High Court says this Commission does under a private arbitration clause.

PN279

JUSTICE GIUDICE: Well, the quote from his Honour, Mason J, at the bottom of page 10 of your submissions really raises the issue in terms of an implication from the submission to arbitration. Isn't the question we have to decide what implication should be drawn from the submission to arbitration by the parties in a case of this kind?

PN280

MR WEST: Well, your Honour, in this case the implication which is drawn is that the parties have empowered the Commission to determine the legal rights of the parties as a court of law would determine them. It's not asking the Commission, you couldn't imply into the submission to arbitration a power in the Commission to change the legal rights of the parties and it's hard to see, with respect, how a power of private arbitration to ensure the continuing settlement of an award could enable the Commission by private arbitration to change the rights of the parties which have already crystallised.

PN281

JUSTICE GIUDICE: If a settlement of dispute procedure in an award can empower a board of reference for a member of the Commission to fix what remuneration somebody should received by, for example, resolving a classification issue, doesn't that involve a question of legal rights?

PN282

MR WEST: No, your Honour. We're not concerned here with a board of reference. We're concerned with first limb a 134H and only 134H first limb, namely to determine a dispute about the application of the agreement and to determine that matter as a private arbitrator. Now, if that's what the Commission is doing, it's a very narrow function.

PN283

JUSTICE GIUDICE: So it's confined to what remedies in your submission?

PN284

MR WEST: It is confined, your Honour, to the remedies a court would give, namely you look at the nature of the dispute about the application of the agreement. Almost invariably it will be a claim that the agreement means X or Y, or that - - -

PN285

JUSTICE GIUDICE: Declaration?

PN286

MR WEST: A declaration.

PN287

JUSTICE GIUDICE: Injunction?

PN288

MR WEST: No, your Honour.

PN289

JUSTICE GIUDICE: Damages?

PN290

MR WEST: No. If there were damages available, if it were possible, because of the terms of the agreement with which you were faced whereby there was a provision in the award which enable damages to be crystallised, then the Commission could do it. It's a matter of what's in - I'm sorry. The instrument, that that did it but - - -

PN291

JUSTICE GIUDICE: Why not an injunction?

PN292

MR WEST: Because the Commission can't issue injunctions, the court can't issue injunctions. A court of law cannot issue an injunction with respect to a breach of an industrial instrument. Hasn't been able to do so for years, not since I was at law school. Clarrie O'Shea showed all that, and there's a series of cases in the Federal Court which make it very clear that the power of enforcement of an industrial instrument are the powers which are reposed in the Federal Court or any other court named in the statute by way of civil penalty proceedings, as they now are.

PN293

Now, that regime is consistent with no court being able to issue an injunction with respect to an industrial instrument, it would be met with that line of approach immediately.

PN294

JUSTICE GIUDICE: Well, it seems to me that it's either a private arbitration or it's not. Is it permissible to condition the powers that can be exercised by reference to statutory limitations relating to enforcement of awards and agreements? Or does one look at it really, in the common law sense, unencumbered by the statutory constraints?

PN295

MR WEST: Your Honour, you look at this on the basis of saying, what is it that a court could give with respect to a claim about the application of disagreement under 134H.

PN296

JUSTICE GIUDICE: I see.

PN297

MR WEST: And once you characterise the nature of the issue so the relief falls - - -

PN298

JUSTICE GIUDICE: Well, does that mean you could impose a penalty?

PN299

MR WEST: If there were a penalty provided for in the instrument, you would be able to do it. Otherwise we would respectfully submit one could not.

PN300

JUSTICE GIUDICE: And what was the answer about damages?

PN301

MR WEST: Yes, your Honour. There could be an award of damages if there was a provision in the instrument that enabled damages to be determined in the event that there was conduct of a particular kind. Now, that sort of provision is unusual, but I mean, the range of instruments in which one might find clauses like this can't really be fully imagined. Ordinarily one sees - well, you can't be determinative about what might be the nature of the dispute, because minds will differ, people will agitate new and ingenious ways of persuading the Commission under a private arbitration clause that the dispute is really about the application of the agreement. That's what this Commission has said time and time again.

PN302

The first thing we have to do is characterise what the dispute is. What is its true nature? And when you do that the rest of the resolution of the matter falls out. So that ordinarily there will be an appropriate remedy which a court would give which would be by declaration.

PN303

JUSTICE GIUDICE: So do you say that was the only remedy that could have been given, assuming breach relevantly?

PN304

MR WEST: Yes.

PN305

JUSTICE GIUDICE: Some adverse finding. That's the only thing that could have been done in this case?

PN306

MR WEST: In this case, yes, and that would have been - - -

PN307

JUSTICE GIUDICE: What would the next step be?

PN308

MR WEST: Well, your Honour, the next step depends on what happens.

PN309

JUSTICE GIUDICE: Let's just assume that the union wanted to act on such a declaration. What could be done? You don't think that you should be advising the union - - -

PN310

MR WEST: I don't think I could be advising the union.

PN311

JUSTICE GIUDICE: Well, let's put it in a more neutral context. If one wanted to enforce an order, if it is an order, of this kind, how could it be done? Is there an action based on the arbitration itself or is it breach of a Commission order under the statutory provisions?

PN312

MR WEST: No. If the union wished to act upon the order then the union would have a choice of these. It would have a declaration determining what the legal rights of the parties are. It could then commence proceedings, cause proceedings to be commenced under the penalty provisions in the statute. There's no reason why it can't do it, and again it depends on, ordinarily awards of arbitrators are enforced in the ordinary common law courts. It depends what the nature of the relief is that the arbitrator gives.

PN313

But in a case like this where what you're determining is, in our submission, what are the legal rights of the parties, the Commission will simply declare, if it made any declaration at all, and we say it shouldn't have made any, but if it decided it would declare what the rights are and the parties - and may I put it this way, your Honour, the parties are to be taken under a dispute resolution clause, impliedly accepting what the arbitrator determines either at first instance or on appeal. That's an implied term of the agreement.

PN314

That really is part of the efficacy of this arrangement and so what might happen in any particular case about enforcing or taking steps consequent upon the receipt of a declaration might depend on a number of aspects of what the parties have said to each other about what their conduct will be. But that doesn't determine - what might happen subsequently doesn't determine the nature of the relief the Commission gives as a court.

PN315

SENIOR DEPUTY PRESIDENT LACY: If the Commission had declared that there'd been a breach of the agreement and found that the breach or but for the breach it would not have been a termination of employment, could it declare an invalidity?

PN316

MR WEST: Declare that the - - -

PN317

SENIOR DEPUTY PRESIDENT LACY: An invalidity in the termination?

PN318

MR WEST: Possibly. I mean, it's a question of the scope of the declaration which is sought. What the Commission can't do however, to take that example a bit further, is if what you are faced with is something which is a breach of the agreement, the Commission couldn't, under guise of giving a declaration, give relief of the kind that a court couldn't give and thereby render the legal rights of the parties different from what they truly were at that stage. But you can't change legal rights. That's fundamental in this.

PN319

JUSTICE GIUDICE: Is that a convenient time to adjourn?

PN320

MR WEST: It is, your Honour.

PN321

JUSTICE GIUDICE: You've still got some time to go, I take it, Mr West?

PN322

MR WEST: Not very much longer, your Honour. There's a few more cases to go to, but the factual materials has been traversed. It's really a matter now what appears between page 10 and page 16 some of which I've already presaged, plus dealing with the question of Hegarty's case.

PN323

JUSTICE GIUDICE: Well, if there is some prospect that we'll finish today, we'd obviously be prepared to sit a bit longer or truncate the luncheon adjournment. Mr Reitano, do you have anything to say about that?

PN324

MR REITANO: Well, which aspect of it, your Honour? In respect of sitting longer and truncating it I - - -

PN325

JUSTICE GIUDICE: Well, is there any prospect of finishing today?

PN326

MR REITANO: I'm a terrible estimator, but I think so, yes, your Honour.

PN327

JUSTICE GIUDICE: Yes, well, it's pretty un-persuasive. We'll resume at 2.15.

<LUNCHEON ADJOURNMENT [12.46PM]
<RESUMED [2.21PM]

PN328

JUSTICE GIUDICE: Mr West?

PN329

MR WEST: Your Honours, I said I'd deal with the Hegarty case and if I may deal with that immediately. Your Honours should find on your bench there a copy of Hegarty.

PN330

JUSTICE GIUDICE: Yes.

PN331

MR WEST: This was a case which, as they say, was completely different. The position in this case was that an award of the Commission made in settlement of a dispute contained a provision of what might once have been called a traditional board of reference type. In order to appreciate this in its full moray one needs to go to page 622 in the judgment of Mason J. In the second paragraph on that page his Honour sets out the award and what was contemplated by the board of reference.

PN332

The award, which was an industry award, was made in 1973 and later varied on several occasions. It prescribes:

PN333

The minimum annual rates of salary payable to employees, in particular classifications. It requires the employer council to properly classify an officer on his initial engagement or upon his promotion. It provides that the ...(reads)... either the board of reference constituted under the award or should the parties concerned agree upon such a reference.

PN334

So that what was committed to the board of reference, assuming that that was where one went, was the resolution of a disagreement about the proper classification of an officer and if one then goes over a little bit further, on 623, at the bottom of the page after his Honour sets out the classification pay scales applicable in this dispute, he says:

PN335

The prosecutor did not agree to his re-classification and the Association by letter dated 28 March requested that a board of reference be convened under clause 27 of the award to deal with the difference which had arisen.

PN336

Then on the next page at 624 the board of reference provision in clause 27 is set out and the functions are listed in Roman (i), (ii), (iii) and the third of them is the operative one to decide by majority decision any matter which by this part of this award is assigned to the board of reference for determination. Then your Honours will note there's a carve out in (c) in relation to interpretations of any clause of the award which is assigned to the Federal Court.

PN337

Now, what then was happening here was that the board of reference was charged with making the decision which the employer should have made. That is, if the employer didn't agree, the board of reference would make the decision for him. Now, that's a different function to the function with which we are concerned in this case and it had a different statutory framework in order for it to be thrown up. So that, in our respectful submission, Hegarty's case simply stands as authority for the fact that a mechanism built into an award which exists in the interests of the perpetration of the settlement is a valid provision, but it doesn't deal with the next question which arises as a result of the High Court decision in the private arbitration case.

PN338

So that nothing in that case operates to determine what happens here. May I then, your Honours, before I return to a couple of further cases I would like to take the Commission to, one other point which arose from your Honour, the President, just before the break for lunch when your Honour asked me could a Commissioner acting under one of these 134H clauses deal with a penalty. Now, I answered that question and I answered it on two bases. One, well, it would depend upon what was in the agreement.

PN339

Secondly, however, I hope I pointed out that it's an issue which doesn't fall for determination because nothing in these proceedings seeks a penalty and whether or not in a particular case it would be open to the Commission acting under a 134H clause to do what is by the statute assigned to the Federal Court is quite another question, and even though the Commission is acting as a court would act it acts as a court would act with respect to the relief which is sought. Now, I don't want, by that answer, to cause the Commission to travel into areas which it doesn't have to go into in order to answer the question that's before the Commission.

PN340

There may well be issues should anyone ever try it about whether or not such a claim, were it to be made, mixes part of the express industrial settlement jurisdiction with something quite foreign and whether or not that is the kind of dispute which could be resolved under a dispute settlement clause, but it doesn't arise in this case. It's not necessary for the Commission to consider it in order to answer the question which does arise here.

PN341

Now, may I, your Honours, just before we get to the section in section 8, Private arbitrator gives legally available relief. I dealt with the decision of the High Court in the Atkinson-Leighton Joint Venture case and your Honours will then see at the top of page 12 of the written argument a reference to a clutch of further cases including the IBM case and the Sugar Parliament case. Now, the IBM case is behind tab 8 in your Honour's bundle and I only want to go to it very briefly.

PN342

The issue that concerned the Court of Appeal there arose from the appointment of an arbitrator under an arbitration clause in an agreement and whether or not relief which could be given in the arbitration included relief under the Trade Practices Act and so that that involved the consideration of the questions found in the submission to arbitration which are quoted in the headnote:

PN343

Any controversy or claim arising out of or related to this agreement or breach thereof.

PN344

A somewhat broader invitation for relief than one finds in a 134H clause. But nevertheless the importance of the case is the analysis of the issue given it by the President of the Court of Appeal, Kirby J, towards the end of his Honour's judgment at page 480, in 1991 22 NSW LR, 466 to 480.

PN345

There's a paragraph commencing at letter (c) on that page, "Conclusion: the arbitrator has authority", and your Honours see that his Honour started with Atkinson-Leighton Joint Venture and then works down through a number of cases looking at how the petty trust claims and the like might arise in relation to a dispute and in a similar vein he said that, between (f) and (g):

PN346

In England it has been held that an arbitrator may be cloaked with power to grant relief under a law reform frustrated contractor's act -

PN347

and there's reference to the Governor of Gibraltar's case, and then (g) he resumes the tack:

PN348

In the present case the rule, if claimed, is particularised by the solicitors is not so exceptional as to cast doubt on the construction of the arbitration clause in a way similar to that adopted in the GIO case. ...(reads)... when the language of the submission is expressed in perfectly general terms. How the arbitrator exercises such authority in a particular case presents an issue which has not yet arisen in the present case.

PN349

Now, again one finds the clear approach to the remedies which a court of law of competent jurisdiction would apply to resolve the dispute between the parties and finally, your Honours, may I just take you to the Sugar Parliament case, that's at tab 10. This case has a bit of colour and movement about it, concerning as it did the outbreak of World War 1 and consignments of sugar stuck on the wharves in Germany.

PN350

COMMISSIONER GAY: Mr West, your previous case turned in part of Wyatt Earp's case. I was hoping you'd take us to some of that. It's a pretty powerful arbitrator and understanding.

PN351

MR WEST: I'm not suggesting that the use of pistols or shotguns should be introduced into this Commission's armoury, your Honour. What happened here, if I may just pick out of the headnote for summary purposes, there was a multi party transaction through the London Produce Clearing House, and under the terms of the House's regulations which applied to these transactions, there was available an arbitration mechanism in the event that issues arose about the contract between the parties and in particular it involved rule 491(a) which is referred to about three-quarters of the way down the headnote:

PN352

By rule 491(a) of the rules of the Sugar Association of London, in the event of Germany being involved in a war with England, the contract, unless previously closed ...(reads)... shall be entitled to appeal to the council of the association for a decision which should be binding on all concerned.

PN353

And it's that latter mechanism that's the subject of this decision. Just over the page:

PN354

The sugar was, at the time of tender, in the free port of Hamburg. On August 4 war was declared between Great Britain and Germany and on a subsequent date in August the clearing house disclosed to the plaintiff ...(reads)...tender under the rules notwithstanding the embargo, the sugar was, at the time of tender, free of customs formalities.

PN355

But nevertheless the court went on to deal with 491(b) because, as their Lordships found, they were satisfied the parties had presented detailed and important argument on that operation:

PN356

Under rule 491(b) the council upon an appeal to them by a party to a contract can only decide according to the legal rights of the parties. They're not entitled to decide what in their opinion is fair and reasonable to be done as between the parties and the circumstances.

PN357

Now, the council of the Sugar association was of course not comprised of lawyers. We've extracted in the written submissions a reference in the judgment or the opinion of Swinfinide J, 957 to 958. It's not necessary to go to anything else, and I just go to that. I'm sorry, at 953, yes. In the opinion of Lord Justice Swinfinide, about the second paragraph will do, the first full paragraph on the page:

PN358

Then another point raised is to the meaning of the words appealed to the council for a decision. The defendants contended that such language left the council entirely at large to order whatever from a business point of view the council might think fair and reasonable ...(reads)... by what is called a tender and the performance of which became illegal as involving trading or intercourse with the enemy.

PN359

Then, if we go across to Lord Justice Pickford at 957, down the bottom, about five lines up:

PN360

I think this decision of the Divisional Court in Tolmey v Grey is correct and I adopt the language of Mr Justice Scrutton when he says ...(reads)... it remains for the court to determine the rights of the parties in the events that have happened.

PN361

So again, it's an arbitration clause and what the council had to do was to make a decision about the parties' legal rights. A finding in Lord Justice Banks 961 in the first full paragraph on the page has this to say:

PN362

The construction of rule 491(b) is therefore not directly in question -

PN363

this is the point where one may say, well, this is obiter, so be it, but it is the English Court of Appeal dealing with a matter of great importance to commerce:

PN364

- but as much as in so much argument has been addressed to the point I think it's right to express my opinion upon it. In the first place I think that the object of introducing the first two lines of the rule was merely to exclude ...(reads)... In my opinion the decision referred to in the rule must be a decision on the rights of the parties under the contract ascertained in accordance with legal principles.

PN365

Now, in our respectful submission the cases in the High Court of Australia, including the most recent consideration specifically of this matter, the private arbitration case, and all of the other cases which have also been looked at at least by Vice President Lawler in the first Telstra decision point unerringly in the same direction, that what is required to be done under a private arbitration is to decide the issue before the court in accordance with the legal rights of the parties.

PN366

Now, that means that they get legally available remedies as Justice Heerey said in the NUW case. We deal with this in paragraphs 8.1 through 8.3 of the written submissions and I won't repeat what there appears. In paragraph 8.4 we refer to a decision of your Honour, Senior Deputy President Lacy, in the MUA case and we do so for this reason only, that - your Honours, this is behind tab 15, I think, in your Honours' case book. This is a decision of your Honour, 3 September 2001, under a certified agreement, under a dispute resolution clause of the kind we're dealing with here and we only go to this for one reason, and that is to perhaps sympathise with your Honour's observation at paragraph 63 where your Honour had referred in paragraphs 56 through to almost 63 to the powers of the Commission under section 170LW and in paragraph 61 your Honour begins to draw consideration of the earlier cases together and your Honour finds that in the present case:

PN367

In the present matter, the dispute relates to the conduct of the management under the grievance procedure and disciplinary action taken against two employees at East Swanston Dock. Questions as to whether the agreement was applied ...(reads)... to two states in states other than Victoria does not convert what's essentially a local dispute into an interstate dispute.

PN368

And your Honour found the jurisdictional challenge had to fail, and your Honour says this:

PN369

What then of the orders that the Commission may make in the exercise of powers under an agreement in settlement of a dispute over its application?

PN370

And your Honour says this:

PN371

It seems that the scope and nature of the orders that the Commission may make in such circumstances will depend on the agreement of the parties as recorded in the certified agreement.

PN372

And then your Honour says:

PN373

Provided only that it is reasonably incidental to the application of the agreement to which the dispute relates -

PN374

and a reference to the private arbitration case.

PN375

That reference, reference number 52, was I think to paragraph 39 of the private arbitration - 31, I'm sorry, 31 in the private arbitration case, and, your Honour, what we want to submit with great respect is that your Honour appears there to have been looking for some guidance about what the powers were. Now, your Honour, with respect, was correct to go to the private arbitration case. However we would respectfully submit that paragraph 31 of the private arbitration case in fact does not provide the sort of assistance that your Honour might then have thought that it did.

PN376

In paragraph 31 of the private arbitration case which is [2001] HCA 16; 203 CLR 645 and in your bench book at tab 5. Paragraph 31 on page 658 says this:

PN377

Where parties agree to submit their differences for decision by a third party the decision maker does not exercise judicial power but a power of private arbitration. Of its nature judicial power is a power that is ...(reads)... But rather its effect depends on the law which operates with respect to it.

PN378

Now, stopping there at the end of paragraph 31 our respectful submission it this. That what should have been pointed out to your Honour, but seems it was not, is that in fact the notion of reasonable incidence to the application of the agreement to which the dispute relates is in fact not a reference to any continuity between reasonable instance and the nature of the dispute with which the commission is seized. That notion doesn't come from the High Court decision in the private arbitration case, nor does it come from any of the other High Court authority.

PN379

The closest one gets to it is, as we submitted before lunch, the case dealing - the Atkinson-Leighton Joint Venture case where the High Court was prepared to allow, because justice required it, because a court could do this justice, to award interest on an arbitrator's award where the statute was silent on the point because a court could do it. Now, it may be that what was put to your Honour had something to do with the way in which that matter was reason to a conclusion, but in our respectful submission that notion has no role to play in any jurisdictional or power sense in relation to the Commission's function as a private arbitrator.

PN380

To the extent that Vice President Lawler thought that something similar might have been appropriate, as his Honour found in the first of the Telstra cases, that's Vice President Lawler in - it's in 125 IR at 88 and it's behind tab 3 in the Judge's book and which we have, for convenience, extracted in the written submissions to save everybody going from volume to volume, that notion seems to have crept into the decisions in the Commission and perhaps this is the first time that any party has sought to call attention to the fact that it's a notion which has no role to play in any jurisdictional of power since, and that submission is put in full knowledge and appreciation of the fact that there are words to similar effect in section 110 of the Workplace Relations Act.

PN381

But section 110 is not directed to jurisdiction, nor is it directed to power. Section 110 is directed to procedure and where a court or this Commission is enlivened under a 134H clause to determine the legal rights of the parties to the extent permitted by the scope of the reference, it isn't open to the Commission to use justice and fairness and equity as a guiding mark, far less a jurisdictional measure in the exercise of its power and in determination of legal rights. It must do it in accordance with law and the reference to equity, good conscience and the substantial merits of the case is inconsistent with, in any jurisdictional sense, the exercise of the Commission's obligation to decide legal rights.

PN382

If it meant no more than the Commission was to be ensured that its procedures were fair, that's one thing, one would expect the same with any arbitrator, but it's quite a different thing as Vice President Lawler seemed to conclude that it could be linked to the notion that what the Commission is doing is determining legal rights and that the arbitrator can exercise all such powers as are necessary to fairly and effectively determine the dispute. That's what the Vice President said, with very great respect to the Vice President, we cannot find anywhere anything in his judgment which shows where that expression comes from, but it's our respectful submission it doesn't come from any of the authorities.

PN383

But it's a notion which, because it came to the surface in your Honour's decision in the MUA case, we felt with some deference that at least we should raise it lest that concept still, as it were, might be thought by the Commission as presently constituted to have some role in a jurisdictional sense. It could not, one could not in our respectful submission, the Commission could not use that notion to expand the jurisdiction to determine the legal rights of the parties so as, for example, to make a reinstatement order because the Commission felt that was fair.

PN384

May I then come also to - I'll deal with this one, my learned junior has asked me to deal now with the University of Wollongong case and I'll deal with that now. There's more loose paper coming up, I'm terribly sorry, your Honour.

PN385

JUSTICE GIUDICE: Thank you.

PN386

MR WEST: The Full Bench of this Commission in the National Tertiary Education Union case decision 9 April 2003. In this case, as appears from the first paragraph the union had appealed against the decision of the Commission on Lawson in which he had dismissed two applications which the union had commenced. The first application was a notification of an alleged industrial dispute under section 99. The second was a notice under a dispute settlement procedure in an enterprise bargaining agreement. In both matters the University of Wollongong was the other relevant party. The section 99 notification has alleged that an industrial dispute existed between the union and the University concerning, "The type of employment classifications, redundancy payments," et cetera.

PN387

The notice was given - with a Dr Grant Dodwell - the notice was given under the dispute settlement procedure in an agreement referred to as the Academic Staff Enterprise Agreement that was certified under 170LJ, the parties are the University and the union. The matters in dispute described in that notice were in identical terms. Both notices were dated 29, but it appears common ground that each was filed in the Registry on the 30th. Now, those matters came forward for determination on appeal and relevantly at page 82 of the report, paragraph 21, down the bottom of the page, the Full Bench says this:

PN388

We also agree with Mr Shaw's submission that the Commissioner was in error in determining that, as there was no provision in the agreement regulating the circumstances in which an employee on a fixed term contract could be changed to continuing employment ...(reads)... There's no constraint in these terms upon the remedy that may be decided upon once jurisdiction has been established.

PN389

Now, there is, in our respectful submission, a problem inherent in a description of the Commission's position in those open ended terms. This Commission has held many times, as we've indicated in the written submissions, that as for example in CFMEU v McMahon Contractors, that the powers found in section 111 of the old Workplace Relations Act marked the outer limits of the powers of the Commission in relation to a dispute resolution clause.

PN390

Now, it's true that the McMahon Contractors' case was an unusual case, but nevertheless the Commission certainly, under your Honour, the current President, has made this point on numerous occasions. In McMahon Contractors, which we have put in bundle 16, I just need to go to that for the sake of completeness.

PN391

JUSTICE GIUDICE: Yes.

PN392

MR WEST: This was a decision, your Honour, the President, presided, and Vice President Lawler and Commissioner Raffaelli:

PN393

There was a determination of a dispute between the employer and the relevant union. The Commission at first instance determined that although 170LW of the Workplace Relations Act did not empower to determine a dispute, ...(reads)... by an award or decision it makes, nor can the parties to an agreement. The Commission at first instance made an error and so on.

PN394

Now, the problem was that the dispute settlement procedure clause, which is set out at page 467 of the report was simply - when one sees those subparagraphs 14.1(a) down to (g), this was simply not a dispute resolution procedure of the kind which 170LW authorised the Commission to approve should the parties to agree to put such a clause in the instrument. At paragraph numbered 4 on 468, just after LW is extracted, the Commission says that:

PN395

Section 170LW empowers the Commission to settle disputes over the application of the agreement. By contrast 14(1)(a) of the agreement refers to a grievance which arises through the course of employment.

PN396

So that the Commission there very rightly was drawing the parties back and, with respect, correctly anchoring its conclusion in the scope which 170LW or 134H, as the case may be, anchors in it and accordingly what the parties had attempted to do by this provision was empower the Commission with jurisdiction which it didn't have. So that unless one fitted through the gateway of 170LW or the equivalent provision, then what the Commission was doing was not authorised in the way that Parliament intended.

PN397

So that when the Commission says in paragraph 12 on page 470 that the Commissioner's conclusion was wrong, we would respectfully submit that is so, and also that the Commissioner had misconstrued what was said in the private arbitration case. But the case is important to show that the Commission has time and time again expressed the view that it's jurisdiction can't be enhanced. Now, we make the point in our written submissions that there is no jurisdiction in the Commission under the Act in a 134H case to order reinstatement. It simply isn't there, and unless the parties had put in a certified agreement that is within the LW clause specifying what the remedies were which the Commission could award when acting as a private arbitrator, there would be no jurisdiction to do it.

PN398

In our respectful submission, that hasn't been done in the present case and therefore there isn't jurisdiction to do it. The powers in 111, even to the extent they might be available in the conduct of a private arbitration, don't empower the Commission to do it either. The 111 powers, and powers they truly are, have to be read to answer hopefully the question your Honour, the President, announced earlier this morning and wished to ask me that, how do 111 powers work. The 111 powers have to be read in the light of the jurisdiction which the Commission is exercising. That jurisdiction is jurisdiction it gets through 134H and 62.

PN399

That is, jurisdiction of a private arbitrator. That means that a number of those powers which the Commission might otherwise have are simply inappropriate in the conduct of the private arbitration. For example, the powers of what used to be 111(1)(g) to discontinue hearing a dispute in the light of triviality of it, that sort of thing. That's one that readily is inappropriate. Others of those powers are plainly useful but they're not, as it were, necessary in order for the Commission to carry out its function. The parties could in fact, in the terms of their submission to arbitration indicate to the Commission what powers it may in fact exercise and it can cut down clearly what's in 111. It's not a matter of contracting out of the statute.

PN400

It's a recognition that by reason of what Parliament is allowing the Commission to do, something it could never otherwise do, namely, determine matters in accordance with law, legal rights. This is a power which is informed and is shaped by reference to that jurisdiction and that means the Commission is not at large to act in accordance with equity and the merits of the case if that means, by that mantra, that there's an additional jurisdictional twist that enables the Commission, although deciding that the legal rights of the parties are that the employer under this particular dispute settling procedure had not complied with various provisions of the dispute settlement requirements, that the Commission could then go on and make an order of reinstatement. In our respectful submission, it simply cannot do it.

PN401

Now, your Honours, in our respectful submission the submissions are perhaps a little novel and so far as we can see, the full scope of this sort of approach has not been laid out before. It's plain that in the first Telstra case Vice President Lawler did in fact attempt to do just this, something very similar, and I don't really need to go to that beyond what we've already said about it, but in a very lengthy and closely reasoned judgment, until his Honour got to the point where he said that, in effect, the arbitrator could use equity and good conscience as we've indicated, up to that point one didn't have the problem. Once he got to that point, there was a point of departure and that point of departure is not anywhere indicated by his Honour and it's just inconsistent with the approach the High Court took in our respectful submission.

PN402

There's one further judgment which I must mention and that is the decision in Qantas Flight Catering v Australian Municipal Administrative and Clerical Services Union, I've got copies of here to hand up. This case seemed to have started off - or after this case started there seems to have been a change of personnel at the bar table. By the time the matter got before the Full Bench I think Dr Jessup of Queen's Counsel had come in to the matter and, as his Honour then was, and I only want to go through what is really a footnote to an exchange with Dr Jessup which was only discovered by looking at the transcript as to who was involved.

PN403

But at page 88, paragraph - I'm relying on what I'm told by others here so far as the role of Dr Jessup, and I don't mean his Honour any - for me complimenting in a sideways fashion. But at paragraph 69 the Full Bench begins to look at how section 111 operates and reference to any other proceeding under the Act and that sort of thing in the statute as it then stood, and it gets down to 72 where they say:

PN404

In our view the context in which the Commission is performing its private arbitration functions does not lead one to conclude the power in section 111(1)(s) is not applicable. ...(reads)... to settle disputes over the application of the agreement. It's the institution which is empowered to settle such disputes.

PN405

Now, stopping there, it's not entirely clear what is embraced by that proposition:

PN406

If it means the institution with all of its trappings and all of its power and all of its authority, the answer to that must be no, with great respect, for the reasons we've already articulated. ...(reads)... Such a power is an incident of the parties choosing and the Commission approving the Commission as private arbitrator.

PN407

Now, with very great respect to their Honours, it doesn't follow, in our respectful submission at all in the way there suggested, that because Parliament has given the jurisdiction to a particular body that you take the body as you find it, as it were, and all of its powers, plenary and procedural. That doesn't follow at all because - - -

PN408

JUSTICE GIUDICE: It doesn't appear that that's intended, though, does it?

PN409

MR WEST: Your Honour, then I'm content if your Honour reads it in that way.

PN410

JUSTICE GIUDICE: Well, I'm not sure what Mr Reitano will say about it.

PN411

MR WEST: I'm sure he will say something about it - well, he may, but I'll reserve anything they might wish to say to reply, if I might.

PN412

JUSTICE GIUDICE: Yes.

PN413

MR WEST:

PN414

We also accept that the application of 111(s) in the context of private arbitration by the Commission means that the Commission will be able to do ...(reads)... provides that the parties may choose the Commission to settle disputes over the application of the agreement. One consequence is the choice of the arbitrator will have the power of summons.

PN415

And then this is said:

PN416

The appellant also submits that 111(1)(s) if applied, the Commission would be able to exercise that power regardless of the terms of the parties' agreement under which a matter is referred to the ...(reads)... However, as that issue does not arise in this matter, it's not the subject of detailed argument.

PN417

I can then pass over - there's an acknowledgement as to the role of the private arbitration case, at the bottom of the page they say:

PN418

But the Commission is a creature of statute invested with statutory powers. In this regard it's important to note that powers are conferred on the Commission by the agreement ...(reads)... of the Act authorises the Commission to exercise those functions.

PN419

And I'm just about where I want to be. I'll skip over the next paragraph, and, 83:

PN420

If, as the appellant contends, the Commission's powers in an arbitration pursuant to a dispute settlement procedure in a certified agreement are co-extensive with the powers ...(reads)... The appellant conceded that as a consequence the Commission would be obliged to apply the rules of evidence in determining such disputes.

PN421

Now, that's the concession footnoted to the transcript and our illustrious predecessor seems to have - it's been attributed to his Honour, but with very great respect, it doesn't follow at all. In commercial arbitration, conducted under the Commercial Arbitration Act, rules of evidence can be done away with, parties can agree not to apply them. That doesn't meant that the arbitrator doesn't determine the matter in accordance with the legal rights of the parties. That's a matter, a procedural matter that the parties can agree between themselves. It doesn't have the consequence that if the rules of evidence are not applied, there's not a matter to be determined according to law, and that's the point we wish to simply make.

PN422

So that what in our respectful submission this review seems to demonstrate is that there are a number of views within the Commission, as it stands, as to what precisely the Commission is doing in relation to private arbitration and what its powers might be. I don't wish to be misunderstood with that submission, your Honours and I mean no disrespect in putting it that way, but that individual benches have formed individual views about this. But one thing, in our respectful submission, remains clear, and that is the guidance given by the High Court of Australia and that nothing detracts from that and nothing results in the procedural powers of the Commission giving rise to some jurisdictional bonus whereby the Commission is able to award reinstatement.

PN423

Now, your Honours, they are the essential submissions we came here to put, subject only to confirming that your Honour, the President, has confirmed on at least two or three previous occasions that a decision under one of these provisions is in fact an order for purposes of the Act and Woolworths v Miller is one, 206151 IR 236, and even without that, we would respectfully submit that it plainly is an order for the reason I gave at the outset of the argument this morning. The relevant passage is at 238 to 239, paragraph 5 through paragraph 8 and I won't - the term "order" is not defined in the statute.

PN424

JUSTICE GIUDICE: Well, there is a complication or at least there's a difference in the new Act. The new Act, I mean the Act that came into operation on 27 March last year.

PN425

MR WEST: Yes.

PN426

JUSTICE GIUDICE: Section 111, by coincidence the same section in the amended Act, the earlier Act, used to have provision for the making of an award or order.

PN427

MR WEST: Yes. Now it doesn't.

PN428

JUSTICE GIUDICE: Now it doesn't. That's one difference, and there's a preamble to the Commissioner's determination which might raise an issue as to what he was doing. I think that often in these cases, Mr West, both sides are reasonably content for the matter to be treated as an order and I'm not sure there's really been a detailed analysis of it. I'll re-read some of the decisions you're referring to me with some interest, but I think that the question is there. We want to be sure we're proceeding with jurisdiction and I'll be interested in any other submissions you've got about it.

PN429

MR WEST: Yes. Your Honour, we would up this, that the Commissioner is certainly - he doesn't need 111 to make his order. He makes his order by reason of the fact that he has jurisdiction, which the parties give him, to determine the dispute between the parties. Now, that determination can be done by way of a declaration because he's able to give the relief a court could give. That declaration is a declaratory order in the ordinary parlance of the courts. It's as much an order as any other order and it declares once - I'm sorry, your Honour?

PN430

JUSTICE GIUDICE: And it's appellable?

PN431

MR WEST: And it's appellable and it - - -

PN432

JUSTICE GIUDICE: Why?

PN433

MR WEST: Because what the Commissioner is doing is exercising power which, under 121(a) an appeal lies against an award or order made by a member of the Commission. Now - - -

PN434

JUSTICE GIUDICE: Yes, but I fully understand that.

PN435

MR WEST: Yes, of course.

PN436

JUSTICE GIUDICE: The question is, is it an order in that sense.

PN437

MR WEST: It is an order in that sense.

PN438

JUSTICE GIUDICE: If there's no power to make an order under 111, where does the power to make an appellable order come from?

PN439

MR WEST: He gets it, your Honour, because he can make a decision under 111 if he needs 111. He doesn't need 111 at all because he's exercising jurisdiction given him by 134H kept alive by 62 and that means that he links - his jurisdiction is on two legs, two feet. Part of it is anchored in the old Act under 134H. That's where he gets his jurisdiction from. If he didn't have that he wouldn't have any, so says the High Court. What 62 does is keep the window open to let him keep reaching back to his source of power, source of jurisdiction to decide the matter. If that window closes, that's the end of it.

PN440

JUSTICE GIUDICE: Well, on the face of it it's a bit curious that there's no power to make an order.

PN441

MR WEST: Well, your Honour - - -

PN442

JUSTICE GIUDICE: Yet there is a no appeal available. I understand your submission.

PN443

MR WEST: Your Honour, that's how with respect we put that and we would submit, as I indicated by reference to the Queen v Recorder of ex parte Brasnose College 1969 3 All England Reports, 428 at 431 where Mr Justice Bridge said this:

PN444

To require taking an affirmative course of action it is equally cleat that it can have a wider meaning.

PN445

That's what order means and that's what's required here.

PN446

JUSTICE GIUDICE: Yes. I'm not suggesting it would not be a binding order in relation to any future proceedings to enforce it. The question is really one of statutory construction.

PN447

MR WEST: And, your Honour, just so I may complete that, the fact that there's no definition of an order contained in the statute as a result of the surgery applied to it is - as a result of that, your Honour, the meaning ascribed to the word "order" is at large. You're not driven back to some statutory dictionary to interpret it, in which case, in our respectful submission, the result is as we've submitted. They're the submissions we wish to put if the Commission pleases.

PN448

JUSTICE GIUDICE: Can I just tax you a little bit longer, Mr West?

PN449

MR WEST: Of course, your Honour.

PN450

JUSTICE GIUDICE: On the question of the application of some of the other parts of division 4 of part 3, 111 is in that division, but there are other sections that conceivably are relevant. For example, 110(1) which deals with the rules of evidence and so on, and incidentally, 111(1)(c) has the fatal formulation in it.

PN451

MR WEST: It does, it does.

PN452

JUSTICE GIUDICE: Now, 110(2) and 110(3) and so on, there are earlier provisions in the division dealing with the public interest and so on, various conventions. My question really went beyond 111, quite a bit of make of these other statutory provisions in the context of the private arbitration.

PN453

MR WEST: Your Honour, they have no work to do, with respect. What the Commission is doing here is exercising a particular function which is to determine the legal rights of the parties to a dispute. Now, that is a, on one view, very narrow but nevertheless, one can understand, essential function for the Commission to have given the role which has been described for these 134H agreements, namely to facilitate the continuance of the settlement of an industrial dispute which did extend .....

PN454

So that for the Commission to determine as it were during the currency of that instrument, the legal rights of the parties in a particular way, whilst unusual, can be seen to have a very valuable role to play and one which the Commission didn't have until the successors of 134H came into the Act and, as Heerey J pointed out, for want of it, your Honour's point didn't fly and had there been such a provision, your Honour, the President, would have had a complete victory.

PN455

JUSTICE GIUDICE: I didn't have many of those, Mr West.

PN456

MR WEST: They elude us all from time to time.

PN457

JUSTICE GIUDICE: But nevertheless the issue is, what is the implication of the submission to jurisdiction in the context of this legislation? I don't think it's sufficient simply to say, well, it's only the legally available remedies that you can award or governed by what a court could do in dealing with such a matter. Isn't the question, what is the implication from the submission that the parties make in the context of this legislation?

PN458

MR WEST: Your Honour, the parties - - -

PN459

JUSTICE GIUDICE: The answer may be the one you suggest, but I think the analysis is, what's the implication.

PN460

MR WEST: Your Honour, the implication is that he parties ask for the Commission to decide the legal rights in the way the High Court has said they did. It would be open for the parties - perhaps I just need to go back one step. I withdraw that it would be open for the parties. This particular dispute resolution clause is fulsome as to what the requirements are which lead to it being triggered. It doesn't otherwise contain any express statements about what the parties intend the Commission to do. But the law as laid down by the High Court is that the parties could have cut down the procedures that the Commission could follow in the determination of their legal rights.

PN461

It's not the Commission's powers to resolve a dispute as though it were resolving an ordinary industrial dispute cut down. It's the Commission's power when exercising this special jurisdiction can be cut down. So that the constant guide is, if the Commission is acting as a private arbitrator, it's doing what a private arbitrator does. It's not doing what an industrial arbitrator does. However at first blush unusual one might think that result - the High Court had no difficulty with it. Indeed, Heerey J had no difficulty with the concept of private arbitration with respect to his Honour.

PN462

The problem was that the statute didn't exactly enable to do what was done, to do what was done and have legal effect, but now it does.

PN463

JUSTICE GIUDICE: It led to a lot of applications for leave, though, the case.

PN464

MR WEST: Yes. It was a lot of fun, obviously. It's become a landmark case on this matter, but your Honour, one can - I mean, I don't want to repeat myself, but in our respectful submission the implications of other aspects of industrial arbitration, for the reasons given by Heerey J are not germane to this debate. They go to one side. The Commission here is wearing a pinstripe suit, if I may put it that way.

PN465

JUSTICE GIUDICE: Is that all, Mr West?

PN466

MR WEST: Subject to anything else that your Honours wish to ask me, they're our submissions.

PN467

JUSTICE GIUDICE: Thanks very much. Thank you, Mr West. Mr Reitano?

PN468

MR REITANO: If it please the Commission, can I deal with my submissions in this way. The first matter I want to deal with is the last matter that my learned friend raised and that is in respect of the competency of the appeal. At the forefront of our submissions is that at least insofar as there is any suggestion that an order is being made such that is permissive of any appeal, the appeal is incompetent because there was no order made by the Commissioner in the sense that would allow this Commission on appeal to deal with the matter, primarily because of the reason that, your Honour, the President, identified and that is that the power to make an order in proceedings of this kind is not to be found in section 111 any longer.

PN469

But your Honour did raise, I think, what may have been or what might be the curiosity that the Act allows appeals to be made against awards or orders still, but doesn't allow orders to be made. That's not quite right, with respect, because of the enormous number of provisions throughout the Act that empower the Commission to make orders.

PN470

JUSTICE GIUDICE: Yes. It's just that they're not in the general powers.

PN471

MR REITANO: There is no general power to make an order and there is no power that would be relevant triggered by, if I can use the old language, 170LW or its equivalent, that would allow, on our submission, an order to be made in such proceedings, and I'll come to that ultimately when I deal with the question of private arbitration or otherwise. But the first issue is that insofar as there is a challenge to any order which requires some kind of - I don't say this in a pejorative sense - merit review of Commissioner Smith's decision, the appeal is incompetent.

PN472

Insofar as jurisdiction is concerned what I might call the private arbitration point, there's no issue that the appeal is competent in that respect, because it challenges jurisdiction and that's available.

PN473

JUSTICE GIUDICE: I hesitate to ask this question, but given the provision that the Commissioner was operating under, the one based on 134H, was he exercising powers under the current legislation?

PN474

MR REITANO: I wonder if I could take that on notice, your Honour?

PN475

JUSTICE GIUDICE: Yes.

PN476

MR REITANO: It did occur to me when your Honour asked the question about orders and appeals.

PN477

JUSTICE GIUDICE: Yes, it might be relevant to that.

PN478

MR REITANO: And there is something that I want to look at, but I think it may provide an answer, but I don't want to guess the answer.

PN479

JUSTICE GIUDICE: Yes, very well.

PN480

MR REITANO: So the first issue, and the only matter that I need to take the Commission to because the decision in Woolworths has been handed up, the relevant paragraph is paragraph 7, the relevant reasoning behind distinguishing the Tax Office case relies on at least the failure in the Tax Office case to refer to section 111(1) and the power that was available then to make an order and that's found, as I say, at paragraph 7. I don't need to, at this stage, I don't think, to remind the Commission that Commissioner Smith in his decision in the appeal book, if one needs to find it, at page 19 and in paragraph 72, said this:

PN481

As the arbitrator with powers conferred by the agreement and the Act I determine

PN482

- and then he made a series of determinations.

PN483

Not, as was put to your Honour on the stay application, not as my learned friend put many times orders. At no point did the Commissioner make in terms at least an order. Even if it is in substance an order, to the extent that the current appeal relies on the current Act, it would be incompetent. That's the point. It's short, sharp, simple and I don't wish to say anything further about that. Can I then say that - I'm sorry, yes. I'm reminded of course that the power in the agreement, and I'll come to the provisions of the agreement shortly - the power in the agreement in respect of this particular clause or clauses of the agreement is to refer the matter to the Commission for conciliation/determination and that appears to be absolutely entirely consistent with what Commissioner Smith was purporting to do when he determined the matter in the way that he did, picking up the specific power that is conferred by the agreement to determine the matter.

PN484

It will be necessary to say something more about that in due course because even if some of my learned friend's submissions were to - or in the unlikely event that they were to find favour, the power conferred by the agreement was to determine, and when one talks about needing to find a power in the agreement to do various things, Commissioner Smith did exactly what the agreement empowered him to do, to determine the dispute. As I say, when I come to the agreement I'll deal with it.

PN485

Can I say there are five matters that I want to deal with in terms of the appeal, although they, broadly speaking, fall into the two categories in which my learned friend has addressed with one exception. Shortly I want to come to firstly Commissioner Smith's decision and spend a little time walking the Commission through that. Secondly, I want to deal with the claim, misconceived as it is, that there was no dispute relevantly before the Commission that had gone through the various steps of the dispute settlement procedure in the agreement and I want to take the Commission to some of the references to the evidence rather than some of the submissions of the parties about that evidence. I also need to there refer back to some of the things that Commissioner Smith found.

PN486

The third point that I want to raise that will be short and sharp is what I might call the employee point, or the ING point. My friend makes the formal submission it's wrong. I will make the formal submission that you should be bound by and follow the majority in ING and so I'll be very quick when I come to that. The fourth point that I want to deal with is the Gordonstone point, I'll call it that. You can call it the private arbitration point, if you'd like. Then I need to fifthly deal with some matters arising from our own appeal and of course, if what I've said in relation to the competence of the appeal were to find favour, it has some fairly fatal consequences for the appeal that is being relied on by my client.

PN487

Then finally I just want to deal with some miscellaneous points at the end. Could I say before I come to - one further thing before I come to Commissioner Smith's decision, and that is this, that in order for my learned friend to succeed in all that he's put to the Commission, it is our position that he needs to have this Commission, as presently constituted, overrule not one and not three, but four other Full Benches of the Commission on various points. I can tell the Commission that those decisions, and I'll come to each of them in due course, ING, which I've already referred to, I think the only one on which I think your Honour, the President was involved was the Telstra appeal, and I'll come to that in some detail.

PN488

The third one would be Wollongong University and the fourth would be the Qantas Flight Catering decision. All of them in different ways would need to be overruled by the Commission as currently constituted in order for my learned friend to succeed in what he puts to the Commission. Could I then firstly deal with Commissioner Smith's decision. It's convenient for a number of reasons, not the least of which is that it records the relevant provision of the redundancy agreement and it will be necessary to say something about that.

PN489

The decision is found at page 1 of volume 1 and I think it's fair to say that from paragraphs 5 through to paragraph 19 the Commissioner deals with the jurisdiction point in relation to the third matter I want to deal with, and that is the employee point and the ING decision. The Commissioner not only picks up, as I understand the Commissioner's reasoning, the reasoning of the majority in ING but he also picks up an argument that was put to him in relation to a judgment of her Honour, Branson J, in the Federal Court of Australia in a case called Miller.

PN490

I don't want to waste any time on that at the moment, but simply to highlight that that's what happened to paragraph 19. At paragraph 20 the Commissioner sets out what he describes as the principle focus of the agreement being clauses 7.3 and 7.4 of the redundancy agreement. It is vitally important not only to this case, but also to the redundancy agreement itself that the provisions of clauses 7.3 and 7.4 together not be deprecated in this agreement. It is fundamental to the purpose of the agreement and the way in which it is to operate that clauses like 7.3 and 7.4 are observed and are observed strictly.

PN491

In part, when I deal with other parts of the agreement in due course, the Commission will see that one of the objectives of this agreement is to preserve career employment for people within Telstra. It also delivers redundancy benefits, if I can describe them that way, but there are very important provisions of the agreement which the parties have agreed upon that concern efforts to protect job security and protect career employment and 7.3 is as important as 7.4 may be. It is not to be presumed that the clause, in particular 7.4 is only for the benefit of Telstra. 7.4 lays down a time limit for various things to be done, in particular for the consultation required by 7.3 to take place.

PN492

It is wrong to presume that Telstra or the union or anyone else has power to extend the period in 7.4, as Telstra propounded before the Commission that it had the right to do, a right that's not found in the agreement at all, and then to rely on what it says it did by way of consultation outside the two week period. When the Commissioner came to deal with the matter of authority and decision making and the like, at least in part it must be understood that what he was referring to was what was happening within the two week period and I'll come to why that's so in a moment.

PN493

Clause 7.3 requires two things to be done concurrently with the notification that I think was referred to by my learned friend as the form A, the form As that we suggested to Commissioner Smith were invalid because they wrongly identified the wrong classification of the people who will be made redundant. Form A identified CW5s. It was 6s and 7s who were being made redundant and that's the subject matter of Mr Metcher's letter that I think my learned friend took the Commission to earlier. But concurrently with that notification two things need to take place. The first is information about the proposed retrenchments and the reasons for them, and secondly there must be afforded to the union an opportunity to consult with Telstra over two very important matters.

PN494

This is not an obligation that is to be regarded lightly, nor is it an obligation that is met by someone sitting in a room either listening to someone else say words or, when they say those words, say no. Consultation involves a great deal more than that. My learned friend described one of the meetings, the first in sequence, as the first consultation meeting. What the Commission should understand was happening in that first meeting, as is apparent from all of the evidence, is that it was compliance with paragraph (a). That is, this is what Telstra is proposing to do. Here is the information and here is the reasons for why we're doing it.

PN495

It could not sensibly be understood that the union was being consulted at that point with Telstra on the matters referred to in paragraph (b). And the consultation required by paragraph (b) involves firstly measures to avert the proposed redundancies and secondly, measures to mitigate the adverse effects of the proposed retrenchments and one of the very important measures that was the subject of evidence before Commissioner Smith that the union was saying could be taken in order to avert the proposed redundancies was to have regard to the positions at Coffs Harbour that had just been vacated and it is wrong to suggest that those positions were at the time that Telstra was undertaking any consultation, if it be called that, or was affording the union an opportunity to consult, it is wrong to say that those positions had been filled.

PN496

It is correct to say that offers had gone out in some cases, I think. I'll come to the evidence about it, but it is wrong to suggest that anything more than that had happened at that point in time. The fact, as I think was put in argument, the fact that the right hand didn't know what the left hand was doing is entirely beside the point because in order to afford an effective opportunity to consult on measures to avert the proposed redundancies, it was absolutely vital that the right hand know what the left hand was doing, and it was absolutely vital that information about such things was forthcoming from Telstra. Effective consultation meant that they had to provide information in the process. They as much as the CEPU did the talking about measures to avert the proposed redundancies.

PN497

Commissioner Smith's references to the lack of authority and the lack of decision making authority properly understood where a reference to the fact that no one was in a position in an organisation of the size of Telstra to consult about measures that were available to avert the proposed redundancies throughout Telstra. All that was considered, if there was any consideration at all were things about the actual business unit itself and things to do with positions that might or might not be available within the business unit itself and the response to that was effectively one party sitting in the room and saying no.

PN498

Commissioner Smith deals with various things to do with what is referred to as the concept of swaps, and I address just for a moment, our appeal raises that issue and the Commissioner's consideration of it without going into it before I come to it, the concept of a swap was well explained in the proceedings as being where one person's position is made redundant and that person is about to be terminated and someone else would prefer to be made redundant and they could go into each other's positions as it were swapping, that that would be something that historically could be done under the predecessor to the agreement. It was eliminated from the agreement by reason of a further agreement, if you like, and Telstra contended that there was no obligation any longer to undertake swaps.

PN499

The union contended in these proceedings before Commissioner Smith that no, no, no, no, we don't say that there is any obligation to perform a swap or to carry it into effect. What we do say, however, is that it is comprehended within 7.3 in particular (b)(1)(ii) that that may be a measure that would be the subject matter of consultation that would avert proposed redundancies or mitigate the harsh effects, one way or the other and evidence was given I think by Mr O'Keefe from Telstra's part that he would be astounded - astonished, I think was the word - if swaps were considered to be part of the agreement, because the intention on Telstra's part was not to have them in the agreement.

PN500

Evidence from the union was there was never any intention to give up the opportunity to consult about swaps. What was intended was to give up the mandatory implementation of the previous agreement. We put to the Commissioner, interpret the agreement according to its terms, its four corners. Be very careful about accepting what's said about one party's intention and no both parties' intentions, have regard to authorities of courts on interpreting agreements and the like and on that basis we win, there's an obligation to consult about swaps, the Commissioner rejected that, and as I say, when I come to our appeal, I'll deal with that a little bit more fully.

PN501

That's dealt with until about paragraph 32 on page 10 of the decision. At 33 the Commissioner says this:

PN502

Before turning to the operation of clauses 7.3 and 7.4 it is appropriate to recall the process which led to the Commission as constituted dealing with the matter. Telstra took the view ...(reads)... After all, that is the agreement of the parties. There were four persons who had completed the process under clause 17.1 when the matter came on for hearing the interim application.

PN503

I think my learned friend alluded to the interim application as being an attempt to stop by order of the Commission the termination of the four employees.

PN504

That failed. They were terminated and the ING point, which then was in abeyance, was taken by Telstra as there being no jurisdiction. The process meant that the Commission only had two working days in which to hear and determine the matter before the people were dismissed. ...(reads)... Finally, the CEPU was forced to construct on behalf of its members letters which were directed to legalities rather than merit.

PN505

Can I just pause there. No one hid from the Commissioner the fact that the letters that I'll take the Commission to in a moment were drafted by the union. It was on the table.

PN506

I accept that Telstra was treating the process in a bone fide way, but in the circumstances of this case the process could lead to a lack of employee confidence ...(reads)... no distinction is made between policy matters and matters which can be authoritatively considered by relevant online managers.

PN507

Now, it needs to be said that the process in the dispute settling procedure, the three steps and the like, cannot depend, as appears to now be submitted, on the ability of individual Telstra managers to hoodwink individual Telstra employees into believing that they don't have a dispute. A person gets to the third level, or the third step in the dispute resolution process presumably because they are aggrieved by something and the fact that that person is not skilled in advocating the detail of their own grievance and because a manager appears to be able to ensure that they don't say anything about their grievance does not dictate whether there's a dispute or not, a matter to which I'll return.

PN508

Consultation and structure of Telstra, Commissioner Smith then turns to the substantial matter arising under 7.3 and 7.4 and in paragraph 35 the Commissioner says this:

PN509

I now turn to consider whether or not there was information provided about the proposed retrenchments and the reasons for them, together with an opportunity for the CEPU to consult with Telstra ...(reads)... However, the question can rightly be asked as to who is the decision maker that the CEPU should consult that could implement action in accordance with clause 7.3.

PN510

Then his Honour makes a series of critical findings against two of the most important witnesses in the process. Can I come to the second before I return to the first, which is Ms Ahearn. In paragraph 38 Mr Wood gave evidence, and he was the Executive Director, Human Resources of Telstra Operations and the Commissioner asked him this question, and bear in mind this is the Executive Director, Human Resources of Telstra Operations:

PN511

Mr Wood, could I just ask one question before Mr Reitano resumes his seat, do you have the authority to place an employee who is identified as redundant, from one business line to a vacancy that might exist in another business line?

PN512

Answer:

PN513

No, I don’t, Commissioner.

PN514

And then working backwards, I think my learned friend took the Commissioner to paragraph 37 which describes Ms Ahearn's role as the Manager, Human Resources in the relevant business line, and in 39 the Commissioner deals with, without reading it, the same type of consideration concerning Ms Ahearn's authority and in 40 the Commissioner says:

PN515

In this sense there's a real issue as to who is the decision maker and the capacity of Telstra to implement its agreement with eth CEPU given that each business line is treated as if it were the employer ...(reads)... The decisions are the prerogative of business lines managers.

PN516

And then he uses from 41 onwards Coffs Harbour to illustrate the very point that he's making. He says:

PN517

Within the 48 redundancies announced for designers in Service Delivery CAN Provisioning, some were at Coffs Harbour. At the same time as redundancies were being announced ...(reads)... When inquiries were made of the business line it was discovered that offers had been made to fill the positions and in some cases acceptance had taken place but nobody had started in the positions.

PN518

I think a question that the Commissioner asked this morning.

PN519

Ms Ahearn was asked about whether or not something could be done to withdraw the offers and place some of the people who were being made redundant in those positions. ...(reads)...What I committed to was finding
out -

PN520

and so on and I don't read the rest of the quote. In 45 there is a reference to Mr Hatton. Mr Hatton was not called to give evidence. Mr Hatton was referred to as being the person to whom Ms Ahearn spoke to in the other business line and the Commissioner rightly points out that the gaping wide hole in everything that Telstra was trying to put about this, in one sentence, quite simply, further, simply because offers had been made and in some cases not accepted, did not mean that the situation was beyond examination and Telstra treated it as though it was and effective consultation, meaningful consultation required the very situation that the union, rather than Telstra, had identified and the way to deal with that was for Ms Ahearn to go and talk to someone and simply say, not doing anything about it and to come back and say no the union, and that's exactly the vice in the whole approach Telstra took.

PN521

It limited consideration to one business line. Bear in mind Coffs Harbour was being used by the Commissioner as an example, and secondly, the person who was saying no, for which Ms Ahearn was acting as the postman was not someone with whom the union was entitled to or had the opportunity to consult with. Now, in that light what follows in 45 through to 49 is hardly surprising and in 50 the Commissioner says:

PN522

Given these structures, including a lack of central authority, and the lack of a coordinated approach to redundancies and vacancies within Telstra, I find that it not complied with clause 7.3 of the agreement ...(reads)... has not been possible.

PN523

Now, could I pause there. It is not just the Commissioner saying consultation with a decision maker was impossible, as was put by my learned friend. It is everything in the sentence that renders consultation not having been possible. That is, the lack of a coordinated approach to redundancies and vacancies within Telstra is as important as it was not being able to talk to a decision maker. The fact that there was no one from Telstra's perspective allowed an examination of all available options rendered the process one that was not in compliance with the agreement and one that required rectification.

PN524

From there on the Commissioner deals with each of the individuals. That is, to about paragraph 68 and I will say something about those individuals when I come to the fact that it is now said that there's no dispute. But for present purposes I'd simply identify that. At 69 the Commissioner says:

PN525

I've reached the conclusion because of the organisational structure of Telstra where there is no authority reposed in any officer to implement the agreement. The clause 7.3 of the agreement ...(reads)... was consciously removed from the agreement and the need to return the relevant redundant employees to a position where the new approach can be implemented.

PN526

And then he goes on and determines the matter in paragraph 72.

PN527

JUSTICE GIUDICE: Mr Reitano, one of us has a matter at 4.15. If that's a convenient time to adjourn, we might do so. If it's not, we could go on a few more minutes.

PN528

MR REITANO: Could I just - - -

PN529

JUSTICE GIUDICE: Yes, by all means.

PN530

MR REITANO: There's just one matter that ties in.

PN531

JUSTICE GIUDICE: Yes.

PN532

MR REITANO: When the Commissioner came to deal with whether there was effective consultation and whether there was an effective organisational structure within Telstra he did so in the context of what was being actively put to him about what that would involve and what was put to him, amongst other things, was that consultation would involve not only the dissemination of information about what Telstra was proposing to do with this business line and with these employees, but also in the context of the provision of information about what could be done by Telstra for employees. Not by the business line for employees, but by Telstra, the organisation that employs something in the order of 22,000 employees, what it could do for these employees was as important as it was about what it was doing for its future.

PN533

Similarly consultation was said to involve the exchange of views between the parties on what could be done, the authority to make decisions and to influence the decision maker, the free and full and frank debate about what was being proposed, the concept involved putting everything on the table and putting it all up for debate so that 7.3 could properly be complied with within the time frame set by 7.4.

PN534

That might be a convenient time, your Honour.

PN535

JUSTICE GIUDICE: Very well. We'll adjourn till 10 in the morning.

<ADJOURNED UNTIL THURSDAY 1 MARCH 2007 [4.12PM]