C2007/2804, Transcript of Proceedings [2007] AIRCTrans 409 (24 August 2007)

TRANSCRIPT OF PROCEEDINGS

---

Workplace Relations Act 1996 17258-1

SENIOR DEPUTY PRESIDENT ACTON
DEPUTY PRESIDENT IVES
COMMISSIONER BLAIR

C2007/2804 C2007/2808 C2007/2825 C2007/2829

s.121 - Appeal to Full Bench re an Organisation matter
Appeal by Australian Federation of Air Pilots
(C2007/2804)

s.121 - Appeal to Full Bench re an Organisation matter
s.121 - Appeal to Full Bench re an Organisation matter
s.121 - Appeal to Full Bench re an Organisation matter
Appeal by Qantas Airways Limited
(C2007/2808)

Appeal by Australian Federation of Air Pilots
(C2007/2825)

Appeal by Qantas Airways Limited
(C2007/2829)

MELBOURNE

10.04AM, THURSDAY, 09 AUGUST 2007

Continued from 8/8/2007

Hearing continuing

PN498

THE SENIOR DEPUTY PRESIDENT: Mr Borenstein.

PN499

MR BORENSTEIN: If the Commission pleases. Can I before returning to the submission just attend to two small matters? I mentioned yesterday the order that was made by Senior Deputy President Kaufman on 13 June of 2007. I now have copies to hand up for the Commission's benefit.

PN500

THE SENIOR DEPUTY PRESIDENT: Thank you.

PN501

MR BORENSTEIN: I also mentioned yesterday I think that one of the authorities that we had prepared and put into the folder at tab 10 is the decision of Senior Deputy President Williams. It was photocopied in a strange way which would make it hard to deal with and we've got a substitute for that which we would hand up.

PN502

THE SENIOR DEPUTY PRESIDENT: Can you remind us what tab it was?

PN503

MR BORENSTEIN: Ten.

PN504

THE SENIOR DEPUTY PRESIDENT: Thank you.

PN505

MR BORENSTEIN: Without seeking to re-ignite the discussion which engaged us yesterday afternoon, can I just make this submission about the evidence that we were addressing concerning the failure of AIPA to take any steps in relation to the industrial representation of people that they've enrolled rightly or wrongly? We've made our submissions about the relevance of that material and we press that, but if the Commission were against us on that, we would seek to remind the Commission that that is only one aspect of the matrix of evidence that was before his Honour that he had to consider and even if the Commission were of the view that that material was not helpful to the resolution of the matter, it still doesn't touch upon all of the other material that we went to yesterday morning in terms of the conflict of interest between AIPA and the pilots in the regional airlines and we took the Commission to the various documents and so on, so that we simply want to make it clear that we don't see the point that we were debating yesterday afternoon as touching on our ground of appeal about the lack of attention in the reasons to the conflict material which we had elaborated earlier.

PN506

I think that that took us through to grounds 10, 11, 12 and 13 of our notice of appeal. Ground 10 was that his Honour wrongly failed to apply any inferences against AIPA in respect of its failure to call any evidence from any pilots from any airline other than Eastern Airlines to answer the evidence of the pilots called by AFAP generally and specifically in relation to the matters of conflict and then ground 11 is that his Honour wrongly failed to apply any inference against AIPA in respect of its failure to call any evidence from the pilots from any airline other than Eastern Airlines to answer the evidence of the objectors or to cross-examine the objectors' witnesses in relation to those matters and that his Honour wrong failed to apply any inference or burden against AIPA in respect of its failure to lead any evidence about Sunstate and then in round 13 a failure to apply any inference or burden against AIPA, a failure to call any pilots employed by Jetstar, especially when there were persons who had purportedly enrolled as members and one would imagine ostensibly supporters of AIPA coverage at Jetstar.

PN507

The way in which it seems that his Honour got past that sort of material and I explained to you yesterday that there was material caught by the objectors from the pilots in terms of conveniently belong and so on and there was no evidence called to answer that from AIPA. It seems that one must infer, although it's only an inference, that his Honour dealt with the question of conveniently belong in that passage in paragraph 112 I think it is at the top of the page where he said that:

PN508

AIPA was a fierce defender of the rights of its members and that his Honour therefore took the view that it would similarly defend the rights of the pilots to be enrolled if the application were granted.

PN509

And I've made submissions about that and I won't repeat them, but it leaves unattended to this issue of the Jones v Dunkel inference which his Honour referred to at paragraph 90 of the decision. You will see in the third last line of paragraph 90 his Honour notes:

PN510

It was noted by the objectors that AIPA led no evidence from any pilot to support its case. They submitted I should draw a Jones v Dunkel inference that their evidence would not have assisted the AIPAs case. I accept that submission.

PN511

Then he goes on to say:

PN512

The AFAP adduced evidence from several pilots to the effect that they were opposed to the AIPA being able to enrol them as members. They thought that to grant the rule change would lead to a conflict of interest that would be divisive and destabilising and conducive to dissent and disunity. They believed that it would not be in the interests of pilots employed in the Qantas subsidiaries. There would be friction -

PN513

and so on. Having noted that at paragraph 90 that a Jones v Dunkel inference was asked for and having accepted the submission, you then don't find anything in the decision about how his Honour actually applied the inference in the circumstances of the evidence. We've set out in our outline in paragraph 59 at the top of page 25 a summary of the three propositions that emerge from the Jones v Dunkel inference. I am sorry, it's not page 25, page 11. I am sorry, paragraph 59 at page 11 in (i), (ii) and (iii) we've set out the three propositions which emerge from the Jones v Dunkel proposition and they are that an unexplained failure by a party to give evidence or to call witnesses may in appropriate circumstances lead to an inference that the uncalled evidence would not have assisted that party's case.

PN514

Secondly, the unexplained failure to call evidence entitles the trier of fact to more readily accept any inference which was fairly to be drawn from the other evidence before the trier of fact on which a witness not called by the party could have been expected to give evidence, so in other words - and finally that the evidence of a missing witness must be such as would have elucidated a matter in issue, so the three propositions are that if you've got an unexplained failure to call a witness to give evidence, that the tribunal may draw an inference that that evidence, that the evidence of that witness would not have assisted the case of the party who didn't call it, so if we translate that into the situation in this case, the lack of evidence from pilots in support of the AIPA in those airlines where they claim to have had support, when set up against the positive evidence of the pilots called by the objectors to say that it would be not a good idea to have AIPA coverage may lead the tribunal to more readily accept the evidence of the objectors' witnesses by drawing the inference that the evidence of the pilots, the AIPA possible pilot witnesses, would not have assisted AIPA on that point.

PN515

The second proposition is that you can more readily draw the inference that's available on the evidence which the objectors led and which wasn't cross-examined because there is no answering evidence called from witnesses who are available and might have been expected to give contrary evidence if they were called such as pilots who were said to be supporters of AIPA to the extent that they had signed up and paid money and then the third point is that you need to be satisfied in drawing the inference that those witnesses who weren't called were witnesses who could give evidence on a relevant issue and it's clear that they could.

PN516

It's clear that the pilots who it said supported AIPA could just as readily give evidence about the question of the desirability of AIPA having coverage as the pilots who came along and gave the contrary evidence. And you'll recall yesterday we drew attention to the fact that in Jetstar, for example, when the first of the applications that had been withdrawn by AIPA was filed in the Commission, there were pilot witnesses who were prepared to come forward and on this occasion there were not and that adds strength to the inference we say you should draw that the conclusions that can be drawn from the evidence of the objectors about more conveniently belong, based on the evidence of the pilots that we did call should more readily be accepted when there is no counter evidence that could have been called, but wasn't called and in that sort of a situation, where there is evidence all one way and no other evidence from pilots.

PN517

In our respectful submission it cries out for at least some mention in the reasons as to the drawing of the inference in relation to a particular issue, so as to say that when his Honour comes to address the comparison that's required under subsection 4 about more conveniently belong, the state of the evidence and the application of the Jones v Dunkel inference cries out for the reasons to say on the question of conveniently belong. I have reached this conclusion by reference to the evidence and I have drawn this inference one way or the other as a result of the evidence and the failure to call other witnesses and again, apart from that single line where his Honour says he agrees that it should be drawn, there is no mention in the reasons of him actually doing it and explaining to what effect he has done it and it's a live issue because of the result that he came to because he found that the comparison was against the AFAP and in favour of the AIPA and he did that in circumstances where all the evidence of the pilots was in favour of the AFAP and there was nothing in favour of AIPA from the pilots, apart from one pilot.

PN518

It was a live issue in contention, it was a central issue in contention in the case and it needed to be addressed and the decision doesn't address it and that in our respectful submission constitutes an error for the reasons that we've explained yesterday and on the principles that we explained yesterday. It's of particular relevance in relation to the question of conveniently belong because the Commission will recall that there's a two pronged test for the comparison. One is more conveniently belong and the other part of the test is better represent. Now, it's been said in the authorities that the judgment about better representation is an objective judgment based on whatever material is presented to the Commission and the Commission makes an objective judgment, but in relation to the conveniently belong, it's been held that that is a more subjective test which allows scope to take into account the views of the persons to be affected by the rule change and the reference for that proposition is in the Full Bench decision in Re CPSU at tab 11 in the folder. It's tab 11 and it's at page 346 at the bottom of the page. The Full Bench says:

PN519

Nor do we consider that there's any substance in the criticism made about the failure to segregate considerations relevant to the more conveniently belong limb from those relevant to the more effectively represent limb. The categories of considerations relevant to those broad comparative headings are not mutually exclusive. In his statement of principle, Senior Deputy President Williams explained that the more conveniently belong limb is oriented towards the perceived convenience of the relevant employees. It requires an assessment of the relative convenience from the perspective of the relevant class of persons who would become eligible for membership of the NTEU. The orientation of the more effectively represent limb is about the relative capability of the applicant and the other organisations to effectively represent for the purposes of the Act the industrial interests of the relevant class of persons. The more effectively represent limb would appear to be satisfied by an array of considerations and organisation specific characteristics, less subjective in nature than those marshalled to satisfy the more conveniently belong limb.

PN520

So there seems to be a distinction drawn by the Full Bench in that case in terms of subjectivity of judgment and in our submission it is that sort of an analysis that opens the door to consideration of the views of the persons who are sought to be enrolled in the new eligibility rule and to the extent that that material is relevant, as we say, the summary which his Honour has set out in his decision shows that it's overwhelmingly one way and having agreed that an inference can be drawn against AIPA, we say that his Honour failed in not making clear how he has dealt with that evidence and why it was that having dealt with that evidence, he nonetheless came to a conclusion that was contrary to the way in which the evidence before him on this point was directed.

PN521

At paragraphs 61 and 62 we've set out and given references to the evidence that was called on behalf of the objectors on this point and at paragraph 63 at the end, we've given a reference to the part of our submissions to his Honour where we make this point to him about the need to draw the inference and I think I directed attention to that paragraph yesterday in the course of other submissions. Now, I would go then to the next grounds of appeal which we've put together which is grounds 14 and 15. These deal with his Honour's failure to deal in the reasons with the conflict of interest evidence and his findings about that at paragraph 112 and 113.

PN522

We have in dealing with the other grounds yesterday dealt with that paragraph and with those issues and we rely on those submissions and we don't need to take up time repeating those matters. In relation to grounds 16 and 17, paragraph 16 deals with the finding at paragraph 112 of the decision which I've already discussed with the Commission that having found that AIPA was a defender of the rights of its members, his Honour expressing the view that he had no reason to doubt that they would do likewise with the other pilot groups. We've made our submissions about the fact that there was no evidence about that and we rely on those submissions.

PN523

At paragraph 70 of our outline, leaving aside the first two sentences, we reiterate the points that we made yesterday about AIPA continuing its campaign to protect the interests of the main line pilots while at the same time espousing an interest in covering the pilots in the other airlines and again as I said, we've addressed those matters yesterday and we rely on those submissions. Now, ground number 18 deals with the order which his Honour made granting the rule change in paragraphs (vii) and (viii) of the order which we've handed up. You will see that (vii) includes:

PN524

Any successor or transmittee or assignee, whether immediate or not, of the whole or part of the business of any company, airline or entity referred to in the preceding paragraphs (i) to (vi) or -

PN525

And this is (viii) -

PN526

any subsidiary, related body corporate or associated entity as those words are defined in the Corporations Act 2001 of any company, airline or entity referred to in the preceding paragraphs.

PN527

Now, we took objection to those paragraphs on the basis that they were too wide and too vague and didn't enable an identification of the employees that would be covered by such a rule change sufficient to enable the comparison under section 158(4) to be made. We made our submissions about this in volume 4 at page D0101.

PN528

DEPUTY PRESIDENT IVES: Sorry, the reference again was volume 4?

PN529

MR BORENSTEIN: Volume 4, D101, at paragraphs 58 to 60. We made the submission that the successor or transmittee clause operated not just in relation to a direct successor or transmittee or an assignee, but extended to subsequent assignments or transmissions unlimited and applied also not just to the whole of the business, but to any part of the business and our submission was that you could have an example of a case where one of the entities, one of the named entities sold part of its operation, large or small, to a non-Qantas company and that that part of the business might be integrated into the purchaser's business so that it could no longer be identified as a discrete operation.

PN530

The pilots who worked in that part of the business might well be totally integrated into the pilot body of the purchaser so that they no longer do that work or predominantly do that work which they were doing with Qantas or the Qantas company and yet it would seem that somehow the eligibility rule would reach out to that purchaser. It leaves unanswered the question of whether the eligibility rule is somehow to be confined only to the pilots who were in the original part of the business that was sold or whether the eligibility rule reaches out and operates only while the part of the business that was sold is maintained as a discrete entity in the purchaser's operation or whether the eligibility rule, if it's changed like this, goes into the purchaser's business and then takes over everybody who was in the purchaser's business, so, for example, if you had this new airline, Tiger Airlines, that's just starting up and if there was an arrangement arrived at where they took over flying let's say from Perth up the north-west coast of Western Australia, from a Qantas operation, but otherwise operated generally as they do, does it mean that AIPA would by reason of this have coverage of the whole of the Tiger Airways operation throughout Australia or does it mean that they only have coverage for the pilots that went across or does it mean that they only have coverage for the routes that were sold by the Qantas entity to Tiger and if the routes are changed in the course of business, what does that do?

PN531

So these are all matters that we advanced to his Honour to demonstrate the problem about the practical operation of this part of the rule change, but also to make the point that in order to do the comparison that's required under the subsection, you have to be able to identify with some precision the people who are going to be caught by this rule change so that you can make the conveniently belong and better represent decision and because this is so wide, you can't do it and then you add to that, you add on top of that problem about its width the fact that it's not confined to the first transmission, so they can sell these routes to Tiger Airways, let's say and then Tiger Airways might sell it to someone else and they might sell it to someone else and the whole operation might be unrecognisable within a short space of time as having any relationship to how it was when it was owned by the Qantas entity and yet this rule would seem to follow it to the grave.

PN532

That is just in our respectful submission so broad and generalised that it can't possibly allow the Commission to discharge the function under the section and should not have been allowed as part of the rule change. In relation to the second clause which is the corporations law clause, the same sort of problem arises. The clause is framed by reference to the definitions that are in the corporations law and if I could hand up some extracts which contain those definitions and which we also provided at the time to his Honour. It will be seen that the order in (viii) speaks of subsidiary, related body corporate or associated entity. Section 9 is the definitions section of the Corporations Act and associated entity on the first page of the photocopy is defined as having the meaning given by section 50AAA. On the second page you have the definition of related body corporate means:

PN533

A body corporate that is related to the first mentioned body by virtue of section 50.

PN534

And subsidiary on the third page of the photocopy in relation to a body corporate means:

PN535

A body corporate that is a subsidiary of the first mentioned body by virtue of division 6.

PN536

And on the fourth page of the photocopy you get the substantive provisions. Division 6 is headed subsidiaries and related bodies corporate. Section 46 says what is a subsidiary:

PN537

The body corporate in this section called the first body corporate is a subsidiary of another body corporate if and only if the other body corporate controls the composition of the first body's board or is in a position to cast or control the casting of more than half of the maximum number of votes that might be cast at a general meeting of the first body or holds more than half of the issued share capital of the first body, excluding any part of that issued share capital that carries no right to participate beyond a specified amount -

PN538

et cetera, and because the definition in A(1) talks about control of the board of the first body and section 47 explains what that means and it says that:

PN539

The composition of the board is taken to be so controlled that the other body exercising a power exercisable whether with or without the consent or concurrence of any other person can appoint or remove all of the majority of directors of first mentioned body and for that purpose of the division, the other bodies taken to have power to make such appointment -

PN540

Et cetera. Section 50 defines related bodies corporate and section 50AAA explains associated entities and you will see that the associated entity criterion can be established by any one of the matters that are set out in subsections 1 to 7 so that you can be an associated entity if you're a related body corporate which means that you're a holding company or a subsidiary, et cetera. You can be an associated entity if the principal controls the associate and the notion of control is explained in section 50AA at the bottom of the page and it will be seen that that doesn't necessarily involve the principal from owning an equity interest in the entity that's being controlled.

PN541

It could be a borrower, for example, that has the capacity to determine the outcome of decisions about financial and operating policies, so if, for example, an airline was leveraged to some large financial organisation and that organisation had the capacity to control what the airline did because of its financial interest, that would be sufficient to give it control and to make it an associated entity. Now, let's say for example if you had one of these hedge funds or these companies that were trying to buy Qantas a little while ago, they obviously have interests in more than one company.

PN542

If they are an associated entity in relation to Qantas or one of the Qantas companies and also an associated entity in relation to let's say Singapore Airlines or Emirates or one of the other ones, then this definition opens up a Pandora's box of the scope to which this clause might be stretched in terms of coverage. There are new airlines, I mentioned a moment ago Tiger Airways, we don't know what the structure or the financing of Tiger Airways is. We know that there are some connections to Ryan Air and there are some connections to Singapore Airlines, but we don't know what all the financial arrangements are and what we point to and the argument we make about this clause is that the Commission doesn't know either and when you come to deal with the application under section 158(4), all the authorities say it's vital that you be able to identify the group of pilots that are going to be affected by the decision so that you can make a meaningful comparison.

PN543

Now, these definitions show you how potentially broad the reach of this clause is and because of its breadth, how impossible it is to be able to say with any confidence what pilot groups are going to be affected if you grant this part of the rule change and if you can't say that, then you can't go on to say that there is no union that is better able to represent and so on and this is the tenor of the argument which we put to his Honour based on these definitions which we gave to his Honour and which his Honour rejected at paragraphs 116 and 117 of the decision.

PN544

We say that his Honour is in error in doing that for the reasons which I have outlined. We also draw attention in passing to the inconsistency between the way in which his Honour dealt with this part of the case to the way in which his Honour dealt with the first part of the amendment which his Honour rejected and at paragraph 70 to 72 his Honour gave the reasons for or his conclusion on the first part of the rule change which you will recall was seeking to delete the word principally and adding the successorship and corporations law extensions and at paragraph 70 his Honour said:

PN545

In my view, insofar as pilots employed by airlines who would be caught by amending the first paragraph, the AFAP as against AIPA as a better organisation , it's an organisation to which those persons could more conveniently belong. It's also an organisation which could more effectively represent them.

PN546

This is at paragraph 70 of the decision and then he goes on to say:

PN547

It's clear that the motivating factor behind the rule change is to enable pilots employed by any of the Qantas Group of companies to be eligible to join AIPA. The deletion of the word principally extends that rule far beyond that. An organisation, the AIPA, that did not intend its rule change to have that effect and the president of which does not expect pilots employed by such airlines to join it is an organisation to which such pilots could not as conveniently belong as an organisation the AFAP which already has as members such pilots and which satisfactorily looks after their industrial interests. Nor is it an organisation that could as effectively represent those pilots as can AFAP. To put it positively in terms of the schedule, the AFAP is an organisation to which persons who would be eligible for membership of the AIPA because of the alteration could more conveniently belong and that would more effectively represent those members. In any event, having regard to the largely unintended enlargement of the scope of the operation of the first paragraph, I would in the exercise of my discretion not consent to the alteration.

PN548

What his Honour was referring to there was that in the course of Captain Woods giving his evidence for AIPA, he was questioned about the potential reach of the first part of the rule change if it were amended. All of the material that was filed in support of the application focused on the proposition that the Qantas subsidiaries were part of the Qantas Group and that it made sense that they should all be covered by AIPA, or that AIPA should have eligibility. When it was pointed out that the effect of the rule change might extend well beyond the Qantas Group, the evidence of Captain Woods was, well, that's okay, but there was no intention to enrol people beyond the Qantas Group, though at some time in the future AIPA might well want to be the one big union for all pilots in Australia and it's that sort of evidence that his Honour was referring to there as being the unintended expansion of the rule change beyond the Qantas Group and that was the basis on which he said that AFAP was the better organisation because these people were outside the Qantas Group and it wasn't intended by AIPA that they wanted to cover people outside the Qantas Group.

PN549

Now, if you accept that as a proposition, as a premise, it's difficult to understand how you reconcile that with the potential reach of the last two paragraphs of the rule change, that is paragraphs 7 and 8, which similarly extend potentially well beyond the Qantas Group and into airlines that may have nothing in common with Qantas in terms of the type of flying they do or the way in which they do their flying or their corporate culture or any of the reasons that were advanced by AIPA in support of its claim to look after the pilots who were in the Qantas regionals and so as a second proposition we say that quite apart from the breadth of these rules being such as to prevent a decision allowing them going forward, the findings are inconsistent with the approach which his Honour took about airlines outside the Qantas Group when dealing with the first part of the rule change and we say that his Honour's approach in the first part of the rule change was correct and it should have applied in the second part as well and the way in which you would do that would be to strike out 7 and 8 from the change.

PN550

I move then to ground 20 of the grounds of appeal and the complaint that's made there is that his Honour erred in failing to exercise the general discretion under 158 in relation to this particular rule change. It was accepted and I think it's accepted in all the authorities that the Commission in dealing with an application for consent to the change of an eligibility rule has a residual discretion to be exercised on public interest grounds to withhold the consent even if on the specific grounds it might otherwise be granted and those that Mr McDonald represents made submissions, substantive submissions to his Honour on that aspect and pointed to various matters which we said should move him to exercise that residual discretion.

PN551

We have set out in paragraph 75 a range of matters which we also put to his Honour in our written submissions. We pointed to the conflict between the pilots, we pointed to various facilities about loss of licence, we pointed to the lack of any provision for autonomy in the AIPA rules, we pointed to the evidence that was available to his Honour that AIPA had operated in contravention of its own rules and we pointed to instances of the failure to collect dues from the pilots that it had enrolled. There were instances of the failure to record minutes of its - to record decisions of its committee of management in the minutes.

PN552

We pointed to the fact that having advanced the rule change in the broad terms in which it did, it emerged from the evidence that there hadn't been any real consideration given to that and that, really, the focus had been simply to attend to the Qantas Group. We pointed to the lack of any action being taken by AIPA in the interests of the pilots that it sought to cover. We pointed out that despite its claims to be a good industrial representative, the evidence showed that it had not been able over a period of two or three years to negotiate a replacement agreement for the enterprise agreements that it had within the mainline operation for the pilots that were its existing members and we pointed to that as a factor militating against giving them the representational rights for the other pilots.

PN553

We pointed to the conduct which they engaged in which was detrimental to the groups that they wanted to enrol. We pointed to the conflict of interest. There was also evidence which can be found in I think the third volume of the court book where they went - no, I think it's actually the fourth volume, I'm sorry. It's at page C1418. It's exhibit QANTAS26 and this is a document, an email sent by Captain Woods, 1418, and the point that was made in the evidence was that Captain Woods was at the IFALPA conference, that is the International Federation of Airline Pilots Associations and at the conference he said that they were going to try and persuade IFALPA to support if necessary an international recruiting ban on Jetstar so that he was taking steps in an international forum to impose an international ban on recruitment into one of the companies that was the employer of one of the groups of pilots that they seeking to cover and this was pointed to as conduct which is antithetical to proper industrial relations behaviour and weighed against, in a discretionary sense weighed against allowing an extension of the eligibility rule and there was also a letter at QANTAS27 which commences at page 1420, it's the next part of the court book, this is again from Captain Woods and at page 1422 in the middle of the page there is again this claim on behalf of AIPA that:

PN554

The transfer of flying to Jetstar required a protection of the flying for mainline pilots.

PN555

So it's again a repetition of the catchcry that it's our flying that was seen in the statement of claim that we looked at yesterday. Now, all of those were matters that were advanced to his Honour or were before his Honour and he was asked to exercise his residual discretion. Mr McDonald's clients made submissions as well which can be found in the court book and his Honour, if one reads the decision, did not address that discretion at all. There is no indication anywhere in the decision that his Honour turned his mind to that matter which was put squarely before him by the objectors based on evidence that was before him.

PN556

His Honour simply failed to look at it and deal with it judging from the decision and if his Honour did consider it and deal with it, it being a significant matter, it was incumbent on his Honour to put his reasoning into the decision so that it can be seen and if necessary assesses for the purposes of appeal which is one of the reasons established in all the authorities for the giving of reasons, but his Honour hasn't dealt with that at all and that is a fatal flaw in our respectful submission in his Honour's decision. It was incumbent on him in the exercise of the jurisdiction he had under the section to deal with it and he didn't, so they are the grounds of appeal upon which we rely and the arguments in support of them.

PN557

It's our respectful submission that the issues which are raised in this appeal are very significant and important issues about the proper exercise of the jurisdiction under the schedule in relation to these sorts of matters. They raise important issues about the approach which the Commission is required to take in discharging its function under the subsection and how it should go about the assessment of applications and the evidence and the objections that are advanced and it raises those matters in a way which warrants the grant of leave to appeal and we ask that leave to appeal be granted.

PN558

That then gives rise to the question of what should occur in relation to the disposition of the appeal. We have made some submissions about this in our reply submissions in B2 at paragraphs 32 and following. The submission we make is that leave should be granted and that the appeal should be upheld and the decision and the consent that was given by his Honour should be quashed. We submit that the appropriate course is for the appeal to be decided by this Full Bench by use of the powers that are available under section 121.

PN559

The material that's before the Full Bench is the whole of the evidentiary material that was before his Honour. The material contains the submissions that were made by all of the parties which are detailed submissions on the material and the law that's applicable. There were no issues raised before his Honour going to the credit of this witness or that witness. Submissions were put as to whether his Honour should accept the evidence of one witness or the other by reference to the comparison of the evidence that was given and by the use of inferences of the kind which we've discussed this morning and so in our respectful submission there is nothing to preclude this Full Bench as an appellate body from dealing with the matter itself on the material that's before the Commission.

PN560

To the extent that it may be of assistance to the Commission as presently constituted, there is power under subsection 6 to direct a member to provide a report to the Full Bench and if that were thought to be an effective or an efficient way of progressing, we would submit that that could be done and that a member of the Commission could provide a report on the material that's been presented, the evidentiary material that's been presented and then the Commission could act upon that report.

PN561

If it were thought to be helpful, the Commission or the member might invite the parties to make further submissions about the material. We wouldn't have a view for or against that, but we would submit that that would be an effective and an efficient way to determine this matter which is a very large matter. I think Mr Friend in his submissions said it took three weeks and you can see the amount of time and effort that's gone into presenting the material at the trial of the matter. It would be a considerable burden to have the parties have to repeat that process again in a second hearing when all of the material is here and it's possible in our respectful submission for this bench to deal with it.

PN562

So that would be our preferred option and we would urge the bench to determine the application and we would say for the reasons that we've pointed out on the matters that we've drawn attention to that the proper course ultimately would be to dismiss the application for the change of the eligibility rule in paragraph 2 or at least to dismiss it so far as it extends beyond Qantas Airlines Ltd which is one of the entities in the paragraph. If that's not a course that attracts the Commission as presently constituted, then the matter would have to be remitted back for re-hearing.

PN563

We would submit that it would be entirely inappropriate for the matter to go back to the Senior Deputy President to be reheard because of the nature of the errors which we've complained about and we point to the disposition of the appeal in the Cruikshank case where the President and the Full Bench in that case took a similar view about sending the matter back to the member who had decided it in the first place, so that's our second position, that if the Full Bench is minded to remit the matter, that a direction should be given that it be remitted and allocated to a member of the Commission other than the Senior Deputy President who heard it in the first place.

PN564

There's a final matter which has been raised in the submissions filed in answer to our submissions by AIPA and that is a matter that goes to the competence of the appeal. The argument that seems to be advanced by AIPA is that section 121(1)(a) and (e) do not permit of this appeal. Subsection 1 identifies the types of appeals that can be brought and paragraph (a) allows an appeal against a decision of a member of the Commission by way of a finding in relation to a matter arising under the RAO schedule. Subsection (e) allows for an appeal against a decision of a member of the Commission that the member has jurisdiction or a refusal or failure of the member of the Commission to exercise jurisdiction in a matter arising under the RAO schedule.

PN565

The Commission will have seen from the way in which I have elaborated the grounds and the basis for this appeal that it is almost entirely based on a complaint that his Honour has not properly exercised the jurisdiction in the sense that he's not dealt with a number of issues central to the determination of the matter and/or has not given reasons for the conclusion that he's arrived at and the authorities which I referred the Commission to yesterday morning in relation to those matters make it clear that they are errors of jurisdiction. They are failures to exercise the jurisdiction and so they are clearly caught under paragraph (e) and the appeal is competent under paragraph (e) if nothing else.

PN566

However, we have also relied upon or sought to rely upon paragraph (a) which is a decision by way of a finding in relation to a matter. The decision which we appeal against is a decision which is constituted by the consent to paragraph 2 of the rule change. It's a decision by way of a finding in relation to a matter under the RAO schedule, namely the application for alteration of the eligibility rule which is clearly under the schedule. The term decision has been discussed generally in the High Court in Bond's case which we have given to the - I am sorry, we haven't provided you with that, but we have set out the text of the relevant passages at paragraph 6 of B2. This is from the judgment of Mason J which was the leading judgment in the case and his Honour said at page 335:

PN567

The word has a variety of potential meanings. As noted by Deane J in Chaney's case, in the context of judicial or administrative proceedings, it ordinarily refers to an announced or published ruling or adjudication.

PN568

So to that extent at least we are a decision in this case:

PN569

In such a context, the word may signify a determination of any question of substance or procedure or more narrowly a determination effectively resolving an actual substantive issue.

PN570

Again, that applies here:

PN571

Even if it has that more limited meaning, the word can refer to a determination whether final or intermediate or more narrowly again a determination which effectively disposes of the matter in hand. In the context of judicial proceedings, the Privy Council has accepted that the natural, obvious and prima facie meaning of the word decision is decision of the suit by the court.

PN572

Leaving out the various citations:

PN573

But here the relevant context is not that of a decision reached in a curial or judicial proceeding, so the meaning must be determined by reference to the text, scope and purpose of the statute itself.

PN574

And we accept that here, too. At page 337 his Honour says:

PN575

The policy arguments do not in my opinion call for an answer different from that dictated by the textual or contextual considerations. The answer is that a reviewable decision is one for which provision is made by or under a statute. That will generally but not always entail a decision which is final or operative and determinative at least in a practical sense of the issue of fact falling for consideration.

PN576

And again the issue of fact here is whether or not there is an organisation that can better represent or whether a consent should be given having regard to the various considerations that are set out in the section:

PN577

A conclusion reached is a step along the way in the course of reasoning leading to an ultimate decision would not ordinarily amount to a reviewable decision unless the statute provided for the making of a finding or ruling on that point, so that the decision, though an intermediate decision, might accurately be described as a decision under an enactment.

PN578

And then his Honour says:

PN579

The interpretation of the decision which I favour is not as broad as that preferred by the Federal Court in Lamb v Moss. There the Full Court after reviewing the authorities which the court said revealed some inconsistency stated, " in our opinion there's no limitation implied or otherwise which restricts the class of decision which may be reviewed to the decision which finally determined rights or obligations or which may be said to have an ultimate and operative effect." My view -

PN580

That is Mason Js view -

PN581

Is more in accordance with the tentative opinion expressed by Ellicott J when he said, "it may well be that the word decision means an ultimate or operative determination, not a mere expression of opinion or a statement which can of itself have no effect on the person." However, I would not wish for myself to place emphasis on the words itself in this statement.

PN582

And then he concludes:

PN583

To say that a reviewable decision is an ultimate or operative determination does not mean that antecedent conclusions or findings which contribute to the ultimate or operative decision are beyond reach. Review of an ultimate or operative decision on permissible grounds will expose for consideration the reasons which are given for the making of the decision and the processes by which it is made.

PN584

Bond's case was a case under the Administrative Decisions Judicial Review Act which deals with administrative decisions reviewable for jurisdictional error, but the references which his Honour makes have in our respectful submission general application and that it's clear that the decision which his Honour made here was a decision firstly in relation to a matter under the RAO Act. Secondly, it was a decision based on findings relevant to the granting of consent, findings which were mandated by the section, findings about more conveniently belong, better represent, findings about whether there were agreements which were applicable and which were going to be affected by a decision to change the eligibility rule and all of the matters that are set out specifically and required attention in the course of coming to the conclusion about whether or not to give consent, so that you have a decision which reflects those findings, is required to reflect those findings.

PN585

Section 121(1)(a) uses the phrase by way of a finding, a decision by way of a finding. We have set out in paragraph 9 of B2 the Macquarie Dictionary definition of by way of which means as a method or means of, so if it's a decision by way of a finding, it's a decision as a method or means of making the finding and the English Oxford Dictionary has a definition to the same effect. Now, that application of the phrase was adopted and applied in the decision which we refer to which is the Commonwealth v Precision Pools case in the Federal Court and we've provided that in tab 14 of the folder and you will see at page 188 in the second paragraph on that page where on the fourth line of the paragraph his Honour says:

PN586

The phrase by way of indicates a method or means -

PN587

which is the definition in the Macquarie Dictionary -

PN588

or through the medium of.

PN589

So applying that meaning of the phrase, we submit that it means that the paragraph, that's paragraph (a) of section 121(1) is directed to a decision which is a method or means of making a finding in relation to the matter arising under the RAO schedule and we say that that is what has happened in this particular case. Now, Mr Friend's submissions refer to some authorities which he says point to a contrary outcome. At paragraph 5 of his outline which is F1, he refers to the decision of the Commission in the Commonwealth Steamship Owners v Merchant Services Guild and the Commission doesn't have a copy of that.

PN590

I am assuming Mr Friend has got one which he will hand up and I am wondering, it's probably more convenient if I deal with these particular cases once Mr Friend has taken you to them and I can take a couple of minutes in reply just to deal with them, rather than deal with them now, but we would submit that the cases, the three cases that he refers to do not produce a result that would prevent an appeal against a decision like this from being competent. Mr McDonald in his outline has set out a detailed analysis of the history of the provision and we would adopt it and support those submissions in aid of the construction under paragraph (a).

PN591

Beyond that, if the Commission pleases, we would make the submission in relation to paragraph (e) that contrary to the submissions which are made in Mr Friend's outline at paragraph 4 which are effectively that the only jurisdictional error that can be advanced under paragraph (e) is an error that was raised in the proceedings under appeal, we would submit that that is entirely an incorrect and too narrow construction of the section. The cases are full of - cases on appeal in this Commission are numerous which deal with the failure to give adequate reasons for the decision of the first instance hearing.

PN592

Cruikshank is a recent example where that occurred and if the AIPA submissions were correct, then there would be no recourse by way of an appeal to the Full Bench in cases like that, because they are matters that become apparent after the hearing and on the delivery of the judgment and that would have the effect that a jurisdictional error which would found an application to the High Court couldn't first be dealt with by a Full Bench on appeal and that would be an incorrect outcome and not one to be supported here. We have given a reference to the United Firefighters' Union case which is at tab 16 in which the Full Bench dealt with this matter commencing at paragraph 60 and at paragraph 65 the Full Bench notes that:

PN593

There is a stated preference in the High Court that the Commission deal at least initially with allegations that a party has not been accorded procedural fairness.

PN594

There are references to The Queen v Marks. There are references to the amendments to the Act as it was at that time. At paragraph 68 there's a reference to the Federal Court decision in the Tweed Valley case which again supports the proposition that it's intended that there be access to the Full Bench on all jurisdictional matters and at paragraph 72 their Honours in the Full Bench state that the view that they've adopted -

PN595

accords with the general proposition that rights of appeal should be interpreted beneficially.

PN596

And with the observation of Wilcox CJ and Beazley J that:

PN597

The modern trend has been to interpret widely the concept of jurisdictional error.

PN598

And saying:

PN599

It is likely in practice that a remedy would be available to any party before the Commission whose interests were prejudiced by legal error.

PN600

So the thrust of the decision is that the grounds of appeal should be construed broadly rather than narrowly and that's inconsistent with the position which is advanced by AIPA, but it's consistent with the position which the objectors advance and it supports the competence of the appeal under either of the two paragraphs. They are our submissions, unless there are any other matters that the Commission wishes to raise.

PN601

THE SENIOR DEPUTY PRESIDENT: Thank you, Mr Borenstein. We will take a brief adjournment.

<SHORT ADJOURNMENT [11.18AM]
<RESUMED [11.26AM]

PN602

THE SENIOR DEPUTY PRESIDENT: Mr McDonald.

PN603

MR MCDONALD: Thank you, your Honour. Your Honour, we have prepared a folder of materials and perhaps if it's convenient, we would hand that folder up at the outset. That folder contains the cases which are referred to in the two sets of submissions which have been filed. It also contains extrinsic materials which are relevant to the matters canvassed in the reply submission concerning the competency of the appeal. In relation to that issue, the competency of the appeal, if it's convenient, what I had in mind was that the reply submission deals exclusively with the competency issues and speaks for itself.

PN604

We've attempted to go into some detail in the submission and if it's convenient, I think that I will adopt the course of waiting to hear what Mr Friend says in relation to those matters and deal with it briefly by way of reply, so on that basis I just go straight to the substantive matters which are raised by way of appeal and the first of those matters concerns the contention of the parties for whom I appear that his Honour Senior Deputy President Kaufman failed to properly apply the statutory test in section 158(4) of schedule 1 and there are two limbs to this argument, both of which we submit are fatal to his reasoning.

PN605

The first is that his Honour failed to identify the relevant class of employees for the purposes of section 158(4) and the second is that he failed to undertake the requisite comparative exercise required by the two limbs of 158(4), that is (a) and (b). Before going to that argument, however, if it's convenient I would like to just set out by reference to the application which was filed by AIPA how the interests of the parties for whom I appear arise, so if we could go to the decision of his Honour which is page 1 of volume 1 of the appeal book, at paragraph 4 of the decision his Honour sets out the AIPA application and he's noted that the changes to the existing rule are underlined.

PN606

Now, you'll see that in paragraph 1 the existing rule, eligibility rule, the proposed amendment was the deletion of the word principally in the phrase principally engaged in providing international regular public transport airline services and the addition of a successor and transmittee provision and then there was what we've referred to in our submissions as the third alteration which appears at the top of page 3 which is the naming of discrete entities. Now, in relation to paragraph 1 of the rule, the case advanced - sorry, paragraph 4, the first amendment, that is the deletion of the word principally engaged, the contention which was advanced by the parties for whom I appear with Mr Dalton was that Qantas Airways Ltd and Australian Airlines fell squarely within the existing rule, that is both of those airlines have at all material times been principally engaged in international regular public transport airline services and it was on that basis that it was submitted before Senior Deputy President Kaufman that the pilots employed by those airlines were not within the relevant class for the purposes of section 158(4) because when one turns back, his Honour has conveniently set out in paragraph 2 of his decision, he sets out the terms of section 158(4) and it's to be noted firstly we have the statutory prohibition:

PN607

The Commission must not consent to an alteration of the eligibility rules of an organisation of in relation to persons who would be eligible for membership because of the alteration there is -

PN608

and then the test is set out, so it was put squarely before his Honour that in terms of identifying that class of persons, that is persons who would be eligible for membership by reason of the alteration, effectively he put a red line through pilots employed by Qantas Airlines Ltd and Australian Airlines because they're already within the existing rule, then turning back to the top of page 3, this is the substantive part of the application which his Honour granted, save for the deletion of Jetstar Asia Holdings and Jet Connect, they appear at placitum 5 and placitum 8, you'll see from the order which his Honour granted, that his Honour made, that the balance of that rule change was accepted, it's significant and I will come to this in due course, that this part of the rule change, it operates by reference to persons who are normally employed as pilots on airline services operated by those individual airlines.

PN609

Now, that will become relevant for the purposes of the comparative exercise which was required to be undertaken, but we've submitted before his Honour and we submit here that because that part of the rule change operates by reference to employment with named entities that for the purposes of undertaking the comparative task in section 158(4), it was necessary for his Honour to determine as between AIPA and AFAP which was the better organisation in respect of pilots employed by for instance Jetstar, Eastern, Sunstate. The global approach which his Honour adopts, the Qantas Group approach if I can describe it that way, was not permissible.

PN610

SENIOR DEPUTY PRESIDENT ACTON: You say that under the rule as it existed prior to this application (i) Qantas Airways Ltd was already covered?

PN611

MR MCDONALD: Correct.

PN612

SENIOR DEPUTY PRESIDENT ACTON: And (iii) was already covered?

PN613

MR MCDONALD: That's correct.

PN614

SENIOR DEPUTY PRESIDENT ACTON: Not (ii)?

PN615

MR MCDONALD: No. Qantas Ltd, that is a freight company.

PN616

SENIOR DEPUTY PRESIDENT ACTON: Okay, so (i) and (iii) you say are covered?

PN617

MR MCDONALD: Covered, not necessary. We submitted to his Honour simply not necessary.

PN618

SENIOR DEPUTY PRESIDENT ACTON: Thank you.

PN619

MR MCDONALD: There was no doubt in a practical sense and this wasn't in issue, in a practical sense in the proceedings, the primary focus of the case and this is conceded in the evidence of Captain Woods in cross-examination, the primary focus of the union's application was Jetstar, Eastern and Sunstate because those were airlines where certainly the position taken by the employers and by the AFAP was that pilots employed by those airlines were not currently within the rule and those pilots clearly were within the relevant class for the purpose of section 158(4) because they would be brought within the scope of the eligibility rule if the application was granted.

PN620

That reference to SunState, Eastern and Jetstar pilots being the and these are the exact words, the primary focus of the application, that's in the evidence of Captain Woods, the president of AIPA. He gave that evidence at paragraph 6073 of the transcript which is at appeal book 1, page B631. Just on that issue, it's to be borne in mind, we submit it's relevant, that each of Jetstar, Eastern and SunState had lodged a separate objection to the rule change application.

PN621

Now, on this first limb of this argument, that is the failure to identify the relevant class, the criticism which we make of the decision is that notwithstanding the contention of Australian Airlines that the pilots employed by Australian Airlines were within the existing rule, his Honour failed to make any clear finding on that issue. It's left up in the air in the decision and one sees that at paragraph 28 of the decision in the last five lines of paragraph 28, if I can go to that. This is on page 10 of the decision. His Honour states:

PN622

Australian Airlines is an Australian airline probably engaged in providing international regular public transport airline services. Accordingly, its pilots are possibly eligible to be members of the AIPA under its current rule. It is, however, arguable that it is Qantas and not Australian Airlines that provides the regular public transport airline services, in which case pilots employed by Australian Airlines would not currently be eligible to be members of the AIPA.

PN623

Now, with respect to his Honour, because of the way section 158(4) operates, it wasn't an option for him to effectively leave this class of pilots in limbo. We were urging upon him that he should make a clear finding that the Australian Airlines pilots were within the scope of the existing rule and we were doing that for the stated purpose that what flowed from that was that they were not within the relevant class under section 158(4) and therefore were not to be brought into the mix for the purposes of the comparative exercise required by 158(4). Now, his Honour doesn't make the requisite determination in paragraph 28.

PN624

DEPUTY PRESIDENT IVES: Doesn't he in effect do it by inclusion in the order of Australian Airlines, Mr McDonald?

PN625

MR MCDONALD: With respect, your Honour, one can't go behind the decision. The decision is that he hasn't decided the matter. This is a recurring problem, with respect, with his Honour's decision. There are so many matters which are either not dealt with at all or matters are referred to, but no conclusions are made in relation to submissions which have been advanced and the submission that we advance in relation to that decision is that the High Court authority in relation to the approach of an appellate tribunal to decisions at first instance is that it's not open to go behind the reasons for the decision.

PN626

Mr Borenstein referred to the judgment of Hayne J in the Waterways Authority case yesterday. Another example of that proposition is to be found in the decision of the High Court in the Insurance Employees' Union case and it's probably convenient to go to that right now, because it is a recurring issue throughout this decision. This is at tab 4 of the folder which has been handed up. Just before I go to the point, your Honour, it really is ambiguous as to what one is to deduce from the fact that his Honour did include Australian Airlines pilots in the order which he's issued, because the true position is that if he had accepted the submission that we advance that Australian Airlines pilots were already covered by the existing eligibility rule because Australian Airlines is principally engaged in international regular public transport airline services, there's simply no need to have them in the order, they're already covered.

PN627

DEPUTY PRESIDENT IVES: But doesn't 158(4) prevent him from including them if they are already covered?

PN628

MR MCDONALD: He shouldn't have done it.

PN629

DEPUTY PRESIDENT IVES: Yes, but doesn't it imply at least that a determination was made? The inclusion in the order implies at least that a determination was made, doesn't it?

PN630

MR MCDONALD: Not in the face of the clear words in paragraph 28 where his Honour vacillates:

PN631

Pilots are possibly eligible to be members.

PN632

With respect, your Honour, one falls back to the position as set out in the High Court by Dawson J in Insurance Employees' Union Ex Parte Academy Insurance Pty Ltd. This was a case where in relation to an application to refer a matter to a Full Bench, the president, you'll see this at page 467 about line 12:

PN633

In refusing the application, the president said in my opinion no special or extraordinary circumstances exist in this case and the application should be determined having regard to the particular circumstances of the case before the Commission.

PN634

So the issue was that the president had referred to a test of special or extraordinary circumstances which was not the relevant test, which was simply confined to I think the test being as set out just above that passage, whether the matter was of such importance, in the public interest it should be dealt with by a Full Bench and you will see at line 23 his Honour says:

PN635

The application before me is one in which the applicants were entitled to make ex parte, but allowed the unions who were respondent to be represented and/or oppose the application. They submitted that the president by referring to the submissions of the employer's counsel on the application before him took into account in reaching his decision all the matters affecting the public interest which he was required to consider. That submission does not in my view suggest any real answer. Where reasons are given for a decision, it would be wrong to speculate upon matters beyond those referred to in the reasons which may have motivated the decision. Therefore the reasons given by the president are those which I must accept and do accept as being his reasons. The criterion applied by the president are clearly that of special or extraordinary circumstances.

PN636

Now, with respect, it simply wasn't open to his Honour, Senior Deputy President Kaufman, having expressed the views that he has in paragraph 28, to have gone off and formed a different view than that which is expressed in 28 and have acted on that. The AIPA as we read their submission in exhibit F1 at paragraph 23 of that submission have submitted that it was not necessary for his Honour to determine precisely the limits of the AIPA rule, so AIPA are putting in issue in this appeal whether or not there is an obligation for the purposes of the proper application of section 158(4) to precisely determine the limits of the rule.

PN637

We submit that in relation to that question, the authorities are clearly with the position for which we contend and in particular the relevant decision is that of the Full Court in Re Australian Workers' Union Ex Parte CFMEU, but before I go to the Full Court decision, can I refer the bench to the Full Bench decision in that matter because I will be making a number of references to this Full Bench decision because we submit that of the decided cases in this Commission, this Full Bench decision, although it was overturned, but on very narrow grounds, is very helpful in these proceedings.

PN638

It's at tab 1, the Full Bench decision, a decision of 28 February 2001. Now, this was an application by the CFMEU to extend its eligibility rule outside of the construction industry and into a number of other industries, landscape gardening, concreting and the like. The decision was subsequently overturned in the Full Court, but it was overturned on the narrow ground that the Full Bench in giving its decision, it was held by a majority in the Full Court, had had not had sufficient regard to agreements which had been reached between the CFMEU and objecting unions prior to the application being pressed, but many of the aspects of the reasoning of the Full Bench were not in any way challenged or touched on appeal. Now, in relation to this issue, can I take you to paragraph - that is the requirement to identify the precise limits, can I take you to paragraph 60 of the decision:

PN639

In any event, his Honour -

PN640

that's the judge at first instance -

PN641

did not express a view as to the limits of the CFMEUs existing eligibility rule. In our respectful view, however, his Honour was in light of the views he himself expressed in paragraph 38 and with which we have respectfully agreed, required to identify the limits of the CFMEUs existing eligibility rule. This is because the relevant employees are employees who are within CFMEUs proposed rule, excluding such of them as are eligible for membership under the existing rule. Therefore, unless the employees who are eligible for membership under the existing eligibility rule are identified, it is not possible to identify the relevant employees.

PN642

And also at paragraph 91:

PN643

In summary, then, we are of the view that Senior Deputy President Williams failed to correctly identify the relevant employees, that is persons who would be eligible for membership because of the alteration, because he incorrectly construed the terms of the CFMEUs proposed rule, failed to compare the existing eligibility rules of the CFMEU rules with the rules as they would be if the application were granted -

PN644

and so on. Now, when the matter went on appeal and that's at tab 5, firstly can I take you to paragraph 42 - I beg your pardon, 43.

PN645

SENIOR DEPUTY PRESIDENT ACTON: Sorry, where are you taking us?

PN646

MR MCDONALD: I am taking you, this is the Full Court judgment.

PN647

SENIOR DEPUTY PRESIDENT ACTON: Yes, paragraph?

PN648

MR MCDONALD: Paragraph 43, under the heading consideration of the issues.

PN649

DEPUTY PRESIDENT IVES: Sorry, under tab?

PN650

MR MCDONALD: Tab 5, the Full Court judgment.

PN651

DEPUTY PRESIDENT IVES: Thank you.

PN652

MR MCDONALD: This is the review of the decision I've just taken you to, the Full Bench decision and you'll see three lines into paragraph 43:

PN653

In relation to grounds 2 and 3, it was not in issue that it was necessary for a designated presidential member when considering an application for consent to an alteration to an eligibility rule to identify the relevant employees in order to consider the issues raised by section 204(4).

PN654

Which relevantly is the same as section 158(4):

PN655

That is, it's necessary to identify the persons who would be eligible for membership because of the alteration.

PN656

And then going on to paragraph 44:

PN657

Determining who are the relevant employees would ordinarily involve ascertaining the scope of the pre-existing eligibility rule of the applicant organisation and the scope of the alteration. This will often entail construing both the pre-existing eligibility rule and the alteration on the assumption that it formed part of the eligibility rules.

PN658

And then if I could take you to paragraph 142 in the judgment of Merkel J. Now, Merkel J was in dissent in this case, but his dissent was limited to the issue of whether or not the Full Bench had or had not had proper regard to the agreements which had been reached between the CFMEU and the objecting unions. Now, at 142:

PN659

There is some force in the CFMEUs submission. Plainly in determining that consent is not to be withheld by reason of 204(4) -

PN660

and can I interpolate that is the case we're dealing with here, a case where Senior Deputy President Kaufman has determined consent is not to be withheld by reason of 158(4) -

PN661

a designated presidential member is to form an opinion in respect of persons, the member must identify as persons who would be eligible for membership because of the alteration. It is difficult to envisage how such an opinion can be formed without identifying the persons who will be covered after the alteration that were not covered before it.

PN662

But then in 143 and I will go to this because it's an issue that arises with our friend's submission, at 143 his Honour says:

PN663

However, it does not follow that the same identification must be made if an opinion is formed that consent is required to be withheld under
section 204(4) -

PN664

not this case -

PN665

in that case, the consent must be withheld if the member forms the opinion that because of the alteration there are persons who would belong, who would be eligible for membership who might more conveniently belong to another organisation that would more effectively represent those persons. The requisite opinion need not be formed in respect of all persons who would be eligible because of the alteration. Putting to one side de minimus issues, if the opinion is formed that there are persons who fall within the categories described in 204(a) and (b), then the consent to the alteration must be withheld notwithstanding that there may also be persons who would be eligible because of the alteration, but who do not fall within the categories in 204(a) and (b).

PN666

So to give an example of what Merkel J is referring to there in the present case, if Senior Deputy President Kaufman had decided that in relation to pilots employed by SunState those are persons who are within the relevant class, they're not currently covered by the AIPA eligibility rule, if he formed the view just in relation to those pilots, well, on the basis of the test in 158(4)(a) and (b), I am of the view that in effect of those pilots, AFAP is an organisation to whom they can more conveniently belong and can better represent those pilots, Merkel J is saying, well, at that point it would have been open to Senior Deputy President Kaufman to say that's it, doesn't have to go on and make a decision in relation to the totality of the rule, but he's saying in the case that we do have here, whereas a designated presidential member makes a decision, I am not going to withhold consent under 158(4), there there is an obligation to fully determine the limits of the pre-existing rule and the rule subsequent to the alteration.

PN667

SENIOR DEPUTY PRESIDENT ACTON: But to that extent, he did dissent from the majority.

PN668

MR MCDONALD: I beg your pardon?

PN669

SENIOR DEPUTY PRESIDENT ACTON: To that extent, Merkel J differs from the majority.

PN670

MR MCDONALD: He differs on that point in the sense they don't express a view about that issue. I don't read the majority decision as having referred to that and said I don't agree with it. They don't express a view on that. In a sense, that - I am not sure if at the end of the day much turns on that, because in the category of case that we're looking at here, that is where a decision has been made on the basis of 158(4) not to withhold consent, everyone, that is the majority where I've referred to in paragraph 43 and Merkel J at 142, everyone seems to be swinging in the same direction, that is you must determine who would be covered and you do that by a matter of common sense, what the current rules say and what is the effect of that and who is coming in, who is not in there now.

PN671

SENIOR DEPUTY PRESIDENT ACTON: But on that distinction made by Merkel J, then, it's not possible to find the tests in (a) and (b) aren't met with respect to SunState, but can be met with respect to Jetstar, for example. Is that right?

PN672

MR MCDONALD: He's saying you don't need to go to the point of finality of expressing a final conclusion. That's what he's saying. He's saying once you identify a class of people within the relevant class, for instance, SunState employees, pilots, you don't need to express a concluded view.

PN673

SENIOR DEPUTY PRESIDENT ACTON: That's the end of the application.

PN674

MR MCDONALD: No, he says subject to whether or not the Commission exercises the power under section 158(2), so he contemplates that the Commission could blue pencil, but as I say, it's a fruitful source for debate, but in terms of this appeal, that issue doesn't arise. The only issue which arises in this appeal as to construction of 158(4) is what is the obligation on a member of the Commission in the Senior Deputy President's situation in circumstances where that member has decided not to withhold consent by reference to - - -

PN675

SENIOR DEPUTY PRESIDENT ACTON: I wonder whether it doesn't arise, because I thought part of the submissions were that once you've identified the class and you would say it's Eastern, SunState, Jetstar and Qantas Ltd, you then need to look at each of those subdivisions, subclasses, to see whether the tests in (a) and (b) are met with respect to each of them.

PN676

MR MCDONALD: We say they're different classes. That's our submission about the way the rule operates. We say when you look at the order, we make this submission very squarely, that in this case, because of the way the application has been made by reference to employment, by reason of employment with A, B, C, D, E, when you come to look at 158(4), you do it in respect of A, B, C, D, E and that was the obligation we say that fell to the Commission, to Senior Deputy President Kaufman which he just goes off in a completely different direction which just wasn't open to him.

PN677

SENIOR DEPUTY PRESIDENT ACTON: So there is effectively four different rules, you're saying, each of which has underneath it successor assignee and related?

PN678

MR MCDONALD: Definitely, and there were four different objections, by different - there's no issue in this case - well, there is an issue in the way in which his Honour couches his reasons, but there's absolutely no issue forensically that each of these employers, SunState, Jetstar, Eastern, were significant employers of pilots in their own right. They operate by reference to their own air operator's certificate, they are separate legal entities, they have all of the attributes of separate employers with their own certified agreements and so on and so on and his Honour accepts that, so, yes, certainly, your Honour, that is one of the vices in the successor transmittee provisions. It's a multiplier effect.

PN679

SENIOR DEPUTY PRESIDENT ACTON: In terms of the objectors, did Qantas Ltd lodge an objection?

PN680

MR MCDONALD: No. What happened at a relatively early stage in the proceedings, an issue arose in relation to I think - in relation to Jet Connect, the New Zealand company, as to whether or not a separate objection needed to be lodged in respect of that company or whether or not Qantas Airways Ltd as a holding company, whether it would be accepted for the purpose of the proceedings that Qantas Airways Ltd as a holding company of these other subsidiaries would be able to advance submissions and there was a directions hearing before Senior Deputy President Lacy and the upshot of it was, effectively the agreed basis of a proceeding, that in respect of Jet Connect Ltd and some of these other subsidiaries, that Qantas Airways Ltd as the parent company would be permitted to put submissions effectively in respect of those parties and that's why you don't see separate objections having been lodged in respect of some of those other subsidiaries, because there was a live issue, you will see from the decision, there was a live issue as to whether or not an issue of extra-territorial operation of the Act arose in respect of Jet Connect Ltd, so that's the long winded answer to your Honour's question.

PN681

SENIOR DEPUTY PRESIDENT ACTON: So they did object via Qantas Airways Ltd?

PN682

MR MCDONALD: Yes, effectively. The first point we make is his Honour was we say obliged to make a finding as to the scope of the rule, current scope of the AIPA rule. He didn't do that. The second error that he makes in respect of this application of section 158(4) is his inclusion of Qantas Airways Ltd and Australian Airlines notwithstanding his finding at 28, his inclusion of the pilots employed by those two airlines in the relevant class for the purpose of undertaking the comparative exercise required by section 158(4) and to make good that submission, I need to refer to three paragraphs in the decision. The first is at paragraph 111 of the decision:

PN683

In my view, the AFAP is not a better organisation on either limb of the test in section 158(4) insofar as pilots employed by the Qantas Group are concerned.

PN684

So one then goes back to paragraph 14 to get a clear indication of what his Honour means by the expression the Qantas Group. At paragraph 14:

PN685

Qantas Airways Ltd, the overall parent company and its subsidiaries are described as the Qantas group. I shall so refer to them in these reasons.

PN686

We submit that where his Honour in paragraph 111 undertakes the comparative exercise in 158(4) by reference to pilots employed by the Qantas Group, the only sensible way to read that is a meaning to pilots employed by Qantas Airways Ltd and each of its subsidiaries, Australian Airlines, Jetstar, SunState, Eastern and there's really no doubt about that approach when one has a look at paragraph 38 of the decision. You'll see above paragraph 36, well, you'll see above paragraph 35, the second paragraph, that's a reference to that part of the rule change which has ultimately been the subject of his Honour's order, where all the various entities are listed, so at paragraph 36 we've got the heading class of persons affected and at paragraph 38 his Honour refers to a submission from Mr Borenstein and then five lines down his Honour says:

PN687

It seems to me that insofar as Qantas is concerned, the rule change may be said to have effect that all pilots employed by the named Qantas companies as well as their successors, assignees, transmittees and related companies will be eligible for membership of the AIPA. In deciding whether or not to consent to the alteration in whole or in part, it is necessary to have regard to the operation of all those entities.

PN688

Now, therein lies the fundamental flaw in his Honour's approach which affects the way he deals with the matters between 111 and 114

PN689

True it is that the effect of the rule change is that all the pilots employed by the named Qantas companies as well as their successors -

PN690

and so on -

PN691

will be eligible for membership of AIPA.

PN692

But that, with respect, is not the question. The question is who in the named entities who are not currently eligible for membership will become eligible for membership as a result of the rule change? So his Honour clearly on the face of paragraph 38 when read in conjunction with paragraph 111 and 114 has misdirected himself as to the proper test under section 158(4). I should say that all of this occurs in circumstances where it really wasn't in issue between the parties that the focus needed to be in respect of those persons who would become eligible for membership as a result of the rule change.

PN693

I will turn it up in due course, but the submissions which are advanced below by our friends, the written submissions which are advanced by AIPA didn't dispute this need to apply section 158(4) by reference to those who would become eligible. Where it's explicable that his Honour has fallen into this error is that our friends certainly placed emphasis in their decisions on the operation of Qantas and its subsidiaries as a group entity and the relationship between the subsidiaries and the parent company and their case before his Honour was very much one of AIPA has a long established track record as the Qantas airline. We've got 2500 members, we've got all of these agreements and then they said to his Honour look at the way the Qantas Group operates, the interrelationship between the parent company and the subsidiaries and they use that interrelationship as an argument in support, that AIPA on the 158(4) test was the better organisation to represent pilots employed in the subsidiaries.

PN694

Now, it's only by reference to that that it's explicable that his Honour has fallen into this error which is manifest in paragraph 38 and 111 of the decision and we make the same submission, this is where the Academy Insurance point arises again, our friends say in their submission, AIPA says for heaven's sake, you can't read 111 of his Honour's decision that way. That would have meant that his Honour fundamentally misunderstood the task at hand. We rely upon Academy Insurance. The decision speaks for itself. It uses a term in 111 which has been defined earlier in the judgment in paragraph 14 and it's entirely consistent and in paragraph 38 is follows up, it ties it together.

PN695

Paragraph 38 with respect is entirely consistent with the way Senior Deputy President Kaufman then approaches the application of 158(4) in paragraphs 112 through to 114 of his decision, that is when one reads paragraphs 112 to 114 of the decision, one sees no reference at all to the specific interests of SunState, Eastern, Jetstar. Everything is rolled in together. There's a Qantas Group approach. This issue was to the correct construction. If I can take you to appeal book volume 4 at page D44 at paragraph 28. Paragraph 28 is the submission that was put squarely to his Honour regarding the need to identify those who were newly covered by the rule.

PN696

The matter was put squarely before his Honour. That's in the Qantas submissions, so in terms of the failure to conduct the relative comparative exercise, well, I've referred to the order which was made by his Honour Senior Deputy President Kaufman which follows the terms of the rule change application itself wherein the extended eligibility operates in relation of persons normally employed a pilots on the airline services operated by the named entities. Now, in response to this submission, that is the submission when you look at the way this change operated, you had to - there was an obligation for the purposes of undertaking the comparative exercise for his Honour to have in respect of SunState.

PN697

We submit there should have been a section in his Honour's decision, SunState. He should have said firstly, yes, these are within the relevant class, these pilots, 158(4)(a) and (b), all right, well, make a decision as to who can more - whether the pilots more conveniently belong to and be represented by the AFAP or AIPA and he should have done the same in respect of Eastern and he should have done the same in respect of Jetstar and he should have done the same in respect of Qantas Ltd, the freight services. Now, Mr Friend's submission, he relies upon paragraph 81 of Senior Deputy President Kaufman's decision. To put that in context, you probably need to read paragraph 80 where his Honour notes the fact, he says:

PN698

To a significant extent, Qantas and each of its subsidiaries operate as an independent entity. Each employs its own staff, including pilots, each has its own directors, administers its own recruitment of pilots for subsidiaries, processes for pilots. I have referred in these reasons to some of the details of Qantas and its subsidiaries.

PN699

And then at paragraph 81, this is what AIPA refer to:

PN700

However, the fact remains Qantas is the overall parent company for all the entities falling within the Qantas Group.

PN701

And his Honour sets out there in the middle of the paragraph, he says:

PN702

Each has considerable autonomy in running the business segment. That autonomy is subject to the decision of the general manager being consistent with the overall strategy of Qantas as set by its board. The chief executive officer of Qantas bears the ultimate responsibility for Qantas and its subsidiaries. Although the business segments involved in flying are managed in an independent manner, major network decisions are made at a group level. Significantly, all network decisions which involve changes to the operating carrier on a route are made at senior Qantas Group level in order to ensure optimum network coverage, ensure other strategic issues are addressed. Market pricing decisions are co-ordinated between the various group airlines as are decisions as to which airlines fly on which route and when. It seems that Qantas owns all aircraft flown by the Qantas Group.

PN703

So our friends say, well, when you have regard to that, it was quite legitimate for his Honour to adopt the approach that he has in paragraph 111 of his decision. Our response to that is that paragraph 81 of the decision says nothing about the issue of the proper application of section 158(4) which falls to be determined by reference to the way in which this extension of the eligibility rule operates. Say for argument's sake, with respect, say for argument's sake the only application which was made by AIPA was that it sought to cover SunState and Eastern pilots and between those two airlines, I think the figures are that that would account for some 350 pilots employed by those two airlines.

PN704

If that was the only application which would support his Honour, would it have been legitimate for his Honour to have conducted the exercise required by section 158(4) without making any reference at all in his decision to matters which related specifically to those airlines such as the fact that they operated within a regional airline industry which is quite discrete from the domestic and international markets, such as the history of award coverage in respect of Eastern and SunState, the history of industrial servicing of the AFAP of pilots employed by SunState and Eastern, it seems quite far fetched when you outline it in that way and yet that is precisely what has happened in this case which on the evidence of the president of AIPA, the primary focus of the application was coverage of SunState, Eastern and one other, Jetstar.

PN705

At paragraph 30 of its written submissions, AIPA has contended that the reasoning of Merkel J at paragraph 144 of the Full Court decision is contrary to the approach for which we contend, that is the requirement to apply section 158(4) in respect of the discrete airlines, but if I can take you to 144 of the decision - - -

PN706

SENIOR DEPUTY PRESIDENT ACTON: What tab is it again?

PN707

MR MCDONALD: That is tab 5. At paragraph 144 his Honour says:

PN708

Accordingly, while it will usually be helpful for the decision under section 204(4) to identify the persons currently within the scope of the unaltered rule and those who would fall within it because of the alteration, it is not always necessary to do so. Relevantly for present purposes, in the case of a refusal for consent under the subsection the member does not necessarily fall into jurisdictional error by failing to identify the persons who would be eligible under the unaltered rule and the persons who would be eligible because of the alteration.

PN709

Now, the problem with the AIPAs reliance upon 144 is that firstly it seems to be directed to the earlier point, that is the requirement to identify the proper delineation of the existing and the proposed rule. Secondly, when you read 144 in context, his Honour is following on from his discussion in 143 of the situation which prevails where the member has determined to withhold consent, so his Honour's discussion at 144 is not talking about the situation which prevailed in this case. He is talking about a refusal. At paragraph 31 of the submissions put forward by AIPA, this submission was made. In the middle of paragraph 31 AIPA make this submission. I beg your pardon, this is exhibit F2. There were two submissions files, so it's exhibit F2 and at paragraph 31, six lines into paragraph 31:

PN710

In this case Kaufman SDP formed the view that the potentially eligible pilots employed within the Qantas Group should be regarded as one class. That indeed was his expressed decision at paragraph 38.

PN711

So that brings very sharply into focus where we part company with AIPA. Our submission is paragraph 38 clearly discloses an error, that it was not open to his Honour to adopt the one class approach. It's the wrong class. Now, this error, the failure to identify the relevant class and the failure to undertake the requisite comparative exercise under section 158(4), firstly it's an error in the decision-making process which would justify quashing of the decision and secondly we submit it's a clear misapprehension as to the nature of the inquiry which had to be undertaken for the purposes of the proper application of section 158(4) and therefore it's a jurisdictional error and we've referred in our decision to the authorities in relation to that point at paragraph 31 of our written submission.

PN712

Can I then come to the second limb of the substantive appeal, that is the failure to take account of relevant considerations? The starting point in considering this aspect is to identify whether the matters which have been identified in the appellant's written submissions as having been matters which should have been taken into account are in fact relevant considerations and we submit in that respect that the touchstone for relevance are the statutory criteria in 158(4)(a) and (b), that is are the matters to which we've made reference matters which were relevant to the question of whether the pilots in question would more conveniently belong to the AFAP as opposed to AIPA and could be more effectively represented by AFAP as opposed to AIPA and we submit each of those matters which we've referred to in our written submissions which starts at section C of the submissions which is on the bottom of page 10, starts at the bottom of page 10, so it's from paragraph 32 and it runs through to paragraph 59, we've identified a number of discrete points, each which we submit were clearly relevant matters and each of which we submit were not properly taken into account by his Honour Senior Deputy President Kaufman.

PN713

Now, the first of those matters is the question of the hostility of AIPA to the expansion of Jetstar's international operations. We submit that that was clearly a matter which was relevant for the purpose of section 158(4) because of necessity, the interests of the pilots who are employed by Jetstar is bound up with the capacity of the airline to expand its operations. Those operations, international operations, will provide additional benefits and opportunities for its pilots. Now, his Honour Senior Deputy President Kaufman makes reference in his decision in one line of the decision, he makes reference to the fact that submissions were advanced by Qantas in relation to that matter and he says these matters are set out at paragraph 147 of the written submissions. Can I take the Commission to paragraph 147 of the written submissions? They're found in volume 4 of the appeal book at D70.

PN714

DEPUTY PRESIDENT IVES: D70?

PN715

MR MCDONALD: D70 in volume 4. That's towards the back of volume 4. Paragraph 147 starts at the bottom of D69, so you'll see that at page 70 and 71 we have set out in our written submissions six separate incidents which we put before his Honour as evidencing hostility of AIPA to the expansion of Jetstar's international operations. What is significant about these matters is that each of them was constituted by documentary material, that is the first point, 3 March 2006 is a letter of demand, the second mater is the Federal Court proceedings, statement of claim, the third matter the intervention in the proceedings to vary the certified agreement to incorporate provisions which were an essential prerequisite to international flying. That's the transcript of the proceedings.

PN716

The fourth matter is the matter that Mr Borenstein referred to, the ban on international recruitment. The fifth matter, the assessment process for the ETOPS permit application. ETOPS is extended twin engine operation and so what that was all about was in order for Jetstar planes to be able to fly further, they needed CASA approval and the evidence was that they sought accelerated CASA approval. The evidence was the normal course is that it takes 12 months and they sought this approval within a two month period and AIPA opposed that accelerated approval process and we've referred there to the transcript. It should in fact be 6253 to 6264, that's the evidence of Mr Woods in cross-examination.

PN717

SENIOR DEPUTY PRESIDENT ACTON: Sorry, where was that 6253?

PN718

MR MCDONALD: This is on page 71, in the middle of the page you'll see a bullet point:

PN719

In 2006 AIPA wrote to CASA.

PN720

And at the end of that paragraph there's a reference. It should be paragraph number 6253.

PN721

SENIOR DEPUTY PRESIDENT ACTON: Thank you.

PN722

MR MCDONALD: Then the final matter is the Federal Court proceedings alleging that Qantas Airways Ltd constitution does not comply with the Qantas Sale Act. The relief it seeks, directions that QAL is prohibited from conducting international air transport passenger services under the Jetstar or Jetstar International names or under any names other than that that includes the expression Qantas, so these were all matters which were rooted in objective documentary material and there's nothing in the material that we've seen which has been filed by AIPA to suggest that any of these matters were seriously contested or put in issue.

PN723

Rather, their contention is, well, Senior Deputy President Kaufman, he's dealt with these matters in paragraph 112 where he states that he disagrees with the proposition that alleged antipathy of AIPA and its Qantas pilots should persuade him that AFAP is a better organisation. Well, what is significant about paragraph 112 is his Honour never actually makes a finding anywhere in his decision about these matters. His Honour never bites the bullet, so to speak, to make a determination as to whether or not he accepts these matters, whether he accepts this evidence and what flows from it.

PN724

The most significant we would suggest of all of these incidents, the one which is the most significant was the matter referred to on 8 March 2006, the intervention, the attempted intervention of AIPA in the proceedings in the Commission before Commissioner Raffaelli to thwart the variation to the certified agreement because there we know the evidence being unchallenged that that variation was supported by 73 per cent of the Jetstar pilots and yet here was AIPA going to the Commission, making serious allegations about pilots having been pressured and the like, none of which was subsequently followed up in the proceedings before Senior Deputy President Kaufman.

PN725

Here was AIPA adopting a course which was objectively inconsistent with the stated preference of the significant majority of the Jetstar pilots. In the ordinary course of events, where that's been put squarely in issue before a member of the Commission in a hotly contested arbitration, that's a matter about which a finding has to be made. His Honour is still, with respect to him, wedded to the concept of well, alleged antipathy. It simply wasn't open to him and there was no issue. This variation was an essential prerequisite to Jetstar being able to engage in international operations, so this was truly an attempt to blow up the bridge, so to speak, on that issue.

PN726

The other thing which is significant about this part of the submission, at D70 and 71 is that these matters were all quite specific to Jetstar. They don't relate to any of the other airlines and yet his Honour, with respect to him, there's a slide in his decision and it's a product of his group approach, this impermissible group approach which he adopts. When you look, with respect, at paragraph 112 of the decision, much was made by the objectors of the alleged antipathy shown by AIPA and its Qantas pilot members towards other airlines and their pilots in the Qantas group.

PN727

That, with respect, completely mischaracterises the case which was put below. In relation to Sunstate and Eastern, there was no case put based on alleged antipathy of AIPA towards Sunstate and Eastern. In relation to Sunstate, for example, the case there was based primarily on the fact that AIPA had never shown any interest at all in relation to Sunstate pilots. It was in a different sector of the industry, a longstanding track record of servicing by the AFAP and yet his Honour bundles it all in together. That's not consistent with the case that was put. This question about hostility was the focus here was Jetstar and it should have been dealt with, with respect to his Honour, in the context of Jetstar.

PN728

One of the complaints we make about his Honour's approach is, and we submit this properly, that on the face of the material before him, so much of which wasn't challenged in any meaningful way, that if his Honour had approached the application of section 158(4) in respect of the discrete entities, he would have been driven to make a finding by proper application of the criteria that consent be withheld because the AFAP was the better organisation.

PN729

This is where there is clearly an intersection between this part of the argument, that is the failure to take account of relevant considerations and the failure to give adequate reasons because this is a classic example of the Cruickshank point, where the Full Bench in Cruickshank v Priceline says that it's quite impermissible to jump to an ultimate conclusion without having made intermediate findings in respect of matters which have been put squarely in issue. What we have in this case is that these matters were put squarely in issue and his Honour jumps to the ultimate conclusion in paragraph 112 of, "Well, I don't accept that" or "I don't believe that." With the greatest of respect to him, that leaves the parties at this end of the bar table completely in the dark as to what his Honour made or did not make of all of these matters that were put before him that fall into this category.

PN730

This sums up our complaint very neatly, a passage from the Full Bench decision in AWU v CFMEU which is at tab 1 of our folder and if I can ask the Bench to go to paragraph 161 of that decision:

PN731

Williams SDP, however, makes no reference to any of this evidence under his heading Potential Disputation. In his paragraph 105 he calls the reactions of the objectors rather emotive and says that these reactions fail to acknowledge the shared coverage of plant operators and the lack resulting in serious industrial disputation. While we agree that the factors of shared coverage of plant operators result in serious industrial disputation are relevant, they are not the only relevant factors. Another relevant factor in our view is the evidence of a large number of witnesses about the potential for industrial disputation if the CFMEU's application was granted. His Honour makes no reference to any of this evidence. Having regard to it's nature and extent his Honour, in our respectful view, was obliged to refer to it and express conclusions about it. Did he think it had any weight, if so, what weight? Why did it not on balance outweigh freedom of choice considerations? In the absence of conclusions being expressed it is our respectful view that his Honour failed to give adequate reasons for the conclusion expressed.

PN732

We ask, with respect, exactly the same question. What did his Honour think of this evidence? If he rejected it, on what basis did he reject it?

PN733

I'll go to a new point that I can deal with very quickly because it was a matter that was dealt with by my friend, Mr Borenstein, and I don't want to labour the point. I simply make this observation in relation to his Honour's failure to deal with the Jones v Dunkel submission that was made in relation to the failure of AIPA to call any pilot witness to rebut the evidence that was advanced by the objectors in relation to Jetstar.

PN734

The submission which is put against us in relation to this matter is that, well, look, there's no scope for Jones v Dunkel inference in relation to the failure to call Jetstar pilots because those pilots could not have given probative evidence in relation to the principal contention which was advanced on behalf of AIPA, that is that, you know, basically all pilots do the same work up in the cockpit. That's their response so they say look, they couldn't have given any probative evidence.

PN735

That, with respect, is a fairly flimsy response to the Jones v Dunkel submission. The first point is well, if his Honour was going to reject the Jones v Dunkel submission on that basis, he should have said so. When you read the decision there is simply no reference in the decision to the fact that a Jones v Dunkel submission was put in respect of the failure of AIPA to call Jetstar pilots and that his Honour was invited to draw an adverse inference against AIPA.

PN736

The second matter is that is somewhat perplexing that his Honour doesn't deal with the matter because he did draw precisely that same adverse inference in respect of the failure of AIPA to call any Sunstate and Eastern pilots. Thirdly, and perhaps most significantly for the purposes of these proceedings is that when the bench looks at the matters which were set out in paragraph 147 of the written submissions that were filed by the Qantas Group, one can readily imagine why there would have been a strong temptation on the part of AIPA not to call a Jetstar pilot because any Jetstar pilot called by AIPA who got into the witness box would have been confronted with vigorous cross-examination about each of the six separate matters which are referred to in paragraph 147 of the written submissions and the evidence, which almost certainly would have fallen from their lips in relation to those matters would not have advanced AIPA's case, quite the contrary.

PN737

Is that an appropriate time?

PN738

SENIOR DEPUTY PRESIDENT ACTION: Yes. We'll adjourn this matter until 2.15.

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

PN739

SENIOR DEPUTY PRESIDENT ACTON: Mr McDonald.

PN740

MR MCDONALD: Just before I move to the next point, I just make one final quick response in relation to the Jones v Dunkel point. It needs to be borne in mind that the process that was followed in this particular case before Kaufman SDP was that the objectors filed their material first and the applicant then responded to that. In the material that was filed on behalf of the AFAP a number of Jetstar pilots provided witness statements which contained evidence which was generally supportive of the position of the AFAP as against AIPA. For instance, there was some specific evidence about some of the AFAP pilots expressing evidence to the effect of concern about conflict in the cockpit if AIPA were granted coverage rights. That was clearly material of a nature which a probative response could have, and in the normal course you would have expected would have been provided by AIPA.

PN741

Can I move on then to the next subset of material consideration which it is submitted was not taken account of by his Honour and this concerns the conduct of AIPA. The first limb of this concerns the conduct of AIPA in respect of the Eastern Pilots Group. This was a hotly contested issue before his Honour. Eastern Airlines submitted before his Honour that from late 2004 onwards the AIPA coordinated the establishment of the Eastern Pilots Group as a rival to the established organisation within Eastern Airlines which was the Eastern Airlines Pilots Council.

PN742

The Eastern Airlines Pilots Council was actually an officially recognised
sub-body of the New South Wales branch of the AFAP and it was submitted to his Honour by Eastern that the AIPA launched a carefully orchestrated raid on the established organisation that is AFAP's longstanding representation within Eastern, that it set out to disrupt the negotiations for the 2005 EBA, that it did so, that it disrupted those negotiations and that the effect of that was that the pilots at Eastern were delayed in receiving pay increases by some 12 months, the cost to them being in the range to 6 to 8 thousand dollars.

PN743

That's what was put fair and square and more to the point AIPA engaged with that debate. AIPA's submissions in reply, and they're to be found in volume 4 of the appeal book - they're to be found starting at D10 in volume 4, this is towards the back of the appeal book. You'll see starting at paragraph 37 on page D10:

PN744

The story at Eastern is a very sorry one.

PN745

That was agreed between the parties but from there we took very different directions and you'll see it runs between 37 through to about paragraph 40 on D13.

PN746

SENIOR DEPUTY PRESIDENT ACTON: Whose submission is this?

PN747

MR MCDONALD: These are the written submissions of AIPA. Then in the written submissions in reply of AIPA they commence at D22 and you'll see at D26 paragraph 33:

PN748

A good deal of the submission of Qantas which has been adopted by AFAP in relation to this is based upon tendentious or incomplete reading of the transcript.

PN749

The submissions run through to paragraph 40 at D30. Of course, these matters were supplemented by oral submissions which were put as well. So the parties engaged directly in a debate in relation to the conduct of AIPA in respect of the Eastern Pilots Group and what his Honour should make of it.

PN750

SENIOR DEPUTY PRESIDENT ACTON: The Eastern Airlines Pilots Council is a group of pilots?

PN751

MR MCDONALD: That's correct.

PN752

SENIOR DEPUTY PRESIDENT ACTON: Who were members of the AFAP.

PN753

MR MCDONALD: That's correct. If you go to paragraphs 92 through to 94 of the decision, this is where his Honour deals with the issue. The criticism that we make of his Honour's decision is his failure to make findings in relation to these matters. You'll see in the third line in paragraph 92:

PN754

There was considerable criticism levelled at AIPA's presumed involvement in the creation of the Eastern Pilots Group and the hand that it had in the defeat of the proposed enterprise agreement.

PN755

Then in 93:

PN756

AIPA was criticised for its enrolment of some Eastern pilots in 2004. It was submitted that AIPA fomented discontent amongst a series of pilots who formed Eastern Pilots Group and it induced the Eastern Pilots Council branch of AFAP to undermine the AFAP negotiations with Eastern for terms and conditions.

PN757

Then his Honour goes on:

PN758

The resultant defection of a group of Eastern pilots from the AFAP to AIPA is said to have been orchestrated by the AIPA.

PN759

Then in paragraph 94:

PN760

It was submitted that the attempt by the AIPA to gain membership at Eastern was not a genuine attempt to improve the lot of Eastern pilots, it was merely a strategy to assist with its application for the Commission's consent.

PN761

The submission that we make is that in relation to a hotly contested matter, where there was a very substantial volume of material, his Honour simply did not make findings in relation to those matters and this was a very important matter, particularly as it was specific to the Eastern Airlines and the Eastern pilots.

PN762

Because the series of dates, just to put this in sharp focus, how this unfolded in the evidence, the sequence of dates is important so we've prepared a chronology which we'll hand up and so we've got the date, we've got the description and we've got the appeal book reference in the right-hand column. Just going back to the point that your Honour, the presiding member has raised with me, April 1992:

PN763

Pilots at Eastern Airlines formed themselves into a sub-council of the New South Wales branch of the AFAP to provide representation at the local level. The committee became known as the Eastern Australian Airlines Pilots Committee.

PN764

Going through to late 2004 Mark Alphandary, who was an Eastern Airlines pilot who gave in the proceedings, he gave evidence that he became aware of AIPA's view that Eastern Pilots could be eligible for membership. Late 2004 there was a special deal on membership for a $50 subscription fee. Then in December 2004 the Eastern Pilots Group was established. The evidence in the proceedings of the rules of the Eastern Pilots Group were drafted by the two in-house legal staff within AIPA, a Mr O'Neill and Ms Starke and the committee, the initial committee of that pilots group, all of those individuals who are listed there were also members of the Eastern Pilots Committee, the AFAP body, with the exception of Westwood and Ramsey. That evidence is to be found - another entry is at paragraph - - -

PN765

DEPUTY PRESIDENT IVES: I'm sorry, you've lost me, Mr McDonald. They were all members of the council.

PN766

MR MCDONALD: Yes, they were all members of the council. All of these members of the Eastern Pilots Group, the first committee, were also members of the committee of the Eastern Airlines Pilots Council.

PN767

DEPUTY PRESIDENT IVES: Right.

PN768

MR MCDONALD: Except for Westwood and Ramsey, and that evidence appears at paragraph 4342 of the transcript at page B471 in volume 1. The evidence, you'll see at item number 10: The Eastern Pilots Group at the time of its establishment and ongoing had no assets, employed no one, no bank account, rented no premises. Membership was free. AIPA provided the secretarial support and stationery for the Eastern Pilots Group. There was evidence of the correspondence having input from AIPA and EPG having sought AIPA's advice on every piece of correspondence that EPG sent out.

PN769

On 6 December 2005 Captain Ben Campbell. He was a member of the Eastern Pilots Group committee, he writes to all the Eastern pilots regarding the formation of the Eastern Pilots Group, says:

PN770

The objective is to negotiate our own collective agreement.

PN771

Also states that:

PN772

The EPG has been established to replace the Eastern Australian Airline Pilots Committee and to negotiate a non-union agreement to the exclusion of the AFAP.

PN773

The post office box that's referred to there, 228 Botany, New South Wales, the evidence was that was a post office box established by AIPA. The evidence was that AIPA cleared that box with its own secretarial support. The evidence was that AIPA maintained the membership records of the Eastern Pilots Group.

PN774

SENIOR DEPUTY PRESIDENT ACTON: How many pilots does Eastern have?

PN775

MR MCDONALD: About 250, I think - sorry, 150. Then on 6 December 2004 Captain Campbell on behalf of the Eastern Pilots Group Committee writes to Captain Davey, the chief pilot at Eastern notifying him of the formation of the EPG established to negotiate a new agreement with Eastern and have that agreement certified by the Commission pursuant to section 170LK. Of course, the existing agreement at the time of the AFAP was an LJ agreement.

PN776

On 7 December 2004 Captain Campbell writes to Captain Holt, the president of AIPA informing him of the formation of the EPG and stating that the EPG looks forward to a close working relationship with AIPA. That letter of 7 December 2004, bear in mind, this is Captain Campbell writing to Captain Holt on the letterhead of EPG, the letterhead provided by AIPA advising Captain Holt of the establishment of an organisation, the EPG, the rules of which have been drafted by two in-house AIPA employees, O'Neil and Starke, we submit in an attempt to create an impression of an arm's length relationship between the EPG and AIPA when none existed.

PN777

Then you'll see items 14, 15 and 16, the highly coordinated activity which takes place all on the one day. Captain Robin Holt, AIPA, writes to all Eastern Airline pilots expressing the view that Eastern pilots are eligible for AIPA membership, inviting them to join AIPA. The letter indicates that AIPA would be prepared to allow Eastern pilots to have a structure that would allow them to determine their own issues. Same day, Campbell, he's from the Eastern Pilots Group, writes to Davey, chief pilot at Eastern stating that the EPG will be conducting all EBA negotiations and that the services of the AFAP are no longer required during EBA meetings. The evidence was before that letter went out EPG held discussions with senior representatives of AIPA and AIPA had input to the contents of the letter.

PN778

Same day, 7 March Captain Campbell, EPG, writes to Captain Richard Higgins, president of AFAP, informing him that EPG will now be conducting the EBA negotiations. There's a response to that on 9 March from Captain Higgins, not surprisingly. Then on 23 March Campbell of the EPG writes to Davey expressing concern that Eastern has held discussions in relation to the current EBA without the presence of the EPG representatives or the EAPC negotiating team. Then on 24 March Campbell write to all pilots at Eastern regrading Eastern pilots' eligibility to be members of AIPA. Attached to the letter is an application for membership of AIPA. He's recruiting.

PN779

24 March Higgins writes to all AFAP members employed by Eastern to clarify the status of EAPC as a sub-council of AFAP and states that the AFAP is opposed to a non-union agreement with Eastern. In a meeting on 12 April Captain Campbell in a meeting with Eastern states that a 170LJ agreement is not acceptable to the EPG. 14 April Davey, Eastern chief pilot, writes to Campbell stating the EPG is not a party to the EBA, has no legal standing in the negotiations. 16 May Davey writes to Campbell stating that Eastern will not be inviting EPG representatives to the next EBA meeting.

PN780

Then in June Alphandary of the EPG, serves a notice initiating a bargaining period. 6 June he writes to all Eastern pilots explaining the EPG's decision to lodge the notice of initiation of bargaining period. Of course, there was evidence of AIPA involvement in relation to this process. Then on 12 July AIPA's committee of management resolves to admit new members from Eastern. On
9 December , Kirsch, the EAPC chairman, but he's also a committee member of the EPG, writes to all Eastern pilots stating that the majority of the EAPC members do not support the EBA and recommending that pilots reject it.

PN781

December 2005, Eastern and EAPC, but it had been reconstituted by the AFAP, because the position was that EAPC had effectively been taken over by EPG, AFAP reconstituted the committee and a proposed agreement went out to ballot. The agreement was voted down. Then in March 2006 negotiations recommenced.

PN782

In July 2006 Captain Woods publishes an AIPA Insights article in which he raises doubts about the efficacy of the proposed agreement, the new agreement. His point was, "Well, this is a new Act agreement and the problem here is that after
90 days after the nominal expiry date of the agreement, it could be terminated. When this was raised with him in cross-examination he conceded that that would have been a good reason to have voted up the earlier agreement. That reference is at paragraph 6301 at page B652 in volume 1 of the court book.

PN783

In July 2006 the replacement agreement is voted up. The only significant difference from that agreement and the one that had been voted down was that there was no back pay. Pilots lost between 6 to 8 thousand dollars. That's the framework within which the debate took place before his Honour and - - -

PN784

SENIOR DEPUTY PRESIDENT ACTON: Can I just take you to item 15, Captain Campbell writing to Captain Davey, chief pilot, saying that the services of AFAP are not longer required, Captain Campbell is associated with the EPG, is that right?

PN785

MR MCDONALD: Yes, that's correct.

PN786

SENIOR DEPUTY PRESIDENT ACTON: Are all the pilots members of the EPG at this point?

PN787

MR MCDONALD: No, not all of them. I think the evidence was that 75 - I think 75 per cent but there was no - membership was free but they were members in that sense. They didn't have to do anything to become a member other than say, put up their hand, "I want to be a member." What is significant about this was that at no stage during what we see as a highly coordinated raid on the AFAP by AIPA, was the relationship between AIPA and the Eastern Pilots Group ever disclosed to these people who joined the EPG.

PN788

Bear in mind, this is at a time - all of this is taking place at a time after late 2004 when AIPA is claiming that it has got the right to recruit and enrol Eastern pilots. At one point in the proceedings below Kaufman SDP actually raised with Mr Alphandary when he's in the witness box, "Why didn't you all just join AIPA? Why did you need to have EPG?" Of course, we submitted to his Honour that the whole rationale for EPG was AIPA undermining the position of AFAP within Eastern Airlines and that they used - our submission to his Honour was that AIPA - we submitted that they should be condemned, that they had exploited these somewhat naïve individuals on the EAPC committee, had exploited them to do their bidding to foment discontent within AFAP's membership within Eastern Airlines and that that they succeeded in doing that. EPG is now defunct, it's been defunct for a long time.

PN789

The other thing that needs to be borne in mind in relation to this is exhibit AFAP34, appeal book 3 at page 746. This is the committee of management meeting - hang, on, I beg your pardon, I've given you the wrong reference - 726 I'm told, yes, I'm sorry. The reference in paragraph 46 of our submission is incorrect, it should be C726, that's in the fourth-last line of paragraph 46. These are the minutes of the committee of management meeting on 12 April 2005. You'll see that the attendees who were there - you'll notice on page 726 in the middle column of the attendees three down, is Andrew Marshall, AM. You may recall that Andrew Marshall was the person who was referred to in the letter, I think it was exhibit IW20, the letter which was sent out to Jetstar pilots informing them that Andrew Marshall was in the process of redrafting the union's rules to provide for rights of representation. He's the treasurer.

PN790

On page 728 some four entries from the bottom of the page, AS - I'm not quite sure who this AS is:

PN791

AS noted that any suggestion of making Eastern pilots' membership less than full membership would be less than their expectations. AM -

PN792

that's Marshall:

PN793

With all these people as members it makes it much easier to achieve our rule change. Robin Holt: Our master strategy is there. We may well to negotiate with the AFAP. We will deal with voting rights as we move forward. We need revised rules that are relevant with future situations.

PN794

If Mr Friend seems to think that helps his case, I'll refer to that. Here we are going back to the chronology, this hive of activity that's taking place around March 2005. We've got the committee of management meeting of the union and Marshall making the observation:

PN795

With all these people as members it makes it much easier to achieve our rule change.

PN796

This is all highly coordinated, somewhat cynical, but certainly we would submit certainly warranting his Honour to have made some findings about these issues.

EXHIBIT #M3 CHRONOLOGY OF EASTERN PILOTS GROUP

PN797

MR MCDONALD: Moving on from that point - - -

PN798

SENIOR DEPUTY PRESIDENT ACTON: Could you just excuse me for a second. Yes, Mr McDonald.

PN799

MR MCDONALD: What's put against us in relation to this, for the purposes of this appeal proceeding, the AIPA submission at paragraph 50 is that, well, look, it wasn't necessary for Kaufman SDP to make any findings about the establishment of the EPG and the allegation that the EPG misled pilots as to potential benefits. They say, "Well, look, you know, there was this evidence before his Honour and it was compelling."

PN800

That really misses the point. The issue in the terms of the House v The King point, that is, was this a material consideration? The point is simply this. All of this evidence in relation to the Eastern Pilots Group was clearly a material consideration because it went directly to the question in respect of the Eastern pilots who were to be brought within the eligibility of the AIPA as to whether or not they would be more effectively represented by an organisation, AIPA, at whose hands lay the responsibility for the fact that all of these Eastern pilots were denied a pay increase of 6 to 8 thousand dollars for a 12 month period.

PN801

Were they to be more conveniently represented by an organisation which we say, the material disclosed quite convincingly, had been prepared to engage in a cynical exercise of seeking to undermine the organisational interests of a rival organisation for AIPA's own organisational benefits, as demonstrated by Marshall's comments in March 2005. It was very material and his Honour simply hasn't dealt with it.

PN802

I'm up to paragraph 44 of the written decision - of the written submissions. I'd be happy for you to accept it as a decision but that's probably a bit optimistic. That's the misconduct of AIPA misleading of prospective members. We've made reference there to exhibit IW20. Mr Borenstein has dealt with that matter in his submissions and I'll simply rely upon the matters which are there set out. At paragraph 46, this is in relation to the misleading of Eastern pilots regarding the extent to which they could have control of their own representational interests, we've set the relevant matters out in paragraph 46, including exhibit AFAP34 to which I've just taken you.

PN803

The next material matter that we say simply hasn't been taken account of is the existence of the regional airline industry. I've touched on that earlier this morning. We've set out in the submission the relevant extract in the evidence. This was a very detailed witness statement from Paul Lidbury who is the relevant regional airlines manager and the statement is to be found at appeal book 3, 967 to 974. He details in very great - some considerable detail in his statement the fact that there is a very well recognised, discrete segment of the Australian airline industry, the regional airline industry and how it operates differently, not just in terms of the nuts and bolts issues of the types of planes and the types of airports, but the different regulatory arrangements.

PN804

The gravamen of his evidence was that, well, the AFAP has had a very long established track record as the established union representing pilots in this sector of the industry. He wasn't cross-examined at all about any of that. The evidence just went in. straight through to the keeper unchallenged. It was a very powerful consideration which weighed in favour of refusing the consent in respect of Eastern and Sunstate and it just doesn't rate a mention as a relevant consideration in his Honour's decision. There's a reference to the fact that the submission is made in relation to the regional airlines industry and that's it.

PN805

The next point, I'm up to paragraph 51, group opportunity list. This again is one that seems to have slipped under the radar. It's worth just taking a moment to actually look at just what we're talking about here. It's to be found in volume 2 of the appeal book at page C349. C349 is a statement AIPA15, it's a supplementary statement of Captain Woods and you'll see, starting just above paragraph 4 on page 349, there's a reference to this list and he explains what it is:

PN806

The group opportunity list is a proposal prepared by AIPA. The list proposes that existing seniority lists within the Qantas Group -

PN807

And he refers to mainline, regional, Australian Airlines and Jetstar -

PN808

- would be frozen at some point in time, for example 30 June 2007. For flight crew on each frozen seniority list career progress within the particular airline would remain superior to the opportunity afforded to those on an opportunity list created on 1 July 2007. However, after 1 July 2007, opportunities created by a transfer between Qantas Group Airlines would be in accordance with the pilot's position on the list.

PN809

DEPUTY PRESIDENT IVES: Is this why that - - -

PN810

MR MCDONALD: No, the why was a specific proposal in relation to the integration of Australian - TAA pilots back in the 1990s. This is an entirely new proposal. The evidence was, and it's to be found in exhibit Q28, which is at - in the evidence was that this was rejected out of hand by Qantas on cost considerations but you'll see that Mr Woods says at paragraph 5:

PN811

The list would be created on the basis of data seniority -

PN812

and so on and it goes through to - explains it through to paragraph 9. The next document which appears on 351 is the important one. This actually spells it out in some detail. You'll see under the heading Career Progression for Qantas Pilots, the second bullet point in bold:

PN813

Seniority lists throughout Qantas Group Airlines frozen as at 1 July 2000 and a Qantas Group promotion list formed.

PN814

There was a deal of evidence in relation to this group opportunity list and you'll see that at paragraph 51 of our submission we've set out the references to the evidence of Captain Woods in relation to this matter. His evidence was the primary purpose for seeking clarification of AIPA's eligibility rule via the rule change application was to give effect to its group opportunity list and he also gave evidence that the group opportunity list and the rule change application were inextricably linked.

PN815

Qantas and AFAP were very critical of this group opportunity list. It was put as being another example of AIPA pushing the barrel of a proposal which was all about protecting the interests of mainline pilots to the disadvantage of pilots employed by other subsidiary airlines within the Qantas Group. You'll see in paragraph 51 of our written submissions, we've set out the submission which was advanced by Qantas. We said that it was a classic illustration of AIPA protecting the interests of QAL pilots:

PN816

The so-called group opportunity list is a proposal that freezes the seniority of existing QAL pilots. This means that for many years no one from regional airlines has any realistic chance of successfully bidding for a vacancy within QAL. Today the Dash 8 captain who has 15 years of seniority at Eastern and wants to take up a first officer position with QAL in a B737, he has no chance. A second officer at QAL with two years' seniority there has bidding rights ahead of the Eastern captain. On the other hand QAL pilots would be able to access opportunity within the regional airlines, such as Jetstar, which are growing fast and therefore creating lots of new jobs.

PN817

There was a sharp divide on this issue, as with many others. This is
Captain Woods saying, "This is what's is all about. The application is inextricably linked with this." The objector has been highly critical of the opportunity list, yet his Honour makes no reference to it at all in the decision, even though it's been identified as being a very important matter by the applicant.

PN818

Again, in terms of the criticism of his Honour for going to the ultimate conclusions without any intermediate findings - one of his Honour's key findings in paragraph 112 is that he said he had no reason to doubt that were it able to enrol all pilots employed by the Qantas Group it would act in the interests of all of them and here the objectors saying, "Well, hang on, here's the key issue being pushed by the union and it's directly contrary to the interests of all of these other pilots." His Honour could only have come to the conclusion he's expressed in 112 if he had formed the opinion that all the criticisms that were being made of the group opportunity list were without substance. Maybe that was his view, maybe he did have that view but we would like to know the basis upon which he could come to that view. As a matter of procedural fairness, that's what we're entitled to.

PN819

The next matter is under the heading C4, AIPA's Lack of Interest in Sunstate. This runs through paragraph 53 to 56. I've already referred to that. It was just an uncontroverted matter in the proceeding and it beggars belief as to how it could be held that AIPA was the better organisation and can more effectively represent Sunstate pilots when their own evidence was they'd never had any interest in those pilots ever. We rely on what's set out in 53 to 56.

PN820

Of course, his Honour grants the consent in relation to Sunstate, notwithstanding his acceptance of the Jones v Dunkel submission. As a matter of logic, it's very difficult to grapple with an outcome where his Honour having accepted the proposition that if any evidence had been led by AIPA in respect of its claim for coverage of Sunstate, that evidence would have been detrimental to its case, that his Honour nevertheless confers a right of coverage on Sunstate. His Honour has made the Jones v Dunkel finding that there's a logic or disconnect between that finding and the outcome in respect of Sunstate.

PN821

The next matter, this is at paragraph 57, concerns the likelihood of demarcation disputes. It's important to bear in mind in relation to this matter that one of the views his Honour did express in relation to the construction of section 158 is that which is set out in paragraph 56 of his decision under the heading Principles. His Honour at paragraph 56 sets out with approval a passage from the decision of a Full Bench in re CPSU and in particular it's noteworthy that in paragraph 80 set out under paragraph 56, the Bench stated four lines into paragraph 80:

PN822

We consider that, among other purposes, it is now the purpose of the Workplace Relations Act to allow for competition between organisations and to discourage primarily, if not only, that kind of competition which manifests as a demarcation dispute.

PN823

It's in that context that one has to have regard, we respectfully submit, to the submission which was advanced and which is set out at paragraph 57 of our written submission where we there repeat what we put to his Honour. We submitted to his Honour that this wasn't simply a case of a likelihood or a potential for a demarcation dispute. We submitted to his Honour that if he granted the coverage in respect of Jetstar, that there would in fact be a demarcation dispute in existence as a consequence of that right of coverage. At the bottom of page 19 of the written submission in the extracted part of paragraph 57 from our submission below, we've said:

PN824

If AIPA obtains coverage of Jetstar pilots there will be a dispute as to the right of these members, vis-à-vis the Qantas pilots that AIPA has demanded should be flying the A330 planes transferred from Qantas to Jetstar.

PN825

I'm now on page 20:

PN826

As between AIPA and AFAP there is in existence a classic demarcation dispute between AFAP and AIPA re the flying of the four A330 planes which have been transferred from Qantas to Jetstar. AIPA demands that these planes be flown by Qantas pilots paid in accordance with EBA7.

PN827

We refer to the exhibits:

PN828

AFAP's position is that this flying can be done in accordance with the Jetstar EBA to which it is a party.

PN829

Of course, bear in mind that the AFAP had previously appeared in the Commission before Commissioner Raffaelli and had supported the variations to the Jetstar EBA to enable the international flying to take place. It is a classic demarcation situation and at paragraph 58 we've submitted that, well, his Honour needed to deal with a number of what we say were factual contentions that we've put there, firstly, that Qantas long haul pilots control the AIPA committee of management.

PN830

The evidence in support of that is to be found in volume 3 of the court book at page C514, I think - bear with me. It's exhibit VIRGIN6. It's at C1514 in
volume 4, I'm terribly sorry. It's in volume 4, VIRGIN6 C1514 and this is an exhibit that was tendered by Virgin Airlines and just to make sense of it, you'll see in the fourth column you've got LHs and SHs and so on and references to different types of planes. What this exhibit shows is that of the 40 members of the AIPA committee, 31 of them were long haul pilots. The only short haul pilots are those that have got the initials SH, they fly the B737s and the Dash 8 pilot, at about point 6 of the page, Gary Elsass, he's a Dash 8 Eastern pilot, he's a short haul pilot. He's the fifth entry down after the break in the middle of the page. Only nine out of the 40 were short haul pilots and that was the unchallenged evidence regarding the composition of the committee of management.

PN831

The other matters that we've set out in paragraph 58 regarding the demands that Qantas pilots should be flying A330 planes which have been transferred, that issue there was that there wasn't any dispute about the fact of the matter. Four airbus planes had been transferred from Qantas across to Jetstar and the intention was, I think the evidence was, that those planes were going to be used in a start-up phase of Jetstar's international operations and there was a dispute - and this is what some of this Federal Court litigation has been about - there's been a dispute between AIPA and Jetstar/Qantas over who was to be doing the flying and what was to be the conditions of those who were flying those four planes, the demand being the flying be done by mainline pilots on mainline conditions.

PN832

The material which underpinned this submission as to the actual existence of the demarcation dispute was really - it was incontrovertible, it was just, you know, the composition of the committee of management dominated by long haul pilots, it's a matter of fact; the demands which had been made by AIPA in respect of the flying of these A330 planes which went from Qantas to Jetstar, that was a matter of fact. If the evidence had actually been considered, the Senior Deputy President, with respect to him, would have had no option but to accept the submission which was advanced and he himself has identified the prospect of demarcation disputes as a key issue to be taken account of under 158(4). Again, in paragraph 112 we simply have an expression of belief, "I believe that if this happens, that AIPA get coverage, I believe there won't be any demarcation disputes."

PN833

Failure to have regard to section 158(8), this is the general discretion. I won't repeat what my friend has said this morning about this, Mr Borenstein, but can I just make this observation, that in the written submissions of AIPA before his Honour they specifically addressed the general discretion under 158(8) and it's to be found in volume 4 of the court book at page D16, starts under the
subheading (f), the general discretion, and it continues on page D16 and I think continues through to D18. Our friends representing AIPA in their own submissions acknowledge that the 158(8) point was a live matter for his Honour to consider and yet his Honour did not. Of course, it's been noted the 158(8) issue is not one which is confined to questions of public interest. The Commission is at large in terms of the discretionary matters which it can take account of.

PN834

Can I then go to the question of the failure to give adequate reasons. My friend Mr Borenstein has dealt with this matter in some considerable detail and we've set these matters out in detail in our written submissions. They start at paragraph 64 and they run through to paragraph 74 and I think, given time considerations and the fact I've covered most of these matters already in the context of the material considerations point, can I ask the Bench to note those submissions. I'll just simply make this observation, if I may, the way that we have attempted to approach this issue, you'll see firstly in relation to the question of his Honour's finding as to alleged antipathy.

PN835

In paragraph 66 we've identified what we submit were the intermediate steps which his Honour was required to consider in line with the reasoning of the recent Full Bench decision in Cruickshank and we set out why we say his Honour hasn't done that. We've done the same in relation to the question of his Honour's finding that starts at paragraph 69, his finding that AIPA would act in the interests of all pilots in the Qantas Group.

PN836

At paragraph 75 we've made the submission that the nature of the error here is one which offends the rules of natural justice and the two authorities we've set out in 75, Edwards v Giudice and Cruickshank v Priceline put that matter beyond point.

PN837

At paragraph 79 we've dealt with the issue of Qantas Limited, that's the airfreight services company. Our submission here is that there was simply no case advanced by AIPA, we would submit, no meaningful case advanced as to why it should have coverage of this company. His Honour's reasoning which we've set out at paragraph 80, we've set out his Honour's reasoning at 115 which, as we read his decision, underpins his decision to confer coverage. He says:

PN838

Nevertheless the perfectly proper conduct of the Qantas Group had the result that some pilots of the group are not eligible for membership of the AIPA. I have concluded they should be. I see no reason to accept pilots of Qantas Limited which is engaged in the provision of airfreight services.

PN839

The evidence was that in the freight area the AFAP was the union that had established coverage in the area and established track record of coverage. AIPA, none.

PN840

SENIOR DEPUTY PRESIDENT ACTON: What paragraph was that, sorry?

PN841

MR MCDONALD: That was at paragraph 79 of our submission making reference to paragraph 115 of his Honour's decision. We make the point in relation to air freight services on the face of the decision, his Honour simply, we say, has not applied section 158(4) in coming to the conclusion that AIPA should have coverage of air freight services - sorry, Qantas Limited.

PN842

The next part of the submission starting at paragraph 82 deals with the - - -

PN843

DEPUTY PRESIDENT IVES: Sorry, Mr McDonald, is that the only reference
to - - -

PN844

MR MCDONALD: In the decision?

PN845

DEPUTY PRESIDENT IVES: Yes.

PN846

MR MCDONALD: Yes, that's the only reference. At paragraph 82 we refer to subparagraphs (9) and (10) of the application, that is the successor/transmittee point and my friend Mr Borenstein has made detailed submissions about that point and we would adopt those submissions and we would rely upon the matters we've set out in writing at paragraphs 82 through to 84. Again, the way his Honour approached this part of the rule change was that it was very much a case of his Honour took the view, "Well, I've granted the substantive application in relation to Qantas Group in terms of Jetstar, Sunstate and Eastern. These other bodies, they're part of that cohort and they should follow on." We would say the reverse applies, that is, that if this Appeal Bench is satisfied that the principal part of the claims fails in respect of Sunstate, Jetstar and Eastern, then this appendage to that claim should similarly fail, particularly in light of the matters that my friend
Mr Borenstein referred to this morning.

PN847

Finally, as to the issue of the disposition of the appeal, we would adopt the position which was put by Mr Borenstein this morning. You'll see that I've made an uncharacteristically ambitious submission in paragraph 87 that the Full Bench simply proceed immediately to dispose of the application, but on reflection we accept that that's probably not the appropriate course and that the better course would be for the matter to be allocated to a member, we would submit appropriately a member of this Bench to consider all of the material and make a report to the Bench.

PN848

This was not a credit case. This was a case which very much - it was run on the basis of the documents. As you'll see from the court books, there's a lot of documentary material which was put forward and yes, there was quite robust cross-examination of witnesses but it's not a case where conclusions as to weight to be attributed fell in terms of demeanour of the witness. It just simply wasn't that type of case. The material is in, there's a lot of documentary material there and it's a Warren v Coombes type situation. The Appeal Bench is in as good a position as the member at the first instance to deal with the substance of the application.

PN849

Indeed, going back to the AWU v CFMEU case, what happened, there was the first decision, the Full Bench decided the issue, went to the Full Court, they set aside the position on the basis that the Full Bench had not taken into account the agreements which had been reached, went back to the Full Bench, they said, "All right, we'll now take account of those decisions." They came down with a decision where based on the material, the objective material, they dismissed the underlying application, so it can be done. That's an example of the Full Bench being able to exercise jurisdiction in respect of the substantive application.

PN850

The reason we submit why the matter, consistent with the approach taken in Cruickshank, the reason why in a case like this it's not appropriate to remit the matter to Kaufman SDP, is that he has expressed in clear terms, albeit we submit not appropriately, he has expressed final conclusions in clear terms. If the matter was simply to be remitted to him on the basis, for instance of failure to give adequate reasons, there would be a very real perception on the part of the objectors, for whom I appear, that human nature would dictate almost that his Honour would consider himself wedded to those final conclusions which he has already expressed.

PN851

We would submit it's for that reason that in Cruickshank, in a case of this type, failure to give adequate reasons, the approach that the Full Bench took in that case, that is not remitting it back to Commissioner Eames who made the decision at first instance which had been criticised, that's the appropriate approach. If the Commission please.

PN852

SENIOR DEPUTY PRESIDENT ACTON: Would you like a few minutes,
Mr Friend?

PN853

MR FRIEND: If I may, your Honour.

PN854

SENIOR DEPUTY PRESIDENT ACTON: We'll adjourn briefly.

<SHORT ADJOURNMENT [3.21PM]
<RESUMED [3.29PM]

PN855

SENIOR DEPUTY PRESIDENT ACTON: Yes, Mr Friend.

PN856

MR FRIEND: Your Honour, may I commence by handing up a volume of authorities. It's been provided to my learned friends. It has also appeared to us that, given the disparate nature of the two appeals and the very large number of appeal grounds, it might be useful to have a short summary of what's between the parties in the case. We've made it as short as we could and it's still five pages, but I'll hand that up to the Full Bench. It might at least, if nothing more, be useful as an aide memoire as to what's where in the case.

PN857

DEPUTY PRESIDENT IVES: Is that something agreed?

PN858

MR FRIEND: No, no, it simply outlines the appeal ground that we put - that's put against us and a very simple one line summary of our submission, if you like. It's not in place of our submissions obviously, full written submissions but at least the Commission will be aware where various things are.

EXHIBIT #F3 OUTLINE - GROUNDS OF APPEAL OF THE AIPA

PN859

MR FRIEND: We wish to start at the beginning which is, of course, the question of jurisdiction. Because of the way that this matter evolved with the jurisdictional point being taken by us and AIPA's submissions obviously put in second, we, in our written outline were reasonably expansive in terms of what we had to say about jurisdiction.

PN860

What I propose to do today first is simply to deal with what's been put against us in relation to that. Can I just ask the Commission first to turn to section 121. Two grounds are relied upon by AFAP, (a) a decision of a member by way of a finding in relation to a matter arising under the schedule and (b) a decision of a member if the member has jurisdiction or a refusal or failure of a member to exercise jurisdiction in a matter arising. The Qantas group also rely on (b) in relation to an order.

PN861

Could we say that the Commission will have seen a number of appeals already in relation to matters such as this and one might wonder how they arose. There used to be a provision allowing an appeal from a decision of a designated presidential member sitting as such. If you look, for instance, in the AWU v CFMEU case and in the Full Court that's how the court describes the matter coming from a presidential member to the Full Bench of the Commission on its way to the court. That was under the old section 45 of the pre-reform Act and that's prior to the introduction of the RAO schedule. It's 45(1)(f) but that's no longer there.

PN862

AFAP deal with the argument in relation to (a) by reference first to the High Court decision in Bond. Bond deals with - perhaps I should ask - I hadn't intended to go through the written outline of submissions but rather simply to deal with these reply submissions. Would it assist the Commission if I went through over it in outline on this point at this stage?

PN863

SENIOR DEPUTY PRESIDENT ACTON: We've all read it, Mr Friend.

PN864

MR FRIEND: I will save some time. Bond is really a case about what the word "decision" means in terms of the ..... Act, the decision being the final operative instrument and doesn't, in our submission, take the matter any further. The real question is what's meant by the word "decision" by way of a finding and as we submitted in the outline by way of a finding means that the finding is the operative thing that brings about the decision. The case that we referred to there - bear with me a moment - AWU v AFCC at 1 IR 27 where the challenge was to the findings of the matters in dispute. That was found not to be justiciable on appeal. All that was justiciable was the dispute finding itself is on point.

PN865

What AFAP have said - relying I say on Commonwealth v Precision ..... is that it means a decision which is a method or means of making a finding but the other definition given in Commonwealth v Precision ..... is by way of means through the mode of. In other words, the decision arises as a result of the finding. It flows from the finding itself. The finding ipso facto in a sense gives rise to the decision and that's the type of decision that can be appealed against in relation to paragraph (a).

PN866

They say in paragraph 11 of the Commonwealth Steamship Owners case - I'm sorry, the AWU case, paragraph 11 of AFAP's reply is a product of the particular statutory provision in issue there. That's the one I've just been referring to, but of course, that's the same statutory provision as the one we're dealing with here, except in a sense it refers to the finding of a dispute. They rely on United Firefighters Union of Australia v NFESB in relation to paragraph (e). I might come back to that as I deal with the Qantas reply on this point. Qantas go into a good deal more detail.

PN867

I should also say perhaps, in terms of what Mr Borenstein said this morning in relation to this, he indicated that the finding was the issue of fact that whether or not one organisation was better or whether or not consent could be given. Those were his words and you really can't talk about a finding of fact in terms of whether or not consent can be given. Of course, the finding about - or the reaching of the opinion about whether or not one organisation is better isn't a finding of act and can't be categorised as a finding in any event.

PN868

Qantas at paragraph 6 cavil with the expression - this is 6 of their reply submissions that contemplates a decision which is instrumental to or directed to a finding or explanatory of a finding but those submissions are taken from the case that's referred to in paragraph 5 of our outline submissions, commonwealth Steamship Owners v Merchant Service Guild so we would stand by that and also by the other words we put there, that it's an actual determinative Act, not all the matters considered and the conflicts resolved along the way to reach a conclusion.

PN869

They say in paragraph 7 that "by way of" doesn't mean a decision instrumental to or directed to and as I've said, those are the words we've taken from the cases and it doesn't mean a decision explanatory of a finding. It simply means that the finding is the means by which the decision is made and we go that far with them but it's the singular finding which is what leads to inexorably the decision. If it means every finding in every case that results in a decision of any kind, then there would be no need for any other provisions in 121(1). There's some reference to legislative history and in particular the second reading speech and explanatory memorandums but none of that, in my submission, takes the matter any further.

PN870

The next point in relation to this is the question of whether or not there's an order and our point - there can be an appeal against the order, if it was an order. Our point in relation to that is there's no power to make an order recording the consent. In other words, everywhere in this Act now where the Commission is given power to make an order, it says so. What the presidential member is given the task that he or she is given under 158 is to decide whether or not to consent to the granting of a variation and in those circumstances there's no expressed and certainly not implied power to make an order. I'm reminded that Mr Borenstein conceded that at the stay hearing before the President on behalf of the AFAP so even though the consent was ultimately expressed as an order, it doesn't take effect as such and the mere fact that it was called that doesn't give rise to a right of appeal under that provision.

PN871

The highest it's put by Qantas is at paragraph 37 of their reply submissions where they say Kaufman SDP had power to consent to the alteration to AIPA's rules, further section 158(9)(a) is premised on the consent being in writing specifying the date it is to take effect. The Senior Deputy President did have power to make the order of 13 June and we submit it doesn't follow that the consent is to be expressed in writing, that it must be expressed as an order or indeed that there is power to express it as an order.

PN872

The final question is subparagraph (e) which is, so far as is relevant, the refusal or failure of the member of the Commission to exercise jurisdiction. For the purposes of the matter before this Full Bench, and on this point only, we find ourselves, at least in terms of what this Full Bench can do, persuaded to some extent by one of the things that Mr McDonald said. We've had an opportunity to consider fully the Tweed Valley case which is at 65 IR 393 and it's at tab 18 of the Qantas volume of cases.

PN873

The point that's put against us in relation - the argument that we put and we put formally and it's in the outline is inconsistent with the Full Court decision, so as far as this Bench is concerned, we don't press it here although we maintain it on a formal basis. The line of authority, of which Tweed Valley is the best exponent, is to the effect that a jurisdictional error by a member of the Commission will amount to a constructive failure to exercise jurisdiction. A constructive failure to exercise jurisdiction, if one is found, would bring the matter within 121(1)(e). So insofar as the appellants seek to raise matters which are jurisdictional errors by the Senior Deputy President, then for the purposes of the submission today, we accept the appeal is alive.

PN874

If one turns to Tweed Valley and the judgment of Wilcox and Marshall CJ at
page 419, at the bottom of the page:

PN875

The finding that Commissioner Redmond fell into error does not necessarily lead to the conclusion that the Full Bench had jurisdiction to quash his decision. The Full Bench had jurisdiction to take that course only if his error amounted to a failure to exercise jurisdiction. If he had asked himself the right question the Full Bench would not have been entitled to interfere with his decision, even though its members thought that he had come up with the wrong answer. For example, if he had appreciated that having regard to the terms of the EFA, paragraph (a) of 170MC(2) was satisfied and he needed to consider
paragraph (b) but he had reached the conclusion about public interest in which the Full Bench disagreed, that would be an error within jurisdiction if at all.

PN876

Then going to the bottom of that page and Moore J's judgment:

PN877

The language of the latter part of section 45(1)(g) -

PN878

45(1)(g) is the equivalent of 121(1)(e) -

PN879

- when it speaks of a refusal or failure of a member of the Commission to exercise jurisdiction is in wide terms. It is consistent with the language and structure of the paragraph to treat the word "refusal" as a reference to an overt act of a member of the Commission expressly declining to exercise jurisdiction. The expression "failure to exercise jurisdiction" would consistent with its ordinary meaning comprehend situations where the Commission fails to exercise jurisdiction inadvertently either by not exercising jurisdiction at all or purporting to do so but in a way that was erroneous in some fundamental respect.

PN880

For these purposes, as I've said, we accept that insofar as such matters might be raised, and we'll address that during the course of the submissions, then the appeal is a valid one. Can I, by way of example in this area, take the Commission to the AWU v CFMEU decision or re AWU ex parte CFMEU 131 FCR 527. I think it's in our list of tab set.

PN881

SENIOR DEPUTY PRESIDENT ACTON: Of your authorities?

PN882

MR FRIEND: Of our authorities. This goes to some of the matters that have been raised in this case. At paragraph 48 at page 549 the majority - Gray and Moore JJ say:

PN883

By parity of reason it might be asked whether section 204(4) -

PN884

and I might interpolate that's the equivalent of 158(4) -

PN885

- imposes an imperative duty on a designated presidential member correctly to give effect to the true interpretation of the rules of the organisation applying for consent to an alteration in the context of determining questions that conveniently belong and effective representation. In our view it does not. An error in construing the pre-existing eligibility rules and the alteration when ascertaining who were the relevant employees would be an error within jurisdiction at least as long as it was apparent that the decision-maker, whether a designated presidential member or a Full Bench, understood the task required by the subsection and addressed the pre-existing eligibility rules and the alteration in determining who were the relevant employees and apply the accepted principles of construction in ascertaining the meaning of the rules.

PN886

At 51 Gray and Moore JJ note in the fourth line:

PN887

The section calls for assessments which almost necessarily involve broad value judgments of no particular precision. It is unlikely that parliament intended that the opinion could be impugned in proceedings for constitutional writs because the designated presidential member had formed a view about the meaning of the pre-existing eligibility rules and the alteration which differed from the view adopted by a court, notwithstanding that the ultimate opinion upon which section 204(4) operates has this significant discretionary element. The contrary view will expose to challenge consent given under section 204 and require potentially the reconsideration of all discretionary aspects of the decision to grant consent by reference to what a court determined was the proper construction of the eligibility rules if that determination did not coincide with the construction adopted by the Commission.

PN888

For court in that paragraph one has to read the Full Bench in this case if our submissions are accepted and the only valid sort of appeal is under 121(1)(e).

PN889

Then at 52:

PN890

In our opinion, it is comparatively clear that any error the Commission might make whether at first instance or on appeal -

PN891

and the Commission will remember that here there was a right of appeal because it was a decision of a designated presidential member. That right was removed.

PN892

- concerning the proper construction of the eligibility rules and the alteration would not be a jurisdictional error having regard to the nature of the power conferred on the Commission by section 204 and the specific duty created by subsection (4). Whether when an administrative tribunal makes an error of law, the error is jurisdictional can depend on whether it's apparent the legislature intended the tribunal could decide the issue itself even if the decision was wrong. In our opinion it's probable that the Commission has been given by parliament some latitude in exercising the power conferred by section 204, including the latitude to take a mistaken view about the meaning of the eligibility rules and the alteration.

PN893

This is subject to the matters we mentioned earlier and I've read those to the Commission a moment ago. If I can go to Merkel J's decision, this really says something about inadequacy of reasons while we're here - - -

PN894

SENIOR DEPUTY PRESIDENT ACTON: What page are you on?

PN895

MR FRIEND: Sorry, paragraph 167. His Honour said:

PN896

I do, however, have some concern about the additional conclusion of the Full Bench that the application of the CFMEU to consent should also be dismissed as a consequence of the inadequate reasons. In my view that conclusion which operates independently of the other conclusions reached by the Full Bench is unsustainable. Inadequacy of reasons might result in an order for further reasons or in appropriate circumstances might result in the quashing of the decision but there is no legal principle of which I am aware that would justify the dismissal of an application.

PN897

We raise that really to set what we say are the four balls of the appeal that insofar as an error by his Honour is alleged or asserted, we say that one needs first to ascertain whether or not there is any such error in terms of the fair and proper reading of his decision and secondly then to ask whether or not it's a jurisdictional error. If it's not a jurisdictional error, well then, the appeal goes nowhere because, unless there's a failure to exercise, or a constructive failure to exercise jurisdiction, in our submission, there's no right of appeal to a Full Bench and that's a consequence of the removal of the right of appeal which used to be there before the RAO was introduced against the decision of a designated presidential member.

PN898

Can I next take the Full Bench to section 158 and the reason I do this is because sitting here for the last few days, I could have come to the conclusion that - of the RAO, I'm sorry - that we were dealing with was a case which was solely concerned with 158(4). It's the case of course under 158(1) that an organisation can propose a change of its eligibility rules but it doesn't take effect until the Commission consents. Under 158(2) it must not consent unless it's satisfied that the change has been made under the rules of the organisation. That was a live issue in the matter before his Honour until the conclusion of the hearing, really, when no points about jurisdiction were taken.

PN899

158(3) is not relevant 158(4) is the one that we've been debating, but that's not the litmus test of whether or not you consent, it's simply a barrier to consent if a particular opinion is formed:

PN900

The Commission must not consent to an alteration of the eligibility rules of an organisation if, in relation to persons who would be eligible for membership because of the alteration, there is in the opinion of the Commission another organisation to which those persons could more conveniently belong and that would more effectively represent those members.

PN901

We get to that stage. Now, in the present case his Honour in relation to the first proposed rule change decided there was another organisation and decided there wasn't in the second, but even if there is another organisation you then move onto 158(5):

PN902

Subsection (4) does not apply if the Commission accepts an undertaking from the organisation seeking the alteration that the Commission considers appropriate to avoid demarcation disputes that might otherwise arise from an overlap between the eligibility rules of that organisation and the eligibility rules of the other organisation.

PN903

That would be the next step, even if it had been found against us in relation to better organisation under 158(4). Then consent can be refused if it would contravene an agreement or understanding which the organisation is a party to. There were three or four such agreements or understandings argued for by AFAP before his Honour and we'll see from his reasons that he rejected them either being no longer current or not relevant.

PN904

158(7) sets out other grounds for refusal which weren't relevant in the case below. 158(8) gives rise to what's been said to be the general discretion, in other words that subsections (6) and (7) don't limit the grounds on which the Commission may refuse to consent to an alteration of the eligibility rules.

PN905

There's a great deal more to considering the matters before the Commission than just 158(4) and in particular the question of acceptance of an undertaking. We'll come back to that at the end of submissions but that's obviously something that would have to be considered in terms of any further disposition of this matter, if the appeal is successful. It's an undertaking that's proffered by my client below in the event that we're unsuccessful under 158(4).

PN906

The other thing that hasn't been done to date in this matter - - -

PN907

DEPUTY PRESIDENT IVES: Do you know where in the materials that was done?

PN908

MR FRIEND: It's done in paragraph 1 of Captain Woods' statement and he's also cross-examined about it. Captain Woods offered a particular undertaking. In submissions we also offered undertakings. The authorities say, your Honour, that it's open to the Commission to come back and say, "Well, I want this undertaking," or "I want a particular type of undertaking," and we simply would be amenable to considering whatever undertaking the Commission thought was appropriate.

PN909

The undertaking is C0109 in appeal book volume 2 and it simply says:

PN910

For the purposes of section 158(5) of the schedule, the AIPA undertakes that if ..... the coverage specified in the application it will not engage in demarcation disputes with the Australian Federation of Air Pilots.

PN911

Can I ask the Commission to take up the decision because what's really happened in the submissions of the appellants is that they have gone to the decision and pulled out a bit here and pulled out a bit there. It really does bear examination as a whole document, in our submission. It's one that needs to be read as a whole and fairly. His Honour commenced by setting out the genesis of the application in section 158, he defines what would be - the other organisation for 158(4) is the better organisation, using his shorthand, then set out the rule changes that were proposed to rule 4, noted the objections and then turned to paragraph 9 for the background. He described the background of my client and the awards that it deals with, the background of AFAP, the awards that it deals with and set out its eligibility rule which before the change it was more or less the mirror of the AIPA rule, in other words it has pilots employed on regular public transport - sorry, persons employed as pilots other than those normally employed in regular public transport airline services extending beyond the Commonwealth of Australia operated by an airline principally engaged in providing international regular public transport.

PN912

His Honour then turned to - this is important to the Qantas Group of companies. He described each of them and what they do in some detail. He talks about the regional airlines and puts Eastern and Sunstate in that category. He says that Eastern has 190 pilots, 155 are AFAP members, 99 were members of AIPA. Most of those, all but one of those being on the $50 plan that was introduced in 2004. He refers to Sunstate, Airlink which is not a Qantas company, and he refers to the Qantas Link brand which is what Eastern and Sunstate fly under and describes Jetstar as being the successor of Impulse, 360 pilots, 124 members of AFAP and 30 members of AIPA. Jetstar Asia Holdings, Jet Connect.

PN913

He deals with Qantas Limited. This is air express or express freighters.
Mr McDonald was asked if he dealt with it anywhere else in his decision other than at the end, I think by your Honour Deputy President Ives, and he does deal with it here by describing it and implicating what its nature is. He deals with Australian Airlines and I think everyone at the bar table has attempted to avoid the confusion between the Australian Airlines that operates now and that that operated in the 1990s by calling the old one TAA.

PN914

Australian Airlines is an international carrier. It flies at the moment under Qantas branding. It's a wet lease, appears as a normal Qantas flight but the crew are employed by Australian Airlines although the aircraft are owned by Qantas. Then he says:

PN915

Although the pilots provided by Australian Airlines under this arrangement are employed by Australian Airlines, they are in fact Qantas pilots on leave of absence from Qantas.

PN916

The arrangement was facilitated by a letter of agreement between AIPA and Qantas. Pilots are possibly eligible to be members of AIPA under the current rule. It's arguable that it's Qantas and not Australian Airlines that provide the RPTAS in which case the pilots employed by Australian Airlines are not currently eligible to be members. We're talking of 30 pilots here.

PN917

We don't need to deal with Virgin Blue. We don't need to deal with the effect of the alteration in terms of the first paragraphs, which are paragraphs 32 to 34. His Honour then at 35 describes the effect of the second paragraph of the alteration, names the various Qantas Group companies and then successor subsidiaries in the following paragraphs. Notice that he observes that there's not even a requirement that the airline be engaged in providing regular public transport, merely need to be providing airline services and noted that Qantas Limited, that's the air freight company, does not provide regular public transport. He says:

PN918

That's not surprising, given that the main reason for the proposed alteration is the AIPA's desire to be able to enrol as members pilots employed by the Qantas Group generally.

PN919

His Honour understood that AIPA's desire was to extend its coverage from Qantas mainline, if I can call it that, to the balance of the Qantas Group.

PN920

His Honour then deals with the class of persons affected and agrees that the Commission has to identify the class of persons subject to the proposed rule change. At 37 he says:

PN921

It seems to me that by undertaking an analysis of the effect of the rule change of the class of persons affected by it becomes apparent. This analysis has been undertaken based on the evidence and submissions. Mr Borenstein submitted four relevant classes, pilots in the low cost airlines, regional airlines, pilots employed by airlines that perform some international RPTAs and pilots employed by foreign companies.

PN922

His Honour said that Mr Borenstein was correct in the sense that that was a possible set of categories, as I understand it, but it was not necessary to categorise the pilots in that manner:

PN923

Insofar as Qantas is concerned, the rule change may be said to have the effect that all pilots employed by the main Qantas companies as well as their successors, assignees, et cetera, will be eligible for membership of AIPA and in deciding whether or not to consent, it is necessary to have regard to the operation of those entities.

PN924

His Honour has clearly understood that there are a number of pilots who are members of AIPA who are employed by Qantas and there are a number of additional entities, Qantas entities, parts of the Qantas Group who employ pilots who would become eligible as a result of the rule change.

PN925

In 39 he deals with the genesis of the application. He says at 40 that:

PN926

It's not surprising that the only objectors to the second paragraph are Qantas and the AFAP. It's also not surprising that AIPA became interested in altering its eligibility rule to ensure coverage of Qantas subsidiaries not long after Jetstar came into existence. Objectors make the point that although Eastern and Sunstate have operated for many years, it was not until relatively recently that APIA showed any interest in representing the industrial interests of the pilots. Other than by making the application it has not interested itself in pilots employed by Sunstate.

PN927

His Honour is aware of those matters. This is not just a recitation of the evidence without resolving conflict. These are his Honour's statements about what the position is. He then sets out a summary of the evidence of Mr Wheeler dealing with the operations of Jetstar and makes the finding at 43 that Jetstar is not principally engaged in providing international regular public transport airline services. He makes an observation about Qantas in paragraph 44 on the basis of Mr Wheeler's evidence:

PN928

I set out the excerpts of Mr Wheeler's evidence to demonstrate how fluid is the corporate structure used by the Qantas Group to organise its schedules. This approach is not of recent origin. Both Eastern and Sunstate were wholly owned subsidiaries of Australian Airlines, itself a successor to TAA prior to the acquisition of that airline by Qantas in 1992. Australian Airlines is also used as a vehicle on a wet lease basis.

PN929

Then he makes the finding that Jetstar has started flying Qantas routes since 2004. His Honour at 48 deals with the submission that was made by me that there was eligibility because Qantas was one airline in any event. We don't need to go to the detail of that. It's sufficient to say that his Honour found that the submission was without foundation, that there are several distinct airlines within the Qantas Group. It followed from that that the Jetstar, Eastern and Sunstate pilots were not eligible to be members of AIPA.

PN930

At 51 his Honour deals with the objections. He said:

PN931

All the objectors contended that AFAP was the better organisation.

PN932

AFAP, Eastern and Sunstate contended that the Commission ought to organise its discretion to refuse consent under 158(6) because of the agreement or undertaking. Jetstar, Eastern and Sunstate contended that the alterations would change the effect of orders under 133. All the objectors contended that the alteration was too wide rendering the meaning vague and uncertain and that it was contrary to the public interest as well as contrary to the objects of the Act and the RAO schedule.

PN933

At this stage, it would be fair to say, in my submission, that his Honour has demonstrated a very clear understanding of the picture of the industry, in particular how Qantas operates, what its constituent parts are, who is where in all of this and what the case is, in its general sense at this stage, which is put up by the objectors.

PN934

At 54 he deals with the principles of the case when he talks about the global assessment and I'll come back to deal with that in due course and then at 55 again setting out the thrust, as he calls it, of the objectors' submissions, was that:

PN935

AIPA is essentially a Qantas in-house union dominated by its long haul pilots with their interests at heart. It's put that there would be a conflict of interest between Qantas pilots, especially long haul, and pilots employed by its low cost subsidiaries. The objectors contend that the AIPA does not and could not have in place mechanisms to deal with this conflict of interest. Accordingly, it is said that the AFAP with its history of representing pilots generally, other than Qantas pilots, is a better organisation -

PN936

and then rephrases the statutory test. Next there are principles from the decided cases which aren't controversial, I think, in the present circumstances set out. Then there is consideration of the first paragraph and in regard to that, can I draw the Commission's attention to paragraph 70 on page 24 when he says:

PN937

In my view, insofar as pilots employed by airlines who will be caught by amending the first paragraph, the AFAP, as against the AIPA is a better organisation. It is an organisation to which those persons could more conveniently belong. It's an organisation that could more effectively represent them.

PN938

At 71:

PN939

It is clear that the motivating factor behind the rule change is to enable pilots employed by any of the Qantas Group of companies to be eligible to join AIPA. The deletion of principally extends far beyond that. An organisation, the AIPA, did not intend its rule change to have that effect and the president of which does not expect pilots employed by such airlines to join it, is an organisation to which such pilots could not as conveniently belong as an organisation, the AFAP, which already has as members such pilots and which satisfactorily looks after their industrial interests, nor is it an organisation that could as effectively represent those pilots as can the AFAP. To put it positively in the terms of the schedule the AFAP is an organisation to which persons who would be eligible for membership of the AIPA because of the alteration could more conveniently belong and that would more effectively represent those members.

PN940

In other words, his Honour put it both ways in terms of the more conveniently belong and more effectively represent. Is that a convenient time?

PN941

SENIOR DEPUTY PRESIDENT ACTON: Yes, it is. We'll adjourn until 10 o'clock tomorrow.

<ADJOURNED UNTIL FRIDAY 10 AUGUST 2007 [4.17PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #M3 CHRONOLOGY OF EASTERN PILOTS GROUP PN796
EXHIBIT #F3 OUTLINE - GROUNDS OF APPEAL OF THE AIPA PN858