C2007/3000, Transcript of Proceedings [2007] AIRCTrans 456 (11 September 2007)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 17344-1

SENIOR DEPUTY PRESIDENT ACTON

C2007/3000

s.554(1) - Application for variation of award (other grounds)
Application by Mechanical Engineering Services Pty Limited
(C2007/3000)

MELBOURNE

11.20AM, THURSDAY, 30 AUGUST 2007

Continued from 22/8/2007

PN32

THE SENIOR DEPUTY PRESIDENT: The same appearances?

PN33

MR ADDISON: Yes, your Honour. Your Honour, just to start, I think Mr Terzic has indicated to me that he thinks he should go first and I've got no objection to that. But just to bring you up to speed with where we are at, your Honour we filed and served written submissions on Tuesday which was a bit late, and I apologise about that. I've been having significant technological difficulties and I never was particularly good with IT, but Mr O'Grady kindly filed and served the submissions on the Commission and AMWU on Tuesday.

PN34

As a result of my technological difficulties I in fact didn't get to serve the submissions on the common rule parties until yesterday, but they have been served on those parties. So I would seek that our submissions be marked.

PN35

THE SENIOR DEPUTY PRESIDENT: Yes. Did I mark yours, Mr Terzic?

PN36

MR ADDISON: Yes, you did.

PN37

MR TERZIC: Yes, your Honour. AMWU1 I think.

PN38

THE SENIOR DEPUTY PRESIDENT: Thank you.

EXHIBIT #MES1 WRITTEN SUBMISSIONS OF MECHANICAL ENGINEERING SERVICES

PN39

MR ADDISON: With that said, your Honour, I'll take my seat and I'll let Mr Terzic have the floor and then take over from there.

PN40

THE SENIOR DEPUTY PRESIDENT: Okay.

PN41

MR ADDISON: If your Honour pleases.

PN42

THE SENIOR DEPUTY PRESIDENT: Mr Terzic.

PN43

MR TERZIC: Your Honour, the AMWU advised to have the application dealt with summarily and dismissed altogether on the basis of a clear and apparent lack of jurisdiction, and that is made plain by the decision cited in the AMWU submission, which I'll call. Alternatively that section 113 will be in with the Baycorp matter. I do have some copies of that decision available.

PN44

THE SENIOR DEPUTY PRESIDENT: Thank you. Yes.

PN45

MR TERZIC: The full citation is referred to in the submission; I won't repeat it here. Your Honour, the applicant in this matter has recognised the significance of the decision, I submit, and in its written submission at paragraph 17 the applicant has referred to the decision and the way the applicant appears to deal with this, and I quote, is to say that:

PN46

To the extent that the Full Bench did make such a pronouncement it is respectfully submitted that it was an error.

PN47

I end quote. They've not attempted significantly to distinguish the decision. I simply say there's no room to go around the Baycorp decision. For this Commission to proceed further with this matter, I submit, the Commission would have to come to a view that the Baycorp matter was wrongly decided and we contend it's not wrongly decided; but that would be the only scope for this matter to proceed further.

PN48

All of this brings the issue of determination into sharp focus and it is submitted that if your Honour was to go along with the Full Bench in Baycorp, the application is dead. That provides a convenient course for dealing with this matter and it would satisfy the relevant tests for summary disposal of a matter; a matter that was completely untenable, it has no basis, it cannot concede. It is hopeless, in other words.

PN49

I do concede that the Full Bench's decision in Baycorp did lack full analysis of the reason for holding what it did; and that is to say that an application of this sort does not fall with any of the bases for variation as enumerated in section 522(1) of the Act. Just at that point I might digress slightly.

PN50

THE SENIOR DEPUTY PRESIDENT: 522 it is, yes?

PN51

MR TERZIC: 522(1). 552(1), sorry.

PN52

THE SENIOR DEPUTY PRESIDENT: Yes.

PN53

MR TERZIC: The AMWU contends that that subsection acts like a compendium and it particularises all of the powers available to the Commission to make an order to vary an award. Such was noted in the Baycorp matter and the Full Bench relevantly said at paragraph 25 on page 7, referring to a purported application to vary an award.

PN54

THE SENIOR DEPUTY PRESIDENT: Yes.

PN55

MR TERZIC: It's at the end of paragraph 25, I quote:

PN56

An award variation of that type is not covered by any of the circumstances specified in section 52(1). It follows that the variation was beyond power and the order varying the award was of no effect. This order also must be quashed.

PN57

THE SENIOR DEPUTY PRESIDENT: Yes.

PN58

MR TERZIC: The application of MES in this matter seeks to rely on section 554, which is referred to in paragraph D of section 552(1), but it also goes on to, as I said, cover all the bases for avenues for the Commission to act to make an order to vary the award.

PN59

I just digress slightly for a moment. It might mean that the Full Bench's decision is slightly inflected with error in and of itself in that in the Baycorp matter the award eventually was varied, but the Full Bench doesn't refer to section 552 grounding how it was varied. The AMWU refers to how that probably did happen and that would be relying on paragraph G.

PN60

THE SENIOR DEPUTY PRESIDENT: Yes.

PN61

MR TERZIC: So the slight error is that there is or there was a basis upon which the Commission can vary an award in the manner sought by the applicant, and that was in reliance on a regulation, but of course that regulation is now defunct. So that avenue is closed. It was open to the Commission in the Baycorp matter and there have been other instances, quite a few instances indeed, where the Commission had acted to vary redundancy awards to give effect to the acceptable alternative employment exemption. But that was all pursuant to the regulation that is referred to in both submissions, that was regulation 2.24 of chapter 7; which ended its operation on 5 June 2007.

PN62

THE SENIOR DEPUTY PRESIDENT: Was it the 5th of June, was it?

PN63

MR TERZIC: 5th of June.

PN64

THE SENIOR DEPUTY PRESIDENT: Right.

PN65

MR TERZIC: 2007.

PN66

THE SENIOR DEPUTY PRESIDENT: Do you know why it only had 12 months of operation?

PN67

MR TERZIC: No, your Honour. No, there's no indication of why it was remitted in its life but it was and accordingly with its passing it's our submission that the acceptable alternative employment exemption and all the other exemptions in the redundancy clause that rely on further order of the Commission, cannot be enlivened in the manner proposed by the applicant. The Full Bench appears to be quite unequivocal in making that pronouncement. It's a pronouncement that was made in conformity with the submissions of the Minister. We contend on that occasion the Minister was right.

PN68

THE SENIOR DEPUTY PRESIDENT: Stop the press.

PN69

MR TERZIC: Yes. As inconvenient as that might be to some, it's the law and for the Commission to act otherwise would take it outside of the law. The Commission is a creature of statute; it can only do what the statute provides and the statute has now ceased to give the Commission the amplitude of variation powers that once existed, that were once set out in section 113 of the pre-reform Act.

PN70

The powers of the Commission to vary an award are now tightly curtailed and constrained and there is no more at large discretion to the Commission to vary an award within the pre-existing jurisdictional boundaries. Those boundaries of course would have been limited by statute and allowable award matters as they once were, there would have been other boundaries that would have been established on grounds that are no longer really of any relevance; that is to say the ambit of the industrial dispute that grounded the original award. All of that is in the past now and it would be a mistake to think that in some way those residual powers are available to the Commission. The Commission must act within the enumerated bases for varying an award as set out in section 552(1).

PN71

The applicant here has sought to hang its application on section 554, what I will call the ambiguity or uncertainty basis, which of course has been a feature of award varying functions for some time. Those words were used in section 113 and they appeared in analogous sections that allowed for variations of agreements without going through the full approval process. They appear to follow the, I think it's the equitable remedy of rectification which allowed for contracts and other documents to be brought into line with the intention of the parties.

PN72

Going beyond what the Full Bench said, because as I said earlier the Full Bench did not give specific reasons as to why variations such as this are beyond power.

PN73

THE SENIOR DEPUTY PRESIDENT: Well, didn't it?

PN74

MR TERZIC: I'll say this; there was a paucity of analysis.

PN75

THE SENIOR DEPUTY PRESIDENT: Well, I mean, they raised the issue about ambiguity and uncertainty in that paragraph 25 and effectively don't they say that this isn't about ambiguity or uncertainty; the variation is about removing Baycorp and its liability to make severance payments. That is the effect.

PN76

MR TERZIC: That's the effect and that's the effect of what is sought here and there was no greater level of analysis than simply to make that observation.

PN77

THE SENIOR DEPUTY PRESIDENT: Was there any need?

PN78

MR TERZIC: Arguably not we just concur and say that if one is to then give further consideration to this matter, the deeper the consideration the more correct the Full Bench's comments become. Because in and of itself the award does not disclose any ambiguity or uncertainty. I struggled to find any complaint that the award terms give rise to multiple meanings at all. It's quite plain what they mean.

PN79

THE SENIOR DEPUTY PRESIDENT: The clause is, in the Mills award, in a fairly standard term of such redundancy provisions.

PN80

MR TERZIC: Yes.

PN81

THE SENIOR DEPUTY PRESIDENT: Yes.

PN82

MR TERZIC: It appears to have one meaning and one meaning only and it has only ever really been applied as having one meaning; that is that if an employer obtains acceptable alternative employment it would then fall to the Commission to make an objective assessment as to whether the alternative employment was acceptable. It wasn't a subjective assessment but to look at whether it was acceptable to the relevant affected employee or employer. It was an assessment made by the Commission on various bases and the provision has been applied both through the regulation, while the regulation was alive, and prior to that when the Commission had broader award variation powers in a manner that was never considered to be ambiguous or uncertain.

PN83

There has not been ventilated in the employer's, in MES's submission, any contention that the clause in and of itself is ambiguous or uncertain. Their principle complaint or their argument hangs on the notion that with the restriction in the Commission's award making powers there appears to be some ambiguity or uncertainty as to how it can work. But the section doesn't speak about the statutory regime creating any sort of restriction as being a basis for finding uncertainty or ambiguity in an award, in and of itself. The section refers to an award or a term of award being ambiguous and uncertain. Those terms do not throw up any ambiguity or uncertainty.

PN84

Moreover, in conformity with what the Full Bench had to say about this, the ultimate object of the application as propounded by the applicant here is not to rectify any purported ambiguity or uncertainty, but it is to simply attempt to give a particular effect or create an award variation that denies particular employees an entitlement to the award's severance pay. Because the Commission's powers under section 554(1) require as a condition precedent for the Commission to find that there is ambiguity or uncertainty in an award or in a term of an award; and then the Commission's powers are limited so as to remove the ambiguity or uncertainty.

PN85

We are saying that even if the Commission was to find that there was any ambiguity or uncertainty, what the applicant seeks of the variation is not to remove ambiguity or uncertainty, but it is to do something of an entirely different character. That is use the principle embodied in the exemption as a basis to give the exemption a particular effect in a particular circumstance. That is clearly beyond what section 554(1) allows.

PN86

Your Honour, it has been stated clearly by a Full Bench that an application of this sort is not permissible; it's beyond the Commission's power. If the Commission was to go on and entertain this application further, there would be a requirement on the parties to bring forward considerable amounts of evidence and argument, and that would be at great cost to the respondent; it would consume much time of the Commission and on that basis we say the correct course, the most expedient course, the course supported by authorities is for the Commission to rule on this matter. We say it should rule that the application is ultra vires and that the whole matter should be dismissed forthwith. If the Commission pleases.

PN87

THE SENIOR DEPUTY PRESIDENT: Mr Addison.

PN88

MR ADDISON: Thanks, your Honour. Your Honour, we obviously rely on the written submissions that we purport.

PN89

THE SENIOR DEPUTY PRESIDENT: Yes, I've read those, Mr Addison, as I have the AMWU's.

PN90

MR ADDISON: Yes. Sorry?

PN91

THE SENIOR DEPUTY PRESIDENT: As I have the AMWU's.

PN92

MR ADDISON: Yes, indeed. Indeed, your Honour. Your Honour, the application that we dealt with this morning was an application to dispense with the hearing of this matter on a summary basis. The submissions put by Mr Terzic acknowledge that he needs to meet the bar that he set for himself , which is that this application is without merit, this application is entirely unable to be argued. In my submission Mr Terzic has not met that level of necessity.

PN93

Your Honour, we agree that the relevant authority or one of the relevant authorities is the General Steel's decision, and that’s outlined I think both in Mr Terzic's submissions and ours. We say that we simply need to put and convince your Honour that we have an arguable position to put. We don't need to go beyond that. We say on that basis that it's clear that redundancy payments are an allowable award mater for the purposes of the current application before you. Section 513(K) sets out that redundancy payments are an allowable award matter.

PN94

Section 552 also provides, your Honour, that an award may contain terms that are incidental to an allowable award matter which is a term of the award and essential for the purposes of making a particular term operate in a practical way. Your Honour, we say that the terms of the award -and we've outlined them in our application at paragraph 10, 4.4.2E, 4.4.3A2, 4.4.3B, 4.4.5 and 4.4.6A - are terms which allow the allowable award matter to operate in a practical way.

PN95

These terms operate to limit the capricious or potentially capricious way in which the redundancy pay provisions could be applied. The intention of the award maker, when the award was originally made back in 1984 and again in 2004, was that redundancy pay was not an unfettered right. Redundancy pay in both circumstances of the employer and the employee was to be constrained by certain circumstances.

PN96

THE SENIOR DEPUTY PRESIDENT: If you are right in this regard, that there's a general power, why was there the need for the reg, 2 point - - -

PN97

MR ADDISON: Your Honour, I have spent countless hours trying to find a reason why that regulation was in fact limited in its operation. There are in fact three identical regulations in the Act, in the regs. There's one that deals with constitutional corporations, which is the reg we talk about, 24(2). There's a mirror reg that deals with exempted employers which doesn't have the same restraint and there's another reg, I can't remember who that quite deals with, but that similarly is a mirror reg and doesn't have the same limitation. Now I don't know why that limitation is there. I've no idea.

PN98

THE SENIOR DEPUTY PRESIDENT: But it is.

PN99

MR ADDISON: Yes, a limitation is there.

PN100

THE SENIOR DEPUTY PRESIDENT: Setting aside the date on it.

PN101

MR ADDISON: Yes.

PN102

THE SENIOR DEPUTY PRESIDENT: It's a reg put in and arguably it has only been put in because there isn't another provision within the Act that enables you to do the sort of variation that you seek. You seek to argue it under machinery type provisions.

PN103

MR ADDISON: Well, your Honour, I think what we say is a bit broader than that. We say there's a whole range of exemptions I the TCR case. But when the award was originally made back in 1984, there was a whole range of argument about the practicality of severance pay, if I can put it in those terms. There was a whole range of exemptions that were put into the award in the standard TCR clause and that has operated for 20 something years. In 2040 when the matter was re-visited by another Full Bench of the Commission there was the additional exemption that dealt with trying to ..... the business, that if you were offered a position on essentially the same terms then redundancy pay didn't apply. But if you were an employee bound by the award you could make application to the Commission to say that's not fair in this particular circumstances.

PN104

So there is a range of exemptions. The regulation that we are talking about only deals with one. It doesn't deal with all of them; it only deals with this question of acceptable alternative employment. Why it's there I have no idea, your Honour, and I have literally spent days trying to find a reason and I can't. I searched everything from Hansard all the way through.

PN105

THE SENIOR DEPUTY PRESIDENT: In terms of statutory construction, wouldn't one have to come to the view that it had a role to do because the general Act didn't provide for variation in terms of alternative employment?

PN106

MR ADDISON: Well, one needs to look at the general Act, in my submission your Honour. One needs to look at what is allowable and what is not allowable and where it all takes you. If you look at 513K, redundancy is allowable. If you look at 522 it says, "An award may contain these machinery items for the practical application of ht allowable award matter". There's a Full Bench of the Commission in the Australian Submarine Corporation, which was a Full Bench - and it's referred to in our submissions, your Honour - PR974105. That Full Bench says if there is an ambiguity or uncertainty then you need to look at the intention of the award maker or the parties that made the award to try to come to a resolution of that ambiguity or uncertainty. We will get there shortly.

PN107

522 allows for those machinery items to be in the award. That means that 4.4 of the Metal Industry Award or the Metal Engineering and Associated Industries Award 1998 in its entirety is arguably all allowable. We say that's an irresistible conclusion, just looking at 513 and 522. It is an irresistible conclusion. You could argue that the exemption that deals with acceptable alternative employment, because of the regulation, may not apply; but certainly the other limitations must, in my submission, apply by force of 522.

PN108

That in itself gives rise to an uncertainty in the application of the award; it must. On that basis the Commission then does have a general discretion to vary the award to put certainty into the operation of the award by virtue of section 554.

PN109

THE SENIOR DEPUTY PRESIDENT: So this is an ambiguity or uncertainty created by regulation 2.24, was it?

PN110

MR ADDISON: No, no. Well, it goes a bit beyond that. Yes, that's part of it.

PN111

THE SENIOR DEPUTY PRESIDENT: Yes, well how else is - - -

PN112

MR ADDISON: But awards must be dealt with in their statutory context. They have to be and the Commission has to operate within the statutory context when dealing with awards. What we say is that all of the elements in the award are allowable pursuant to 513 and 522. They must be allowable.

PN113

THE SENIOR DEPUTY PRESIDENT: Yes.

PN114

MR ADDISON: On that basis, the Commission has a capacity to vary the general prescription, but because of the way 552 operates that capacity seems to be constrained. That must give rise, arguably, to an uncertainty with regard to how the award operates. Now the Commission then - - -

PN115

THE SENIOR DEPUTY PRESIDENT: So the operation of 552 creates the ambiguity or uncertainty does it?

PN116

MR ADDISON: No, no, no. 513 and 522 say that all of the terms are allowable and can be in the award, which means they must have some operation. Mr Terzic says that 552 is a compendium. That's not necessarily correct, in my submission. 522 must be read down to allow the Commission to deal with machinery items in awards. We say all of that read together creates an uncertainty in how the general severance pay prescription is to be applied. The Commission must have the capacity under 552 to deal with the machinery elements, and a Full Bench has said that if such an ambiguity arises then the Commission ought look at what the intention of the award maker was in terms of how the award should operate.

PN117

We say that that is the correct thing to do; that severance payment must be limited by the machinery matters within the award and there must be some mechanism to give effect to that. So we say the Commission can deal with that. We say at the very least that's arguable. In terms of the Baycorp decision that has been referred to, in our submission the Full Bench didn't deal with the question of ambiguity or uncertainty in terms of that decision.

PN118

The Full Bench at that point in time had at its disposal the regulation that we are talking about, and that's how the Full Bench resolved this matter. It simply used the regulation to vary the award. It didn't deal with the question of ambiguity or uncertainty at all, in my submission. It said, "Yes, it was raised but we’re not going to deal with that because it's not a matter we need to deal with. We've got this regulation here. We'll simply use this regulation and we will vary the award to give effect to the previous variation that had been made in any event". So in my submission a reliance on Baycorp doesn't take us anywhere, given the fact the matter wasn't dealt with.

PN119

Your Honour, we say that there is capacity arguably under 513, 522, 554 and 552 to deal with this matter; and that the Commission can resolve the operation of this award. We say there is a clear ambiguity or uncertainty in its operation. There is no regulation, for instance, that dealt with the incapacity to pay argument. That wasn't dealt with by regulation. Incapacity to pay is a ground on which the applicant in the substantive proceedings will rely and it clearly is allowable within the award, pursuant to 522. 522 - sorry, the incapacity to pay prescription says that an employer or a group of employees can make application to the Commission to have the general severance pay prescription varied.

PN120

THE SENIOR DEPUTY PRESIDENT: Is that in the award?

PN121

MR ADDISON: Yes, it's in the award. It's in 4.4.5 I think, your Honour. Yes, 4.4.5:

PN122

The Commission may vary the severance pay prescription on the basis of an employer's incapacity to pay. An application for variation may be made by an employer or a group of employers.

PN123

That's one of the grounds that MEC will rely on in terms of its substantive application.

PN124

THE SENIOR DEPUTY PRESIDENT: So where does that fit in 522?

PN125

MR ADDISON: 552?

PN126

THE SENIOR DEPUTY PRESIDENT: Yes.

PN127

MR ADDISON: We would say that fits in fairly and squarely in 522.

PN128

THE SENIOR DEPUTY PRESIDENT: 522.

PN129

MR ADDISON: In that it is a term that may be included in the award and it is included in the award.

PN130

THE SENIOR DEPUTY PRESIDENT: Yes.

PN131

MR ADDISON: "That it is incidental to an allowable award matter for which there is a term in the award". I mean, that's clearly 4.4.1, which is the general severance pay prescription and that's an allowable award matter.

PN132

THE SENIOR DEPUTY PRESIDENT: Yes, but where is my power to vary? I'm not inserting it for the first time. I’m varying that provision, aren't I?

PN133

MR ADDISON: Well, if we then go to D of (1):

PN134

It is essential for the purposes of making a particular term operate in a practical way.

PN135

THE SENIOR DEPUTY PRESIDENT: Yes.

PN136

MR ADDISON: We say - - -

PN137

THE SENIOR DEPUTY PRESIDENT: But that avoids the issue of my power to vary. It's already in there.

PN138

MR ADDISON: Yes, that's in there.

PN139

THE SENIOR DEPUTY PRESIDENT: Yes.

PN140

MR ADDISON: That's in there.

PN141

THE SENIOR DEPUTY PRESIDENT: It's already in there in 4.4.5.

PN142

MR ADDISON: So it's in there and it says - - -

PN143

THE SENIOR DEPUTY PRESIDENT: It says I can vary that provision, right?

PN144

MR ADDISON: It says you can vary the general severance pay prescription.

PN145

THE SENIOR DEPUTY PRESIDENT: However the statute now limits my power to vary.

PN146

MR ADDISON: Well the statute says that if a term of an award is uncertain or ambiguous.

PN147

THE SENIOR DEPUTY PRESIDENT: Yes, so you are relying on - - -

PN148

MR ADDISON: Then the Commission can do what it considers necessary, effectively.

PN149

THE SENIOR DEPUTY PRESIDENT: Yes, yes. I was taking you back to which part of the Act you are relying on for the variation, and you are relying on 552(1)D.

PN150

MR ADDISON: B.

PN151

THE SENIOR DEPUTY PRESIDENT: B?

PN152

MR ADDISON: Sorry, sorry. No, no, you are right. The 552 and the 522, that keeps getting me confused.

PN153

THE SENIOR DEPUTY PRESIDENT: Yes, 552(1)D, which refers in turn to 554.

PN154

MR ADDISON: Ambiguity or uncertainty, that's right.

PN155

THE SENIOR DEPUTY PRESIDENT: Yes.

PN156

MR ADDISON: The terms are allowable; the terms are there. There is a power to do something.

PN157

THE SENIOR DEPUTY PRESIDENT: Yes.

PN158

MR ADDISON: The statute seems to suggest that there isn't a power to do something.

PN159

THE SENIOR DEPUTY PRESIDENT: Yes.

PN160

MR ADDISON: We say that creates an uncertainty, arguably. Arguably, your Honour.

PN161

THE SENIOR DEPUTY PRESIDENT: Yes.

PN162

MR ADDISON: We say that's as far as we need to go. We don't need to go beyond arguable this morning.

PN163

THE SENIOR DEPUTY PRESIDENT: Yes.

PN164

MR ADDISON: So we say arguably there is no certainty or an ambiguity there and that you have a power under 554 and that power is fairly broad:

PN165

The Commission may, if it considers that an award or a term of an award is ambiguous or uncertain, make an order varying the award so as to remove the ambiguity or uncertainty.

PN166

That must be read to be dealt with in specific circumstances.

PN167

THE SENIOR DEPUTY PRESIDENT: The ambiguity or uncertainty is because you say it's unclear now because of the provisions of the Act about whether you can do it.

PN168

MR ADDISON: Well, the provisions of the award say you can do it.

PN169

THE SENIOR DEPUTY PRESIDENT: Right.

PN170

MR ADDISON: The Act suggests that you may not be able to do it.

PN171

THE SENIOR DEPUTY PRESIDENT: Right.

PN172

MR ADDISON: It's clearly an arguable uncertainty, in my submission.

PN173

THE SENIOR DEPUTY PRESIDENT: Yes.

PN174

MR ADDISON: There's tons of authority as to the fact that it's not the specific words in a particular clause that may give rise to the ambiguity or uncertainty. It may be a range of clauses read together that creates an ambiguity or uncertainty and we've dealt with a number of cases in our written submission with regard to that particular point. We say that once we get to a position of saying there is an ambiguity or uncertainty, that the Commission may make an order so as to remove the ambiguity or uncertainty. Mr Terzic says in his submissions - - -

PN175

THE SENIOR DEPUTY PRESIDENT: You don't want me to remove the ambiguity or uncertainty, with your clause, do you? You want me to actually apply the provision of the award and vary it so that your employees - your employer, sorry - doesn't have to pay the severance. I won't be changing at all the general prescription in the award. I will just be adding another clause, won't I?

PN176

MR ADDISON: You are probably inserting a new clause. I think that's the only practical way you can do it, your Honour.

PN177

THE SENIOR DEPUTY PRESIDENT: Yes. I’m varying the award by inserting a new clause. I’m not altering anything else in the award.

PN178

MR ADDISON: Well, this has been done numerous times in the past, of course. This particular application for exemption from the general severance pay prescriptions. There is tons of cases in the Commission that has dealt with incapacity to pay and acceptable alternative employment, and that deals with each application in its particular context. The Metal Industry Award itself, I don't know that it has ever been varied as such, but an order has simply been issued by the Commission to relieve an employer in a particular case of the requirement to pay; or to relieve an employee, to ensure the employee does get paid the severance in particular circumstances.

PN179

THE SENIOR DEPUTY PRESIDENT: Yes.

PN180

MR ADDISON: It works both ways, your Honour. It's not a one-way street. It works in both sets of circumstances and there have been numerous decisions where it's been a split decision. Some cases employees are entitled to severance because the particular factual circumstances that what is offered is not acceptable or is not reasonable; other employees in the same workplace have in fact had their severance pay withdrawn on the basis that what was offered was acceptable.

PN181

I think particularly of the Hot Tuna case with regard to that, which was one of the key cases with regard to that.

PN182

THE SENIOR DEPUTY PRESIDENT: The variation you seek would leave the provisions of the award intact.

PN183

MR ADDISON: Yes.

PN184

THE SENIOR DEPUTY PRESIDENT: They would add this other clause.

PN185

MR ADDISON: I think it's the only practical way it can be done, your Honour. But we would be - - -

PN186

THE SENIOR DEPUTY PRESIDENT: Well on your basis then the ambiguity or uncertainty would still exist, wouldn't it?

PN187

MR ADDISON: Not in this particular circumstances it wouldn't, your Honour.

PN188

THE SENIOR DEPUTY PRESIDENT: Is this for everyone else except MES in respect of the dozen employees or so mentioned?

PN189

MR ADDISON: Your Honour, I think in terms of that if that approach was adopted - and once again we would be entirely in the Commission's hands as to what the Commission did to resolve the ambiguity or uncertainty; because the Commission may make an order varying the award so as to remove the ambiguity or uncertainty; they could vary the award to say in this particular circumstances, "Yes, there's an uncertainty with regard to the application of the award. It says you can make an application to the Commission. It says the Commission can do certain things in the award. We're prepared to do those certain things and in these circumstances X will apply", and you can make an order varying the award to that effect. The next employer that comes along - - -

PN190

THE SENIOR DEPUTY PRESIDENT: Why don't I read the provision as Parliament knew exactly what they were doing and they didn't want those provisions of the award to operate. They didn't want it to be varied.

PN191

MR ADDISON: If you do that, your Honour, you must read all of the provisions liberally.

PN192

THE SENIOR DEPUTY PRESIDENT: Yes.

PN193

MR ADDISON: At 522 read literally, which say the award can have those provisions. Yes the award can have those provisions - - -

PN194

THE SENIOR DEPUTY PRESIDENT: It can have the provisions, because it has got them.

PN195

MR ADDISON: It has got them.

PN196

THE SENIOR DEPUTY PRESIDENT: The Parliament has decided they cannot be varied.

PN197

MR ADDISON: It has got them, so then you need to come to a conclusion that given the fact the award has got these clauses, what is the practical effect of that? "I've got to apply this award in a practical way". That's what the provision says. "Let's have a look at the provisions. The provisions say if an employer has got an incapacity to pay, well I can vary the award to say that that particular employer doesn't have to pay the severance pay prescription. On the other hand, if I've got an employee that comes along and says, 'Well, the employer has refused to give me severance pay because the employer says it's a transmission of business and I've been offered a job on reasonably the same terms but it's unfair'," then you have got to be able to deal with that too.

PN198

So on my submission, even a literal, an absolute literal reading of the provisions, the four provisions that exist give rise to an uncertainty. They must give rise to an uncertainty, your Honour. On that basis you have some power to deal with it.

PN199

THE SENIOR DEPUTY PRESIDENT: Are MEC and MES related?

PN200

MR ADDISON: Yes. They have common directors, yes.

PN201

THE SENIOR DEPUTY PRESIDENT: So MEC previously owned essentially the plant?

PN202

MR ADDISON: No, no, your Honour. The structure was that MES was the landlord and the employer.

PN203

THE SENIOR DEPUTY PRESIDENT: Yes.

PN204

MR ADDISON: So MES owned the building and employed the employees.

PN205

THE SENIOR DEPUTY PRESIDENT: Yes.

PN206

MR ADDISON: MEC, which is a different corporate entity, contracts to provide work. So it contracts with Fred Nerk to build - - -

PN207

THE SENIOR DEPUTY PRESIDENT: So it has no assets really?

PN208

MR ADDISON: Sorry?

PN209

THE SENIOR DEPUTY PRESIDENT: MEC has no assets?

PN210

MR ADDISON: MEC, I would need to get some instructions on that entirely, your Honour, but it's asset is the ongoing business I think.

PN211

THE SENIOR DEPUTY PRESIDENT: Presumably - yes, okay.

PN212

MR ADDISON: It has got no assets.

PN213

THE SENIOR DEPUTY PRESIDENT: Yes, it must - well, presumably it gets the revenue from what it contracts to, which it then uses to pay MES.

PN214

MR ADDISON: To pay for the labour and its rent.

PN215

THE SENIOR DEPUTY PRESIDENT: Yes.

PN216

MR ADDISON: MES provides the building to MEC on a rental.

PN217

THE SENIOR DEPUTY PRESIDENT: Yes, okay.

PN218

MR ADDISON: It certainly did. I'm not entirely sure that it still does, but it certainly did provide labour to MEC on a contractual basis. But because of the Corporations Act 588G insolvency proposition MEC found itself failing in December; in late December, early January of this year it went into administration.

PN219

THE SENIOR DEPUTY PRESIDENT: Yes.

PN220

MR ADDISON: The administrator terminated contracts for the supply of labour from MES, certainly trades labour.

PN221

THE SENIOR DEPUTY PRESIDENT: Yes.

PN222

MR ADDISON: I'm not entirely sure of what has happened since then in terms of the labour hire arrangement. I know MEC now directly employs tradespeople and that was something put in place by the administrator. The administrator advertised for employees in the general pres - offered all of the employees the subject of these applications employment, some of whom accepted and some of whom didn't -well, some of whom didn't respond. But I know that MEC is now an employer and it wasn't prior to these things happening.

PN223

So, your Honour, we say we've got an arguable case. Whether it's strongly arguably or weakly arguable is a matter for a substantive hearing. We say that the Commission ought to find that there is an arguable case based on the submissions that we've put and set the matter down for or program the matter for hearing. Mr Terzic's right. It will take a bit of time to progress. There will be a need for some evidence. There will be a need for some evidence from MES and certainly the administrator of MEC. In that event, we would expect that it would take a few weeks to deal with. They are our submissions, your Honour.

PN224

THE SENIOR DEPUTY PRESIDENT: Mr Terzic.

PN225

MR TERZIC: Just for a moment putting aside the roadblock that the Baycorp decision presents to the applicant in this matter, having now heard the entirety of the applicant's submission we say he has failed to put the application neatly into section 554(1). The applicant has failed to demonstrate or propound any argument that would show that an award or a term of an award is ambiguous or uncertain, which is the condition precedent for this Commission having the relevant power to make an order varying an award, firstly.

PN226

Then even if that element of the applicant's case is made out, your Honour, and we say it's not, but even if that threshold is crossed then the Commission's consequent power is limited and I'm quoting particularly from the statute -

PN227

is to make an order varying the award so as to remove the ambiguity or uncertainty.

PN228

We associate ourselves with the tentative views expressed from the bench here, and the views expressed by Baycorp. The order sought does not do that. The order sought has a different character altogether. The order sought does not remove any ambiguity or uncertainty. One could take the observation in paragraph 25 of the Baycorp matter and say that the effect of the proposed variation is to remove MES's liability to make severance payments to the employees who were offered, in their view, acceptable alternative employment by MEC.

PN229

The purported variation is of a wrong character altogether, so we simply say that this application is wholly misconceived, untenable and hopeless and ripe for summary disposal.

PN230

THE SENIOR DEPUTY PRESIDENT: I have reached a decision in this matter.

PN231

This is an application to vary the Metal Engineering and Associated Industries Award 1998. The variation sought is in the following terms, "that Mechanical Engineering Services of Yallourn Drive, Yallourn be exempted from the requirement to pay severance payments to the following employees", and then names employees. It is apparent the effect of the variation is to remove MES's liability to make severance payments to certain employees.

PN232

In my view it is clear that such a variation is precluded by the operation of section 552(1) of the Act. In my view, having regard to the provisions of section 552(1), I do not have the power to make such a variation. I reject the notion that such a variation is to remove an ambiguity or uncertainty. Whereas in the Baycorp matter or the Baycorp case the Full Bench of the Commission ultimately relied on Regulation 2.24 in Division 18 of Part II of Chapter 7 of the Regulations; that regulation has now ceased to operate and does not provide a basis on which I can vary the award as sought by the applicant in this matter.

PN233

Accordingly, I'm satisfied it is clear that I lack jurisdiction to make the variation sought. The application to vary is therefore dismissed.

PN234

I now adjourn.

<ADJOURNED INDEFINITELY [12.14PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #MES1 WRITTEN SUBMISSIONS OF MECHANICAL ENGINEERING SERVICES PN38