C2008/2757, Transcript of Proceedings [2008] AIRCTrans 679 (29 October 2008)

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 17803-2

SENIOR DEPUTY PRESIDENT KAUFMAN
SENIOR DEPUTY PRESIDENT RICHARDS
COMMISSIONER ROBERTS

C2008/2757

s.120 - Appeal to Full Bench

Appeal by Cochlear Limited
(C2008/2757)

SYDNEY

10.00AM, WEDNESDAY, 15 OCTOBER 2008

Hearing continuing

PN1

MR M HARMER: I seek leave to appear for Cochlear Ltd, the applicant. I appear with MR J HOR and with MR HOWITT from the company.

PN2

MS C HOWELL: I seek leave to appear for the respondents and with me is
MR S PENNING, solicitor.

PN3

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you, Ms Howell. Leave is granted to each of you. Yes, Mr Howell.

PN4

MR HARMER: If the Commission pleases, Ms Howell and I have had the opportunity to confer and there has been some exchange of correspondence around the process of the matter. Subject to the discretion of the Commission, if I could just hand up a brief outline to assist our oral submissions today and subject to making a brief opening I understand the union has an application to make concerning the process and subject to the Commission's discretion so I'll just hand that up.

PN5

SENIOR DEPUTY PRESIDENT KAUFMAN: Mr Harmer, there's been a lot of material floating around and there was a letter I think from your office indicating that a set of documents will be provided today that contains all the material. Do I take it that that's the only material for which we will need to have regard?

PN6

MR HARMER: Your Honour, it is my hope that that folder was filed earlier this week. It was attempted to put together all of our materials as filed plus correspondence between the parties and ..... documents.

PN7

SENIOR DEPUTY PRESIDENT KAUFMAN: Is that a file that's headed Brief Outline of Submissions of the Applicant, Annexures and Correspondence Between the Parties?

PN8

MR HARMER: That's is correct, your Honour.

PN9

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, we have that, yes.

PN10

MR HARMER: Thank you, your Honour, and you're quite correct, that set of material is pulled together in one place what we appreciate ..... It was a series of electronic and then the filing to Commission in terms of provision of information.

PN11

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes. That's the material upon which the appellant will rely?

PN12

MR HARMER: That's correct, your Honour.

PN13

SENIOR DEPUTY PRESIDENT KAUFMAN: And there is a deed poll I think that is not included in that folder.

PN14

MR HARMER: That's correct, your Honour.

PN15

SENIOR DEPUTY PRESIDENT KAUFMAN: And that's additional evidence upon which you will seek to rely.

PN16

MR HARMER: At a particular point and subject to the Commission's discretion.

PN17

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you, Mr Harmer.

PN18

MR HARMER: Now, the Commission might not have had time as I understand it to review the correspondence that's been enclosed in that folder. In essence the parties in recent weeks have conferred about potentially attempting to assist in the understanding of the applicant's case through the provision of an outline. With apologies just due to exigencies of overseas travel that ended up being a brief outline of submissions and then further material would follow and it was put forward on the understanding that we would elaborate today orally during the course of today on the material which we've put forward and the case outline of the applicant for today's hearing is in essence a guide to what we will be putting forward to the Commission today and it does cross refer to the other materials that have been filed.

PN19

So if I could just move to item 1 of that case outline which is a brief opening. First of all, in terms of the relief sought we have filed a draft order which for convenience we enclose again as attachment A to this outline. I don't seek to go to it in detail at present. It is based upon a precedent of the Commission in the James Hardie matter which I will come to more in the closing of today's proceedings if I reach that point, but in essence it moves on the basis that the applicant would seek that the Commission would deal with both errors at first instance and the second side of the first instance decision and then, with respect, proceed to exercise the power under section 170MH of the pre reform Act and terminate the PCSA the subject of the application and the order merely sets out the exception relating to redundancy provisions in the clause with the preservations under schedule 8 of the Act.

PN20

In terms of the consent arrangements which I've referred to, as I say, we have filed an outline of submissions and we've tried to elaborate with possibly the annexures which we've also put together in tabs in the set of material you have in the one folder. In terms of the objective of the applicant Cochlear, if I can just briefly indicate to the Commission that the applicant is an important Australian manufacturer and exporter. It's a world leader in the competitive Cochlear market. It has assisted in excess of 100,000 people around the world with improved hearing, a very important role which obviously it takes seriously. It carries in our view a highly skilled and highly trained workforce and a very sophisticated manufacturing process.

PN21

In 2005 it became party to the preserved collective state agreement which is the subject of this application for termination and the terms of that agreement which was to run to June 2007 contemplated the parties to the agreement which were its employees, the AMWU and Cochlear Ltd working together to move the business forward in the way of continuous improvement, in the way of a review of its classification structure and various operations in what is a food moving competitive market and in essence, if the Bench please, the evidence at first instance illustrates that that is exactly what happened. The business moved forward as contemplated with the cooperation of the parties and the classification structure in the 2005 PCSA the subject of this application, as a result of that moving forward during the term of the agreement became totally outmoded and totally irrelevant to the reality of the production process on site.

PN22

In essence the classification structure originally envisaged incentives around an entire process of production of the Cochlear implant product. The business moved in its search for improvement and productivity and competitiveness to a teams based approach whereby employees were broken up into specialised components of that production process and could earn progress through an above agreement arrangement which provided them with incentives around skills and competencies and approaches and behaviours within their team specialisation. So in essence, a movement from a whole of production line incentive to a totally different approach of teams based within specialised competencies but carrying with it opportunities for increased progression on an above agreement basis and the company having reached that point attempted to embody that classification structure in a new agreement in 2007, being the next proposed generation.

PN23

That agreement went to two votes of the employees but was voted down twice and so the reality of production on site was not in fact embodied in a next generation agreement in 2007 and it was in that context that the business wanting to continue its move forward, embodied the new classification structure and incentive arrangements in above agreement contracts of employment. It also moved, for reasons I'll come to, to terminate the PCSA, outmoded, out of date and irrelevant to the production reality on site as it was. Now, the contracts that were introduced have since August 2007, when they were introduced, provided 100 per cent of the work at Lane Cove which is the site the subject of this application, with increases of at least 8 per cent, approximately 50 per cent of the workforce with increases ranging from eight to 18 per cent and a limited number of employees with increases of 23 per cent of 23 per cent since August last year.

PN24

Those increases have been two across the board increases of 4 per cent each plus ability to move forward in the classification structure that had been introduced on an above contract basis. Now, just to put that in context, at present I'm instructed on site there's about 295 employees covered by this particular agreement the subject of the application. That's out of a total 900 employees at Lane Cove. It's a particular area of specialised production, approximately 1100 employees in Australia and approximately 1800 employees worldwide. But it is an important core of the production of the key production of the company and the company moved to terminate the agreement on the basis, as I say, to remove the outmoded regulations, to remove confusion of a PCSA being in place, an agreement which no longer had any real reality in terms of the actual production and incentives operating on site, to remove concerns around clashes between the two agreements; in our respectful submission unfounded because the new arrangements operated well above the agreement.

PN25

But nevertheless the union, and the union has been as one would expect, earnest in its attempts to protect the interests of its members and has raised concerns about clashes between the PCSA and the above agreement contracts. The company has moved to terminate not with a view to disadvantaging employees, not as a union for that matter and gave an undertaking at first instance with that objective in mind and seeks to give further undertakings and indeed execute a deed poll with the very aim of addressing concerns raised by the union and certain of its members in relation to the process undertaken. So the objectives are in essence to remove that confusion, remove the outmoded regulation, remove the potential for clash, which as we say is unfounded but nevertheless it exists and the Full Bench will see manifestations of that even in the further evidence the union seeks to put forward of this appeal.

PN26

In our respectful submission all that is happening on site is in the interests of good workplace relations in an enterprise sense. There are wider agendas which the union has in terms of reform of the legislation and public relations campaigns and other things which again are within its legitimate realms of interest but do not concern this business, its employees and their progress. That brings us then to the decision at first instance because obviously the application the made to achieve those objectives that I've just outlined failed and the Bench will find the decision at first instance within appeal book 1 and in essence the Commission in its decision which commences at appeal book page 37 extends a significant component, as one would expect, of the early part of the decision setting out the background to the matter and summarising the evidence and the submissions of the parties before moving to reach conclusions, which is the commencement of the rule rather than of the decision at first instance, at paragraph 243 which is at appeal book page 63.

PN27

It is at that point that the Commission having summarised in quite some detail to the Commission's credit a voluminous amount of material both evidence and submission at first instance, raises the application of clause 21 of schedule 8 of the Act which is that part of schedule 8 which extends section 178MH of the pre reform Act to PCSAs and at paragraph 245 sets out the relevant provision, then moves at paragraph 247, 248 to make the survey undertaken by the Commission to ascertain the views of the employees affected by the agreement and thereafter moves on to set out some of the key decisions about the public interest test under section 170MH.

PN28

At paragraph 256 the Commission notes that it's objects of the current Act to that apply to the exercise of the public interest test under section 170MH and proceeds to set out what the Commission respectfully considered to be some of the relevant competing objects of the Act at paragraph 257. At paragraphs 259 to 260 the Commission then briefly reviewed the scheme of the Act as considered relevant to the exercise of section 170MH and then moves to the key aspects of the Commission's decision at first instance at paragraph 268 and the absolute essence of the decision at first instance occurs in the residual of the decision from paragraph 268 to 290. It's at that point that the Commission at first instance identified three alleged public interest negatives in terms of termination of the agreement, which obviously we'll come back to in detail later, and juxtaposed that in contrast at paragraph 285 to the Commission's inability at first instance to discerning public interest positives in the termination of the specific agreement.

PN29

It was on that basis that the Commission concluded in very summary form obviously that the test of termination being contrary to the public interest had not been satisfied if you like or the termination would be contrary to the public interest and on that basis the company's application to terminate was declined. Now, the company then lodged a notice of appeal which sets out a number of grounds of appeal and if the Commission will excuse me for one moment I'll just grab my copy of the notice. If I can just clarify for the benefit of the Full Bench that the notice of appeal sets out some 23 grounds of appeal and then some nine grounds of purported public interest warranting leave, which I'll obviously come back to during the course of the day when we reach that point. In respect of the grounds of appeal I'm instructed today to press all grounds with the exception of ground 14 which was a case running the alternative at first instance under section 170MHA of the Act. I apologise to the union, I've only just virtually received those instructions so they're hearing this now so I apologise for that.

PN30

In respect of ground 15 we will qualify that ground going to the survey for whilst we consider that the scope of survey contributed to the errors at first instance it is not in itself capable of rendering the decision invalid. Similarly at ground 16 there's a reference to the conduct of the AMWU. Now, the Commission at first instance ended up concluding that the conduct of neither party had warranted considerable weight and in that circumstance we do not seek to press in detail that ground, in fact we'll only go to one very limited aspect of the conduct of the AMWU in the interests of time and relevance as we would see it to the appeal. Other than that we press all grounds for the appeal and for leave set out in the notice of appeal.

PN31

At 1.6 of our outline for today's proceedings we move to what the applicant suggests should be the process for the appeal and we note in this regard with respect to the union which will obviously put forward its own view on the issue, our understanding that the union seeks that the Commission as currently constituted proceed in a split hearing for the current appeal whereby the issues of error at first instance and the separate step we seek from the Full Bench that it then proceed having found error to set aside the decision or terminate, sorry, the agreement should be deal with separately. Now, that is not the view of the applicant and at 1.7 we summarise the basis on which we seek to proceed today.

PN32

Having done that I will, with the leave of the Commission, sit down and allow the union to put forward its application if that's a convenient time. So what the applicant seeks with its own application is to put forward to the Commission today submissions on the nature of its appeal which we say go predominantly to jurisdictional issues, to put forward submissions concerns the nature of the test and the high threshold involved in the test under the Act and we seek to briefly go to the scheme of the Act in that regard. We'll next contend that at first instance where the positions of the parties were well summarised and extensive written and oral submissions to the credit with respect to both parties and it's our view that that material will greatly assist the Full Bench in dealing with this appeal in totality today.

PN33

It will be our submission that the Commission at first instance either applied an incorrect test or to the extent that it applied the correct test, it misapplied it in a vital way. We will further submit that all three of the public interest negatives identified by the Commission at first instance are replete with error that warrant removing each of those public interest negatives and that additional errors have occurred in the decision which warrant that decision being set aside and we say at 1.7(d) that the Commission in light of that material should be in a position to proceed to terminate the agreement with the benefit of some additional assistance with the material below and to identifying factors critical to the limited discretion under section 170MH.

PN34

At one 1.7 we say that there's a practical onus and I use that phrase guardedly and I’m talking about a statutory practical outcome as opposed to some evidentiary onus, but a practical onus as referred to at Tristar, to establish public interest. If the decision is set aside this Full Bench would want to be satisfied that there are real public interest considerations which would stand in the way of termination of the agreement as we seek. It's our respectful submission that to the extent that we have in good faith and in attempting to assist the union and the Commission in understanding our case put on a lot of material, we believe that it is subject entirely for the Commission's discretion that any prejudice caused to the union by the fact that we've put on so much material can be addressed by it, if the Commission saw it fit, having some additional time after the day to deal with any outstanding issues by way of written submission to which we would seek to reply.

PN35

But we're seeking a fairly rapid timetable to tie this matter up and we respectfully submit at 1.7(g) that it is important that this matter be resolved as soon as practicable and we refer in that context to sections 108 to 110 of the Act. Obviously section 108 of the Act talks about the Commission acting as quickly as practicable. In putting forward what I'm about to put forward we attach no assertion or fault, blame or otherwise on either party or the Commission but we merely put forward the practical situation which we find ourselves, whereby if the Commission would look at attachment B to the case outline that I’m currently working through which occurs at page 10 of the document, in very short term by way of chronology the agreement which came into place effectively January 2006 but had a life from mid 2005 to mid 2007, expired 30 June 2007 in terms of its nominal term under the State Act.

PN36

There were then negotiations and attempts to have agreements voted upon, two of which failed in terms of the workforce voting down agreements and for the reasons I've gone to earlier, the application in this matter was originally filed on 7 November 2007. Now, there was then extensive hearings and evidence and interlocutory issues and a decision handed down on 1 August 2008, this appeal lodged, set down for hearing today and about a week ago the union put us on notice that they were seeking to split this hearing with the prospect of further evidence should the Full Bench find error and move to exercise the power under section 170MH itself as we'd seek.

PN37

Now again, we emphasise no attachment of fault for either side and certainly not to the Commission but the reality is that an agreement which had an original two year life and which was the subject of application for termination almost a year ago is now rapidly approaching a point 18 months in excess of its original life and that's a large percentage increase given the original term and it's certainly our respectful submission that for the effectiveness of section 170MH and the whole scheme of the Act in terms of enterprise bargaining these matters do need to be dispensed with as quickly as practicable.

PN38

Now, we put that no higher than this than to say that there is certainly an interest from the company, we respectfully submit, the union and the Commission in terms of certainty around this application and we believe that it can be and should be dispensed with today at least in terms of hearing. We then had additional issues to be addressed by written submissions and the Commission in due course to hand down its decision dealing with both aspects of our application being errors at first instance and in the one process, the setting aside of the agreement if the Commission is so minded. So that's the basis on which the applicant seeks to progress its application. That's probably an appropriate point to hand to the AMWU, with respect, so that they can put forward their application for an alternative process. If the Commission pleases.

PN39

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you, Mr Harmer.
Ms Howell.

PN40

MS HOWELL: Thank you, your Honour. If it please the Commission, I'm not sure I'd characterise our position as an application for a split hearing. We simply say that the appeal should be heard and determined and in light of that outcome the matter should then be set down for disposition if required of the substantive application. We note what Mr Harmer says about the expeditious disposition of the matter as a whole and we don't disagree with that, but we say that should not interfere with a proper disposition of all the issues which are before the Commission.

PN41

The AMWUs position, its primary position is that the Commission should dispose of the appeal by refusing to grant leave to appeal in some fairly unusual circumstances which did not emerge from Mr Harmer's opening. I should say as far as the impetus to dispose quickly of the matter, what has happened in practice is that Cochlear, although continuing to be bound by the preserved state collective agreement which is the subject of the application, has a matter of practicality imposed its individual contracts and applied those individual contracts and certainly there is an issue between the parties as to whether by doing so Cochlear is in fact in breach of the collective agreement. But notwithstanding that dispute we recognise that as a matter of practicality that situation will continue the substantive application is determined.

PN42

So there's no practical difficulties arising for Cochlear at the moment arising out of the fact that the termination has not occurred. Now, there are a couple of reasons why we say leave to appeal shouldn't be granted in light of the special circumstances associated with the application below. The first which I've alluded to in our outline of submissions is that the case on appeal is not any different to that below but is advanced on a basis directly contrary in some respects to that which was put before the Commissioner and in that respect of course I refer to the question of whether the NASPSA, the state award would apply if the agreement was terminated and there are a lot of consequences which flow from that issue which would be dealt with in more detail in the body of the submissions.

PN43

But suffice it to say that the position now advanced by Cochlear that the NAPSA would in fact apply was exactly the position applied by the - or submitted by the AMWU below and not accepted by Cochlear. Once that argument is accepted a whole load of other arguments flow as to whether the individual contracts are in fact conflict with the NAPSA and whether there's a public interest consideration that it would be contrary to the public interest to terminate an agreement where it's clear on our case that the individual contracts which are now proposed to be formalised by reference to a deed poll would be in direct conflict where they're in breach of the relevant industrial instruments. So there's a whole lot of new arguments which come up on the public interest test which the Commissioner didn't canvass below because she accepted the respondent's argument - I'm sorry, Cochlear's argument that it was uncertain whether the NAPSA applied or not.

PN44

The second major issue which would militate against running a split hearing is the issue of the new evidence, the deed poll. Perhaps I should step back and say that this appeal is unlike your typical appeal in that the outcome of the appeal if error is demonstrated doesn't lead to an automatic conclusion as to the result on the substantive application. What happens then is that consideration has to be given a fresh to the public interest test as it applies at the time of the consideration and taking into account all relevant public interest considerations. The new evidence which Cochlear seeks to rely on we received the first copy of a deed poll two days ago and as of I think about 8 o'clock last night my instructing solicitors have seen the second version of the deed poll which is some 50 pages long and if the Commission has seen it, an extremely complicated legal document.

PN45

There's a lot of issues flowing from the deed poll which we haven't even begun to think of I think about as yet and the first of them is whether in light of that evidence we would wish to put some evidence in response. Obviously the deed poll cannot be dealt with today and the question of whether the AMWU wishes to put on any evidence in response to that cannot be dealt with today. Our position with respect to the deed poll is we oppose its admission in the appeal proper on any view but we see no basis that we could oppose it being admitted on a reconsideration because that would really be a consideration of all matters relevant as of the time of the reconsideration and indeed as the Commission is aware, the AMWU has also advanced some evidence in the form of an affidavit of Ms Fortescue which from our point of view updates the position with respect to public interest.

PN46

So having regard to those factors, the first thing we say is even in the ordinary course of events it would not be possible to make useful submissions on the reconsideration of the pubic interest test until such time as we know whether any error has been identified and the particular nature of any error and once that was done we would also need to know whether the Commission would accede to the AMWUs view that notwithstanding those matters, because of the way which the case was run below and because of the new evidence which the Commission would be required to consider, it would be more appropriate that the matter be remitted for decision at first instance, as the Commission is entitled to do on appeal, or alternatively, whether the Commission would simply refuse leave to appeal on the basis that the case on appeal is significantly different to that run below.

PN47

Large parts of it shouldn't be entertained on the usual principles that one is bound by the conduct of the case below and if the case was run effectively for the time on appeal then adverse consequences flow, including the fact that the AMWU is deprived of any appeal rights. So all of those arguments which I have foreshadowed are arguments which we seek to develop and if the Commission thinks that any of those would be usefully developed now I can certainly enlarge of them. But in short we say for those reasons the usual procedure should be followed, that the nature of any error and the nature of any relief flowing from such error should be determined before the Commission considers afresh the public interest test.

PN48

I should also add this is not a case where there's one or two public interest issues. The AMWU below raised a significant number of issues which were not dealt with by the Commissioner, including Cochlear's industrial conduct, Cochlear's conduct which we say breaches the state's collective agreement, the preserved agreements, the issue of the inconsistency with the NAPSA and then of course we have to deal with all of the new evidence, the deed and the AMWUs affidavit. It is impossible that those matters could be dealt with today to finality and in any event as Mr Harmer has already indicated, the AMWU will certainly be seeking additional time to deal with submissions which were about I think about 60 pages of submissions which were forwarded to us for the first time on Thursday, particularly dealing with the construction of clause 1.4 of the state agreement but also going to other issues.

PN49

So for all those reasons we say the Commission should simply deal with the appeal and take such steps as are appropriate after that's been done. If it please the Commission.

PN50

SENIOR DEPUTY PRESIDENT KAUFMAN: Thank you, Ms Howell.
Mr Harmer, do you want to reply to that aspect of the submission at this stage?

PN51

MR HARMER: Yes, if the Commission pleases. I first of all indicate to the Commission with great respect we believe that the union overstates the difficulty facing both the parties and the Commission in dealing with this application. Certainly under section 120(7) of the Act, paragraph (a) and (b) it would not be unusual and I'd go so far as to say it would be the normal course not only under section 170MH of course but otherwise in the practice of this Commission for this Commission to hear and determine both the issue of errors at first instance and the disposition under 127(e) of the termination of the agreement.

PN52

The only, and I emphasise only, decision in the history of this particular section 170MH jurisdiction that we're aware of that pursued any altered course and it's not a significant alteration, was Tristar where the only aberration from that standard approach was that the parties were given time to make additional written submissions on public interest issues after the Commission found error at first instance. So there you have time for additional written submissions on which - but otherwise, consistent with the approach of Full Benches of this Commission in large part, as I say, under the relevant section, 170MH and otherwise, the matter dealt with in one holistic disposition we say that there are limited difficulties in doing that.

PN53

The AMWU presents a number of - first of all indicates that there's no practical difficulties with further delay in the disposition of this matter. Again, I put no issue on the cause of that delay but it is a reality and we are, as I say, facing at the moment about 150 per cent increase in the original term of this agreement which, as I say, is causing confusion on site and we seek to have that removed. It's out outmoded, it's irrelevant and we'd seek to have it removed for that reason. We are facing constant indications of purported breach through operating above agreement and that is a reality we face and one which does cause inconvenience. It's causing work in this Commission elsewhere and it is unnecessary and not in the interests of good workplace relations or the objects of this Act.

PN54

The issues brought about concerning leave can be address in due course. As I've already indicated, it's our respectful submission that the appeal goes predominantly to jurisdictional issues that obviously mitigates any suggestion, not that we agree with it, but any suggestion that there's a new case to be made. The next point I'd briefly make is that the issue of potential clashes with the NAPSA agreement, the underlying state award that would be resurrected on termination has been dealt with below and carries, with great respect, no more weight than the ill founded assertions of breach of the PCSA which were rejected in whole by the Commission at first instance and in our respectful submission will be rejected by this Full Bench as being trite and out of touch with industrial reality.

PN55

The next point we make is that the deed poll is no more than an attempt to embody on a formal basis an undertaking given at first instance. Now, it's our position it's not necessary and if this Bench is fit not to accept the undertaking as I've proffered, or the union does not seek the undertaking for the benefit of its members, then so be it because it's our respectful submission that the undertaking at first instance sufficed, it would always suffice on the basis of extensive authority of this Commission should suffice and raises no issue whatsoever as to its integrity, or on the basis of principles of agency or the Corporations Act, no issue at all that it was proffered by one individual as opposed to a corporate entity publicly listed and yet at first instance we face that issue.

PN56

So in abundant caution we're attempting to remove that uncertainty which has been alleged by the union. If that's not accepted, so be it, we still press our case. In terms of the additional affidavit material that the union seeks to put forward, we strongly press on appeal that section 170MH sets up a very high hurdle to be jumped by any union seeking to resist termination of the agreement. We say that test was misapplied at first instance. We say this Bench will readily deal with the totality of the issues raised at first instance by this union and readily dispense with them as not even craving at the lower ends of that threshold. We're happy to take at its highest, with objection, without demur, without cross-examination everything that Ms Fortescue puts forward in her further affidavit, how on the basis of that material alone applied against the test dispensed with it, because it does not, with respect, come within cooee of what this Full Bench needs to be satisfied of in its limited discretion before it is compelled to terminate the PCSA.

PN57

Now, that dispenses with a whole lot of material. If the union wants to make further submissions relating to its material at first instance, relating to our case, relating to the evidence which we're happy to accept in full as it stands, we have no objection to it being given time for further written submissions. We'd seek only to reply within a reasonable timetable. That's occurred in Tristar, with respect. But it's our respectful submission that that allows the Commission as currently constituted to effectively, quickly as practicable as per section 108 of the Act, dispense with this appeal in a holistic basis consistent with the practice of this Commission.

PN58

Now, I come back to the issue of timing. Again, not in criticism of any entity and certainly not of the Commission, but we place ourselves in the hands of this Commission under the Act with its behest for quickly as practicable action and we seek relief from an out of date agreement which is impeding and creating confusion and creating disputation. That to us is a reasonable case to put forward and which can be readily dealt with today with the addition of written submissions we suggest and in our respectful submission the Bench as currently constituted should choose to proceed on the basis we've outlined. Unless there's any questions that conclusions our position on the union's application.

PN59

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you, Mr Harmer. We'll adjourn briefly to consider.

PN60

MR HARMER: May it please, your Honour.

<SHORT ADJOURNMENT [10.46AM]
<RESUMED [10.56AM]

PN61

SENIOR DEPUTY PRESIDENT KAUFMAN: We have decided that the appeal should run in the normal case. We'll try to dispose of all issues at the conclusion of this hearing if that proves to be possible.

PN62

MR HARMER: May it please the Commission. If the Commission pleases, that brings me to point 1.8 of the case outline and the reference to the deed poll. If I can just say at this stage I am instructed that the company puts that forward as an ..... submission as to what it will put in place. We do not need nor do we seek to press it on the points of error but if it does assist with the issue of termination of the agreement we think it overcomes the issue of enforcement raised at first instance in terms of assisting this Bench. We put it no higher than that and if the union, whether by way of, we would respectfully submit, submission wants to raise concerns with it we'd certainly invite that as part of their process of additional submissions and the Commission can give it whatever weight it chooses. We certainly don't see it as a basis for further delay and I'll come back to it at the end of this case.

PN63

What I'd seek to do at the moment is move to the nature of the appeal which is point 2 and just note that the heading within this case outline parallel the outline of submissions that we've put together in the file that members of the Bench have. So these are just points of elaboration if you like upon the brief outline we filed within that material. Now, first of all we point out in 2.1 that we're dealing with section 120 of the Act. It's the current Act, the current objects, with respect, we submit and the current appeal provisions and I'll come back to why that is so but I don't understand that to be significantly an issue between the parties. Point 2.2 of our outline is more controversial in our understanding of the union's position and if I can just take members of the Commission to section 170MH of the pre reform Act. If members don't have that readily available I do have extra copies of the pre reform Act or it is set out in the decision at first instance.

PN64

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, perhaps you might hand up some copies if you've got them.

PN65

MR HARMER: I'll just fish them out. I might also just give the members of the Commission for convenience the reference in the decision at first instance where it's set out and I will in due course hand up the full terms of the Act. Sorry, that material is being located. So what's just been handed up, it is addition 9 of the CCH version of the Act which is the pre reform Act as we understand it and we move to the provisions of section 170MH. They're at page 32051 and particularly 170MH(3) relating to the basis on which an application for termination of an agreement may proceed.

PN66

That subsection contains two critical components. The first is a precondition of the exercise of termination if you like. If the Commission considers it is not in the public interest to terminate the agreement that component of the subsection 170MH(3) sets out a narrow discretion. It's a discretion because there's a value judgment there about what is or isn't contrary to the public interest. It's narrow because the second component of the subsection is a mandatory element whereby the Commission must terminate by order of the agreement, dependent upon the exercise of that discretion. Error in the exercise of that first component is capable of causing this Commission to one contrary to a mandatory component of this Act.

PN67

This Commission, with respect, as a creature of statute cannot operate contrary to the Act under which it is constituted and pursuant to which it performs its functions. This provision of course picked up in the PCSAs by schedule 8 to the current Act. Now, the effect of that is that is not a normal case of broad discretion whereby this Commission reaches a view on the public interest it may go and do something else in a further discretion instead. Error in the formation of the discretion can lead this Commission to act contrary to the Act and therefore to jurisdictional error and that we say is the case in relation to the vast majority of the errors that we point to at first instance. They are not mere errors of discretion.

PN68

They are errors that cause the Commission at first instance to act contrary to the mandate of the Act and therefore err in a jurisdictional sense. And the case which we seek to analyse in that context at 2.2(b) is that of Olten and I might just hand members to the Commission in accordance with what we've attempted to communicate, but rather than providing a list we just hand up a set of the decisions and only those we seek to go to in this oral presentation. There are obviously no written submissions, many cases. This particular case, Olten, which is a Full Bench decision of this Commission appears at tab 2 and I put it forward not because it's the highest priority on the point, obviously, but it contains an extremely valuable in our respectful submission summation following a review of authorities of the High Court and the Federal Court of this distinction of errors within jurisdiction as opposed to errors of jurisdiction.

PN69

If I could ask the Commission to move to paragraph 65 of the decision, if the Commission will bear with me I'll just run through the analysis in summary form which this particular Full Bench undertook of the relevant authorities before deciding in the context of the former sections 170LT and LU of the Act, which the Commission might recall involved the Commission must certify or must not certify an agreement if it reached a certain consideration. I just note in passing in terms of the analogy between the Commission at present and Olten that at paragraph 63 there's reference to the Federal Court of Australia identifying this issue of satisfaction of a tribunal as being a matter of discretion.

PN70

So we have a similar situation whereby a discretion to be satisfied of something was part up against a mandatory under the Act and was concluded in this Full Bench and in numerous decisions subsequently and in our respectful submission not controversial, to involve under 170LT and LU errors going to jurisdiction if a member of the Commission made a fundamental error in coming to the requisite precondition of a consideration required under the Act. Now, in that context noting the analogy because here there is again a very limited discretion rather than satisfaction there's a necessity to consider an important matter of whether something is contrary to the public interest and that's hard up against a mandatory step required by the statute.

PN71

So at paragraph 65 of the decision the Full Bench, and this is two members of the Full Bench because in terms of the application finally of the test of specific facts Deputy President Blain dissented, but Senior Deputy President Watson and Commissioner Lewin set out at paragraph 65 what they distilled from the authorities and in our respectful submission it's a useful guide to the many errors that can lead in this particular circumstance where there's a mandatory requirement under the Act to an error going to jurisdiction . Just briefly, the third dot points notes:

PN72

And it's clear on the authorities that whether a particular error constitutes an excess of jurisdiction or a failure to exercise jurisdiction it is often difficult to determine.

PN73

The next dot point:

PN74

Jurisdictional error might be find in -

PN75

And it lists a whole range of criteria including, the fifth down:

PN76

Failure to deal with a question at hand and the deciding of some irrelevant question. A failure to account something which it was required to take into account ...(reads)... a right to take into account.

PN77

Skipping one -

PN78

Application of a wrong and inadmissible test.

PN79

The next one down:

PN80

Misunderstanding of the nature of opinion to be formed.

PN81

And the last one:

PN82

Disregard of relevant material when it affects the exercise of its power.

PN83

Now, on the last three dot points on that page there's an important qualification put forward that -

PN84

Where a statutory power is expressed to arise where the decision maker is satisfied that statutory criteria met a determination that the decision maker is not satisfied goes to the jurisdiction of a decision maker -

PN85

We say the same with our discretion -

PN86

If satisfaction is reached by taking into account some irrelevant considerations or by otherwise misconstruing the terms of the relevant legislation that it must be held that the opinion required has not been formed.

PN87

And that brings about what's called a constructive error of jurisdiction or a constructive failure of jurisdiction. The character of the condition precedent based on the satisfaction of the Commission has to be considered in the statutory context in which it appeared and here we say the fact that the decision at first instance goes so against the grain of the whole scheme of the Act is relevant to this issue of the question of jurisdictional error and importantly again the first dot point on the next page and this is the second last dot point in paragraph 65:

PN88

The nature of power exercisable when an opinion is formed and the basis upon which the exercise of the power can be challenged will depend on the statutory context in which the power arises.

PN89

And here I emphasise that power is a mandatory power as soon as this Commission forms its limited narrow discretion as to public interest and 170MH(3). Now, what the Commission Full Bench thereafter did commencing at paragraph 66 was move to analysis of the scheme of the Act for certification of agreements and at paragraph 69 looked at the statutory context in which the relevant decision was to be made and noted the mandatory nature of steps under the relevant section and noted that towards the end of the first part of paragraph 69 there that the statutory context involves ..... of the Act and Part 6B of the then Act and again I'll come back to the relevance of the scheme of the Act and the objects in relation to this.

PN90

At paragraph 72 the Commission said that it thinks that the statutory context, and it there refers to a 170MW case which is quoting from a particular authority where the wording of the section brought it into this jurisdictional category as opposed to any discretion, indicates that the decision maker must have some basis for his or her satisfaction over and above generalised satisfaction and here again in this matter before this Bench as currently constituted we would say the Commission is dealing with a very important issue of something contrary to the public interest and the whole scheme and objects of the Act and we say it is in that level of gravamen ..... jurisdictional concern in terms of steps by the Commission against the grain if you like of the Act.

PN91

At paragraph 107 there's a conclusion reached in this immediate case whereby the decision of his Honour Senior Deputy President Polites having been analysed against the criteria was found to involve a miscarriage of jurisdiction, an error of jurisdiction and at paragraph 110 it's said that -

PN92

The Commission variously took into account irrelevant considerations, failed to properly assess the award in the agreement in accordance with the statutory requirements ...(reads)... within the correct meaning of the Act.

PN93

And at paragraph 112 the Senior Deputy President was found to have constructively failed to exercise jurisdiction and the jurisdictional error materially affected the exercise of the power to set aside the agreement, such that the jurisdiction miscarried. Now, before going to the analysis of the Federal Court and High Court cases that support this basis for assessment of a decision at first instance I just note that some of the matters that we will proceed to in this appeal relate, as has already been outlined, to something as fundamental of did schedule 8 of the Act at present breathe new life into a state award as a NAPSA. The Commission at first instance got that wrong, a fundamental misconstruction of the Act under he was operation and in assessing public interest did not even have the underlying regulation correct in terms of assessing consequences.

PN94

One cannot come to a more fundamental error in our respectful submission in the context of this matter and I'll come to this point about differences in evidence and submissions at first instance, but we're talking about an error of jurisdiction and so I'll also come to those authorities of this Commission and they ..... where this Commission would say if the error goes to jurisdiction, then if it's not, but even if it was raised for the first time on appeal, this Commission draws a distinction and must deal with its jurisdiction. It doesn't have a discretion to grant leave and ignore its jurisdiction. It would place this Full Bench as much against the grain of its Act as the Commission was at first instance, with respect.

PN95

So that's the gravamen of the issue and the Commission, this particular Full Bench commencing at paragraph 52 of the decision commences an analysis of, as I say, on various decisions raising from the House of Lords, the High Court and the Federal Court, of this difficult issue of determining what is an error of jurisdiction. Sorry, before going to that, apart from the NAPSA I should note that it's our submission that the decision at first instance was contrary to the whole scheme of the Act, involved misapplication of the correct under the section, involved fundamental misconstruction of the Act in terms of the application of a NAPSA, involved misconstruction of the PCSCA and the State Act of relevance. These are all fundamental legal errors, not mere matters upon the Commission properly formed an opinion to inform the exercise of a discretion in which it was at large.

PN96

These are fundamental legal errors in a narrow discretion which error leads to the Commission acting against the mandatory requirement under the Act to terminate or not. That goes to jurisdiction and as I say, pretty much all of our grounds of appeal do. So against that background in terms of establishing the relevance of these points, at paragraph 52, the commencement under the heading Jurisdictional Error the analysis begins and at paragraph 54 there's analysis of a Full Bench decision of the Commission whereby -

PN97

Errors of procedural fairness, purpose, motive, reasoning and certain errors of fact may be a basis for establishing a ...(reads)... without jurisdiction and void of effect.

PN98

That's the end of the quote there at paragraph 54. At the end of paragraph 55 which is a long quote within the Tweed Valley case analysing Anisminic which is a House of Lords decision. There's reference to the recent judgment of Wilcox CJ and Beasley then in the Australian Industrial Court and I ask the Bench to take particular note of this -

PN99

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

PN100

And there's a reference to a case -

PN101

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

PN102

In the next paragraph the Full Bench in the Tweed Valley Processes case is referred to and there's reference in the third dot point down of the decision there of Commissioner Redmond -

PN103

If he had asked himself the right question the Full Bench would not have been entitled ...(reads)... come up with the wrong answer.

PN104

Again I emphasise here, we say that the test was misapplied here. More importantly again is back at the end of paragraph 57, this time quoting from the High Court of Australia decision in Craig and this is another important decision in this line, so this is right at the end of paragraph 57 the quote from the High Court:

PN105

If such an administrative tribunal falls into an error of law which causes it to identify a wrong, to ask itself a wrong ...(reads)... any order or decision of the tribunal which affects it.

PN106

Now, again I emphasise that by way of example the Commission at first instance misconstrued the Act and did not conclude that the state award would apply. That certainly seems to fall within that category and yes, many of these errors overlap with what under House v The King would be errors justifying interference with the pure exercise of discretion. That overlap makes it difficult sometimes to discern what one is dealing with. But as I say, the case is emphasised if you look at the statutory context and here by way of strong analogy with 170LT and LU of the pre reform Act a limited discretion is hard up against a mandatory requirement. The analogy is very strong, with respect, in terms of the line and reasoning involved in this particular decision.

PN107

At paragraph 62 there's a reference to a decision of ..... CJ in the Federal Court of Australia in MAAV and I commend without reading through it - well, perhaps I will commence to go through it -

PN108

It is well settled that where a statutory power is expressed to arise where the decision maker is satisfied -

PN109

I emphasise a matter of discretion -

PN110

that a statutory criteria are met, a determination that the decision maker is not satisfied goes to the jurisdiction of the decision maker and is reviewable.

PN111

Further down the indented quote -

PN112

Where the existence of a particular opinion is made a condition of the exercise of power -

PN113

Can I just stop to reflect again. Here we have a precondition that the Commission is satisfied that something is not contrary to the public interest, then there is a mandatory power to exercise once that precondition is met, so returning to this quote:

PN114

Where there existence of a particular opinion is made a condition of the exercise of power legislation conferring the power is treated ...(reads)... the law under which he acts.

PN115

And again I come back to the issue of schedule 8 and the NAPSA. And then continuing with the next quote -

PN116

There is reference to the fact that that does not mean that the court substitutes an opinion for the opinion of a person or authority in question. What the court does do is inquire whether the opinion required by the relevant legislative provision has really been formed -

PN117

And goes on to again discussion constructive error of jurisdiction and then it's at paragraph 63 that we come to that notion whereby satisfaction is described in the quote set out there as a discretionary factor. Now, as I say, and look, there are further cases at paragraph 64, the Coal and Allied decision is referred to and it's that quotation that refers to the narrow discretion. So this is at the end of the quotation at paragraph 64 -

PN118

The narrow end of the discretion where the decision maker is required to make a particular decision that he or she forms a particular opinion or value judgment -

PN119

So one has in discretion of decisions that are wide spectrum. The very narrowest end is where a few reach a limited prerequisite or precondition. You are compelled to do so and there's no discretion there. That narrow end of the spectrum is exactly what we have here and the failure to properly reach the discretion or limited discretion results in jurisdictional error for the reasons I've outlined. What we say in consequence of that analysis is that there is a strong analogy between the sections under review here, 170LT and 170LU of the pre reform Act, that there again there was a limited discretion followed by a mandatory requirement. It was concluded in this Full Bench decision and others that that involves questions going to jurisdiction if there was error involved in the formation of the limited discretion. The types of errors identified in the cases that I've gone to clearly arise in this appeal.

PN120

There is overlap between the House v The King criteria and these errors of jurisdiction which I think are apparent from the cases. The real question is what is the consequence of the failure in the limited discretion and here as with the cases we've analysed, there's a mandatory step under the Act of the taking or not taking which goes to compliance with the Act and therefore jurisdiction. So that in essence is why at 2.2 of our outline we say that the matters - and we've given examples that are raised in an appeal, are matters going to jurisdiction and we say at the top of the next page that this Commission, has already indicated, is a creature of statute. It's trite to say it does not operate contrary to the mandatory requirements of the Act.

PN121

Now, the significance of the appeal, the test for error are those that we've just gone through and we've listed quite a number. The union assertion of a new case which we dispute and we've set out at attachment (c), are the areas that the union seems to say is a new case but we set out where they were raised at first instance. But any suggestion that there is a new case or new issues have to be assessed in the context of this appeal going to jurisdictional issues and the two decisions that I've referred to at the bottom of (c) on the outline are those of Wattyl Australia and Victoria Radio Network which are at tabs 3 and 4 of the cases I've handed up.

PN122

They each point to the distinction I’m referring to and if I go to paragraph 43 of the decision in Wattyl Australia which is at tab 3 of the set of cases we've provided to the Commission.

PN123

SENIOR DEPUTY PRESIDENT KAUFMAN: Paragraph?

PN124

MR HARMER: Sorry, paragraph 43. So this is a decision of a Full Bench of the Commission in August 2005 indicating that -

PN125

We acknowledge that these issues were not argued at first instance. On that basis Mr O'Grady submitted that they should not be entertained ...(reads)... We do not find this argument persuasive on appeal.

PN126

The next paragraph:

PN127

The Commission does not generally entertain merit arguments which had not been advanced at first instance but different considerations apply where the matters raised are of jurisdiction.

PN128

And going to tab 4, the Full Bench decision in Victoria Radio Network at paragraph 15 at the end:

PN129

It's generally not open to a party to reopen a case or entertain new merit arguments which are not being run when the first opportunity ...(reads)... where the matters raised are jurisdictional.

PN130

And there's a foot note there and if one goes to foot note 2 at the end of the case there's a number of additional decisions cited. Now, we would emphasise that we do not concur with the submission of the union that the matters we now press were not raised at first instance and with respect, we would submit that it's not surprising that when faced with a first instance decision one might not on appeal elaborate or press firmly certain instances or issues raised at first instance. But even if we are wrong on that, and we say we're not, because the appeal is in the nature of one going to jurisdiction this Commission would neither decline leave, with respect, which I'll come back to leave to appeal, nor would it ignore the issues raised given that they are critical to its jurisdiction in my respectful submission.

PN131

So that's the issues on the nature of the appeal and that brings us to point 3 of our outline which relates to the nature of the public interest test and I'll try and move through this as quickly as I can, appreciating that there is a fair bit to get through today and also I appreciate with respect that members of the Bench as currently constituted have dealt with a number of these matters. But at 3.1 of our submission we refer to the fact that at first instance at paragraphs 254 to 255 of the decision the Commissioner in looking to the public interest test referred to the well known case of public - sorry, Kellog Brown in terms of what's involved in the public interest and obviously that's most appropriate in terms of choice of a decision to found the nature of the public interest test and then moved on to - so that's set out and quoted under 254 and I don’t' repeat that.

PN132

At 255 of the decision at first instance the Commissioner indicates that as the Commission had done in previous instances, the Commission adopted the approach by Commissioner Whelan in the Geelong Wool Combing matter and that test is then set out in quotes in paragraph 255 and basically it indicates:

PN133

The Commission must be persuaded that termination is contrary to the public interest -

PN134

Is the first point. The second one -

PN135

In the absence of any effect of termination which is contrary to the public interest it is not necessary to persuade ...(reads)... arising from termination.

PN136

The third one:

PN137

Where needed, public interest effects are established they need to be balanced against positive public interest effects that arise from the termination of the specific agreement.

PN138

Now, within the authorities there is some conjecture about that point but I won't to go to that as being relevant to the present. The fourth one:

PN139

There's no exhaustive definition of what constitutes the public interest.

PN140

The fifth:

PN141

In any particular case the whole of the circumstances need to be considered and competing public interest balance.

PN142

The sixth step:

PN143

The interests of the relevant employees of the employer are relevant in terms of the public interest.

PN144

And the final one and in our respectful submission the most important point in this series of steps as stated as basis for applying this section -

PN145

The starting point is the statutory scheme and particularly those aspects of it which deal with the making of agreements and the overall objects of the Act.

PN146

Now, at 3.2 we've noted that the current objects apply and only because the union, as I understand it, puts forward a contrary view 911:29:16) attachment D. As I understand the union in its written submissions on appeal has placed some emphasis on Tristar. The Full Bench decision in Tristar is establishing that it's pre reform Act provisions that apply. Now, attachment D we've summarised the pre reform and the current Act objects just to juxtapose them which I'll come to, but on the last page, page 16 of the outline, we just list the cases that have considered this issue and what the Full Bench is that on the right hand side all decisions of this Commission dealing with PCSAs, Cochlear at first instance, ..... FIP have concluded that the objects of the current Act apply.

PN147

SENIOR DEPUTY PRESIDENT KAUFMAN: That's at attachment D is it?

PN148

MR HARMER: Yes, it's page 16. It's the last page of the outline, sorry, your Honour.

PN149

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes. Some of my pages aren't numbered but they are on the attachments. Yes, thank you.

PN150

MR HARMER: I apologise for that. So it's a table at page 16 and on the right hand side are those cases that deal with finding of the current objects apply and they included Cochlear and FIP which are the only cases to PCSAs. On the other hand, those relating to pre reform certified agreements, including Tristar which the union relies upon, they are findings that relate only to pre reform certified agreements and the reason for that is clear and I don't intend to spend much time on it. But schedule 7 of the Act stipulates the pre reform certified agreements, at clause 13 lists, the Commission might recall, a whole range of sections of the pre reform Act that continue to apply and it includes, for example, the object sections of the old Part VIB and it includes any other provision relating to the operation of the provisions mentioned in the preceding paragraphs and there's about 20 or so of them.

PN151

It's in that context that the Commission in Tristar and otherwise has decided that the pre reform certified agreement, the transitional scheme embodied in clause 13 clearly picks up the objects of the pre reform Act and so it's clause 13.1(u) in the context of all those myriad sections including 170LA and LB which go to the objects of PART VIB that have caused the Commission to conclude that the pre reform objects apply and this particular transitional arrangement. Now, if you go to schedule 8, in contrast, clause 21 which sets out the picking up of section 170MH is quite stark. It does not purport to apply or suggest that beyond picking up in the current Act for PCSAs section 170MH. It doesn't pick up any other sections of the pre reform Act and it's for that reason in our respectful submission that at least three members of this Commission have determined that it's current objects of the current Act that apply to schedule 8 which is the real operative area here.

PN152

Obviously if the legislature has wanted to pick up the whole diverse scenario set out in clause 13 of schedule 7 it could have done so but elected not to. So whilst we don't necessarily say that a huge amount turns on it, although certainly things do, we respectfully put it forward that the union is incorrectly asserting that the pre reform Act objects apply, it's the current Act objects. Now, having dealt with that point, that brings us back to 3.2 where we've made that point about the objects but we also say and we could go through and there's a whole range of paragraphs to the objects of the current Act which have potential relevance to this case. There's no question of that and they are competing objects because section 3 is introductory to and covers the spirit and intent of the entire Act.

PN153

It's not surprising in that context that it will give rise to competing views and it's for that reason that the Geelong Wool Combing case, and we strongly adopt this, said that the starting point is the scheme of the Act and particularly that relating to agreements and that's what we move to at 3.3. What we say importantly is that in determining this issue of whether termination is or is not contrary to the public interest, as Geelong Wool Combing says:

PN154

This scheme of the Act is critical but the scheme is not neutral on the issue. The scheme of the Act creates momentum behind and works favourably towards a public interest fulfilment in the termination of certain agreements.

PN155

That's the high threshold that we refer to at first instance and which we rely on again and what we say at the second dot point there under 3.3 is that the Act has an intended catalytic effect on agreements when they pass their nominal term. So the Act sets up an entire scheme of enterprise bargaining. That scheme is built around nominal terms. A huge range of factors hinge under the scheme of the Act under that nominal term. During it there can be protective action. After it they can. During it the agreement prevails over certain other instruments. After its term in certain circumstances it does not. So if one goes to Part 8 of the current Act nominal expiry dates are set out, relationships for other instrument post expiry on section 348, termination prospects increase post expiry, Division 9.

PN156

Part 9 of the Act, post expiry of the nominal term bargaining periods commence, bargaining power can be exercised, genuine bargaining is to take place or taken on the expiry date. So the Act sets up certain rights for agreements which are sacrosanct during their term and then have this catalytic effect of forcing if you like reassessment of the agreement and it's relevant to the enterprise, et cetera, by completely introducing that framework of bargaining at the end of the nominal term. That very scheme is extended to preserved collective state agreements, and this is at the top of the next page of our outline, by the transitional scheme in schedule 8. Its objects are carried forward and preserved with state agreements and encourage entry of new workplace agreements.

PN157

At clause 14 nominal expiry dates are put in place. Clause 15(g), the issue of cessation, post date nominal expiry dates is addressed. Clause 21, termination and clause 23 again, industrial action post the nominal expiry date. So the whole scheme gravitates towards sacrosanct arrangements during the term and post the term, catalytic impact, encouraging bargaining, encouraging reassessment and a complete shifting of rights under the relevant agreement. Now, we say that it's not intended under the Act that outmoded the relevant agreements will simply continue to apply forever where one party does not find them relevant to the enterprise. That's why there is in the termination provisions what is described in Tristar by Senior Deputy President Watson as a "relatively easily effected termination", which if it is not to be effected on a mandatory basis requires this Commission to find in its ..... discretion that termination not to be contrary to the public interest.

PN158

That in itself speaks volumes for the momentum in this Act towards termination, the mandatory must. If one looks provisions around termination, form a discretion you may terminate, under the scheme of the Act applicable in this matter it's a mandatory step and of course in the context where the WorkChoices legislation and indeed the former state legislation allowed unilateral termination of three months notice. Here all right, a discretion but one with a lot of momentum towards termination and we say that that is what the Act is about. Enterprise bargaining is not about grabbing an agreement and holding it ad infinitum while a business moves on and gets striated against outmoded, irrelevant and confusing regulation that has nothing to do with its current operations.

PN159

That's got nothing to do with international competitiveness under the objects of the Act. It's got nothing to do with the entire scheme and yet, with respect, that is what this company, the applicant faces and what we were burdened, with great respect, at first instance because the Commission, if we move to point 4 of our outline, made numerous errors at first instance. In 4.1 we say the test applied if one goes to the Commission at first instance, the Commission started with this level playing field and said gosh, if I can identify any negative public interest effects at all I've then got to find some palliative public interest effect and I can find none, none at all in an entire scheme which is set up with the momentum I've just described.

PN160

The general public interest behind termination is axiomatic in the scheme of the Act. How can any member of this Commission fail to find any public interest at all on termination? So what we say is that the test properly applied as described in Geelong Wool Combing or otherwise under this section, is not starting with a level playing field and saying are there any negatives at all. Any negative public interest effects have to be balanced against the fact that the whole scheme of the Act is not neutral on the question and if one looks at the decision at first instance the Commissioner does not take any reduction if you like in momentum towards finding negative public interest effects by reference to the scheme of the Act.

PN161

If you look at paragraphs 259 to 260 of the decision at first instance, that's the entire analysis of the scheme of the Act by the Commission and the only decision is that it's neutral in that it doesn't say that termination in itself would be contrary to the public interest. Now, with great respect, that ignores the entire scheme of the Act and is again in our respectful submission a monumental failure to exercise jurisdiction and error of jurisdiction of the kind described in the Olten case. So the potential public interest negatives must first be tested against the scheme of the Act. The objects are broad and will always involve competitive. It's the specific scheme around bargaining which is critical which is what Geelong Wool Combing says but which the Commission did at paragraphs 259 to 260 at first instance did not do. It didn't give critical preference or make it a starting point. It saw it as entirely neutral in the scheme of the test.

PN162

SENIOR DEPUTY PRESIDENT KAUFMAN: Is that consistent with the last sentence in paragraph 260, that last submission of yours, Mr Harmer?

PN163

MR HARMER: I'm sorry, your Honour?

PN164

SENIOR DEPUTY PRESIDENT KAUFMAN: The last sentence in paragraph 260 says

PN165

If the legislature specifically provided for such a circumstance it's difficult to suggest that the termination of an agreement could in itself be contrary to the public interest.

PN166

MR HARMER: Yes, your Honour.

PN167

SENIOR DEPUTY PRESIDENT KAUFMAN: Do you have at least some acceptance of the nature of the scheme as you've just put it?

PN168

MR HARMER: Your Honour, limited with respect, as I indicated earlier in the submission, what we see that indicating is that the scheme of the Act itself doesn't suggest anything in itself towards a finding of contrary to the public interest. Now, that finding is entirely neutral on the other side of the coin about does the scheme of the Act suggest anything in the way of the momentum towards a finding that there is public interest in termination in what we would say is fulfilment of the spirit and intent of the very scheme of the Act. So those two paragraphs whilst, yes, that's the summation of the scheme and the outcome is neutrality or not being contrary to public interest.

PN169

That in our respectful submission says nothing at all about a scheme which has in itself positive public interest effects around termination and respectfully, what the Commissioner then goes back to do is having identified a few purported negatives which we say are replete with error anyway, the Commissioner finds no public interest positives at all, whether it be under the entire scheme of the Act or the specifics of this agreement. Now, as we say in our respectful submission, it is axiomatic that that is in error in terms of the Act and the application of the test. So the last dot point under 4.1 we say that any decision which finds no public interest positive as was found at first instance and that's - I'll just identify the paragraph. I apologise for the delay.

PN170

It's paragraph 28 where the Commission says that it's unable to discern any positive public interest effects. And as I say, this is, it seems, the test as applied by the Commission at first instance is go straight into the public interest negatives and then you've got to find some countervailing public interest qualities and none at all found within the scheme of the Act, the objects, anywhere. Now, we don't deny that the objects were considered and they are ..... But as we say, the Geelong Wool Combing impetus to the specific scheme around agreement making being the key initial step and fundamental doesn't seem to have been properly applies. So at 4.2 we then move to the three public interest negatives that were found by the Commission and we say that each fails in its own right to pass the threshold required for a public interest negative under 170MH(3).

PN171

What the Commission will find is that there's no way to weight the consideration of the Commission in relation to all three. It was just that matter I've found three type negatives, I can't find any positives, that's the test. So whether error in one would totally vitiate, we say they all go to jurisdiction and the first one, for example, is so fundamental that in itself it would be sufficient to set aside the decision at first instance, but there's not way to, as I say, apportion weight between the three. So the first alleged public interest negative relates to industrial standards undertaken as individual contracts and enforcement which is appeal grounds 2 to 5 and in the folder of materials that we've provided to the Commission at annexure 1 there's a survey of the last five years of decisions under section 170MH and diagram 1 which I'm not sure if the print off has come out that way but is intended to be in colour and if the members of the Bench don't have it in colour I might just hand up another version and I apologise if the print hasn't come through that way.

PN172

SENIOR DEPUTY PRESIDENT KAUFMAN: While you're handing that up, of what utility is a survey? Don't all the decisions have to be looked at on their facts, Mr Harmer?

PN173

MR HARMER: Absolutely, your Honour, and I put it no higher than what I'm about to say. I'm certainly not suggesting that either the respondent union or the Bench should spend much time on testing the 60. But what we do say is that out of the 60 decisions, all right, there's only been seven that have led to termination and we say that's at least all indicative of the nature of the test but I don't put great weight on that. Diagram one however in table 2 which - sorry - table 1, which again I might just hand up because it matches the colour coding, this part of the analysis deals with the findings at first instance that there was a public interest negative around this notion of maintenance of proper industrial standards. Now, we have noted in our outline that in Educang the Commission pointed out that since some of the earlier decisions in this issue of maintenance and proper industrial standards, the objects of the Act are shifted and there's a question around the weight that should be allocated to this issue. But assuming that it warrants full analysis, what diagram one indicates are the four decisions which an agreement has been, an application for termination has been refused on the basis of failure to maintain proper industrial standards.

PN174

And the colour coding relates to each of the four decisions set out by way of summary in table one. And the black cross at the top is where Cochlear employees stand with the benefit of the undertaking provided at first instance. And we only set this out to indicate how starkly inconsistent with previous authorities of this Commission dealing with this question of maintenance of proper industrial standards was the outcome at first instance because in the only four other occasions the people concerned have been falling below the agreement in question either to on or just above an award in three cases or below the award and just above the AFPCS.

PN175

And again I note in Educang the Commission observed that even falling to the AFPCS under the current objects arguably wouldn't excite the public interest, but what we say is that here where an undertaking was given not just to maintain the agreement to be terminated, which is the standard undertaking on which
....., but to maintain without variation to mid June mid year 2010 the above agreement common law arrangements. They're the arrangements whereby people are 18 or 23 per cent above the agreement and arrangements which operate in excess of 14 per cent above the award. Somehow an undertaking to keep those arrangements of found to threaten proper industrial standards.

PN176

Now, in our respectful submission not only is that so starkly out of line with all precedents of this Commission, it is incapable of reasonable determination by this Commission and is a most unsavoury precedent for employers in industry looking to move forward with their business in the face of our noted agreements and one with this Full Bench should not follow, with great respect. So that's the point we seek to make there and it was two errors made at first instance which caused the Commission to come to this stark outcome. The first one was that the Commission failed to give weight to the undertaking provided, treating it as an undertaking from an individual even though it was stated on transcript as being a provider on behalf of the company and authorised by the chief executive officer of the company.

PN177

What more ostensible authority could you want, leave aside the provisions of the Corporations Act that were totally against the approach the Commission at first instance took. Nevertheless, you will see the decision at first instance that the undertaking contrary to the treatment of all other undertakings put before this Commission in the survey of 60 cases of ..... was given limited weight and seen as something which might move if the individual moved from his office, yet it was on behalf of the company. And that's why we come here today and I say to you orally the undertaking is on behalf of the company. There's no question.

PN178

And that's all we're trying to do with the undertaking we now seek to give to this Full Bench and indeed the deed poll. We're happy to have it enforceable at law. But the finding on the undertaking was just replete with error. And the other, of course, fundamental finding was that the NAPSA, the state award, may not apply. And so that's what saw the Commission potentially considering this case as lining up with category two, which is the lowest cross there. Something that sits above the AFPCS and may not even meet the award. Now, that misinterpretation of the act, as I say, goes fundamentally to jurisdiction, but it also had a fundamental impact on the Commission at first instance because the Commission when it heard that reacted and said that's unusual.

PN179

The Commission did see that a shift into this unusual category of people falling all the way back potentially to the AFPCS. So we point out where that occurred at transcript at first instance in terms of that shift and, as I say, whilst there's no question at first instance evidence from Professor Ron McCallum as an expert given subsequent to the Transition Act indicated that the NAPSA may apply and the Commission notes that in its decision. The Transition Act wasn't long in place. The company said we don't concede that. But if it does it strengthens our case because there's a higher platform there, notwithstanding our undertaking above. So the company addressed the two alternatives.

PN180

There's no question that did not assist the Commission at first instance. We do not step away from that. The Transition Act was recent. There is no criticism of the Commission at first instance possible in this. It was reformed, it was recent, Professor McCallum had said it was equivocal and may apply, we in our submission said it may apply, we treated if it does, if it doesn't, the union the same to its credit, it does apply. The Commission met with the notion that it was uncertain. That is, we acknowledge, a fundamental error when one goes properly to the provisions of schedule 8 in the Act.

PN181

And I don't think there's any question between either of the parties here on appeal under clause 15G of schedule 8. It clearly specifies that if the state agreement is terminated the notion agreement observing the state award comes into operation. Clause 15G of schedule 8 of the current Act.

PN182

SENIOR DEPUTY PRESIDENT RICHARDS: Just on that issue, I mean just to put paragraph 271 in its particular context. I mean, the conclusion of paragraph 271 is that - and I know you don't agree with it - but the conclusion is that the issue of enforceability becomes important because the assumption was that there was no safety net in place. I mean, that's the decision that was made, wasn't it? And that aligns with Kellogg Brown. I mean, I'm not saying you agree necessarily the conclusion was correct, but Kellogg Brown states that the ..... is authority via its guidance to the effect that the maintenance of proper industrial standards may turn on whether or not an award is in place or whether or not the employees are award free.

PN183

So that when the agreement is terminated there is no safety net. And what the Commissioner has done is say well look the enforceability of these other instruments may be important because in her view there may not be a safety net, which appears to me, at least on its initial reasoning, to be consistent with the Kellogg Brown decision. But you're contesting that the assumption upon which that conclusion was based was incorrect.

PN184

MR HARMER: That's right.

PN185

SENIOR DEPUTY PRESIDENT RICHARDS: I just want to get that that's the context, isn't it?

PN186

MR HARMER: Absolutely, Commissioner[sic]. And as the Commissioner rightly points out the assumption about the award critical impacted this whole area of this first meeting to the point where if one goes to the transcript where I mentioned it one can almost feel the Commission at first instance shifting and saying this is a most unusual case. People are potentially - - -

PN187

SENIOR DEPUTY PRESIDENT RICHARDS: That's getting a little intuitive.

PN188

MR HARMER: I'm sorry, yes. Perhaps I withdraw that. But it is quite critical and, with respect, infects the whole part of this first public interest negative because it is in that context that people could potentially ..... by the award which we note, with respect, in Educang your Honour noted the object shift that made Kellogg Brown less relevant on this point, but leaving that aside that is the foundation for the Commission's concern. And we're not saying that if the NAPSA did not apply, we're not saying that concern would not have been warranted although we could press the other side of our submission which is the undertaking that dealt with that anyway, but it's the two errors, with respect.

PN189

The lack of weight to the undertaking and the notion that it was an undertaking by an individual officer as opposed by a corporate public ..... entity and the notion that the NAPSA, the state award didn't apply. Now, they are so fundamental errors. And as I say, there's no blame on the Commission at first instance in terms of the recent Transitional Act in the flurry of evidence in submission. But the outcome was so fundamental as to go to jurisdictional error because it clearly involves a misconstruction of the Act, clause 15G of schedule 8. It clearly causes a fundamental error in the exercise of limited jurisdiction and that clearly goes to the mandatory requirement of termination or not, which is a matter going to jurisdiction.

PN190

So notwithstanding the fact we acknowledge we, the applicant, would not has such assistance as we could have been at first instance in hedging our position in saying well if it was this, if it was that. As I said, if the NAPSA applies it strengthens our point, despite the undertakings. That can't get around the fact that the finding is just a fundamental error, a fundamental misapplication of the Act and causes a fundamental misapplication of the test which, as I said before, ultimately leads to a jurisdictional error. So that's the first public interest negative. And with respect, that aspect of the case so colours the Commission's perspective that the next two even are impacted, in our respectful submission, but treating them as stand alone.

PN191

At 4.3 we move to the second where it's public interest negative ..... reinforcing bargaining power. And here we have this highly skilled and trained workforce admittedly with a high percentage of people from backgrounds other than English speaking countries, but counteracted by acknowledged extensive training in English speaking. But people who are available to them even as we stand here today, all the bargaining avenues excited by the catalytic effect of the Act I mentioned before. They have available to them bargaining periods, they have available to them that the union can act as a bargaining agent if there is going to be an employee direct arrangement, they have available to them protected industrial action.

PN192

There is nothing in terms of the scheme of the Act that compromises the bargaining position of these people as contemplated by the Act. And in error when one looks at the decisions of this Commission the Commission at first instance seems to have attached considerable weight to shift from collective workplace regulation to workplace contracts, shift from collective bargaining to individual bargaining and yet the cases are very clear. If I go to our outline document they're set out there in summary and I'll only refer to one briefly. But the cases are very clear that the Act itself, the scheme of the Act, the spirit intent does not express any preference for collective regulation versus individual regulation nor for collective bargaining versus individual bargaining and that's made very clear in the case cited in our outline, so this is our outline of submissions in the folder of materials given to you and I'll just refer to one of them which is Castricum.

PN193

That's in the set of decisions that are put forward to the Commission in our set of materials. So we have this situation whereby if I move to it numerous decisions of this Commission using Castricum as an example at paragraph 29 make this point, that the Act carries no preference for a collective versus individual regulation or collective versus individual bargaining and yet the Commission at first instance, with respect, allowed the Commission to be caught up in public policy considerations around bargaining. With respect, that's around what people think this Act should say rather than what it does.

PN194

SENIOR DEPUTY PRESIDENT RICHARDS: Can I - sorry to interrupt your flow, but can I just ask one question. I mean, is the Commissioner's decision in this regard limited only to what are to really the second last sentence of paragraph 274? Is that the extent of the ..... is that really the finding that is made in relation to this particular matter, where it states cultural differences as well as language difficulties would impact on the ability of employees to bargain, that is bargain at that particular level and it's based on the evidence that was before her that she reached that particular conclusion about the efficacy of bargaining at that lower level, at the individual level.

PN195

I shouldn't say lower level, at the individual level. That's the nature of the - that's the finding is it? There's a lot of words around that, but is it that particular finding? And she relies on that evidence, she relies on the evidence of the witnesses to underpin that particular finding, that they effectively couldn't - given their particular circumstances they couldn't negotiate in that particular environment or that particular context. Is that the nature of her conclusion?

PN196

MR HARMER: With respect, it goes further than that. I mean, the second factor ranges all the way through to paragraph 277 and - - -

PN197

SENIOR DEPUTY PRESIDENT RICHARDS: I mean, I know it migrates out to some measure after. But sorry, go on.

PN198

MR HARMER: I apologise, your Honour. The mere point I make is that yes that's one difficulty identified and in our respectful submission that, as I said before, what is available under the Act in terms of bargaining power is available to these employees. But there are observations. The next paragraph 275 goes to the issue of collectively being represented and then to the issue of non consentual variation of contracts which operate well above the agreement to be terminated. And that carries great weight as an indication. So here we're talking about these agreements that operate so far above, sorry these contracts that operate so far above the agreement and the award and bargaining power in relation to those individual contracts which, of course, individual contracts of employment are the only universal mode of regulation contemplated by the Act at sections 5 to 7.

PN199

There is not an employee covered by this Act that doesn't have any individual contract of employment and yet bargaining power in relation to arrangements far above the award and even the PCSA somehow carries great weight in this second negative public interest. And as we pointed out, not only does that not coincide with authorities around issues of collective versus individual bargaining, it also doesn't coincide with authorities that suggest that that is a private interest, not a public interest. The public interest factor is in the scheme of the Act around bargaining and all of those powers around bargaining periods and protected industrial action and bargaining agents are available to these employees as they are to any other regulated by the scheme of the Act.

PN200

SENIOR DEPUTY PRESIDENT KAUFMAN: Mr Harmer, if I may just interrupt you there.

PN201

MR HARMER: Yes.

PN202

SENIOR DEPUTY PRESIDENT KAUFMAN: Did I hear you to say that sections 5 to 7 of the Act contemplates the individual contracts?

PN203

MR HARMER: The only point I make, your Honour, is that the entire Act in its regulation of employment contemplates, in terms of the definition of what constitutes employment, the common law test of a contract of employment. So what the Act regulates are employers and employees. How is that arrangement constituted? Well, no matter who you are in Australia in the Australian work force, if you're covered by this Act, and it's a very large segment of the Australian work force, as I understand it about 80 per cent, you all have as an employee an individual contract of employment. Some may have it in writing, some might have it implied, et cetera. And certainly under this Act superimposed by the statute, by laws, by certified agreements ....., but nevertheless everyone under this Act has an individual contract of employment and that's what determines that they're under this Act.

PN204

They're not a contractor, in which case we go to that specific narrow part of the Act dealing with ..... to contractors.

PN205

SENIOR DEPUTY PRESIDENT KAUFMAN: Is it your submission that an individual contract of employment is an instrument contemplated by the Act, is it?

PN206

MR HARMER: We don't need to put it - - -

PN207

SENIOR DEPUTY PRESIDENT KAUFMAN: An industrial instrument?

PN208

MR HARMER: We don't need to say it's an industrial instrument, your Honour.

PN209

SENIOR DEPUTY PRESIDENT KAUFMAN: I thought you might have been saying that.

PN210

MR HARMER: No your Honour, I'm sorry. All we say is that it is the one universal mode of engagement contemplated. Indeed it's the cornerstone on which the entire Act was built in the regulation of employment. Now, all we say in relation to that is that the Act in its scheme clearly contemplates that post termination of an agreement people will fall back to different modes of regulation. Some will fall back to awards, federal or state, some will fall back to the AFPCS, or will fall back to a contract which makes it above or below those industrial instruments. It just so happens here that these people sit above all the instruments contemplated as industrial instruments by the Act.

PN211

And so those decisions of this Commission would properly say the Act does not express a preference in respect of where people fall back to a collective or individual arrangement. They're the decisions and this is the arrangement and scheme of the Act that would see no public interest, if any, being excited in bargaining their individual collective around an agreement contract. So what we say, with great respect, is that the conclusions reaches as establishing a public interest negative involve error in a number of ways, one being they are a private interest not a public interest, the other being that the entire scheme of the Act is available to these employees.

PN212

There is nothing contrary to the grain of the Act, your Honour. What the Commissioner was dealing was above agreement contracts and again the Act does not, as decisions of the Commission including Castricum have said, express a preference on that issue of collective versus individual regulation or bargaining. And so we say for that reason this area of the decision and the second public interest negative is also in error and we also say that because that also goes against the grain of the scheme of the Act as interpreted by this Commission in other decisions, that that is also an error going to jurisdiction for the ultimate reasons I went to before.

PN213

And that brings us to the third alleged public interest negative which is clause 1.4 of the state agreement. For convenience I might go to the decision where the Commissioner moves to this area of analysis which follows on from the area we've just been dealing with. And this is at the start of paragraph 278 where the Commission says that the third chapter that raises a negative public interest effect is the provision in clause 1.3 of the agreement. Now, before moving to this area of our outline I would note that it's in respect of this clause, as has been properly noted by Ms Howell on behalf of the union, that we've put on a lot of written submissions and I don't seek to, unless the Bench requires me to, to elaborate on those submissions. I'll just summarise them.

PN214

The union has sought the opportunity to respond to that material. That's in the hands of the Commission, but certainly we don't object to that path. We certainly don't want any unfair outcome for the union here and if they want to respond to that material in detail, in our respectful submission they should be permitted to do so within a reasonable time table. But having said that, all we would say in summary is that we contend that if one goes to clause 1.4 set out at paragraph 279 and if the Commission seeks to view it in context, if we go to the appeal book at page 1 you will find the preserved collective state agreement commences on page 1 with page 2 being the contents and appeal book page 3 sets out the formalities of the agreement.

PN215

And clause 1.4 is what applies setting out the duration of this particular provision in the then state agreement. And the Commission will observe that the Commission as expressed as remaining in force until 30 June 2007 and thereafter until varied or terminated or replaced by agreement of the parties. Now, if you go back to paragraph 278 of the decision at first instance there is another agreement, a 2003 agreement, that appears in the appeal book. And just for convenience I quoted here from the decision at paragraph 278. I can give the reference in the appeal book if you like. It's in that chronology that we referred to which is attachment B to our outline.

PN216

If you just look at paragraph 278 for now the Commission notes that in 2003 the corresponding provisions shall remain in force until 30 June 2005 and thereafter until varied or terminated under the provisions of the Act. And so between the 2003 agreement and the 2005 agreement the words "under the provisions of the Act" relating to varied or terminated were taken out and you have this package attached at the end, "or replaced by agreement of the parties". And the position put forward by the union at first instance and adopted by the Commission at first instance was when that package "or replaced by agreement of the parties" was added as a lump sum in 2005 the effect of that was not just to add something dealing with replacement by agreement.

PN217

The effect of the new words were to be read distributively backwards into the clause and impacted the previous words, although they were unchanged, of varied and terminated. And so the Commission took the view that the effect of these few words being added as a matter of grammatical interpretation meant that not just replacement by agreement of the parties to what would be required is impacted, but the other pre-existing words of varied or terminated were changes so as that you can only terminate, for example, here by agreement of the parties. And the impact of that is significant in the Commissioner's decision because that means that rather than being able to bring an application to terminate or to unilaterally to terminate, if one would do so, still under the state Act, Cochlear faced with its outmoded agreement could never get away with it, never get away from it, until the parties, which included the AMWU, agreed that it would.

PN218

Now, what we say is that not only is that not correct, grammar of course not being a matter that industrial parties have at the forefront of their mind in drafting, we say clear authority is that you don't look at the grammar, you look at the industrial context and the reality of the purpose behind the provision, you certainly don't look at the subjective intentions of the parties. And there was competing evidence at first instance, intrinsic, whereby Ms Fortescue said I put it forward for this reason, the company said I put it forward for that reason, two witnesses of the company. And those subjective intentions don't assist in determining the objective or the mutual objective of this clause and yet that's what the union, with respect, put weight on.

PN219

The intrinsic material of relevant we would respectively submit that is of assistance is the preceding agreement of 2003 whereby there was this job lot added in 2005 and yet it's meant to be read distributive and change those two clauses, those two other steps, the variation and termination. But more importantly we say is that the state Act under which this agreement came in place is a code which is exhaustive on the manner in which a state agreement could be terminated. And section 44 of the state Act, which again for convenience or again I could hand up copies of the state Act as it then stood, but in terms of the annexures to our outline of submissions, if one goes to page 2 of annexure 2, as I say just for convenience, there is set out section 44 of the then state Act

PN220

So this is page 2 of annexure 2 in the set of materials that were filed. I quote section 44, and I will hand up so that the Commission can read it in context copies of the state Act as it stood, but just to keep moving section 44(1) provides that an enterprise agreement can be terminated only in accordance with this section. And we do press that properly read, this section in the context of the area of the Act dealing with termination of agreements at the state level at the time that this agreement was made did operate as an exhaustive code. And we put authorities forward as to why that would be the case and one example would be the case involved TIO where Duncan SDP made the same conclusion in relation to the old section 170MG of the pre reform Act that the termination scheme set up by the Act was a code.

PN221

And what we say in summary, and again this is the very summary which I appreciate is set out in detail in writing, is that not only does the industrial context in terms of the history of point 2 the intention of the parties being other than what the union has put forward, but section 44 as a code under the Act is not a set of arrangements whereby the parties can put forward in an agreement their own their own separate code. So where the state Act says that someone can at the end of the expiry date, a key part of a scheme again, terminate on three months' notice it's not for the parties to contract out of that code.

PN222

What the cases say is that if that was even legally possible here express words would be required. Not the ambiguous situation of is this to be read distributive or not as a matter of grammar. Those clear express rules aren't here in clause 1.4. But we go further and we say not only as a matter of construction does the state Act and its code on agreements mitigate against the interpretation ..... if, and we say it's not the correct interpretation, but if the interpretation at first instance were correct we say it runs against the grain of the state Act and is not permissible as a provision of a state agreement which is capable of being picked up by schedule 8 of the Work Choices legislation when it came in later in March 2006.

PN223

So at the time that schedule 8 picked up these PSCAs this clause wasn't there so how can the Commission rely on it as a basis in the public interest for termination?

PN224

SENIOR DEPUTY PRESIDENT KAUFMAN: Mr Harmer, is it possible that there was no actual agreement reached on that method of termination? Each side thought that it was agreed to something different? I have a feeling I know the authority about that, but I'm just not sure. If one side thought we were agreeing to this and the other side thought we were agreeing to that and the words are equivocal, is it possible that there's not an agreement?

PN225

MR HARMER: Your Honour, that's certainly one possible outcome. What we would say in relation to that is that the state Act still stood with its provisions and its code and the agreement was capable of being terminated under that Act unilaterally. When the PCSA is picked up if there is no agreement on termination again that militates against what the Commissioner did at first instance. We say the parties have reached an agreement which prevents anyone doing anything at their site unless the AMWU, with respect, agrees. Not only is that a disastrous industrial outcome and the company says we wouldn't in a thousand years have agreed to that, if we would have simply known that we would have run - I'm exaggerating the evidence, but that's the effect.

PN226

But the effect of what the company says is that we didn't have that intention and if we had known that was what it meant we certainly would not have agreed to it. But that outcome, your Honour, and I must admit I don't have at my fingertips the authority in question, but if that was the outcome it still militates against the position at first instance which was a finding that the company had somehow on an informed basis agreed to waive its right under the state Act to terminate at all unless the union agreed. And if the union doesn't agree then ad infinitum
..... some other legislative reform comes in place this company is
..... by the surviving agreement.

PN227

Now as I say, an industrial outcome which with respect unlikely and intolerable but one that runs against the grain of the state Act and wasn't intended. Now, we go further and say that if a company reached an agreement with a union to say that look come the end of this agreement no matter what the employees want, no matter where they want to go, they can't do anything without your agreement, whether they're members of rules or not. We say that offends the freedom of association provision and we've set out why that's the case. Now, the scheme of the Act remember is that for three years one could reach an agreement and one bound by it, but then there's that catalytic effect and to waive all the options in case there's talk about that are otherwise to the party in favour of you must have the consent of the AMWU whether a member or not we say would render the clause void if it had the intention that the Commission identified at first instance.

PN228

So for that reason we say, and we go into some detail, that clause 1.4 doesn't stand for what the Commission said at first instance and can not for a variety of reasons and therefore it's not a public interest issue warranting a finding that termination would be contrary to the public interest. Now at 4.5, and I'll try and move through the residual and I appreciate the patience of the Commission, the public interest positives, we say there are a number of private manifestations of the public interest established by the scheme of the Act in termination and we've got there removal about mode of regulation and we've referred to the evidence where
Mr Howitt at first instance gave sworn evidence that the business had moved on, that the classification structure was totally outdated, totally relevant to the business and the structure of the work and the incentives put in place above the agreement.

PN229

He would remove uncertainty and confusion concerning workplace regulation because there was this agreement sitting there beneath the contracts, which is no longer relevant. Yes the award also has a different classification structure, but it sits 40 to 50 per cent below ..... And in our respectful submission the fact that the union is even in this case militating the prospect of breach of the underlying agreement through the above agreement arrangements, which we strongly disagree with, but it points to a necessary disputation in a business which has moved on and really has been held to an agreement by a union which says there can be no further arrangement on this site unless it involves us, the AMWU, and our agreement to it. And that's the outcome they put forward.

PN230

That's their interpretation of clause 1.4 and the ..... put forward. Now, if that is not contrary to the public interest in the scheme of this Act then, with respect, it's certainly out there we would say in terms of being contrary to the public interest. So removal of dual compliance, facilitating enterprise progress and productivity. There are benefits here on the evidence to employer and employees. What we also say at 4.5 is that if you read the PCSA, and I won't take up the time of the Commission with it but I've set out the relevant clauses, I said in my opening the 2005 agreement clearly contemplated that the business had to move forward, had to improve, had to review classification structures, had to review incentives, had to move to new modes of production, would consult in that and that's exactly what happened.

PN231

And so the problem that faced the company in 2007 where it was moved to a complete new mode of reward and production team rather than a continuous line rewarded in one was exactly what the agreement contemplated, but then you get this situation whereby the union is saying without our agreement we can't move to anything else. And the company in that context properly, yes unilaterally, moved to contracts above the agreement. Yes the employees ..... yes. We don't put too much weight on this issue of did the employees all leap for joy or
..... or whatever, the facts of the matter is the site moved. About 50 per cent of employees on the site have now received reclassifications to their great benefit, ranging up to 23 per cent increases. It's the live and extant regulation, but this relevant one we can't get rid of.

PN232

Now, if we go to our outline very briefly, this is the outline of written submissions that we filed, we deal with some additional errors which I will only skim across in the interests of time. And so if we go to 4.5 on page 12 of our outline of submissions was the public interest positives. 4.6 we don't press which is the 170MHA point. 4.7 the employee survey, we say there are errors in that but we do not say that that in itself in of itself would ground a basis going to jurisdictional error. 4.8 the conduct of the AMWU. We have concerns with the AMWU refusing to act as a bargaining agent with these employees at one hand and then complain about lack of bargaining power in the other, but we do not seek to divert this Full Bench into what is a whole array of evidence whereby each side is asserting full conduct by the other.

PN233

There's quite a volume of evidence. The Commission at first instance said I don't put weight on it. Each side is stone throwing there and we don't seek to take the Bench there in the context of this appeal. In terms of the history of bargaining, as we say there are two attempts to put to vote a new agreement. The vote
..... this agreement is well and truly right for termination in that context. The point about individual contracts are already made at 4.10 in terms of their role under the Act and as a mode of regulation to which parties can properly fall back down to, or up to in this case. Commission precedence and consistency, I've pointed to the alleged inconsistencies. The objects and scheme of the Act and matters of interpretation I've already referred to.

PN234

Now, we go back to our case outline, what we say is that the Full Bench as currently constituted, having dealt with each of the errors and being able to be taken by the parties to the written submissions which pull together, and the oral submissions which pull together case at first instance, applying the correct test as we've identified, we see that the AMWU, with respect, cannot discharge the practical statutory position it's required to in establishing adverse or negative public interest, that there's more than enough public interest in the scheme of the Act and the specific positives we pointed to to overwhelm anything that is identified and that properly the PCSA must be terminated for the reasons that we've outlined.

PN235

Now, in terms of leave to appeal, we go there to the grounds we've set out in our notice of appeal and I'll be very brief. As the Commission would appreciate, because we've put so much emphasis on jurisdictional error that in itself is traditionally a matter which carries considerable weight in terms of leave of this Commission and given the mandatory requirements of section 170MH is in itself sufficient to carry the vast majority of the grounds we've set forth across the leave line, with respect. The fact that we say the decision at first instance was contrary to the objects of the Act, contrary to extensive authority, we've pointed out why. We say are all things that excite the public interest and leave for reasons that we've summarised in our application.

PN236

But as I say, the most fundamental one is the fact that we raise issues going to jurisdiction and that that should see this Commission properly deal with the appeal granting leave, finding error at first instance, setting aside that decision and moving to terminate in accordance with the order that we've put forward. The last point on our case outline is the form of the proposed order which, as I say, for convenience we've attached at attachment A to the case outline that we've handed up today and as I say, that follows the format involved in the James Hardie case which the respondent union was also involved in. We've put that forward because it involved the Commission having to decide on a number of contentions by the AMWU about the scope what is properly a redundancy provision for the preservation of redundancy clauses under schedule 8 of the Act.

PN237

SENIOR DEPUTY PRESIDENT KAUFMAN: You'll need to take me to that, Mr Harmer. I'm having difficulty seeing how you propose that be done.

PN238

MR HARMER: I'm sorry, your Honour, yes.

PN239

SENIOR DEPUTY PRESIDENT KAUFMAN: And I think that's my difficulty, not yours.

PN240

MR HARMER: No, your Honour, not at all. Your Honour, as I understand it, the reforms were introduced to the legislation, be it within the main body dealing with certified agreements, pre reform or workplace agreements under WorkChoices and also PCSAs with the controversy over Tristar and the prospect of people losing agreement that carried redundancy provisions in the face of redundancy. There were reforms introduced to the legislation and in the James Hardie decision I've referred to which I think is the last decision and we've included the order in our set of decisions, you will see there, I won't go to it, debate over what is caught by this notion of a redundancy pay provision and in schedule 8 of the Act, just after the clause 21 which is the one that picks up section 170MH you will see a new clause 21A and 21B introduced relating to the preservation of redundancy provisions in preserved collective state agreements.

PN241

In essence what they do is provide ongoing life despite the termination of the state agreement to anything that goes to redundancy pay within it so that that issue of losing agreement or losing redundancy in the face of potential redundancy could be removed under the Act and in the James Hardie case in essence, because it goes to redundancy pay there is a proper argument that clauses of the agreement that set up pay provisions, so if you've got redundancy expressed as being two weeks pay per year of service for example and a week's pay is defined under the agreement and cross refers to a clause on wages and a clause on allowances and a clause on certain penalties and brings them all into a notion of an all up rate for redundancy purposes, the argument would be that the concept of preservation of redundancy pay embraces those clauses of the agreement that you need to keep solely for the purpose of calculating and giving integrity to that preservation of redundancy pay.

PN242

So the union, with respect, in the James Hardie case took a broad approach to what fell in that context. There was a contest and the Commission there cut down what the union wanted and put forward the order that it ultimately did and which we rely on in terms of the decision and order. What we've done here in our draft order at annexure A is we've gone through the state PCSA and we've identified the clause that relates to redundancy pay which is part 4.4.5 of appendix 1 to the agreement and we've found that there is a related clause that defines what a week's pay is and it picks up on certain pay rates and allowances and we've cross referred to all of them for that limited purpose. So that's the exercise we've gone through and it may be that the union in its submissions wants to contest that and we're happy to deal with that in further written submission.

PN243

But it's our respectful position that what we've put forward is consistent with where this Bench has arrived at on the issue of redundancy pay which of course is a matter that's being litigated in the context of allowable award matters, so it's not as there is a lack of clarity in what redundancy pay is in our respectful submission. So that's what we've done with the order but all it does is do what we've asked. That is, if the Commission was so minded in response to our submission to set aside the decision at first instance we say then move to terminate properly the agreement but the Commission would have to do so by an order that preserved these provisions and that's what we've tried to achieve in that.

PN244

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you, Mr Harmer.

PN245

MR HARMER: If the Commission pleases. Unless there's any questions that concludes our submissions, if it please the Commission.

PN246

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you. Ms Howell, we were planning to take the luncheon adjournment at 1 o'clock. Would it be more convenient if we took it now and - - -

PN247

MS HOWELL: I'm in the Commission's hands on that. I'm certainly ready to commence submissions but there is one matter I should raise before submissions and that is the status of the respondent's evidence which it's foreshadowed to us that it proposed to tender but hasn't done so. I would like an indication as to whether that evidence is going to be relied on or not.

PN248

MR HARMER: Yes, I an indebted and I did say I'd come back to the undertaking and I haven't, I apologise for that. Look, there were two elements we raised in correspondence. We certainly don't seek to protract the hearing. One element went to certain ABS statistics and we don't seek to press that. It's just basing these employees in the context of I guess the Australian workforce. I don't see that much rests on that. The other document is the undertaking which we've provided to the Commission. Now, we've provided - - -

PN249

SENIOR DEPUTY PRESIDENT KAUFMAN: Not in the form of the deed poll is it?

PN250

MR HARMER: It's an undertaking that undertakes to - I'll hand up a form and take the Commission through it. Now, we put it forward as an undertaking of what we intended MH will do.. The Commission can attach such weight to that as it sees fit. I'm sure the union will have something to say about it. But we intend to take the steps out on the undertaking and it's our respectful submission that to the extent there are issues around the enforceability of the undertaking given at first instance that this will at least give an avenue to a court to hold Cochlear to the effect of the undertaking and that's all we seek to achieve. So I put it no higher than that and I seek to hand it up and tender it on that basis as an undertaking to the Commission.

PN251

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you. Ms Howell.

PN252

MS HOWELL: If it please the Commission. As I indicated earlier, this is a document which my instructing solicitor got at 8 o'clock this morning. It's about 50 pages and it's a complex legal document that the Commission will see that. It appears to refer to two different contracts so it's obviously in different terms to the brief undertaking offered on transcript by Mr Howitt. The AMWUs position as foreshadowed this morning is that we obviously reserve the rights to make submissions on it but we also wish to reserve our right to call evidence in response if having observed and digested the content of that document that would seem to be necessary to protect the interests of the AMWU.

PN253

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes. Perhaps you can use the luncheon adjournment to see if you can be any further advanced on your attitude to that document, especially in terms of whether you want to call any further evidence.

PN254

MS HOWELL: I can certainly endeavour to do that, your Honour.

PN255

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes. It may not be possible - - -

PN256

MS HOWELL: It's a very lengthy document.

PN257

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes. But having said that - sorry, Mr Harmer, you wanted to say something else?

PN258

MR HARMER: I apologise, your Honour, I didn't meant to interrupt. If I could just say something in response to what the union has put forward and as I say I put it no higher than that undertaking from the company, just to explain, the documents attached are contracts that the workforce enjoys. The two categories are when the undertaking was first given there were existing employees, many of whom had been engaged years ago on levels of engagement and they in addition got a contract. New employees are just getting a consolidated version. There's no change. They just get, instead of getting a separate and a contract, they're getting something that pulls it altogether it one version. It's in essence what we've said we'd guarantee in the undertaking.

PN259

We're just extending it not only to existing but to future employees and we've put forward the terms on which those employees would be engaged, those future employees. So look, that's the reason for the attachments. Now, the original deed poll we put forward to the union has been altered to cater for that and as we say, it's something we intend to put in place to give legal binding to the undertaking that we will keep in place for these contracted arrangement and won't unilaterally vary them unless it's to improve things even further. So that's the gravamen of the undertaking and as I say, we put it no higher than unilateral action of this company's undertaking to put in place to the Commission and obviously we'll deal with anything by way of submission or evidence that the union wants to put forward, although it would be our respectful submission that there should be few issues that the union could not deal with in submission in terms of the limited effect it's said to achieve.

PN260

The only other thing I would clarify, as I said before, is that we don't put it forward in respect of error at first instance. Obviously it's a deed poll going to effect, but in terms of this Commission terminating the agreement its own right we say that this will at least support the termination of the agreement and any concerns around enforceability of the above agreement arrangements. So we put forward in that context, if the Commission pleases.

PN261

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes. Well, we'll take the luncheon adjournment, Ms Howell. It will give you an opportunity to examine the document and if you want to say something about it after that.

PN262

MS HOWELL: If it please your Honour.

PN263

SENIOR DEPUTY PRESIDENT KAUFMAN: We'll adjourn until 2 pm.

PN264

MR HARMER: May it please the Commission.

<LUNCHEON ADJOURNMENT [12.40PM]
<RESUMED [1.55PM]

PN265

SENIOR DEPUTY PRESIDENT KAUFMAN: Mr Howell.

PN266

MS HOWELL: Thank you, your Honour. We've had the chance to have a look at the draft deed over lunch and I think we're reasonably safe in saying we wouldn't be seeking to call further evidence in response to that. There's obviously a lot of things we would want to say about it but we wouldn't be troubling the Commission with further evidence in response to that.

PN267

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you.

PN268

MS HOWELL: Mr Harmer has raised the issue about further programming of the matter including written submissions and he has kindly indicated that he wouldn't object to the applicant - I'm sorry, the AMWU being the opportunity to reply in writing to some aspects of the case for Cochlear. I should just indicate to the Commission for the Commission's information we certainly from an early stage have pressed for a consent timetable to deal with all matters by way of written submissions in advance of the hearing. Due to various factors which we don't need to trouble the Commission with, a very tight timetable was established whereby we received all the respondent's submissions - or were to receive them by 3 October and as I've indicated, the annexures which contain lengthy submissions mainly on the construction of clause 1.4 but not only that, there was also a lot of tables and diagrams and miscellaneous material. So we do seek further time to deal with that material.

PN269

The other matter in respect of which we'd seek leave to deal in written submissions is the respondent's oral arguments today on the question of whether the legal arguments - I withdraw that - the alleged errors are properly characterised as jurisdictional errors. It's really material which we've faced for the first time today beyond a simple assertion that they were jurisdictional ..... and the next thing which we would obviously respond to in some detail in written submissions and probably also orally before the Commission if that would be possible is the significance of the deed which a lot of issues would flow from that, not the least of which we would say would be inconsistent between the deed and the NAPSA in the event that the agreement was to be terminated.

PN270

I raise those issues simply by way of foreshadowing that we are not in a position to fully deal with those matters today and we'd seek leave to address them in an appropriate timetable.

PN271

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes. Well, perhaps that can be dealt with at the end of your submissions, Ms Howell.

PN272

MS HOWELL: Yes, thank you. The next thing I should deal with is the tender of the affidavit of Ms Fortescue. I hope the Commission each has a copy of that?

PN273

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes.

PN274

MS HOWELL: So an affidavit of Ms Fortescue affirmed on 13 October 2008.

PN275

MR HARMER: No objection.

PN276

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, very well.

EXHIBIT #RESPONDENT1 AFFIDAVIT OF MS FORTESCUE, AFFIRMED ON 13/10/08

PN277

MS HOWELL: It's probably convenient before I do make submissions to also tender two documents which we've foreshadowed to Cochlear. The first is a comparison document comparing the common law contracts to the NAPSA. It was a matter of which we placed a deal of emphasis and which we press as a relevant consideration in any reconsideration which might eventuate. I should just say that the comparison document was an attachment to the applicant's submissions. I'm sorry, I keep doing that, to the AMWUs submissions below which are found in volume 4 at the very end of the book and so properly should already been in the appeal book so we just ask that members of the Commission to add that document in effectively at the end of volume 4.

PN278

What your Honour and members of the Commission will see that there is already one comparison document properly attached to the submissions but this one was overlooked.

PN279

SENIOR DEPUTY PRESIDENT KAUFMAN: Is it the smaller - - -

PN280

MS HOWELL: Yes, it's a table with two columns, Metal NAPSA and Cochlear CLC.

PN281

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes.

PN282

MR HARMER: If the Commission pleases, we obviously have no objection to that document and we apologise that it wasn't included in the appeal books coming before the Commission. We do reserve our right to make observations on it in submissions but otherwise have no issue with its production. If the Commission pleases.

PN283

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you. Yes, I don't think it's necessary to mark those documents as an exhibit.

PN284

MS HOWELL: No.

PN285

SENIOR DEPUTY PRESIDENT KAUFMAN: It's probably appropriate though to mark the Cochlear deed as an exhibit.

EXHIBIT #APPELLANT 1 COCHLEAR DEED

PN286

MR HARMER: May it please the Commission.

PN287

MS HOWELL: Mr Harmer's observation that he may wish to make observations about the table just leads me to raise another issue which is that, as Mr Harmer rightly suggested, the practical onus on showing that the termination would be contrary to the public interest falls upon the AMWU. Some of the issues which were raised below and will be relied on in these proceedings should the Commission come to consider afresh the termination have not commented on to this point by Cochlear notwithstanding that they were raised before the Commission. So most particularly the issue between the NAPSA and the common law contracts and the AMWUs proposition that the two are inconsistent and if you apply the contracts you will be breaching the relevant industrial instrument which is effectively the State Metal Industry Award, we haven't the benefit of any submissions from Cochlear on that issue and particularly not on the specific clauses which we've identified which we say if you apply the contract you're going to be in breach of the award.

PN288

So the short point there is we may need to respond to any material that Cochlear answers for the first time in these proceedings on that matter.

PN289

MR HARMER: Apologies for interrupting, just for the convenience of the Commission we have no objection to a limited reply within a reasonable timetable on those specific issues, if the Commission pleases, subject to the Commission's discretion.

PN290

MS HOWELL: I thank my friend for that. So with those preliminaries out of the way I can turn to the matters raised by Cochlear on appeal.

PN291

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, thank you, Ms Howell.

PN292

MS HOWELL: Can I just respond briefly to a couple of matters which were put on a number of occasions by Mr Harmer before I get to the detail of the submissions. It was put on a number of occasions that the contracts were substantially above award or above agreements or words to that effect and this proposition made its way into the arguments in a number of places. The AMWU accepts that the wage rates are somewhat above - in the contacts are somewhat above the NAPSA. The position consistently put by the AMWU, and again to be advanced in this proceeding, is that the issue is not the wage rates, the issue is that as between the contract and the collective agreement and as between the contract and the NAPSA, there are fundamental inconsistencies in a range of respects, some of which severely disadvantage employees.

PN293

Just by way of illustrate of the point, in the contracts we have a classification system which bears no resemblance to that in the collective agreements and bears no resemblance to that in the award. The position of the AMWU below was that the application of such a classification system which bears no relation to that in the collective agreement constitutes a breach of the collective agreement and that would be a factor going directly to the public interest.

PN294

SENIOR DEPUTY PRESIDENT KAUFMAN: Was it put below and do you put it now that to classify employees differently than an award or an agreement applies as a breach of those instruments?

PN295

MS HOWELL: Yes, your Honour.

PN296

SENIOR DEPUTY PRESIDENT KAUFMAN: Was that put below?

PN297

MS HOWELL: Yes, your Honour. And one of the difficulties which somewhat clouds the rosy picture painted by Mr Harmer is that a number of discretionary aspects of the classification structure are actually outside of the contract. So whereas the general band including the NAPSA, the Metal Industry Award is a competency based classification system. What is introduced in the contracts is a classification system based on points and the points are allocated for each specific task in which the employee is evaluated to be competent. So the first problem is that advancement depends on accumulation of points. Accumulation of points depends on allocation to different jobs so that one can accumulate points. If you're not allocated to a range of different jobs you can't get past first base in terms of classification.

PN298

The second problem about which there was extensive evidence is that in order to be assessed as competent you have to complete a task within a specified time. So there's a whole range of different isolated tasks which are given what's known as cycle time and one of the major complaints of the employees and the AMWU is that these cycles times have been steadily and unilaterally altered by Cochlear, and this evidence wasn't disputed I must say, so that progressively since the contracts came in it's got harder and harder to gain reclassification in circumstances where the contract is absolutely silent about those issues. So we'll touch upon those issues about how the classification system works when dealing with some of the public interest issues again but it's over simplifying, to say the least, to simply say, well, the contracts are better, the rates are higher and therefore when we imposed them on the employees we were doing it in their interests, despite the fact that they didn't actually want them.

PN299

I think the Commission would have in mind that in considering the various arguments that the contractual issues are complex, to say the least, as to whether the simple facts of higher wage rates is actually a benefit. The other matter which was repeatedly asserted was that if the Commission doesn't terminate this agreement Cochlear is effectively stuck with it ad infinitum until the legislation changes. Of course the existing agreement can be displaced by individual agreements with the employees or by a collective agreement directly with the employees. In either of those instances the AMWU would have no say in the matter. Of course the difficulty with individual agreements with the employees which are recognised under the Act is that one has to procure the consent of the employees to such agreements.

PN300

What Cochlear has done by imposing individual or common law contracts is simply to circumvent any idea of consent on the part of the employees and again that's something which we say is highly relevant to the public interest issues. But it's simply not right to say if the agreement is not terminated it continues until the AMWU gives its consent to some other course.

PN301

SENIOR DEPUTY PRESIDENT KAUFMAN: Again this is a reflection of my lack of familiarity with the evidence, but did the employees not agree to the common law contracts? Are they contracts that are executed by both parties or is it something that the employees work to without having signed anything?

PN302

MS HOWELL: In broad terms, your Honour, the sequence of events was Cochlear put an employee collective agreement under the Federal Act to its employees. That was rejected. It put the employee collective agreement a second time in about I think May 2007 and detail of this is in our submissions below. Again the employee collective agreement was rejected by about 75 per cent of those who voted. What then happened was that Cochlear took the terms of that individual - I'm sorry, that employee collective agreement, put them in a private individual contract and notified employees that their terms of employment were now governed by the individual contracts.

PN303

Cochlear below said well, the employees chose those contracts and they did so by continuing to work effectively and that was the extent of the consent, was that they continued to work under the new arrangements. We say that that sequence of events has some significance and indeed the Commissioner alluded to it, has some significance when one is considering the particular disadvantages of this workforce in terms of negotiating with the employer. I turn now to the submissions made by the respondent on the - by Cochlear, I'm sorry, on the issue of the public interest test and the so called public interest momentum towards termination. Essentially what Cochlear has advanced before the Commission is not that the Commission has to find something would be contrary to the public interest for the purposes of section 170MH(3) but that something would have to be extremely contrary to the public interest because of the so called public interest momentum towards termination.

PN304

We say that is a wrong test and is contrary to the plain terms of the section and commits the error of overlaying the test of public interest with a gloss in effect in an impermissible way and the Full Bench in the Kellog case observed that it's wrong to paraphrase the statutory test and to add rules or guidelines that which is contained in the statute. We concur with Cochlear that the test as set out in Kellog is properly stated and we simply say that one doesn't overlay it with additional qualifications or enhancements. It is a balancing act and as the High Court said in the Queensland Electricity Board case it requires all of the circumstances of the case to be taken into account and the Commission must balance those matters in determining the public interest.

PN305

Now, so far as the support which is claimed in the scheme of the Act for the public interest momentum theory, as far as the general scheme of the Ac we observe that whatever might be the case generally in terms of termination of agreement the legislature in this case has made special provision in respect of state collective agreements and those of course are found in schedule 8. So whereas under the general scheme section 392, I think it is, provides for an unqualified right of termination after the nominal term expires, schedule 8 preserves a specific limitation on that power which is it must not be contrary to the public interest.

PN306

Now, the Commission has the State Act and section 44 of the State Act provides that the parties, absent any consent to the contrary, provides that the parties may terminate simply by giving three months notice once the nominal term has expired. So the effect of WorkChoices when it's translated state collective agreements into instruments under the Workplace Relations Act was that it actually added a new restriction on termination to those agreements. So far from being part of a general public interest momentum towards termination, the legislature has turned its mind to the particular case of state preserved collective agreements and said in the case of those instruments we add an extra layer of protection which wasn't there under the State Act.

PN307

So that's the first point, whatever the general scheme these instruments are given special treatments under the Act and indeed treatment which they weren't accorded under the State Act in terms of preservation. Now, so far as the objects of the act are concerned we agree that objects of some importance in addressing public interest considerations, we do say for the reasons set out in paragraph 27 to 32 of our written submissions that as a general proposition the pre reform objectives apply and I think like Cochlear we say not an awful lot turns on those general objectives because they have a capacity to be contradictory in a sense when considering a particular issues.

PN308

More importantly however are the objects to schedule 8 which were passed over lightly by Cochlear in its submissions and the Commission might recall that Commissioner Cargill expressly referred to the objects found in schedule 8 in the course of her decision and in our submission the objects found in schedule 8 should be given primacy when considering the relevance of objects to the application of the public interest test. And they found at section 2 or clause 2 of schedule 8 and the objects are to preserve for a time the terms and conditions of employment as they were immediately before the reform commencement for those employees relevantly whose employment but for the reforms commenced at that time would be subject to a state employment agreement, a state award or a state or territory industrial law and importantly, to encourage employees and employers for whom those terms and conditions have been preserved to enter into workplace agreements during that time.

PN309

Now, workplace agreements, I think it's very clear, is not a reference to an individual contract but it's a reference to a statutory agreement under the Act. There's a definition in Part 1 of schedule 8:

PN310

Workplace agreements includes an AWA within the meaning of schedule 7A.

PN311

That's not particularly relevant but the definitions in section 4 defines a workplace agreement to include - I think this has changed as a result of Forward With Fairness, but in any event, it includes an ITA or a collective agreement. So it means an ITA or collective agreement and includes a document that the court has ordered under section 412A is to have effect. That was the definition which was in operation when Commissioner Cargill considered and determined the matter. The definition of workplace agreement in the pre Forward With Fairness legislation was not materially different in any event. It simply says workplace agreement means an AWA or a collective agreement.

PN312

So what the objects of schedule 8 are to preserve these agreements, not to get rid of them as was suggested by Mr Harmer, but to preserve them for a time and to encourage the parties into statutory instruments, not into individual contracts. Having regard to those provisions, it is impossible to sustain in our submission the proposition with respect to state collective agreements there is an interest of any sort towards termination. We say the impetus to the contrary is towards preservation with a view to encouraging the parties to negotiate and enter into statutory instruments, whether individual or collective, which are recognised under the Workplace Relations Act.

PN313

So we say it's simply wrong to assert some kind of amorphous jurisdictional error in failing to apply a public interest momentum towards termination and that proposition underpinned much of the respondent's submissions on the Commissioner's supposed jurisdictional error in considering industrial standards as a relevant consideration. Just one other perhaps minor point in respect of the statutory scheme, clause 15G of schedule 8 deals with when preserved state agreements ceased to operate. Just for convenience I'll hand up a comparison of the provision pre and post Forward With Fairness. I apologise for the quality of the photocopy, it's something which I did.

PN314

The last page of the three is the pre Forward With Fairness clause 15G and simply says once one of those instruments comes into operation a preserved state agreement ceases to operate and can never operate again. The amended section 15G, which is in the first two pages which is the current provision, puts some qualifications on that. It says that in certain circumstances preserved state agreements can operate again. So that is just an additional illustration of the fact that the legislature particularly post the Forward With Fairness amendments is not a view that termination is some Holy Grail which has to be pursued. It's to the contrary, moved in a contrary direction by saying there's at least in some circumstances that state preserved agreements can be revived.

PN315

So whilst we don't say that that change is of huge significance it's another indication that the statutory scheme is quite different to that advanced by Cochlear. We've made some observations about the general public interest test and those observations we say have to be applied having regard to that statutory framework. We say that the maintenance of proper industrial standards in general may be a relevant consideration and we say that in accordance with Tristar, parties acting in breach of a current agreement is also a relevant consideration and we say that's what happened here, although that's really an argument on the reconsideration of the termination. But we say that Cochlear's disregard for its obligations under the existing agreement can certainly be a relevant consideration under the public interest test and that is particularly the case in the exceptional circumstances of this dispute given the particular characteristics of the workforce and their vulnerability to unfair conduct by the employer.

PN316

Of course Cochlear doesn't accept that they've breached their obligations and that's a matter I'll come to. Can I turn now to the issue of the role of the NAPSA in the deliberations below and we deal with this issue in our submissions at paragraph 38 to 42. The Commission has heard that it's said a fundamental error was made. I should say Cochlear now asserts that the Commission made a fundamental error in accepting Cochlear's submissions below and we say two things about this. Firstly, we press the proposition that Cochlear should not be allowed to depart from its submissions below and secondly, we say that in any event the way in which this matter was dealt with should be a factor strongly militating against the granting of leave to appeal, particularly in circumstances where Cochlear is at liberty to make a fresh application and run its case below in a more appropriate way.

PN317

Cochlear in its table which is attachment C disputes that it's running a new case and it does so on the basis that Cochlear in its submissions in reply said that if the NAPSA applied then if anything that heightens the level of protection around industrial instruments for these employees and further, we contend public interest excitement. Well, we say with respect that takes the argument nowhere because at no stage did Cochlear say, well, we now change our position and concede that the NAPSA does in fact apply. I need to spend a little bit of time on this issue. It won't be wasted because it's an issue which also goes to the public interest test itself.

PN318

Cochlear relies on something said by Professor McCallum to support the proposition that it was justified in saying that there was uncertainty about whether the NAPSA in fact applied. The relevant passage is found in appeal book volume 2, page 401 and it's paragraph number 2683.

PN319

SENIOR DEPUTY PRESIDENT KAUFMAN: Sorry, what page, Ms Howell?

PN320

MS HOWELL: Page 401, volume 2, your Honour. So what's being relied on here is an off the cuff remark by Professor McCallum in cross-examination.
Mr Joydeep asks Professor McCallum about the five minima and he says:

PN321

That's nothing more than the operation of statute that's yielded that outcome, isn't it?

PN322

And Professor McCallum, with respect, a little bit unresponsively then says:

PN323

Well, I'm not really sure at this stage if the five minima apply or not.

PN324

So fair enough, in cross-examination he said that he personally wasn't sure about that issue. Professor McCallum of course wasn't called or relied on to give evidence as to his construction of the statute. He was called to give evidence about the particular disadvantage of this group of workers in bargaining individually. That evidence having been given in April, I think it has been conceded in the submissions this morning, the issue in fact when one looks at schedule 8 is very clear and Cochlear was clearly put on notice by the AMWU that insofar as it was concerned it was clear that the NAPSA did in fact apply and that was done both in our written submissions and orally.

PN325

I've made some reference to the written submissions in our outline but I should also add reference to paragraphs 3 and 4 of our written submissions below. I don't need to take the Commission to that volume at the moment but I'll just indicate that paragraph 3 sets out the new schedule 15G which was effected by Forward With Fairness and paragraph 4 we then said the effect of section 15G(1A) and that's a typo, it should be (1B), is that the Metal, Engineering and Associated Industries State Award which is a notional agreement preserved with the state award will apply as it would have applied on the reform commencement but for the 2005 agreement. And it was in response to that pretty clear submission that the respondent - I'm sorry, that Cochlear said, (1), it's not directly relevant, and (2), we don't concede that the NAPSA applies and that submission is at appeal book 691, paragraph 31.

PN326

There was some oral submissions about that and again those are in volume 2 and I just take the Commission briefly to those because it really does show that Cochlear was well and truly on notice of this issue and elected below not to deal with it, other than to say it wasn't directly relevant. At appeal book page 525, paragraph 3749, that's me in oral submissions enlarging on the issue of the NAPSA. Can I say some things about the question of the NAPSA applying and its relevance to the proceeding. We, with respect, think that the respondent has given - and that should be insufficient, not sufficient surprisingly enough, insufficient consideration to this issue.

PN327

We don't say that when the contracts were introduced the respondent should have had a crystal ball and anticipated future legislation. That was in response to something Cochlear had said. We criticised the contracts for many reasons but not for that reason but now, as things stand now, the Commission has to make an assessment based on what will happen if the Commission terminates the agreements and we say clearly for the reasons we set out in paragraphs 3 and 4 the effects of the amendments is that the NAPSA will apply and think the pay rates will be determined by an Australian Fair Pay Commission standard, that the NAPSA will nevertheless be the instrument which applies and including the classification structure which is there set out.

PN328

I then go on to hand up the two comparison documents supporting our proposition that the individual common law contracts are inconsistent with the NAPSA and accordingly if the agreement was terminated Cochlear would, as of the moment of termination be in breach of the NAPSA, which was then binding. Cochlear's response to that was to say, as I said, it's not directly relevant and we don't concede that the NAPSA applies and it never departed from that position and it never assisted the Commissioner with those issues of inconsistency which the AMWU raised. As it turned out of course the Commissioner acceded to Cochlear's submission and concluded that there was uncertainty about whether the NAPSA applied or not.

PN329

Now, did that give rise to jurisdictional error? We say no and the reason we say no is because Cochlear was squarely indicating that whatever the AMWU said about the law its position was that it wasn't conceding that any statutory instruments applied. So the Commissioner at the very least could not be certain that Cochlear would regard itself as being bound by the NAPSA. So in concluding that there was uncertainty as a matter of practicality she was absolutely right. It was uncertain whether on termination Cochlear would regard itself as bound by the NAPSA or not and if it didn't regard itself as bound by the NAPSA then presumably the five minima would be the only statutory provision applying to these employees.

PN330

Because of the way in which the case was advanced the Commissioner didn't deal with the specific complex between the NAPSA and the common law contracts which were identified by the AMWU. If the Commission could just turn to the annexure documents which are attached to the AMWUs submissions at page 1479 of volume 4 and the first document which deals with - there are two documents, one deals with the general provisions which we say are inconsistent and the other deals with the inconsistencies in the classification system. I don't propose to take the Commission through the differences in detail at this point but just by way of illustration, under hours of work the spread of hours under the NAPSA is for an ordinary day shift is 6 am to 6 pm with some variation by consent.

PN331

The spread of hours in the common law contract is 6 am to 10.21 pm. Now, here we have Cochlear purporting to advance a deed saying they're going to apply the contracts. How do we resolve an issue like that? Likewise if one turns to shift work, afternoon shift under the award, that is the NAPSA, receives a 15 per cent loading whenever it's worked and we refer to relevant clauses. Under the contract you'll get a loading of 15 per cent if you're on permanent night shift, afternoon shift, but if you're on rotating shift and go through afternoon shift you only get 10 per cent for the afternoon shift, so clear inconsistency again.

PN332

There are various other differences which are simply irreconcilable. Public holiday is the last item in this ticket. Under the award you get standard days plus Easter Tuesday. Under the contract you get standard days plus a Cochlear day which is a date fixed by Cochlear. In those circumstances do you get Easter Tuesday as prescribed by the award or not, or do you get both? Who knows, but the deed certainly won't assist us in working out that discrepancy. So these issues were simply not addressed by the Commissioner on the basis of her acceptance of Cochlear's submission that they weren't directly relevant and we now face the prospect of having them determined for the first time, still not having heard anything of Cochlear's position on how they would be resolved.

PN333

So far as the two different classification structures are concerned, the same point as applies in respect of the collective agreement applies even more so with the classification structure and I'll come back to that on the merits of the public interest test. But in short, a classification structure based on competencies we say is inconsistent with the classification structure in the contract which is based on points for particular tasks and we say that it's not open to Cochlear to now run its case effectively on appeal and we do rely on a couple of authorities in that respect which are on our list. I'll just hand up our bundle of authorities.

PN334

The decision to which I wish to take the Commission is the High Court decision in Coulton v Holcombe. It's behind tab 2 I'm told and it's page 7 of that decision. The majority commenting on the nature of an appeal says:

PN335

To say that an appeal is by way of a rehearing does not mean that the issues and the evidence to be considered are at large. It is fundamental ...(reads)... that the points cannot be taken afterwards.

PN336

And over the page at page 8, about two thirds of the way down, refers to the Metwally decision which has been referred to on a number of occasions in the Commission and then says:

PN337

The Court of Appeal recognised the great importance in the public interest of these principles ...(reads)... new issues of law for the first time in an Appeal Court.

PN338

And that is what we are asked to do. Cochlear seeks to render the proceedings below a mere skirmish so far as this issue is concerned and to require us to contest the issue on appeal effectively for the first time. There's a lot of authority to similar effect which I don't need to take the Commission to but I do refer to a decision of the Full Bench in Big W Monarto Warehouse which is tab 3 and I just refer the Commission to paragraphs 12 to 14 where the issue is succinctly stated. The Commission says at paragraph 12:

PN339

On appeal the Commission does not generally entertain merit arguments which have not been advanced at first instance, although different considerations may apply where the matters raised are jurisdictional.

PN340

And I stress the word may -

PN341

Although Mr Manuel, SC who appeared for the appellant accepted that the argument was not put at first instance, he submitted that evidence had been before the Commission and her Honour had an obligation to take it into account.

PN342

And the Commission then cites Metwally and concludes that -

PN343

There are no circumstances in this case which would justify departure from the established principle ...(reads)... by the case on the merits at first instance.

PN344

Now, the answer of Cochlear to that is, well, this we say is a jurisdictional issue and those blows those considerations out of the water. Well, with respect, it doesn't. There may be occasions around the fact that an issue goes to jurisdiction will lead the court to overlook the fact that the case has not been conducted appropriately below but in our submission the fact that an argument is of a jurisdictional nature is not determinative and the Commission - there's authority of this Commission to this effect. The name of the case escapes me at the moment but I'll provide it. Clearly in the present case the circumstances are such that it's not necessary to set those principles aside.

PN345

We simply say that in those circumstances where the AMWU is faced with arguments for the first time on appeal the appropriate course is to refuse leave to appeal and permit Cochlear to run its case appropriately at first instance. The applicants, Cochlear, has relied both below and before the Commission here on the proposition that the NAPSA is more generous so it doesn't need to be considered further. For the reasons that we've indicated that's not an appropriate response to clear inconsistency between the two schemes so far as terms and conditions and classification structures are concerned.

PN346

As I think we've indicated, we say even if the Commission were minded to let Cochlear advance this argument now, there was no jurisdictional error because the Commissioner had to accept on face value that Cochlear was saying we're not committing to the application of any industrial instruments and certainly not the NAPSA. So to the extent that the Commissioner said that there was uncertainty as to the safety net, with respect, she was right because there was uncertainty as to what exactly Cochlear would treat as the relevant safety net. In light of that uncertainty the Commissioner, with respect, made no error in being concerned about the enforceability of the undertaking offered by Mr Howitt and the difficulties with the undertaking we say and the difficulties with the undertaking we say are tacitly conceded by the advancement of the deed poll. Quite simply an undertaking made in the witness box in the Commission doesn't have contractual status and individual employees have no means whatsoever of enforcing such an undertaking.

PN347

SENIOR DEPUTY PRESIDENT KAUFMAN: Ms Howell, can I just try to articulate my understanding to see if it's correct as to the way in which these matters were being ventilated? You were submitting that it would be contrary to the public interest to terminate the agreement because if it were - well, for several reasons. You were saying that the common law contracts were not necessarily better than the agreement and, in any event, they were inconsistent with the agreement. To terminate would be contrary to the public interest because then the instrument that would bind would be the NAPSA and that was also inconsistent with the common law contract.

PN348

MS HOWELL: Yes, your Honour.

PN349

SENIOR DEPUTY PRESIDENT KAUFMAN: How does that raise or how did you submit that that demonstrate that to terminate the agreement was contrary to the public interest? Even if you're right and the NAPSA would apply and the terms of the common law contract were inconsistent with the NAPSA, why does that make it contrary to the public interest to terminate?

PN350

MS HOWELL: The arguments were slightly different in that with respect to the collective agreements, we said that Cochlear had a pattern of conduct which involved disregard for its obligations under the collective agreement. In other words, it reached a stage where it considered the classification structure to be inappropriate to its needs, so it walked away from it and put in place a completely different structure.

PN351

We said that, really, consistent with the argument in Tristar, that kind of behaviour would not be sanctioned and effectively by terminating the agreement, the Commission would be sanctioning and if not approving, then at least permitting such conduct and allied to that was the point that a party who behaves in that manner, the Commission would be very careful of putting particular employees into a position of having to bargain on an individual basis with an employer which on our case showed scant regard for its legal obligations, in any event, so that was really how the case was advanced with respect to the collective agreement.

PN352

With respect to the NAPSA, it was put in the context of maintenance of proper industrial standards, as a general public interest consideration it must be inconsistent with the public interest, particularly in maintaining proper industrial standards to effectively create a situation where a party is automatically by virtue of the termination placed in a situation of being in breach of the applicable industrial instrument.

PN353

It's really to do with the maintenance of proper industrial standards and whether it's in the public interest for the Commission to in effect create or permit a situation where a party moves into breach of an industrial instrument and again we say that is something which is consistent with the reasoning in Tristar where the bench said breach of a party's conduct in breaching existing agreements may be a relevant consideration.

PN354

We deal further with the submissions advanced by Cochlear concerning maintenance of proper industrial standards at paragraphs 44 and following of oru outline and I don't read those submissions, of course, we rely on them, but one thing that needs to be emphasised is that in our submission at least the Commissioner didn't evince a general preference for collective rather than individual instruments, but, rather, based on the content and circumstances of the particular contracts, she determined that proper industrial standards would not be maintained should the agreement be terminated.

PN355

A large part of the concern which was ventilated during the hearing was that the contracts could, of course, be unilaterally varied by Cochlear and what was advanced before the Commissioner below was that the party which has unilaterally imposed completely new terms of employment on its workforce, when those very terms have previously been rejected by ballot would be liable to unilaterally vary those terms whenever it deemed that such variation was in its interests and Cochlear, of course, did attempt to address that issue through the oral undertaking offered by Mr Howitt verbally in the witness box and at paragraph 49 we set out the terms of that undertaking.

PN356

As we note in paragraph 50, there were a number of issues, including whether the undertaking applies only to existing employees or whether it applies to future employees and exactly what is protected by the terms and conditions. Certainly, as we indicate in paragraph 51, such things as production times per unit and targets and points for reclassification, all of those things are outside the scope of the contracts and could be varied unilaterally by Cochlear.

PN357

In fact, Professor McCallum, it was put to Professor McCallum in cross-examination, well, now that this undertaking has been given, some of your concerns are addressed, aren't they, and this was in April 2008 when Professor McCallum gave evidence and Professor McCallum - I am paraphrasing slightly, but said, well, not really because I don't know what it means, don't know whether it applies to new employees and certainly there are issues about enforcement, so as of April Cochlear had the benefit of Professor McCallum's view that such an undertaking wasn't particularly helpful or comprehensive and from that time until August, no steps were taken to address those issues so that - - -

PN358

SENIOR DEPUTY PRESIDENT KAUFMAN: I am a little puzzled as to why Professor McCallum's view was sought. I understand the matter for the Commission. Does it matter what the professor thought, no matter how much respect I might have for him? It's not a matter for an expert witness to say what an undertaking is worth, surely.

PN359

MS HOWELL: His evidence was admitted without objection, your Honour.

PN360

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, I am just a bit puzzled by that, speaking for myself.

PN361

MS HOWELL: Really, that was something which came up in cross-examination, your Honour. We didn't advance Professor McCallum to say, well, I think the undertaking is worthless. He was asked his opinion and he gave it and what we really advanced Professor McCallum's evidence for was to show that as a general proposition, outcomes for individual bargaining employees were less in terms of benefits and outcomes for collective bargaining.

PN362

Whilst that might not generally be of great weight, it was really advanced in the context of the evidence that this particular workforce suffered from some disadvantages in terms of individual bargaining in any event, so that was really the substance of his evidence. His opinion about the undertaking was drawn out by Cochlear.

PN363

The state of the evidence before Commissioner Cargill was that there were uncertainties about the scope of the undertaking and the enforceability of the undertaking, so we have uncertainty about what underpinning instruments apply, Cochlear saying it's not going to concede what it will apply and uncertainty about the scope of the undertaking and exactly what was protected, whether it be even the most basic question of whether it be only the existing employees or whether it extended to future employees as well, that fundamental question was never addressed by Cochlear until the deed was received two days ago, not addressed in submissions, at no stage below.

PN364

When one looks at those paragraphs of the Commissioner's decision where she says, well, I find that the maintenance of proper industrial standards were a relevant public interest consideration - - -

PN365

SENIOR DEPUTY PRESIDENT KAUFMAN: What paragraph is that?

PN366

MS HOWELL: That is paragraph 268, 269, 270 and 271. We say on the evidence before her, she was entitled to make that finding and having regard to those matters to which she referred which is the uncertainty as to whether the agreement would apply, whether the NAPSA would apply, the nature of the instruments, the difficulty of enforcement and the scope of the undertaking.

PN367

Some weight is given by the respondent to the question of whether the corporations law would be relevant or the principles of agency would be relevant in terms of Mr Howitt's undertaking. Neither of those issues were raised below, but the determinative sentence in paragraph 270 is circumstances may change and attempting to enforce Mr Howitt's oral undertaking may prove difficult for employees.

PN368

Well, with respect, we say that is absolutely correct. How would an individual employee enforce such an undertaking when, (1) it's ambiguous and, (2) it has no contractual or legally binding effect so in terms of maintenance of proper industrial standards, that was a conclusion which was open to the Commissioner and we say even if the Commission as presently constituted didn't agree with it, it's a matter which was within her discretion in assessing the public interest.

PN369

Cochlear on appeal has relied on the proposition that the matter could be relisted before the Commission as something relevant to the enforceability of the undertaking. As we say in paragraph 54, that doesn't advance the issue in terms of enforceability. Those are really our submissions on the first group of errors alleged with respect to the maintenance of proper industrial standards and we say in summary, where it's uncertain on Cochlear's own case what safety net instruments applies and where an undertaking is ambiguous and unenforceable, that's a reasonable conclusion, particularly when one has regard to the objects of schedule 8 which is to encourage parties to enter into statutory workplace agreements.

PN370

The big difference with statutory workplace agreements is that there are statutory enforcement mechanisms and, indeed, in the case of collective agreements can be enforced by the relevant union as well as the individual employee, so particularly having regard to the objects of schedule 8, we say no error is demonstrated. The next group of objections or alleged errors advanced by the respondent, Cochlear, is concerning the next few paragraphs of the Commissioner's decision and that goes to the nature of the Cochlear workforce.

PN371

The Commissioner was very particular in the brief summary of the factors which she took into account and her basic conclusion was that these employees would be particularly disadvantaged in trying to negotiate on an individual basis with Cochlear and again I emphasise the Commissioner made this assessment in the context of individual contracts which had been unilaterally imposed without consultation on the employees which terms and conditions had been rejected in a ballot.

PN372

The Commissioner noted correctly that 95 per cent of the workforce were from non-English speaking backgrounds and at paragraph 274 the Commissioner noted that whilst it's one thing to speak a language and be skilled at your job, it is another thing entirely to be able to bargain effectively with your employer in these circumstances. Cultural differences as well as language difficulties would impact on the ability of employees to bargain:

PN373

I accept the evidence brought by the AMWU witnesses in this regard.

PN374

I will just take a little time to take the Commission to that evidence because it's relevant to the merit determination if the Commission gets to that point as well as to the question of whether there is appellable error. In fact, the evidence is summarised in our submissions below and that's in volume 4. The submission starts at page 1474 under the heading nature of the workforce and I should say something was made by Cochlear of the fact that this was a skilled workforce and that would somehow impact on their ability to bargain.

PN375

The evidence before the Commissioner was that, in fact, the skills which these employees have acquired are peculiar to a very specific production process. They are production employees and they work producing very small devices and those skills are not transferrable easily to other industries and I should say that problem is reinforced when one has a classification structure which bears no relation to the competency based classification structures found in the award, because the classification structures are not recognised outside of Cochlear.

PN376

The AMWU have evidence from Ms Carstens who is the co-ordinator of Asian women at work and Ms Carstens gave evidence of the difficulty Asian women in general have in understanding, let alone as operating as parties in the Australian industrial relations system and that she said was due to language and cultural factors and I've set out some evidence on the following page that migrant women are in a position of disadvantage relative to other workers in the Australian workplace.

PN377

This stems from having poor English skills, the presence of significant cultural differences, especially regarding gender roles and a lack of understanding of what workers in Australia can reasonably expect. Importantly, migrant women without adequate support have less capacity than other workers to negotiate terms and conditions of employment and at paragraph 70 we refer to some further oral evidence given by Ms Carstens.

PN378

Mr Howitt had said, well, I am approachable, I go to the lunch room and Ms Carstens said the employees would very likely regard that as intimidating conduct. Ms Carstens also gave evidence that the fact that employees have functional proficiency in English would not necessarily translate into proficiency for the purpose of negotiating contracts and she further said that - I withdraw that.

PN379

As we say in paragraph 71, Ms Carstens' evidence as to the linguistic and cultural difficulties of the workforce was consistent with the evidence of individual employees and there were three individual - two individual employees who gave evidence on those issues, both from non-English-speaking backgrounds. Mr Kha gave evidence that he and other workers did not understand what an individual contractor is.

PN380

He stated he did not believe he could as an individual negotiate with Cochlear. Importantly, he felt that employees are scared of being branded as trouble-makers and potentially jeopardising their jobs and he further said it is not our culture and tradition to oppose the employer. Workers from China and Cambodia at Cochlear are scared of the consequences for them personally of trying to negotiate directly with the company management.

PN381

Ms Ying gave evidence to similar effect. She also gave evidence that Cochlear had stated to employees that if they asked for more benefit, they would have to - that is Cochlear would have to move their business to China. She like Mr Kha identified that employees were reluctant to explain or express themselves because they did not wish to annoy management and were frightened that if they spoke up, they would lose their jobs.

PN382

Professor McCallum gave some evidence concerning those characteristics as well, particularly in light of the position of these workers as production workers whose skills were not easily transferrable, so that's in broad overview the evidence which was before the Commissioner and we say at the very least it was open to the Commissioner having regard to the objects of the Act not to place those workers in a position which on the evidence would have been of severe disadvantage in being forced to negotiate individually.

PN383

I think one thing that is apparent in Cochlear's position both below and now in advancing the deed is that in reality, there's no scope for individuals to negotiate in any event on the terms and conditions in the contract. Cochlear applies those contracts across the board and there's no evidence anywhere of any capacity for individuals to negotiate the terms and conditions in the contract. They're simply applicable to all production workers and that's the import of the undertaking which was given and the deed, that is what will apply.

PN384

No example was offered by Cochlear where an individual could negotiate the terms of the contract. No employer was brought forward by Cochlear to say, well, actually, we don't think we're disadvantaged by this process and we're happy to negotiate with our employees and the evidence to which I've referred was not tested in any significant way in cross-examination.

PN385

There are a number of objects which would be relevant to making those issues issues of public interest concerns. Again, the objects of schedule 8 of encouraging the parties to move into statutory instruments, but also in terms of the general objects, object E which is enabling employers and employees to choose the most appropriate form of agreement for the particular circumstances and object M which is respecting and valuing diversity of the workforce by helping to prevent and eliminate discrimination on the basis of race, colour, sex, et cetera, and the respondent, Cochlear, in its submissions has suggested somewhat flippantly we would say that by giving consideration to the particular disadvantages of the workforce in terms of their ability, their linguistic and cultural issues arising in terms of their ability to negotiate one on one, we were running counter to the Anti-Discrimination Act.

PN386

We say flippantly because it would be well known to this Commission that discrimination legislation recognises the need for affirmative action in particular circumstances and simply in our submissions it's misconceived to say that taking account of the particular disadvantages of a workforce and protecting them from exposure to a process in which they would not be able to properly participate, that is a fair step consistent with the objects of the Act and to do the contrary and expose those employees to a situation where they're effectively on their own against the employer in all of the circumstances, having regard to the history of Cochlear's conduct does not demonstrate error and, indeed, we say it was open to the Commissioner to conclude and it was right for the Commissioner to conclude that so to do would be contrary to the public interest.

PN387

We then turn to the arguments advanced by Cochlear with respect to clause 1.4 of the agreement and as I've noted, the bulk of the submissions in this respect are found in Cochlear's annexures to which we are not in a position to respond today, but we have made some responses to the matters in the submissions which were served on us on 3 October. We maintain that in a number of respects, those submissions weren't advanced below.

PN388

Most significantly, the arguments with respect to supposed inconsistency with section 811(2) of the Act, that is the freedom of association provisions and what we say is a rather ambitious argument that clause 1.4 is in breach of those provisions because it alters the position of employees to their detriment or injures them in their employment because they have the benefit of an industrial instrument.

PN389

In attachment C to the outline handed up today, it's put that this matter was raised below because Cochlear said in its submissions Cochlear and its employees have embraced the freedom to work out the arrangements that best suit them in individual contracts of employment and that's said to be a basis on which inconsistency with section 811 and the freedom of association provisions was raised.

PN390

I haven't looked, I must confess, at Cochlear's submissions in response, paragraphs 8, appeal book 684 to 686, but certainly to the best of my knowledge, no inconsistency with those provisions of the federal Act were raised, so our first position on that is it shouldn't be allowed to be raised on appeal for the conventional reasons and as we note in paragraph 65, it's important to have regard to the way in which this argument was advanced before the Commissioner concerning clause 4.1.

PN391

It was never the AMWUs position that as a matter of law the agreements couldn't be terminated by the Commission, but simply that it is important to the general proposition that parties adhere to their bargains and that would simply, if the Commission accepted our both grammatical construction and extrinsic evidence as to the construction of the clause, then in effect that is what Cochlear is seeking to do, to walk away from a bargain which it entered into and in our submissions below, we pointed out that on the basis of the evidence of Ms Fortescue in particular, the Commission would conclude that clause 1.4 formed part of a package which was inseparable and had it not been for clause 4.1, Cochlear would not have had the benefit of other parts of the agreement.

PN392

Some point is now raised, two points are raised against the Commission's decision relevantly. The first is the Commissioner erred in holding that she was precluded from having regard to the extrinsic evidence because of the unambiguous terms of the clause. Now, clearly that is not what the Commissioner said. What the Commission said is I regard this clause as unambiguous, therefore it is not necessary to have regard to extrinsic evidence and there's no error of law in that.

PN393

The authorities are clear that it is permissible to have regard to extrinsic material notwithstanding that there is no ambiguity, but it is not a requirement. It's a matter for the court or tribunal whether it chooses to have regard to extrinsic evidence. In this case, although both parties advanced extrinsic evidence, the Commissioner was entitled to say I regard the clause as unambiguous and accordingly I disregard or don't have reference to that evidence.

PN394

The second point which should be made about the extrinsic evidence is, yes, we accept that the statutory scheme can be relevant to construing a clause, but there was a deal of other evidence before the Commissioner from both sides as to the course of negotiations which led to clause 1.4. Now, Cochlear has said, well, whatever is in the parties' minds, that is irrelevant and shouldn't be admitted and regard shouldn't be had to that.

PN395

That proposition may be accepted, but what is simply subjectively in the parties' minds would not be relevant to the construction of the clause. However, the first point is that the evidence was admitted without objection, but the second point is the evidence of Ms Fortescue didn't go just to her subjective state of mind, it went to what she said to the employer about the clause and Ms Fortescue's evidence is in volume 4, pages 1140 to 1259.

PN396

Again it's probably convenient if I just refer the Commission briefly to our submissions below on this issue where we summarise the effect of Ms Fortescue's evidence and that evidence or the submissions in respect of that evidence start at page 1467 and the Commission will see and again this is relevant both to consideration of the alleged errors and also to the fresh application of the public interest test.

PN397

We first say that the change from the old clause to the new clause has some significance and the parties are aggrieved that it has some significance, that the nature of the significance is where the parties differ. In paragraph 35 we've set out the current clause and in paragraph 36 we've set out the old clause and the respondent, of course, contends that the words replaced by agreement of the parties should be read so that - I withdraw that.

PN398

Cochlear submits that the words by agreement of the parties should be limited to the word replaced because they were added at the same time. However, if what Cochlear says is correct, then the amendment has no effect whatsoever. It's totally superfluous because it goes without saying that variational replacements can only be by agreement of the parties. The only thing that may not be by agreement of the parties is termination and so we say it's significant that the Commission wouldn't adopt a construction of clause 1.4 which gives the amendment no work to do in effect and that is what Cochlear is saying, that this change to the clause should be taken as having no effect whatsoever in practical terms.

PN399

We set out why we say that as a matter of grammatical construction the words by agreement of the parties should be read distributively and we also note that variations and replacements could only be progressed by consent under the Act so that only leaves termination which could be effected other than by consent of both parties, but we then turn to the history and the negotiations by Ms Fortescue and as I've indicated, it's not a matter of the AMWUs subjective view which it kept to itself.

PN400

It's a matter of what was said between the parties during negotiations and that is generally admissible evidence and in this case again not put to Ms Fortescue that those things weren't said. Ms Fortescue explains that the reason she insisted on the words - I withdraw that. First of all, she said she did insist during negotiations on the inclusion of the words:

PN401

To protect employees from any attempt to vary or change their conditions.

PN402

That could conceivably be read as her motive rather than what was communicated, but at paragraph 14 Ms Fortescue says she advised Cochlear management that the AMWU would not recommend support for any agreement that did not protect our members' interests from any unilateral variation to their conditions of employment by the employer or any action such as termination of the agreement without consent of the union and its members and at paragraph 41 Ms Fortescue in oral evidence elaborated on the progress of negotiations as to what she said to Cochlear about the need for the amendment to clause 1.4 and Ms Fortescue said:

PN403

I put it to the company that we needed those words because there was uncertainty over what happens to employees over WorkChoices. We have to protect them, because without their agreement remaining on foot, they would be reduced to the five minima. I had direct discussions with Tim McCarthy on that.

PN404

We refer to the evidence of Mr McCarthy which was the only witness called by Cochlear as to the terms of negotiations and we note that there were three representatives of the company involved in negotiations, Mr McCarthy, Ms Lazarus and Mr Lopez and we note that Cochlear didn't call Mr Lazarus and Mr Lopez and we pressed on the Commission that in those circumstances to the extent that there was inconsistency between the evidence of Ms Fortescue and Mr McCarthy, Ms Fortescue's evidence would be accepted for the reasons set out in paragraph 44, including the fact that on our submission a Jones v Dunkel inference would arise from the failure to call Mr Lazarus and Mr Lopez.

PN405

Mr Howitt did give some evidence of what was said to him, I think, and his understanding of the import of clause 1.4. That evidence was admitted over objection because it was hearsay from Mr Howitt who had no involvement in the negotiations and so accordingly we say that evidence is properly admissible as to what transpired between the parties before the agreement was entered into and it clearly shows that in effect clause 1.4, in effect it was a deal breaker as I think Ms Fortescue said in the witness box.

PN406

Without it, there would have been no agreement and it was clearly communicated to the respondent what it meant as far as the AMWU is concerned and why it was being pursued. I suppose there is a little bit of a difficulty for the Commission on appeal because the Commission doesn't have the benefit of seeing the witnesses in the witness box. Ms Fortescue generally had a good and detailed recall of events and Mr McCarthy had very little recall of the negotiations, I think it's fair to say.

PN407

Leaving aside issues of supposed inconsistency with either the federal or the state Act, we say it's very clear what the clause meant on the understanding of the negotiators on behalf of Cochlear and on behalf of the AMWU and their understanding is consistent with the clear grammatical meaning of clause 1.4 and I just add as set out in paragraph 42, Cochlear resisted the amendment on the basis that it should be a matter of trust between the parties, again uncontradicted evidence from Ms Fortescue which further reinforces the conclusion that the clause did actually mean something, did have an effect of preventing unilateral termination of the agreement.

PN408

As we say in paragraph 47 of our submission below, we don't suggest the contractual - could preclude the Commission from terminating the agreement, that is this Commission but we say it would sanction a breach by Cochlear of a clear commitment given by its negotiators and in the agreement and we refer to the authority of the state Commission concerning the importance of parties adhering to bargains which they've entered into.

PN409

As we say in paragraph 48, had it not been for clause 1.4, the agreement in all probability would not have been entered into and Cochlear have the benefit of the agreement and shouldn't be sanctioned in simply walking away from that commitment which it gave, so the Commissioner actually was entitled we say, had regard to the grammatical meaning, but when the other material which was before her is carefully examined, that simply reinforces the conclusion that she came to in our submission.

PN410

The issues of inconsistency with the federal and/or the state Act are issues which we will address in some detail in writing. The only point I would seek to make at this stage is the respondent - I am sorry, Cochlear has repeatedly advanced both in its written submissions and orally that clause 1.4 is inconsistent with the provisions of section 44 of the Act. Section 44 provides a number of means by which an agreement may be terminated.

PN411

One of them is by consent of the parties and the other is by giving three months' notice. Clause 1.4 of the agreement is consistent with and in accordance with section 44(2) of the New South Wales Act which is that an enterprise agreement can be terminated at any time with the approval of all the parties to it, whether during or after its nominal term and clause 1.4 of the agreement simply provides for a means of termination which falls within section 44(2) of the Act.

PN412

Now, our submission is that it's not inconsistent with the New South Wales Act for the parties to agree amongst themselves that with respect to options (a), (b) and (c) for the termination the parties will exercise option (a). Almost all of the authorities I think and I haven't read them all, but all of the authorities relied on by Cochlear in this respect are circumstances where a completely different statutory provision or option is utilised for a particular objective and then one has to look at whether something is a code or not. But this situation is completely different in that whether or not section 44 is a code the parties have simply said, well, within that code we'll confine ourselves to option 1 and there's nothing that we can see in those authorities which even addresses that issue.

PN413

Indeed the decision of Ryan J which is relied on by Cochlear, that's the Kilpatrick Green v ..... That decision makes it clear that whilst the court may be reluctant to conclude the parties intend to exclude the exercise of statutory rights it will do so if the intention is clear. So we say this is such a case where the parties clearly intended by nominating section 44(2) as the means of termination to exclude the utilisation of the parties of other options within section 44 of the Act and we say it's recognised by the courts that the parties can take such a step if they wish to and that's exactly what occurred and the Commissioner was correct in her grammatical construction of the clause.

PN414

I think that's all I can currently say about clause 1.4 from what's already to be said in written submissions. Cochlear has passed lightly over the remainder of the issues and we'll do likewise. I think paragraph 77 of our outline, 77 to 80 deals with the employee survey. Given that the Commissioner appeared to place really no weight on the survey no error could be discernable and I think now no error is alleged with respect to the survey. With respect to the AMWU conduct, one thing is relied on now and that is the fact that the AMWU declined to act as bargaining agent for the individuals in bargaining on their contracts. There's an easy answer to that and it's demonstrated by the survey in fact, but as Ms Fortescue said in evidence, the employees had indicated they didn't want to individually bargain full stop. They wanted to collectively bargain for a collective agreement.

PN415

In those circumstances there was simply no - not only was there no utility in individually bargaining on behalf of members but it would be contrary to their express wishes which was for a collective agreement collectively bargained and lest there be any doubt that that was a preference of the employees the Commission only has to look at the results of the survey to demonstrate that that was what the employees wished for. So I think the appeal ground is that the Commissioner failed to allocate proper weight to that issue. The Commissioner was entitled to and did disregard it.

PN416

The AMWU below advanced a number of grounds about the conduct of Cochlear and we do rely on them in respect of any reconsideration of the public interest test and it's perhaps convenient if I turn briefly to the issues of the reconsideration of the public interest tests. Some of them I've dealt with already. I've dealt with the issue of the nature of the workforce and in that respect we rely on all the evidence which is referred to in our submissions below but if I could now turn to the matters relied on with respect to the conduct of Cochlear, again found in our written submissions starting at paragraph 13. Perhaps if I take a step backwards and just indicate to the Commission that when the Commission comes to consider the public interest test, if it comes to consider afresh the public interest test, as indicated in our outline we rely on all the matters we relied on below and those matters, an overview is set out at paragraph 11 at page 1462 of the appeal books and by way of overview, it's the past industrial conduct of Cochlear in dealing with the AMWU and its employees.

PN417

Clause 1.4, Cochlear's past and present breaches of and disregard for its obligations under the 2005 agreement and particularly the classification structure, the inconsistency between the individual contracts and the provisions of the NAPSA which would apply in the absence of the 2005 agreement, discriminatory provisions in the individual contracts which will become operative on termination of the 2005 agreement, the particular characteristics of the Cochlear workforce and the responses of employees to the survey issued by the Commission. We said below and we say in the Commission today that all of those matters have public interest ramifications to which were relevant to the Commission's assessment under section 170MH.

PN418

Now, at paragraph 13 and following we make some observations about the industrial conduct of Cochlear and I should say that these issues are not completely separate. The issue of the characteristics of the Cochlear workforce and their disadvantage in bargaining has to be assessed in the context of the history which is set out in paragraph 13 and following. The gravamen of the submissions on Cochlear's industrial conduct is really that a party who engages in this type of conduct would not readily be trusted to deal directly with individual employees.

PN419

In the absence of the 2005 agreement discriminatory provisions in the individual contracts which will become operative on termination of the 2005 agreements, the particular characteristics of the Cochlear workforce and the responses of employees to the survey issued by the Commission. We said below and we say in the Commission today that all of those matters have public interest ramifications to which were relevant to the Commission's assessment under section 170(MH). At paragraph 13 and following we make some observations about the industrial conduct of Cochlear and I should say that these issues are not completely separate.

PN420

The issue of the characteristics of the Cochlear workforce and disadvantage in bargaining has to be assessed in the context of the history which is set out in paragraph 13 and following. The gravamen of the submissions on Cochlear's industrial conduct is really that a party which engages in this type of conduct would not readily be trusted to deal directly with individual employees in the absence of statutory protections, again, in the context especially of the objectives of schedule 8 being to encourage statutory instruments.

PN421

We refer first of all to - basically what's happened on three occasions is that Cochlear has purported to negotiate with the AMWU. The first time was back in 2005 and then in the middle of those negotiations and without warning has gone off and directly put an employee agreement which had been discussed with no-one to the employees giving them seven days and have a ballot. On each occasion the agreements have been rejected but we stress we're not complaining that Cochlear has put employee collective agreements to its employees. Of course we couldn't possibly make that complaint but the circumstances and the manner in which it was done give rise to some serious concerns.

PN422

The particular instances are set out - the two recent ones are set out in paragraph 17 and following. They were ongoing negotiations at that stage to replace the collective agreement or at least that's what the AMWU thought was going on. A meeting was scheduled with the AMWU for 28 March 2007 to further discuss a replacement for the 2005 agreement and particularly the new classification structure. The Commission will recall Mr Harmer on a number of occasions saying well this classification structure is obsolete, we're entitled to move on, we're entitled to disregard the agreements and the AMWU effectively shouldn't be standing in the way.

PN423

Well the AMWU was busy negotiating that very issue in March 2007 and had a meeting scheduled for 28 March for that very purpose. Without notice either to the employees or to Cochlear on 27 March, the day before the supposed negotiations for a collective agreement Cochlear put out to its employees an employee agreement and within a week had a vote. And as we say in paragraph 18 and we refer to the evidence this was in circumstances where the AMWU had been given assurances that negotiation and discussion would occur. So having given those assurances to the AMWU the day before it has a meeting scheduled Cochlear puts an employee agreement to the workforce which of course was rejected by the employees.

PN424

In May 2007 the pattern was repeated in circumstances which we say are even more worrying because at that stage there were proceedings on foot before the New South Wales Industrial Relations Commission and in the course of the conciliation proceedings the Commission - I'll withdraw that. In broad terms there was disagreement between the parties about the form of instrument which should apply. No surprise there. But the parties were in conciliation trying to resolve issues. The Commissioner suggested a process which should then be followed to move the parties forward and at paragraph 19 we set out what the Commissioner proposed. The Commissioner proposed:

PN425

That with all positions reserved regarding jurisdiction and everything else why don't we get this next logical step underway to get the union document back to the employer by the end of next week and then the employer can adjust the terms of that and see to what extent the terms that are proposed by the union may be able to be agreed.

PN426

So in other words then, perhaps a further conference here if that's acceptable to the parties, to look at the two documents and see what areas of common agreement might be achieved. So the Commission is proposing, let's forget the formalities, let's look at the substance of the agreement and see if we can find some common ground. Mr Hall who is representing Cochlea took instructions on that and came back to the Commission and said:

PN427

Yes, that course of action that was proposed prior to the break is suitable to the company specifically that the union would provide a marked up form. The company isn't in a position to give any time commitment around when it will be able to necessarily respond to that. We are seeing that the nature of the changes sought. It certainly shouldn't be more than a view weeks after that.

PN428

Some other things were said but nothing that relevantly detracted from those passages which are set out. Effectively the Commissioner's note of proposal and Mr Hall has said, yes, that's suitable we will follow that and the matter was set down for report back on 7 June 2007. The AMWU sent its written document as agreed based on amendments to the previous Cochlear proposal and that was the first unsuccessful agreement which was put to a ballot. Cochlear then sought further time to consider the AMWU's proposal and the AMWU agreed to that. So the hearing was deferred to 29 June 2007 from 7 June.

PN429

On 22 June without any notice to the Commission the AMWU or its employees, Cochlear put out another proposed collective - I withdraw that, employee collective agreement to ballot. So having agreed to a process in the Commission, having said to the Commission it would follow that process, without notice to anyone, it went off on a completely different path of again going directly to its employees with a proposal it hadn't negotiated without anyone and again the ballot was rejected.

PN430

So what was advanced before the Commissioner and is advanced now is that that conduct demonstrates a party which doesn't give weight to its own undertakings which cannot be trusted in industrial negotiations even when its speaking to the Commission and a major union like the AMWU let alone if it is negotiating directly with individual employees. Cochlear came back to the Commission on 5 July to report back and basically said, well, we don't want any more negotiations. It was entitled to do that. But it said:

PN431

The company at present has no express intention of terminating that enterprise agreement. That will continue in force but the company sees no need to pursue the issues of an agreement and quite frankly just like to have a break from it all.

PN432

And then this is at page 1465:

PN433

The company as for its managers invested enormous amount of time and energy it is not taking away any conditions that employees are currently under. They enjoy the benefits of everything that it is in the partnership agreement and the company is quite happy for that to stay and remain the case.

PN434

The Commissioner says:

PN435

I am little surprised or unclear as to just what that means. That all of the activity they are trying to establish a new industrial agreement for the future is now, well it's just scraped is it.

PN436

And Mr Hall responds:

PN437

It's certainly scrapped for the time being. As from the company's perspective it obtained plenty of feedback. It reviewed the document that was provided by the union. It incorporated some of the feedback and the employees have spoken.

PN438

So the company at present has no express intention of terminating and the employees have spoken and it was barely a month after that on 6 August that Cochlear wrote to employees saying it had determined that their employment would now be governed by individual contracts and it was those individual contracts which as I've indicated exactly reflected the terms of the rejected collective - employee collective agreement.

And it was at that time when Cochlear notified employees that they would be covered by individual contracts that the contracts were actually provided to the employees. So no discussion, no negotiation, this is what your employment will be covered by, so, so much for the employees having spoken. And we do say that that sequence of conduct demonstrates that Cochlear is prepared to pursue its own interests with disregard to the views of its employees and without regard to its legal or other obligations. We say that the termination of the 2005 agreement will simply facilitate conduct of that nature.
It will leave Cochlear at large and the employees without any mechanism for an effective role in negotiations and we say that's how come it's contrary to the objects of the Act and particularly to the objects of schedule 8 and clause 2. We also say that as part of the conduct of concern Cochlear put out some information to its employees about the individual contracts and that's referred to in paragraph 28 and reference is given which conveys to the employees that there are no disadvantages in the individual contracts and we identify three clear disadvantages which the company neglected. Not only neglected to bring to its employees attention but really by suggesting there was no disadvantage mislead the employees.

PN439

That is removal of the requirements for a meal break after five hours and the removal of an arbitration provision from the dispute settlement procedure and the imposition of a prohibition on overtime for employees who have taken a day of sick or personal leave. The (iii) the imposition of a prohibition on overtime, there was some dispute in the evidence about what that clause of the contract actually meant. The contracts are found at various places in the evidence. One of them is exhibit COCKLEAR3 which is the statements of Mr Howitt which is in volume 2 at page 543.

PN440

I'll just take the Commission to that clause because it has some significance in terms of a number of the grounds advanced by the AMWU. I think Mr Howitt's contract, I am sorry statement, starts at paragraph 611. I am sorry 543 is where the first sentence starts and the individual contract is DH2 which starts at page 585 and clause 9 of the agreement deals overtime, page 588. The relevant part is the last words of the second paragraph:

PN441

If you take sick leave during the week it is expected that you recover from your illness and restrict yourself to ordinary hours only for that week.

PN442

So in effect whatever the cause of your taking of sick leave it doesn't matter. If you have to go to the dentist or have some other short term incapacitating condition, it didn't matter. You were expected not to get any overtime for that week and Cochlear both in evidence and submissions sought to characterise this clause as really, well, we're just looking after our employee's health and safety and really that is about as disingenuous as Cochlear's proposition that our employees have chosen these individual contracts.

PN443

Mr Howitt reluctantly it has to be said conceded that anyone who took sick leave regardless of the reason for that leave would ordinarily return to work be less likely to get overtime during that week. Now that's a disadvantage to employees. It's also discrimatory on our submission and what Cochlear is doing with its undertaking and its deed is cementing into a higher level of formality a provision which is on its face and in practise discriminating against people who have the misfortune to have some condition which requires them to have leave from work.

PN444

So in addition to the bargaining history there is a misleading of employees about the fact that there are some disadvantages in the contract and that's not even touching on the classification issue but just on simple terms and conditions of employment. You lose your five hour meal break requirements. It's something which incidentally is contained in the agreement and the NAPSA and something else which is important we refer to at paragraph 32 because it reinforces the difficulty of expecting these employees to realistically bargain with their employer.

PN445

The AMWU had a couple of ballots of its members and I think of all employees seeking to get an indication from the employees as to what form of regulation they preferred. As it was said below if the majority had said we're happy to go on to these individual contracts we wouldn't be here resisting this application. Again and again employees have said we don't want the individual contracts and that is one of the means by which that was demonstrated was an AMWU survey. What Cochlear did was simply to ban its employees from discussing union matters at work at the time of the ballot.

PN446

That was admitted by Mr Howitt and we say almost certainly unlawful under the freedom of association provisions but none the less a very telling point in terms of we're really going to respect the wishes of our employee, we're really going to bargain meaningfully with our employees if the Commission removes the protection of the collective agreement. Ms Fortescue's evidence demonstrates some further conducts along similar lines about which we will make some submissions in due course. But essentially one of the AMWU's delegates has now been disciplined for speaking to the press about the dispute about regulation of terms and conditions.

PN447

So freedom of speech amongst its employees is something positively discouraged by Cochlear and that's another consideration that we don't say each of these individually has huge weight but we say look at the cumulative issues going to the conduct of Cochlear and then consider whether it would be to the contrary for the public interest to effectively endorse such conduct by saying, well, we'll allow - I withdraw that. The Commission of course has to consider what will happen if the agreement is terminated and simply put given that track record one can expect further behaviour of that nature and that's not simply a matter of concern to the parties involved having regard to the objects of the Act.

PN448

A situation where employees have so little ability to have input on industrial issues, in our submission, is clearly contrary to the objects of the Act which place emphasis on both parties being able to contribute to the type of regulation which will apply in the workplace. Our submissions below then go on to the effect of clause 1.4 and I've taken the Commission to that already and I then go on the issues concerning Cochlear's disregard for its obligations under the 2005 agreement.

PN449

The Commission would be award that Cochlear's original strategy was to terminate the agreement pursuant to the provisions of the New South Wales Act and it took steps to do that by giving three months notice under section 44. I think it's 44.3. In any event by that time Work Choices had come into effect and the agreement was a preserved state collective agreement for the purpose of schedule 8 and the AMWU advised that it thought that it could but the state Act couldn't be used as a mechanism. There was a dispute between the parties about whether that could or couldn't be done but in any event that precipitated the application in this Commission.

PN450

But as we say in paragraph 51 Cochlear was well aware that you couldn't apply the collective agreement and the individual contracts. It notified its employees in August 2007 that the contracts would be applying and at that stage it indicated and will be terminating the certified agreement and then the contracts will be applying. Sent a memo to employees to that effect and parts of that memo are set out at page 1470 of our submissions and we rely on that simply to show that Cochlear was well aware that you can't apply both the collective agreement and the contracts particularly with respect to the classification structure because as I think I've indicated one was based on skill and the other was based on points for tasks performed.

PN451

In its memo Cochlear said:

PN452

The termination of the EBA will ensure there is no confusion around your employment conditions particularly with regards to the new classification matrix. The EBA will officially terminate in early November 2007 at which stage your employment conditions outlined in your individual contract will commence.

PN453

So Cochlear was clearly foreshadowing we'll terminate the agreement then we'll bring in the contracts, these conditions and that is the conditions of the individual contracts are a combination of the four per cent wage increase, the new classification matrix substantive conditions from the EPA. Mr Howitt agreed in cross-examination that the classification matrix in the 2005 agreement and the classification matrix in the individual contracts are simply not compatible. You have to apply either one or the other and Cochlear disregarded the system in the agreements and the applied the new system in the contracts.

PN454

Now the Commissioner below did not accept our argument that that constituted a breach of the classification provisions in the agreement and the response of Cochlear to date has simply been to say, well, they got paid more money so it couldn't be a breach. Well actually it's clear in our submission that when you have one set of provisions which say if you acquired certain skills you can get an upgrade to the next level. But then you apply a different set of provisions which say unless you get a certain number of points the tasks meeting certain competencies of particular tasks including the time it takes you to perform those tasks then you are by definition in breach of the agreement.

PN455

And effectively what happened was Cochlear - its role out plan was interrupted because it realised it had to proceed under the Federal Act but it didn't alter its position with respect to the classification structure in the contracts, it simply applied that and disregarded its obligations under the agreement. Now one of the things Cochlear relied on below was the allegation that while lots of people - I will withdraw that. In various respect Cochlear asserted that the new classification structure is better and therefore that absolves it from any responsibility to comply with the agreement.

PN456

It pays more money and that disposes of the issue. However the evidence of the employees concerned was a quite different effect. If one looks at the agreement - I probably should take the Commission to the agreement. The classification of an employee is determined by a career development matrix which is at schedule A to the agreement. Again conveniently found it connects to Mr Howitt's first statement which is starting at page 550 of appeal book 2 and schedule A starts at page 581. Before I take the Commission to the matrix I'll just refer to clause 3.3 at page 555 of the appeal book. Clause 3.3 refers to the development matrix identifies that it has two streams. The course stream and the functional stream and says:


The matrix will provide guidance for both employees and management in determining the appropriate level of recognition of acquired skills. The career development matrix will be overlayed with the salary ranges for each level of the matrix.

PN457

And then at schedule A the first thing is the salary levels for the different production grades and following at page 582 and following are the various skills which are required to achieve each grade. The first is the course stream which is skills of a general nature and the second is a functional stream which involves more specific skills but still of a general nature and not referable to particular functions in particular parts of the respondent's operations.

PN458

Then there is at page 584 there is a testing procedure.

PN459

SENIOR DEPUTY PRESIDENT KAUFMAN: Ms Howell, do you have any indication of how long you're going to be?

PN460

MS HOWELL: As far as the submissions on the public interest test goes the main issues I have still to deal with are the inconsistencies between the grievance and the contracts and the inconsistency between the NAPSA and the contracts. I think most of the other matters I've covered but these two issues are certainly issues of significance for our case so probably another hour to two hours I would say.

PN461

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes. Well, we will take a short break and we'll consider whether we sit on or whether we try and find some other time. We will adjourn for about ten minutes.

<SHORT ADJOURNMENT [4.27PM]
<RESUMED [4.47PM]

PN462

SENIOR DEPUTY PRESIDENT RICHARDS: Just before we get into issues logistics, I just have one question, it's just a clarification issue for the Bench's benefit and that is can we be informed just as to the exact status of the common law contracts. What elements, if any, of them are currently being applied?

PN463

MS HOWELL: All of them, all of them as we understand.

PN464

SENIOR DEPUTY PRESIDENT RICHARDS: From what time, from what date?

PN465

MS HOWELL: From the date in, it could be August or November 2007. I think it's around about 2007. There is evidence of that, Commissioner.

PN466

SENIOR DEPUTY PRESIDENT RICHARDS: There's been no breach of proceeding bought in relation to the PC you say, preserved collective.

PN467

MS HOWELL: Sorry?

PN468

SENIOR DEPUTY PRESIDENT RICHARDS: There has been no breach of proceedings bought in relation to these preserved collective state agreements I presume?

PN469

MS HOWELL: No, Commissioner. No, your Honour, sorry.

PN470

SENIOR DEPUTY PRESIDENT RICHARDS: Okay. Is that the common position?

PN471

MR HARMER: Certainly, well there's no breach of proceedings. Obviously we'll respond in due course to what's been put.

PN472

SENIOR DEPUTY PRESIDENT RICHARDS: Yes.

PN473

MR HAMER: The material going to conduct and to breach is not accepted at first instance in any regard and we'll deal with it otherwise but there is no formal proceedings on breach.

PN474

SENIOR DEPUTY PRESIDENT RICHARDS: Is it a case that the individual - the common law contracts - the terms and conditions of the common law contracts have been applied since approximately August. Is that right?

PN475

MR HARMER: November 2007, I am instructed.

PN476

SENIOR DEPUTY PRESIDENT RICHARDS: Since November of 2007.

PN477

MR HARMER: That's correct.

PN478

SENIOR DEPUTY PRESIDENT KAUFMAN: We're not inclined given any fear in which you put us, Ms Howell, to continue today.

PN479

MS HOWELL: Apologies, your Honour.

PN480

SENIOR DEPUTY PRESIDENT KAUFMAN: It will just take it beyond what is reasonable for one to ask but we've had a look our individual diaries and have come up with 20 November as the first day upon which the Bench can, the Full Bench, can convene. We're inclined to, subject to what you say, Ms Howell, to ask you to put - to finish what you're putting today and deal with the matters that you say you want to deal with in writing that have arisen from Mr Harmer's submissions also on that day and then Mr Harmer will reply.

PN481

MS HOWELL: Yes, your Honour, that's suitable to us. If I understand your Honour we would put in writing the matters to do with the legal issues.

PN482

SENIOR DEPUTY PRESIDENT KAUFMAN: It's a matter for you how you wish to deal with it, in writing or on the day that they will be dealt with to finality on that day.

PN483

MS HOWELL: Yes, your Honour.

PN484

SENIOR DEPUTY PRESIDENT KAUFMAN: And Mr Harmer will be in a position to and expected to reply, to make his reply on that day if it's also decided another full day.

PN485

MS HOWELL: Subject to the Commission's wishes I think we'll ideally set ourselves a timetable.

PN486

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes.

PN487

MS HOWELL: So we'd understand each other's cases before the day.

PN488

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, well, what we're doing is you're making your submission, you indicated that you want to - that you're unable today to deal with certain matters that Mr Harmer raised.

PN489

MS HOWELL: Yes.

PN490

SENIOR DEPUTY PRESIDENT KAUMAN: Well, we expect those matters to be dealt with either in writing prior to or orally on the 20th and then Mr Harmer will reply - exercise his normal right of reply.

PN491

MS HOWELL: Yes, your Honour. The only matter I'd raise in that respect is as we indicated with some of the matters about inconsistency especially with the NAPSA we really will be hearing the respondent - Cochlear's case for the first time whenever Cochlear deals with it and in that respect we either formally or informally seek a timetable so we can respond to that.

PN492

SENIOR DEPUTY PRESIDENT KAUFMAN: Well, if Cochlear hasn't put it, it won't have an opportunity to put new matters, Mr Howell will be limited to reply. Are you planning to put something further in relation to it, to the NAPSA?

PN493

MR HARMER: Your Honour, if I could perhaps say this. There's about five week to the 20 November and it would certainly be our desire given the submissions we made earlier in the day about a split hearing that the matter definitely be resolved on the day or heard to finality.

PN494

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, that's certainly our intention.

PN495

MR HARMER: Absolutely, your Honour, and given that there's been some comment about the volume of material we have put on which is not even being addressed today, it would be our respective submission that it would be a benefit to the Commission and both parties if there was a timetable set. Perhaps for the union within two weeks to put on whatever else it wants to in response to that material and the other areas identified. We'd respond in two weeks. That leaves another week for the union to put on anything further but we turn up on 15 November - sorry, 20 November, I'd be lonely on the 15th. The 20th that, you know unless there's something that needs to be addressed in addition we would expect the submissions to be somewhat short.

PN496

We just think that allows the Commission and the parties in a risk management sense absolute certainty that there's not going to be any further extension beyond that date.

PN497

SENIOR DEPUTY PRESIDENT RICHARDS: Mr Harmer, we're not inclined to exceed to that request. There's already been voluminous material filed and we fear that that will just give you an opportunity to chop down a few more trees. We're at a state where Ms Howell is putting her submissions, she wasn't able to conclude them in the time frame that we had hoped and we're finding another day for her to complete her submissions and for you then to reply. Then the only complicating factor seemed to us to be that she had said that some of the matters you put today took her by surprise and she needed time to deal with that.

PN498

Well, she's got that time by default and if she wants to put her case in writing that's to your advantage as much as to hers and as long as she gives you adequate notice or gives you those - anything she puts in writing within a reasonable time, that will be of assistance to you and then it falls only for you to reply to her submissions. I don't understand - I didn't understand that you wanted to put new submissions in relation to the NAPSA to which Ms Howell would want to reply again. That doesn't seem to us to be a satisfactory situation.

PN499

MR HARMER: Yes, your Honour. Ms Howell, correct if I'm wrong but I understood her to address the practical onus which I think she accepts rests with the union under the Act in terms of the fresh public interest issue and to maintain that, leave aside anything else she had a right of reply on that there in that practical onus. Now, whether that's appropriate or not that's what I understand her to putting earlier and she sought some time to do that. There were a number of things that Mr Howell asked to address in writing.

PN500

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, well, she can do that.

PN501

MR HARMER: Yes.

PN502

SENIOR DEPUTY PRESIDENT KAUFMAN: Is there anything that you have not put that you intended to put that is not by way of reply?

PN503

MR HARMER: Your Honour, a certain of the matters being put now and the NAPSA would be an example whereby material not in the appeal book has been put forward and as I understand it there's going to be certain submissions we would be replying to. I don't see us putting forward any fresh material at all and I certainly don't see a difficulty in us addressing what we need to concisely on the next date. As I say our suggestion was in more abundant caution to make sure that that was - - -

PN504

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes, very well. Well the matter will be adjourned until 10 am on 20 November in Sydney. Ms Howell, if you do wish to place any of your further material or in writing, would you please do so in ample time for Mr Harmer to be able to deal with it and reply.

PN505

MS HOWELL: Yes, your Honour.

PN506

MR HARMER: May it please.

PN507

SENIOR DEPUTY PRESIDENT KAUFMAN: Yes. I adjourn the Commission to the 20th.

<ADJOURNED UNTIL THURSDAY 20 NOVEMBER 2008 [10AM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #RESPONDENT1 AFFIDAVIT OF MS FORTESCUE, AFFIRMED ON 13/10/08 PN276
EXHIBIT #APPELLANT 1 COCHLEAR DEED PN285