|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Fair Work Commission Transcripts |
TRANSCRIPT OF PROCEEDINGS
Fair Work Act 2009
COMMISSIONER RIORDAN
C2014/6756
s.739 - Application to deal with a dispute
Lend Lease Building Pty Ltd (LLB)
and
Construction, Forestry, Mining and
Energy Union
(C2014/6756)
Sydney
10.00 AM, THURSDAY, 19 FEBRUARY 2015
PN1
THE COMMISSIONER: Could I have the appearances, please?
PN2
MR WARD: Thank you, Commissioner. My name is Ward. I seek leave to appear for the applicant.
PN3
THE COMMISSIONER: Thank you.
PN4
MR B DOCKING: May it please the Commission, Docking, initial B. I seek permission to appear for the CFMEU.
PN5
THE COMMISSIONER: Thank you. Leave is granted.
PN6
Mr Ward?
PN7
MR WARD: Thank you, Commissioner. This is an application brought by Lend Lease Building Pty Ltd to deal with a dispute under a binding arbitration provision. Commissioner, you're aware, I think, that the matter was previously before the Commission and a decision was made that that was an application brought by my learned friend’s client. You're aware, I think, that the Commission heard contested argument about that application and then resolved or determined that it was without jurisdiction to hear the dispute.
PN8
That decision, put briefly, was made on the basis of a lack of compliance with pre-requisite dispute settlement processes. This application is now brought by my client seeking resolution of essentially the same underlying point of construction of the relevant enterprise agreement.
PN9
Commissioner, there is an agreed bundle of documents which is described as the consolidated bundle of material from the first proceedings which I'll abbreviate as the CB bundle, if I may. Commissioner, I understand that the material contained in that bundle is before the Commission today by agreement and I tender the bundle.
THE COMMISSIONER: I'll mark that as L1.
EXHIBIT #L1 BUNDLE OF MATERIAL FROM THE FIRST PROCEEDINGS, ABBREVIATED AS CB
PN11
MR WARD: Thank you. Commissioner ‑ ‑ ‑
PN12
MR DOCKING: Commissioner, there might be just one correction to the index. I think the tab 16 - the hearing was 6 June 2014. It’s just a minor typo.
PN13
MR WARD: That sounds right, Commissioner.
PN14
THE COMMISSIONER: Yes, thank you.
PN15
MR WARD: Commissioner, I also note that some objections were raised by me to the written statements tendered on behalf of the present respondent in those proceedings. Those objections are recorded in the transcript of the hearing and they run from approximately CB page 658 to 668. The Deputy President on that occasion allowed the material into evidence and reflected my objections on the basis that they be a matter of weight and I ask that the Commission do the same today.
PN16
THE COMMISSIONER: I shall do the same, Mr Ward.
PN17
MR WARD: Thank you. Commissioner, there is an additional further statement which is not in the consolidated bundle, which my friend has seen some time ago, a supplementary statement of Amanda Hughes, dated 7 November 2014, a copy of which I hand up.
PN18
THE COMMISSIONER: Thank you.
PN19
MR WARD: And that’s the evidence for the applicant.
PN20
THE COMMISSIONER: I'll mark the supplementary statement as exhibit – was that the practice of the Deputy President?
PN21
MR WARD: Yes, it was, I think. Yes, yes.
THE COMMISSIONER: I'll mark the supplementary statement of Ms Amanda Hughes as exhibit L2.
EXHIBIT #L2 SUPPLEMENTARY STATEMENT OF MS AMANDA HUGHES
PN23
MR WARD: Thank you, Commissioner. That's the evidence for the applicant.
PN24
THE COMMISSIONER: Thank you.
PN25
Mr Docking?
PN26
MR DOCKING: Thank you, Commissioner. I can confirm that the supplementary statement maker is required for some very brief cross‑examination, that being Ms Hughes. There are two further matters I want to put before the Commission. The first is I tender a letter 9 February 2015 from Murray Coleman, managing director, Australia Building. It is a Lend Lease Building Pty Ltd letter.
PN27
MR WARD: No objection, Commissioner.
THE COMMISSIONER: I shall mark this correspondence as exhibit C1.
EXHIBIT #C1 LETTER FROM MURRAY COLEMAN, AUSTRALIA BUILDING DATED 09/02/2015
PN29
MR DOCKING: Commissioner, it’s a matter for the Commission how it wants to treat the next document, which is a copy of clause 32, superannuation, from the Building and Construction General On Site Award 2010. The Commission might have seen that was subject to some submissions previously and I'm not sure if the Commission, as presently constitutes, marks awards or treats them as necessary to mark.
PN30
THE COMMISSIONER: MFIs normally. I don’t normally mark awards, but I'll mark it as an MFI.
PN31
MR DOCKING: It’s particularly on the second page, 32.4, subclause (j) provides:
PN32
A superannuation fund or scheme which the employee is a defined benefit member.
PN33
In other words, the underpinning award like this enterprise agreement has provided as an option that superannuation obligations can be satisfied by the employer paying into the defined benefit scheme.
THE COMMISSIONER: Yes. I'll mark the award extract as MFI 1.
MFI #1 BUILDING AND GENERAL CONSTRUCTION ON SITE AWARD 2010 EXTRACT
PN35
MR DOCKING: Thank you, Commissioner. They were the additional matters.
PN36
THE COMMISSIONER: Mr Ward?
PN37
MR WARD: Commissioner, I call Mrs Amanda Hughes.
PN38
THE COMMISSIONER: Thank you.
THE ASSOCIATE: Please face his Honour and say your name and address?‑‑‑My name is Amanda Hughes (address supplied).
<AMANDA LEE HUGHES, AFFIRMED [10.11 AM]
<EXAMINATION-IN-CHIEF BY MR WARD [10.11 AM]
PN40
MR WARD: Mrs Hughes, can you state your full name for the Commission, please?‑‑‑It’s Amanda Lee Hughes.
PN41
Could you describe your current position within ‑ ‑ ‑?‑‑‑I'm the group head of compensation and benefits at Lend Lease Corporation.
*** AMANDA LEE HUGHES XN MR WARD
PN42
You've made, I think, a supplementary statement on 7 November 2014?‑‑‑I did.
PN43
And are the contents of that statement true and correct?‑‑‑They are.
PN44
Thank you. I have nothing further.
THE COMMISSIONER: Mr Docking?
CROSS-EXAMINATION BY MR DOCKING [10.12 AM]
PN46
MR DOCKING: Thank you, Commissioner.
*** AMANDA LEE HUGHES XXN MR DOCKING
PN47
Going to paragraph 5 of that supplementary statement, the last line and a half, do you see it says:
PN48
LLB does not make contributions directly to the new JDA DB division. LLC does.
PN49
?‑‑‑I do.
PN50
Do you recall back 6 June 2014, I asked you some questions about LLB reimbursing LLC for the contributions made to the defined benefit scheme?‑‑‑I do recall you asked some questions.
PN51
And at that stage, to summarise your evidence, you were not sure if LLB made actual money contributions to reimburse LLC or whether it was an accounting adjustment made?‑‑‑I knew that there were accounting adjustments. I don't know about the cash flow movements between group companies.
PN52
For the new defined benefit scheme, are you able to say whether LLB pays some sort of contribution to LLC to make good the defined benefit amounts?‑‑‑I’d repeat the earlier statement. I don't know about cash flow. There would be an accounting recharge between group entities.
PN53
You can’t shed any light on the nature of ‑ ‑ ‑?‑‑‑No, I cannot.
PN54
What about the frequency at which LLB is required to make those contributions, whether it be accounting or cash?
PN55
MR WARD: I ‑ ‑ ‑?‑‑‑I don’t. I don't have the answer to that. That's something to do with the internal accounting policy; that I'm not involved with.
PN56
THE COMMISSIONER: So why would LLC make contributions on behalf of LLB employees?‑‑‑LLC has always been the entity that’s made all of the contributions as one payment that has gone across historically. There’s employees employed by multiple ‑ ‑ ‑
*** AMANDA LEE HUGHES XXN MR DOCKING
PN57
I saw there was some argument in the earlier proceedings in relation to - Mr Ward, you might want to take this on notice. I thought there was some discussion between the parties and her Honour in relation to that relationship between LLB and LLC and it came to the orders – the issue that any orders in relation to this matter could not bind LLC because they're not a party to it.
PN58
Now, this evidence today would indicate or throws new light on that issue, compared to what was before her Honour.
PN59
MR WARD: Not at all, with respect. The position is that LLB is the party to the enterprise agreement. LLC is the group party to the trust deed and the participation schedule. So LLC is the responsible Lend Lease entity that is the Lend Lease entity responsible for making superannuation contributions. LLB is the employer which is bound by the enterprise agreement. This will be the JDA8 employees. So there is no nexus between – and this is why I'm going to walk you through some of the provisions of the participation schedule and the trust deed.
PN60
There is no nexus between LLC and these proceedings brought under the enterprise agreement, save that LLC is the party bound by the trust deed of the superannuation trust and participation schedule to make contributions. So, in effect, LLB fulfils its obligations through LLC’s contributions.
PN61
THE COMMISSIONER: LLB fulfils its obligations to LLC?
PN62
MR WARD: Under JDA8 through LLC’s participation in the superannuation trust.
PN63
THE COMMISSIONER: So who employs these 19 workers?
PN64
MR WARD: LLB.
PN65
THE COMMISSIONER: So how does LLB comply with its obligation under the Superannuation Guarantee Levy Legislation?
PN66
MR WARD: Because the employees are parties to a superannuation plan in which contributions are made on their behalf by a third party, LLC. So the employees are members ‑ ‑ ‑
PN67
THE COMMISSIONER: Hopefully, you're going to explain to me how a third party can ‑ ‑ ‑
PN68
MR WARD: I am, yes, because ‑ ‑ ‑
PN69
THE COMMISSIONER: ‑ ‑ ‑ satisfy an obligation upon a ‑ ‑ ‑
*** AMANDA LEE HUGHES XXN MR DOCKING
PN70
MR WARD: The answer is relatively simple when one looks at the actual superannuation documents because both principal employer and a lower case employer are referred to in the participation schedule as being entities and the tripartite relationship exists at that level and the superannuation plan, but not at the level of JDA8.
PN71
THE COMMISSIONER: That's fine.
PN72
MR WARD: If I can just finish this. My submission to the Commissioner on the last occasion – to the Deputy President – was correct and I remake it. LLC is not a party to these proceedings and cannot be because it is not a party to JDA8.
PN73
THE COMMISSIONER: All right, thank you.
PN74
Sorry, Mr Docking.
PN75
MR DOCKING: Thank you, Commissioner.
PN76
On the last occasion you gave evidence, you understood the surplus was some 12 or 13 million dollars?‑‑‑Is that a question?
PN77
Well, is that correct?‑‑‑Yes.
PN78
I understand there’s been subsequent correspondence, are you aware of, between the CFMEU about the surplus?‑‑‑Yes.
PN79
Looking at the defined benefit members only, are you able to identify the amount of funds that are held in their accounts or their defined benefit scheme?‑‑‑Not off the top of my head. I don't know today what the total is for each of those members.
PN80
Do you know what the total contributions that LLB paid LLC for when LLC paid into the superannuation fund are in respect of the remaining defined benefit construction worker members?‑‑‑Just going back over a previous letter. I know we've been through this before in terms of the total value of the liabilities today. I also know we've talked about the total liabilities at a notional end date of 31 March. So I thought it was around six or seven million, something to that extent.
*** AMANDA LEE HUGHES XXN MR DOCKING
PN81
Do you need to check anything and, if so, please do so?‑‑‑Look, I don't have it today. Every day that calculation changes. I don't know what the total value is today. I think in the response that we gave to the CFMEU dated - I think it was around 28 November - I think we said there was an amount of about 7.2 million.
PN82
I want to show you a document which is a letter of Murray Coleman marked exhibit C1, I believe.
PN83
I can provide a clean copy if the Commission wishes to retain the exhibit or give the exhibit copy to the witness, whichever way the Commissioner prefers it.
PN84
THE COMMISSIONER: No, provide a copy. Yes.
PN85
MR DOCKING: Have you previously seen a copy of this letter? Just have a look. It’s one and a half pages?‑‑‑I did see a copy sometime ago.
PN86
Did you see it before it was issued to the various employees as well as to Frank O’Grady of the CFMEU?
PN87
MR WARD: I object on the grounds of relevance, Commissioner.
PN88
MR DOCKING: I'll withdraw it for a moment.
PN89
I want to take you to the first page and do you see near the bottom there’s a paragraph lettered A?‑‑‑I do.
PN90
And do you see it states:
PN91
Pending the determination of any appeals, LLB will take what steps it can to maintain the DB division for the life of JDA8.
PN92
?‑‑‑Yes.
PN93
Do you see what I'm referring to?‑‑‑Yes, I can see that.
PN94
Did you see that written representation before it was sent to employees and to Mr O’Grady of the CFMEU?‑‑‑Yes.
*** AMANDA LEE HUGHES XXN MR DOCKING
PN95
Were you consulted about it?‑‑‑I saw it. I wasn't asked or consulted, no.
PN96
Are you able to assist to explain what steps LLB will take to maintain the defined benefit division for the life of JDA8 if the eventuality occurs set out in that part of the letter?‑‑‑No, I can’t. I'm not employed by LLB and I think this was an “if” so ‑ ‑ ‑
PN97
Do you think it might be that given they're a wholly owned subsidiary of LLC, they’ll prevail upon LLC to maintain the division for the life of the JDA8?‑‑‑I don't know what they’ll do.
PN98
Can’t you give any assistance at all to explain what Mr Coleman meant by saying:
PN99
LLB will take what steps it can to maintain the DB division.
PN100
MR WARD: I object. I object, Commissioner. It’s asking for speculation. It’s asking for evidence from somebody else who’s not here. The witness can’t answer that question.
PN101
MR DOCKING: I'm just wanting to confirm this witness called by this applicant cannot shed any light from her role in these matters on what steps might be taken.
PN102
THE COMMISSIONER: Yes, I'll allow the question?‑‑‑I don't think I can add anything further. I'm not employed by LLB. I'm not a director of LLB, so I can’t say specifically what steps LLB will take.
PN103
MR DOCKING: Do you know if LLB spoke to the superannuation trustee before this letter was sent about what steps it could take to maintain the DB division for the life of JDA8?‑‑‑I'm not sure. I don't believe so.
PN104
But they may have and you weren't informed. Is that right?‑‑‑It’s possible. I don't believe that they did, that LLB did, but ‑ ‑ ‑
PN105
And if you go to the second page, the second‑last paragraph, last sentence, do you see it says:
PN106
LLC has also to date directed that the bonus be paid in respect of JDA8 employees who have retired prior to resolution of the current dispute.
*** AMANDA LEE HUGHES XXN MR DOCKING
PN107
?‑‑‑I do.
PN108
Do you know anything about who in LLC gave that direction?‑‑‑I think it was a combined decision of people who’d been involved throughout the process.
PN109
What do you mean by the people involved throughout the process by name and entity?‑‑‑I think there was probably some discussion between the general counsel, myself, people in finance about, you know, what we should do while the dispute was pending.
PN110
Who are you employed by?‑‑‑LLC.
PN111
Who’s general counsel employed by, if you know?‑‑‑LLC.
PN112
And the other person you mentioned?‑‑‑I don't know.
PN113
What’s the name of the other person?‑‑‑Look, there’s a number of different people involved from HR to finance, to tax, to general counsel.
PN114
I then want to just clarify another matter in your most recent supplementary. It’s again in paragraph 5, fourth line. Do you see you refer to:
PN115
Each of LLC and the trustee have the right to exercise powers in relation to the termination of the new JDA DB division without LLB’s request or agreement.
PN116
?‑‑‑I do.
PN117
If there’s no objection, might I show the witness a copy of the consolidated bundle at tab 15 – withdraw that – tab 16 being the transcript of the 6 June hearing? In particular, I want to show the witness - I'll open it at PN620 through to 623, which is stamped CB-694 in the right‑hand corner. Rather than me reading out loud the questions and answers, I thought it was best to have handed to you a hard copy?‑‑‑Sure.
PN118
If you can read to yourself and tell me when you've finished what’s identified as PN620, 621 and 622?‑‑‑Yes, I’ve read that.
*** AMANDA LEE HUGHES XXN MR DOCKING
PN119
As at today, is the answer you gave at 620 true and correct?‑‑‑I believe so.
PN120
Is the answer you gave at 621 at as today still true and correct?‑‑‑I believe so.
PN121
Is the answer you gave at 622 as at today still true and correct?‑‑‑I believe so.
PN122
Thank you, Commissioner. I have no further questions.
PN123
THE COMMISSIONER: Just in relation to, the trustee is an interesting definition in superannuation terms. It’s normally a trustee board. Who makes up the trustee board?‑‑‑It’s an external trustee, so it’s I think Plum. So they have independent trustees. I'm not aware of their name.
PN124
So does LLC have anybody sit on that trustee?‑‑‑No.
PN125
At paragraph 6 of the supplementary statement, you talk about the movement of the 19 JDA members, but also indicate that there have been 200 non-JDA members moved to that accumulation scheme. Did they do so voluntarily?‑‑‑They weren't given an election. It was a closure of that division and they were moved to accumulation as part of that closure.
PN126
At paragraph 7 you refer to paragraph 19 of your primary statement, which is behind tab 4, from memory, of that bundle. Do you have tab 4? You've got your statement there.
PN127
MR DOCKING: Might I get the folder back from the witness as a copy in the witness box of her first statement?
PN128
THE COMMISSIONER: It’s paragraph 19 of your statement. You provide three reasons as to why LLC have undertaken this process. Paragraph (b) indicates to me that the employees in the defined benefit scheme are going to be disadvantaged if they move across to the accumulation scheme. Is that what you meant by that provision?‑‑‑No, absolutely not. I mean, (b), the equity and consistency of superannuation benefits is really that I think there’s about 11,000 employees in Australia and we have 19 with a defined benefit. So it was more just consistency amongst the employees.
PN129
So the use of the word “equity” in that provision is superfluous or ‑ ‑ ‑?‑‑‑That's comparable ‑ ‑ ‑
*** AMANDA LEE HUGHES XXN MR DOCKING
PN130
‑ ‑ ‑ or not relevant?‑‑‑ ‑ ‑ ‑ consistency the same.
PN131
So you're suggesting to me then that a defined benefit scheme of this type is exactly the same or provides exactly the same benefit as an accumulation scheme?‑‑‑No, that’s not right. I mean, a defined benefit provides a benefit in accordance with a formula, whereas accumulation superannuation, it depends on the value of the investments and the choices that that person makes.
PN132
Yes, I do understand that. But the question goes to one of equity and benefit as to whether or not an employee is better off to be in a defined benefit scheme compared to an accumulation scheme and you're saying to me that if I read paragraph (b) as indicating that consistency and equity across all employees implies that by having people in a defined benefit scheme does not provide consistency or equity on the basis that the defined benefit scheme is superior to the accumulation scheme?‑‑‑That wasn't the intention of that statement. I mean, I guess there’s a question of what is superior. Is that in terms of investment returns or certainty around a formula? So there’s a lot of people who’ve had better returns under an accumulation scheme. It all depends on the investment choice, but the idea was more around parity.
PN133
Yes. But the investment strategies in the defined benefit scheme can be manipulated to mirror a certain product in the accumulation scheme, can it?‑‑‑No, the employees had an entitlement. It was a formula based on years of service and a certain percentage of their ‑ ‑ ‑
PN134
I understand that. I should indicate to you I had 14 years sitting as a trustee in a superannuation fund?‑‑‑Yes.
PN135
And I chaired the investment committee of that superannuation fund for over a decade so I do understand a little bit about superannuation, but the investment strategies of the defined benefit scheme, though, can match that of an accumulation scheme?‑‑‑Yes, but the investment strategy of the defined benefit scheme has no impact on the benefit under the defined benefit.
PN136
I understand that. I understand that. You're the one that raised the investment strategies, not me, in the evidence. I understand the way the defined benefit scheme is paid. Right? So you raised the issue about the investment strategies, so what was the intent of doing that?‑‑‑I think the question was about where did we get this idea of equity or consistency and I thought you'd asked me whether it was true that defined benefit provided a better benefit than accumulation or the same benefit as accumulation, so it was in reference to whether it was the same.
*** AMANDA LEE HUGHES XXN MR DOCKING
PN137
You then answered the issue about investment strategy. There’s no need to pursue that any further. So you're basically saying to me that the defined benefit scheme was closed to the 219 employees to ensure that there was equity and consistency across all employees, but that the equity issue doesn't go to one of disadvantage. Is that what you're suggesting to me?‑‑‑Sorry, what was – I didn't hear the ‑ ‑ ‑
PN138
That the equity comment that ‑ ‑ ‑?‑‑‑Yes.
PN139
‑ ‑ ‑ you put in your original statement doesn't go to disadvantage. It’s not the fact that every other employee of Lend Lease, apart from the 219, were getting a lesser benefit; that wasn't the issue?‑‑‑I think it was a different benefit not a lesser benefit.
PN140
So what would normally happen in a defined benefit scheme when the last employee retires?‑‑‑I'm not sure if I can answer that. I’ve only had experience with the Lend Lease defined benefit scheme.
PN141
So what’s happened with the other Lend Lease defined benefit schemes when they’ve closed?‑‑‑There’s one in the UK, which I'm not familiar with and this is the only one we have in Australia.
PN142
Fair enough. Thank you.
PN143
Mr Docking, anything in relation to anything I’ve had to say?
PN144
MR DOCKING: No, Commissioner.
PN145
THE COMMISSIONER: Thank you.
PN146
Mr Ward?
MR WARD: Some re‑examination, if you please, Commissioner.
<RE-EXAMINATION BY MR WARD [10.34 AM]
*** AMANDA LEE HUGHES RXN MR WARD
PN148
MR WARD: Ms Hughes, in relation to the questions the Commissioner just asked you, could I ask you to have a look at your first statement, if you have it there?‑‑‑Yes.
PN149
And just take a moment to re-read paragraphs 22 through to 39, if you would?‑‑‑Yes.
PN150
Having re-read those paragraphs, could you answer this question: before taking any steps to inform employees of the proposal to close the defined benefit scheme or defined benefit division, did LLC or, to your knowledge, any part of the Lend Lease Group obtain any actuarial advice about the potential impacts upon the members of the defined benefit division?‑‑‑Yes, LLC obtained advice from the client actuary, Guy Holly, in relation to all members in the plan.
PN151
Is it your understanding from that actuarial advice that if the defined benefit division were closed, members would be better off or worse off following a transfer to the accumulation division.
PN152
MR DOCKING: I object. It would require you to look at the individual circumstances of what’s left of 19 individual workers, all of whom one can assume have taken their own advice and made their own decision ‑ ‑ ‑
PN153
MR WARD: No.
PN154
MR DOCKING: ‑ ‑ ‑ and this is just done as a general appellation. If they want to dispute the decision of the 19 workers, they’d have to deal with each and every one of the 19 workers’ circumstances.
PN155
MR WARD: There’s no evidence of any decision of any worker, let alone 19 of them. I press the question, Commissioner.
PN156
THE COMMISSIONER: I'll allow the question.
*** AMANDA LEE HUGHES RXN MR WARD
PN157
MR WARD: Thank you?‑‑‑There’s no way of saying with absolute certainty what the position of every member would be because there’s a lot of things about the future we don't know. We don't know what the future salary growth might be. We don't know how long that employee may be an employee of the Lend Lease Group. We don't know exactly what investment choices that employee may make, but we did have the actuary do some modelling using some reasonable assumptions about future investment growth or future salary growth and those models indicated that the employee appeared to be, or could be, better off under the accumulation plan than a defined benefit plan.
PN158
You were asked a question by the Commissioner about the transfer of some 200 non-JDA8 employees to the accumulation division. Have you personally, or are you aware if, any complaints having been received directed towards that transfer by any of those members?‑‑‑Not since the transfer has occurred. There’s been a couple of administrative questions, but nothing further.
PN159
You were asked some questions by my learned friend ‑ ‑ ‑
PN160
MR DOCKING: I need to object. I don't think the witness answered the question. What about complaints before they were forcibly transferred? It was very carefully answered directing to after.
PN161
THE COMMISSIONER: That's a relevant question, Mr Docking.
PN162
MR WARD: As I understood the thrust of the Commission’s questions were directed towards the fact that there has been a mass transfer of the overwhelming majority of people who were in the old defined benefit division and it’s a perfectly legitimate question, in my submission, to ask, “Have any of them complained afterwards?”
PN163
THE COMMISSIONER: The reasoning from my question, though, was in relation to whether or not the 200 non-JDA employees did so voluntarily or were they directed.
PN164
MR WARD: And the answer was given and it stands.
PN165
THE COMMISSIONER: That it was a direction, basically.
PN166
MR WARD: Well, the division was closed. Yes.
PN167
THE COMMISSIONER: Yes.
PN168
MR WARD: I'll ask a further question.
*** AMANDA LEE HUGHES RXN MR WARD
PN169
Was there a process of consultation undertaken at the time in relation to those 200 members?‑‑‑There was.
PN170
You were asked ‑ ‑ ‑
PN171
THE COMMISSIONER: The follow up question obviously is: were there any complaints from any of these 200 employees about going over to the accumulation scheme?‑‑‑Look, the views were pretty mixed. There were obviously some people who were not happy with not having a choice. There were others who had expected this for a very long time and were surprised it had taken as long as it had. There were others who through the process actually realised that there were some advantages, including, you know, the ability to take into account some tax strategies which they hadn’t considered and were actually kind of happy that it was brought to their attention. So I’d say it was mixed. I don't know the views of all 220.
PN172
MR WARD: Thank you.
PN173
You were asked some questions by my learned friend about the existence of what my learned friend characterises as a surplus in the defined benefit division. First, could I ask you this question: to your knowledge, and bearing in mind that you are not a superannuation tax lawyer nor a trustee of the plan, but to your knowledge is it correct to describe there being a surplus in the defined benefit division?‑‑‑No, it’s not. There is a Lend Lease Superannuation Plan that has an accumulation division and this, you know, defined benefit – JDA defined benefit division. So there are assets and liabilities of the plan overall, so the surplus is of the overall plan.
PN174
Could I show you this document which consists of two letters? There is a letter of 25 November addressed to Mr Eric Hensley and a reply dated 28 November 2014?
PN175
THE COMMISSIONER: Is that in the bundle, Mr Ward?
PN176
MR WARD: No. Could I hand up a spare copy?
PN177
THE COMMISSIONER: Do you wish to tender it?
PN178
MR WARD: In a moment.
*** AMANDA LEE HUGHES RXN MR WARD
PN179
Have you seen those letters before, Ms Hughes?‑‑‑I have, yes.
PN180
MR DOCKING: Perhaps if I could be given a copy?
PN181
MR WARD: I tender the correspondence consisting of the two letters.
PN182
MR DOCKING: Can I just ask on what basis and why is it said to be relevant?
PN183
MR WARD: I'll ask the questions first and then press the tender, if it suits my friend. It arises directly out of his cross‑examination.
PN184
Ms Hughes, if you just take a moment to re-read the first letter. Will you agree that it asks a series of questions in relation to the existence of a so-called surplus in the division ‑ ‑ ‑?‑‑‑Yes.
PN185
‑ ‑ ‑ in the defined benefit division? And do you see that the second letter provides answers to those questions?‑‑‑Yes, it does.
PN186
And if you look at the answer on the second page of the response letter at question A4 and answer A4, you'll see that there is a figure described of $7.2 million. Is it correct to say that that is not a surplus figure, but an amount referred to by an actuary as a notional sum which may be set aside or allocated to a division?
PN187
MR DOCKING: I object to leading on that. Is it leading out of the letter or is it, in our submission, he wants embraced by a witness who may not know and keep in mind what the bottom of page 1 indicates and answered what I asked, “What was the money in the fund for the defined benefit members?” and the answer was, “Six to seven million,” and this letter confirms it.
PN188
THE COMMISSIONER: Yes. I think the question only goes to try and clarify the matter.
PN189
MR WARD: I think so. What I'm getting to simply, Commissioner, is that my friend asked questions about the quantification of figures. This letter as a business record of Lend Lease Corporation represents the best answer to that question as at November 2014. Heaven only knows what the position is today because the surplus will move over time with the investments of the accumulation division. The key point is that there is money in the plan. These are the figures as at 28 November 2014.
*** AMANDA LEE HUGHES RXN MR WARD
PN190
They are not allocated to a division as such. They are available to fund the obligations of LLC for the division, but beyond that they simply have no relevance to the - they're certainly not - my friend seems to make some sort of case that there’s a slush fund there to be distributed equally amongst the members of the defined benefit division, even when it’s wound out, and that simply isn't the case.
PN191
THE COMMISSIONER: No. But what those funds may be used for, Mr Ward, would be to provide LLB or LLC ‑ ‑ ‑
PN192
MR WARD: LLC.
PN193
THE COMMISSIONER: ‑ ‑ ‑ with a contribution holiday in relation to making any payments on behalf of the employees that are part of the defined benefit scheme, thereby meeting their obligations under the Act.
PN194
MR WARD: Yes. But they are also to be used, for example, the payment of insurance premiums for all 11,000 members of the overall plan, or however many members there are, but a very large number. They are there for the other obligations of LLC, in other words, under the plan. They are not solely referrable to the benefits attributable to 19 members of a division of the overall plan.
PN195
THE COMMISSIONER: Yes.
PN196
MR WARD: That is a fundamental point of distinction between myself and my learned friend. I tender the letter, your Honour.
PN197
THE COMMISSIONER: Thank you. I shall mark this bundle of correspondence ‑ ‑ ‑
PN198
MR DOCKING: Commissioner, I won’t answer now, but I’d prefer that they don’t mischaracterise what the CFMEU’s position and what position I’ve advocated. I asked the witness about the money that was left in the fund for the defined benefits members and it’s been confirmed. This letter confirms it. It’s in the range of six to seven million.
PN199
THE COMMISSIONER: Yes.
PN200
MR DOCKING: My introduction to it was:
*** AMANDA LEE HUGHES RXN MR WARD
PN201
Last time you said there was a surplus of 12 or 13 million, but there’s been correspondence since which has clarified that position.
PN202
That's why I asked about the money that was in the defined benefit account.
THE COMMISSIONER: Thank you. I shall mark the bundle, which is a letter from the CFMEU dated 25 November and a response from Lend Lease on 28 November as exhibit L3.
EXHIBIT #L3 BUNDLE OF CORRESPONDENCE, LETTER FROM THE CFMEU AND A RESPONSE FROM LEND LEASE
PN204
MR WARD: Thank you, Commissioner. I have no further questions.
PN205
THE COMMISSIONER: To be fair, I should provide Mr Docking with an opportunity to ask any questions he may wish to ask from exhibit L3.
MR DOCKING: Thank you.
<FURTHER CROSS-EXAMINATION BY MR DOCKING [10.46 AM]
PN207
MR DOCKING: The six or seven million dollars which is attributable to the JDA defined benefits scheme or division, is any part of that invested?‑‑‑The entire assets are invested. I'm not sure what the investment mix is at the moment.
PN208
Can you indicate – and I'm looking at the six to seven million dollars held on account as assets for the JDA defined benefits division members, do you have any idea of what the return per year is on that?
PN209
MR WARD: I object to the preamble to the question, unless my friend can point to a part of this letter in which his preamble to the question appears, that is, six to seven million dollars attributable to the members of the defined benefit division.
PN210
MR DOCKING: Have you seen this letter before?‑‑‑Yes, I have.
*** AMANDA LEE HUGHES FXXN MR DOCKING
PN211
When you gave an answer to me earlier today that it was about six or seven million dollars held on behalf of the defined benefit member accounts, did you have in mind the figures in this letter?‑‑‑I was trying to recall what the latest figure was. There’s so many numbers that have been bandied around and so many submissions. That was my recollection. It was around that number. I didn't have it right in front of me at the time to pull it out.
PN212
I'm not criticising you on this issue, but having seen the letter does it help confirm that’s where you've got your six to seven million dollars from?‑‑‑Yes, because as at November it was whatever the number is here, 7.2.
PN213
Can you be of any assistance about the percentage return per year on that 7.2 million?‑‑‑No, I cannot.
PN214
Can you give any indication of the range?‑‑‑No.
PN215
Based on what you know about superannuation funds, the return on that investment of $7.2 million would more than cover the cost of maintaining the defined benefit scheme, wouldn't it?‑‑‑I don't know what the assets are invested in. I'm not a member of the policy committee. I'm not involved with those decisions. I don't know.
PN216
Financial commonsense ‑ ‑ ‑
PN217
MR WARD: I object.
PN218
MR DOCKING: I withdraw that.
PN219
What do you say the costs are which would be a problem of maintaining the defined benefit scheme?
PN220
MR WARD: I object to that question, too, for this reason, Commissioner: the six or seven million dollars and its attribution is nothing within the control of LLC nor within the control of LLB. It is a matter for the Plum Superannuation trustee and it is a matter for the Plum Superannuation trustee how those funds are disbursed. The costs that my learned friend’s question is directed to, the costs described by Mrs Hughes in her affidavit, in her statement, relating to the administrative costs to LLB of maintaining the division are unrelated to the existence of a surplus in the plan, which is in the hands of the trustee.
PN221
THE COMMISSIONER: Is that right? I thought there was in the evidence costs of around 60 or 70 thousand dollars which was actuarial costs moving forward for the DB fund.
*** AMANDA LEE HUGHES FXXN MR DOCKING
PN222
MR WARD: Yes.
PN223
THE COMMISSIONER: Are you suggesting any of those costs are borne by LLB and not the trustee?
PN224
MR WARD: I am suggesting that. I'll take some instructions to confirm that that’s the position, but that’s my clear understanding. The correct answer I think is that the costs are borne in some part by LLC and in some part by the trustee and there’s some evidence of that in Ms Hughes’ statement at paragraph 9 of the supplementary statement.
PN225
THE COMMISSIONER: All right, thank you.
PN226
MR WARD: Thank you.
PN227
MR DOCKING: I'm not sure if the Commissioner rejects the question or not, but it’s said at paragraphs 9 through to 11 of the supplementary statement the costs are about $2000 per year per member. I would have thought it’s going to be blind commonsense that if you've got $7.2 million of assets, whatever return you're getting will easily meet those costs and I'm surprised that there seems to be some reluctance to acknowledge that point by the applicant, particularly what the Deputy President has previously said on that very matter.
PN228
THE COMMISSIONER: I suppose the issue, Mr Docking, is that if there’s a year of negative returns and the fund actually loses money then those costs will need to be borne by somebody, whether that’s borne by the surplus or borne by LLC or whomever is a matter for conjecture, but based on what Mr Ward just told me that the actuarial costs and the administrative costs are shared between the trustee and LLC.
PN229
MR DOCKING: I assume he’s referring to paragraph 9 of the supplementary statement that has a table.
PN230
MR WARD: Yes, I am.
PN231
THE COMMISSIONER: He’s advised me that they were his instructions. He referred to ‑ ‑ ‑
PN232
MR WARD: Paragraph 9 of the supplementary statement.
*** AMANDA LEE HUGHES FXXN MR DOCKING
PN233
MR DOCKING: Yes.
PN234
THE COMMISSIONER: Yes. I'll take that into account.
PN235
MR DOCKING: If it pleases the Commission.
PN236
THE COMMISSIONER: Thank you.
PN237
Mr Ward, anything in reply?
PN238
MR WARD: Nothing further, Commissioner.
THE COMMISSIONER: Ms Hughes, thank you for your evidence. You may step down.
<THE WITNESS WITHDREW [10.52 AM]
PN240
MR WARD: That completes the evidence, Commissioner. It’s 5 to 11. I'm not sure if you want to press on or take a short break.
PN241
THE COMMISSIONER: I'm happy to give the parties five minutes to collect their thoughts. Thank you.
SHORT ADJOURNMENT [10.52 AM]
RESUMED [11.00 AM]
PN242
THE COMMISSIONER: Mr Ward?
PN243
MR WARD: Commissioner, can I start with the proposition put against us to the effect that the decision of the Deputy President in some way binds the Commission today, could I hand up a decision on appeal, <i>The Transport Workers’ Union v Coles Supermarkets</i>, a decision of 17 January 2013.
PN244
THE COMMISSIONER: Thank you.
PN245
MR WARD: Simply at paragraph 43, the self-evident proposition is stated, which is that a decision without jurisdiction is not only obiter, but it cannot adversely affect the rights or interests of the appellants’ subsequent proceedings or, in this case, my client the applicant, in subsequent proceedings.
PN246
I say that that is the end of that question. That is the status of the reasoning of the Deputy President and my learned friend will say, as I anticipate, “At the very least it’s persuasive,” and my submission is that persuasive it cannot be. It cannot adversely affect rights and interests.
PN247
It would be asking too much of human nature to suggest that the Commission will not have some regard to it and to that extent we also say that, with respect, the Deputy President is incorrect in her conclusions on the central point of construction of clause 11.2C of the JDA and I'll come to that very briefly.
PN248
What I propose to do, Commissioner, is not to rerun those proceedings because everything that I said in the earlier proceedings I say again and so having tendered the transcript of those proceedings, I invite this Commission to have regard to the transcript and my submissions, the oral submissions made in that transcript and to adopt those submissions as having been made in these proceedings and I do ask that the Commission review those submissions before reaching a decision. We also rely on our written submissions and submissions in reply in these proceedings.
PN249
It is, however, I think important that I take you, Commissioner, to just a small number of the key provisions in the trust document, the participation schedule and then JDA8 itself. Could I start at consolidated bundle 290.
PN250
THE COMMISSIONER: Yes.
PN251
MR WARD: This is the trust deed of the Plum Superannuation Fund. Page 1 of it is at page 282. I'm sorry, if you looked at page 283, you will see that the parties are said to be PFS Nominees Pty Ltd as trustee. So this is the trust deed of the Plum Superannuation Fund. Commissioner, I don’t need, I think, to explain how this works. The Plum Superannuation Fund administers superannuation schemes for a very large number of entities, Lend Lease Group being but one of them.
PN252
Within the deed one funds a structure which essentially establishes a participation schedule for individual employer organisations and there can be different participation schedules under the overall umbrella of this trust deed.
PN253
At page 290, you find the definition of an employee and employer. The employer is defined to be a capital Employer designated in the participation schedule and in a moment I'll take you to the participation schedule which defines Lend Lease Corporation Ltd to be the capital Employer of the principal employer for the purpose of the participation schedule.
PN254
I should also just draw your attention at page 329 to clause 4.11 which provides that the participation schedule ‑ ‑ ‑
PN255
THE COMMISSIONER: Sorry. What page are you talking about?
PN256
MR WARD: Sorry, 329.
PN257
THE COMMISSIONER: 329? Sorry. Yes, thank you.
PN258
MR WARD: That provides generally that the participation schedule has overriding effect in respect of any inconsistency between the deed and the participation schedule. I'm sorry, if I could just go back a couple of pages to 296, which is clause 3.1, which is headed Trustee’s Powers on the previous page and then subclause (c) paragraph numbered 15 on the right‑hand side foot of the page:
PN259
The trustee may establish as part of or as a fund separate to the fund a plan or seeking a plan, including a sub-plan membership division –
PN260
et cetera. So that’s the power from which the trustee Plum has the ability to establish plans, sub-plans and divisions within sub-plans. It’s that that Plum has done. Could I then take you to the participation schedule which starts at 339, but the key points appear from 342 onwards?
PN261
THE COMMISSIONER: Yes.
PN262
MR WARD: You can see at page 341 that the participation schedule is between the trustee and Lend Lease Corporation not Lend Lease Buildings. The relevant obligations in the participation schedule apply to the principal employer, being Lend Lease Corporation and, for what it’s worth, at page 357, the principal employee is again set out with the particulars of the principal employer, being Lend Lease Corporation, at a particular address.
PN263
The participation schedule then has schedule 2, which starts at page 359, and these are in fact essentially the mechanical workings of the sub-plan. I should draw the Commission’s attention to the fact that at page 362 there is a definition of defined benefit member and defined benefit division. It’s a fairly circular definition. It simply says:
PN264
Defined benefit division means the division established under schedule 2.
PN265
And they define:
PN266
Benefit member means a member of the defined benefit division.
PN267
At 375 we see one of the central provisions at issue, clause 11 of the participation schedule and just for reference, Commissioner, don’t get confused, there are two clauses, 11 in these proceedings – there’s clause 11 of the participation schedule and clause 11 of the JDA.
PN268
In the participation schedule we have a power to terminate and the power to terminating clause 11 is a power on the part of the employer, which we accept is probably LLB, or the principal employer, being LLC. The principal employer – we don’t need to worry about LLB because LLB is not contributing directly to the plan.
PN269
For the purposes of this argument, it suffices to say that LLC may, as principal employer and as a party to this participation schedule, terminate, reduce or suspend for any period any payment in respect of the plan relating to all or some of the members by notice. Then at 11.5 on the following page:
PN270
If all contributions to the plan or a division are terminated, the trustee may proceed to wind up the plan or division in accordance with clauses 33 to 35.
PN271
Then if we go to clause 33, which appears at page 386, and you'll be pleased to hear that I'm almost done, clause 386 provides for - I'm sorry, page 386, clause 33.1 provides for the ability of the trustee, that is Plum, in its absolute discretion – that is Plum’s absolute discretion – with the consent of LLC to terminate a plan or a division. In this case we’re considering the direct defined benefit division.
PN272
Clause 34 and clause 35 then describe what happens to any benefits and any net proceeds following the termination of a plan or division. It is those provisions which would be triggered in the present case. In relation to something that was obliquely raised this morning in the evidence, could I just note – and perhaps, Commissioner, if you just note it for reference – that clause 4.3, which I didn't take you to, but it appears at page 348, expressly permits insurance premiums to be deducted from the assets of the plan in accordance with the mechanism in 4.3
PN273
The overall structure is that there is a plan administered by Plum to which LLC becomes a party to the fund by reason of its participation in the participation schedule. Plum may administer the fund essentially as it sees fit with such divisions in its absolute discretion as it sees fit and LLC can, at its discretion, cease payments to any particular division within the overall plan administered by the trustee.
PN274
That being the structure, if you then turn to JDA8, and again I don’t wish to repeat unnecessarily what is already in transcript, but the relevant provisions appear at court book 12 and 13. We say that it is completely clear ‑ ‑ ‑
PN275
THE COMMISSIONER: What page are you on?
PN276
MR WARD: I'm sorry, consolidated bundle 12 and I'll be going to 13 as well. Page 12 and page 13 – not tab, sorry, page 12, right at the beginning – tab 1.
PN277
THE COMMISSIONER: Thank you.
PN278
MR WARD: So we say that the position is completely clear to this point, that is that the trust deed and the participation schedule provide absolute discretions to the trustee and the principal employer to establish such plans and divisions as they see fit so long as they comply with the superannuation legislation and there’s no suggestion – no suggestion – that what is proposed breaches any form of, or any part of, relevant superannuation legislation.
PN279
The only way that that position can be changed is my friend’s argument, which is based entirely upon a construction at clause 11.2C(ii). Could I just take you to 11.2 from the beginning because the provision has to be read in its entire context? Clause 11.2 is headed Superannuation at consolidated bundle page 12.
PN280
It requires the company to make superannuation contributions to a fund of the employee’s choice. That's one option. The second option is to the Lend Lease Superannuation Plan. That's the second option; or to the Construction and Building Industry Superannuation Fund CBUS. That's the third choice.
PN281
So the primary obligation in 11.2 is for the company to make superannuation contributions to one of those three options. An employee can choose a fund. It can be the LLSP or it can be CBUS. If the employee is silent as to a choice, paragraph (b) provides that the default fund is LLSP.
PN282
So then we come to 11.2C, which sets out what happens if the employee chooses to be, or by default, through failing to elect becomes a member of LLSP. (i) the company pay its employer contributions for any employee joining after 1 January 1999. That is an important point because that’s why we’re only dealing with older historical employees and a very small number of them.
PN283
So clause 1 sets out an obligation upon the company, the company will pay its employer contributions and any member contributions the employee decides to make into the LLSP in accordance with superannuation guarantee rate or appendix C, whichever is the greater.
PN284
Then we come to clause 2 which sets out as a matter of fact. It doesn't create any obligation in our submission:
PN285
Employees of the company prior to 1 January 1999 may be members of the defined benefit plan of LLSP.
PN286
At the date of JDA8 there was a defined – I mean, there still is today, but there was a defined benefit plan and the opening words of paragraph 2 accurately provide that as a fact some members may be members of the defined benefit plan within the LLSP. It then sets out a mechanism, formula, 12.75 per cent, et cetera, et cetera.
PN287
Now, my learned friend reads into the first words of clause 2 an obligation that there shall be at all times a defined benefit plan. So point 1 is he seeks by that construction to strain the opening words in the first sentence beyond anything that can possibly reasonably be said consistently with Codelfa and, secondly, he does so in a way that’s completely inconsistent with the participation schedule and the evidence is that the participation schedule was known to the representatives of the union at the time that JDA8 was negotiated.
PN288
There has been no attempt to vary the ability of the principal employer to deal in such way as it sees fit so as to ensure it complies with its superannuation obligations. Clause 11.2 read as a whole requires that there be three options, the LLSP, a fund of the employees’ choice, or CBUS. A fund of the employees’ choice does not mean – and it’s the preambular words to 11.2 – does not mean a division within the LLSP. That's taking things too far and I don’t understand my friend to content for that proposition.
PN289
The only point at which my friend gets any support at all for this proposition is in the first sentence of 11.2C(ii) which accurately records, as I said, as a matter of fact the existence at a point in time of a state of facts, that is some employees may, because they were pre 1 January 99 employees, be the members of a defined benefit division and if they are, this is how you calculated their rate of return on a defined benefit.
PN290
It does not on its true construction create any obligation on LLB to require LLC to maintain for all time in the face of LLC’s obligations under the participation schedule a defined benefit division. If it was going to do that, it would have been referred to, one would think, in 11.2A or somewhere else in 11.2 in words of some clarity that make it clear that the defined benefit division, “There shall be,” would be the easiest way of doing it, “There shall be a defined benefit division and members may become a member of it.” That would achieve the objective and that’s really the construction my friend asks you to accept somehow implied into 11.2 and, in our submission, it’s not there.
PN291
That's all I want to say, I think, at this stage. I may say something in reply, depending on what my friend says, but that is the essential point of construction. It’s fleshed out a little more in the submissions before the Deputy President, but I think those are our submissions in‑chief.
PN292
THE COMMISSIONER: Mr Ward, your submissions in reply in paragraph 5 on page 2 ‑ ‑ ‑
PN293
MR WARD: Yes, paragraph 5?
PN294
THE COMMISSIONER: ‑ ‑ ‑ you talk about orders.
PN295
MR WARD: Yes.
PN296
THE COMMISSIONER: You say such orders were made LLB would be liable to severe penalties for failure to comply.
PN297
MR WARD: Yes.
PN298
THE COMMISSIONER: Would you like to expand on that?
PN299
MR WARD: As we apprehend things, if orders are made as to the true construction and nature of obligations of the applicant by the Commission, a failure to comply with an order exposes my client to a penalty because it’s arguably in contempt of the Commission. The orders that are framed in these proceedings by my learned friend’s client are expressed in the most vague and difficult terms.
PN300
They purport to require LLB to do things in circumstances either where LLB can’t because it’s not the party able to do them because LLC is the correct party and that’s the point I’ve dealt with earlier, or they in some way might require LLB to procure LLC to do things, which is placing an awful legal obligation on LLB to assume that LLC will do something when LLC is the parent company. That's putting the cart before the horse.
PN301
I don’t elaborate any further than that, but we say it is something that the Commission would have regard to in deciding whether or not to adopt what we say is a strained interpretation of JDA8.
PN302
THE COMMISSIONER: Thank you.
PN303
MR WARD: Thank you.
PN304
THE COMMISSIONER: Mr Docking?
PN305
MR DOCKING: Thank you, Commissioner. I adopt without reading on to the record the three and a quarter page outline of submission dated 18 November 2014. Can I immediately deal with one of the applicant’s submissions about the Deputy President’s decision was made without jurisdiction?
PN306
I accept that the Deputy President ruled that there was not a properly followed institution and maintenance of the disputes procedure. The respondent, the CFMEU’s, position is that with respect the Deputy President was wrong, but I accept that the Commissioner is not sitting as an appellate member, therefore, the real force of that outline appears from paragraph 7 that there’s simply no warrant or reason for the present Commissioner sitting as a private arbitrator to depart from the reasoning of Deputy President Gooley concerning 11.1 paragraph C and clause 11.2 of the enterprise agreement.
PN307
I think the oral submissions at least have continued to ignore the exception within 11.1C the words in brackets (except for superannuation). As I did before Deputy President Gooley, I accept on both sides there were statements put in which go beyond the type of evidence that can properly be taken into account in construing an enterprise agreement. By that I'm referring to both the union and employer interests effectively giving evidence of their subjected intent as to why those words were included for the first time in this enterprise agreement.
PN308
I assume the Commissioner is more than familiar with principles of interpretation for enterprise agreements. Nevertheless, this was a new inclusion in the enterprise agreement. The CFMEU takes the position it’s quite a clear and simple exercise of construction. In other words, the Commission would follow the same reasoning and approach to construction as applied by the Deputy President.
PN309
Might I then go to the Deputy President’s decision which is behind tab 17 of the consolidated bundle? I adopt without repeating or reading on to the record the reasoning which appears from paragraphs 5 to 7 of that decision. It’s quite clear - I'm told it’s now about 19 members or construction workers who have rejected leaving the defined benefit scheme.
PN310
Exhibit C1, for example, the Murray Coleman letter, records about halfway down the page:
PN311
We understand from the CFMEU that this offer has been rejected by DB division employees by an overwhelming majority.
PN312
It’s quite clear that those individuals have decided that in their individual circumstances each believes he is better off in the defined benefit scheme. The Commissioner will even recall the evidence today in re‑examination, I think of Ms Hughes, the generality of suggesting they will be better off going over to the accumulation scheme and it depends on unstated assumptions and predictions.
PN313
It cannot be suggested or held that any of these 19 would be better off going over to the accumulation scheme from the defined benefit scheme. It is clear that all of these are longstanding employees of decades or so, or thereabouts, worked for Lend Lease. That's clear because in 11, being the clause of the enterprise agreement, they had to be members prior to 1 January 1999 and some have had service even before that and that’s why I say it’s some decades for these employees.
PN314
I return to the Deputy President’s reasoning. In paragraph 8, that part of Ms Hughes’ statement which dealt with equity and consistency was clarified in proceedings today before the Commission. It was effectively accepted that the reference to equity does not and could not apply.
PN315
Then I go to paragraph 9, the supplementary statement of Ms Hughes again raises the issue of costs. That's at paragraphs 9 through to 11. The same reasoning can be applied, and should be applied. The cross‑examination of Ms Hughes today reminded her she previously said the surplus was 12 million, but that’s been clarified in subsequent correspondence.
PN316
I then asked her about the money that would be in the accounts effectively of defined benefit members. It was said it would be about six to seven million dollars. The applicant employer then tendered the exchange of correspondence. Ms Hughes, I took her to it, confirmed, yes, having had a chance to look at it again was where she got the figures from.
PN317
She accepted that the money held on account of the defined benefit members would be earning as well. Unfortunately, there’s no precision or specifics available. It is quite clear a figure of about $2000 per member per year, which one assumes is split across the trustee and LLC, pales into insignificance.
PN318
The reasoning of the Deputy President at paragraph 9 should again be applied. It’s quite clear that LLB has not been able to persuade the 19 or so employees that they would be better off and exhibit C1 confirms that is the position. It’s interesting when one looks at the last sentence of paragraph 9 of the Deputy President’s reasons, it includes:
PN319
In my view, LLB should take all steps available to it to ensure that employees can remain in the DBD.
PN320
I say it’s interesting for two reasons because that’s the type of order or recommendation that has been sought for some time by the CFMEU. More recently, exhibit C1 as at 9 February 2015, three quarters or so of the way down, part of the paragraphs led at A probably best just focuses on originally the underlined words ending “that is the CFMEU wins”. I understand Mr Coleman is using plain language which will be understood by construction workers.
PN321
With respect, I'm not sure that the earlier part before the brackets, that is accurately reflects what the Commission previously found or is being asked to find in these proceedings, but nevertheless construction workers would understand that is the CFMEU wins:
PN322
LLB pending determination of appeals is undertaking will take what steps it can to maintain the DB division for the life of JDA8.
PN323
I'll come later to the recommendation that’s been sought or orders sought for the Commission in the present dispute. It’s the first one which it seems LLB is already willing to take steps. It immediately begs the question, “Well, what steps? What could they be talking about?” There’s no dispute that LLB is a wholly owned subsidiary of LLC. One looks at the second page of the letter and despite Ms Hughes professing ignorance about the process that went behind writing parts of this letter, the second‑last paragraph, the last line makes it clear in the vernacular, LLC must have its hands all over this letter and know all about it or know about the sorts of undertakings its wholly owned subsidiary is giving. For example, it says:
PN324
LLC has also to date directed that the bonus be paid in respect of JDA8 employees who have retired prior to resolution of the current dispute.
PN325
In other words, the letter itself suggests and supports that LLC were informed and knew of the steps its wholly owned subsidiary were taking. It is obvious that one of the steps that LLB should and would take is to urge its parent not to close the defined benefit division for the life of the enterprise agreement. I then go back to ‑ ‑ ‑
PN326
THE COMMISSIONER: Mr Docking, what do you say to the question I asked Mr Ward in relation to relationship between LLC and LLB in relation to the super guarantee legislation?
PN327
MR DOCKING: As did ‑ ‑ ‑
PN328
THE COMMISSIONER: How does LLB contract out its obligations under that legislation?
PN329
MR DOCKING: I immediately have to say I don't have the expertise of others about superannuation and trust deeds and obligations of trustees. But I would have thought here the evidence is clear and I asked Ms Hughes about it today. In her first statement she has a table where it indicates that LLB reimburses LLC for contributions made and her evidence confirmed both last time and today – for example, last time at PN595 through to 599 – LLB reimbursed LLC for superannuation payments made.
PN330
On the last occasion, Ms Hughes couldn't explain whether that was a cash contribution made or whether it was some sort of accounting entry. I pause there. I'm not suggesting accounting entries that are untoward, but the fact is contributions, either cash or accounting entries, are being made by LLB.
PN331
Accepting I'm not an expert on that field, whether that would satisfy the fact that LLB reimburses its parent company for all the contributions made and the parent then makes those contributions to the trustee ‑ ‑ ‑
PN332
THE COMMISSIONER: It’s an issue which goes to the contract of employment, I would have thought.
PN333
MR DOCKING: In what way, Commissioner?
PN334
THE COMMISSIONER: Insofar as the employer is required to make contribution payments on behalf of employees. The JDA acknowledges that and identifies a number of ways that can occur. The only commonsense outcome in that regard would be for there to be some sort of transaction between LLB and LLC, if the evidence which is undisputed, is that LLC makes the contributions to the defined benefit scheme.
PN335
MR DOCKING: When it says it’s undisputed, it was something I asked Ms Hughes on the last occasion and when Mr Ward was going through the clauses – if I take the Commissioner to tab 4 of Ms Hughes’ annexures, the definition at CB 290 or it was then handwritten page 35 before the Deputy President, the definition of employer, I do not think was read, but it actually has a number of alternatives within it. It has:
PN336
Employer means a party or parties designated in the participation schedule as the employer.
PN337
And in relation to a member means:
PN338
The employer, by which that member is employed.
PN339
There is no dispute that it’s LLB that employs these construction workers. As best I can understand it, Mr Ward tries to say, “Well, when you go to the participation schedule, the employer can only be LLC.” However, with respect, that’s not even clear because the participation schedule uses the expression – if the Commission will just bear with me – at CB 341 where it lists out the participants, Lend Lease Corporation at about point 2 on the page is referred to as principal employer.
PN340
Then it’s clear on CB 342 or, as it was before the Deputy President, handwritten page 87, the definition of employer also makes reference to not only the principal employer, but any associated employers. So the position is not as clear as Mr Ward suggests.
PN341
If one goes to the enterprise agreement itself, can I note that within the agreement itself at clause 1 definitions, it includes a definition of Lend Lease Group. It means Lend Lease Corporation Ltd and its related bodies corporate and then one also finds the term Lend Lease Group referred to in both 11.1 paragraph C as well as in 11.4.
PN342
Again, whilst I’ve gone to 11.1, it’s clear that the obligation to make the contributions and meet the obligations under the enterprise agreement falls on what’s described as “the company”. The company is defined in clause 1 as Lend Lease Project Management Construction (Australia) Pty Ltd. No issue was taken before the Deputy President or now that that company’s name is now LLB, if I use the abbreviation.
PN343
THE COMMISSIONER: So are you suggesting to me that in relation to the participation schedule on page CB 342 that LLB is in fact an associated employer and, therefore, becomes a participant in this schedule?
PN344
MR DOCKING: I'm not able to say that with confidence other than say there’s an unclear position.
PN345
THE COMMISSIONER: Thank you.
PN346
MR DOCKING: It was raised with Ms Hughes at first instance in cross‑examination and she couldn't clarify that point when I went to that definition of employer on CB 290 where it has that option:
PN347
In relation to a member means the employer by which that member is employed.
PN348
I think the approach – if I go back to the Deputy President’s decision – is correct and should be followed. Going to paragraph 10, it sets out an oft cited proposition from Madgwick J in Kucks<i>.</i> Can I inquire whilst referring to that judgment, the CFMEU can provide a copy of some of the authorities to the Commissioner as presently constituted that were relied on at first instance if the Commission wishes to receive them? I'm not sure what your preference is about paper copies.
PN349
THE COMMISSIONER: There’s no need.
PN350
MR DOCKING: If I go back to the Commissioner’s consideration as to whether the Deputy President’s reasoning should be followed as a matter of consistency or because the Commissioner accepts the Deputy President’s reasoning, I adopt the construction of clause 11 of the Deputy President from paragraph 33 through to 35. Part of 35 is acceptance of LLB’s submission that clause 11.1C does not impose obligations on LLB, but then there’s the heading:
PN351
Does the agreement require LLB to maintain the defined benefit?
PN352
I adopt the reasoning which then follows from paragraph 36 right through to 45 and it’s the last of those paragraphs:
PN353
I, therefore, find that LLB has an obligation under the agreement to provide the benefits set out in clause 11.2 paragraph C(ii).
PN354
It’s no answer to say even if on the proper construction of the trustee’s deeds and participation schedule that it’s LLC that can make the decision. That will not be any defence to a contravention by LLB of not providing benefits under 11.2 paragraph C(ii). I'm not sure if it’s suggested that the only remedy the CFMEU or its members could look at – it was suggested some sort of contempt of the Commission.
PN355
I was thinking of - I think it’s section 50 of the Fair Work Act which is if you fail to comply or contravene an enterprise agreement provision, you can take contravention proceedings in an appropriate court, such as the Federal Court. That is the decision LLB – and dare I say LLC would have to take as developed before the Deputy President. If LLC did shut down the defined benefit scheme, thereby preventing LLB meeting its enterprise agreement obligations, I maintain the submissions I’ve put before that LLC will expose itself to those civil penalty contraventions in its own right and by its own acts or omissions.
PN356
That's not something that frankly need trouble the Commission as presently constituted. That would be a matter for any contravention proceedings, either a member or the CFMEU as a registered organisation might take in an appropriate court for contravention proceedings. This idea that the trustee somehow might just wind up the scheme as a matter of practical reality has no factual merit.
PN357
The Commissioner will recall that I took Ms Hughes to her 6 June cross‑examination on this very point about if I put it in plain terms, who would call the shots in closing down the defined benefit scheme. I took Ms Hughes to her previous evidence at PN620 through to 622. Ms Hughes confirmed even as at today her evidence still stands. It would require LLC to give consent to terminate the defined benefit scheme and that a trustee would not unilaterally decide to do so. It would require Lend Lease Corporation to take certain steps.
PN358
So I then go briefly to finalise the oral submissions to page 3 of the 18 November 2014 outline of the CFMEU to paragraph 10. I touched upon this before when I went to exhibit C1. It appears that what’s sought in the orders set out in paragraph 10 subparagraph (a) is something LLB has already told the CFMEU and the 19 or so defined benefit members that it will do.
PN359
If the Commission as presently constituted accepts the approach of the Deputy President on the proper construction of the clause, in my submission, given the concession in exhibit C1, there would be no reason not to make an order in terms of paragraph 10 subparagraph (a). It could only be that LLB says it’s unnecessary because of what it’s now written expressly and told people in exhibit C1.
PN360
Then the orders in – before I go to those other orders, the order in subparagraph (a) paragraph 10 was based on two previous decisions; first what the Deputy President found in the interim order on 27 May 2014. A copy of that interim order is in the consolidated bundle at tab 8. Secondly, it was also based on what the High Court said in the <i>Shell</i> case.
PN361
The Commissioner might recall that the issue of a company and its related entities, including its parent, shutting down superannuation funds and what will happen to the money that sat in a fund has been subject to High Court consideration previously. That was in the context of when you had to get the constitutional industrial dispute and it was found one could get appropriate dispute findings directed to a company to procure or encourage another company not to shut down a fund or how the other company should deal with what money is left in the fund. The language “use its best endeavours to procure” is taken straight out of what was found to be a valid industrial dispute in the <i>Shell</i> authority. In the <i>Shell</i> case it’s described as the first claim as part of the industrial dispute. Again, I can offer to provide from the CFMEU a copy of the CLR for <i>Shell</i>.
PN362
THE COMMISSIONER: That's fine.
PN363
MR DOCKING: The Commission might recall, for a while there were many cases in the then Commission, by whatever name it was known, as defining a dispute with an employer concerning what would happen with superannuation funds or what actions might be taken by a third party related to that company. Ansett is an example.
PN364
Unfortunately, in the interim decision I raised and conceded I hadn’t had a chance to look at it properly, but it’s unfortunate that I do not think under this current legislation in the context of a dispute under an enterprise agreement orders cannot be made against a third party. I can’t find anything to support by previous decision
PN365
One could say a lot about the present legislation, but that’s for another place and time. Unless there’s any other matter the Commission wish me to address, they are the submissions for the CFMEU as the respondent.
PN366
THE COMMISSIONER: Thank you, Mr Docking.
PN367
MR WARD: Just two or three brief points, Commissioner. Could I start with the most bizarre proposition I’ve heard all morning, which is that there is a concession contained within exhibit C1? Could you take a look at it? It’s the letter of 9 May 2015. At the bottom of the page, clause A. The part that my learned friend has now three or four times described as a concession starts with the words:
PN368
If the Commission determines that LLB is required to maintain a defined benefit as set out in JDA8, i.e. the CFMEU wins then –
PN369
and what then follows is essentially words to the effect of, “We will comply with the Commission’s ruling.” There’s no concession. What it does is explain to members that if the CFMEU wins this morning, the members will be worse off and does that in very plain terms. It says:
PN370
If you accept a proposition prior to the proceedings, the employee will receive a bonus amount of $2000 or one per cent or a lesser amount calculated in a formula that’s previously been explained to all members.
PN371
If the CFMEU wins these proceedings this morning and the defined benefit scheme remains open, it remains open on its existing terms without the bonus. So that’s the point of that clause. It in no way contains a concession and I ask the Commission to disregard the submissions to that effect.
PN372
Obviously, I need to return to the definition of employer, principal employer and associated employer very briefly. Could I ask you, Commissioner, to go back to the participation schedule, starting I think at 342?
PN373
THE COMMISSIONER: Yes.
PN374
MR WARD: There are three categories in the participation schedule of employer referred to. The point of that is that each of the three types of employer has different obligations placed upon them by the terms of the participation schedule. That is the principal employer has some obligations and powers. An associate employer has other obligations and powers and an capital employer with no associated or principal beside it has further rights and obligations or other sub-sets of rights and obligations.
PN375
I did take you to, and I will do it again – I took you to the operative provisions which make clear what the principal employer can do, what an employer can do and so on. Just for the sake of clarity, at court book 341, the principal employer is defined to be Lend Lease Corporation.
PN376
On the following page, page 342, an employer means collectively the principal employer, so that’s Lend Lease Corporation, any associated employers – I didn't take the Commission to the definition of associated employers because it’s irrelevant, but I will in light of my friend’s submissions, and then it concludes:
PN377
And where used in relation to an employee or member means the lower case employer of that employee or member, being in each case a person who has not ceased to participate in the plan.
PN378
Can I say this because I may not have made this entirely clear? The principal employer is Lend Lease Corporation. We accept completely that the employer is Lend Lease Building in the case of these members. There’s no dispute about that. If you turn to 359 you find a definition of associated employer and associated employer means:
PN379
Any lower case employer approved by the principal employer who participates in the plan by arrangement with the trustee -
PN380
there isn’t one. But if there is no relevant entity, satisfies the definition of associated employer. So we’re dealing here with principal employer, Lend Lease Corporation and employer, being Lend Lease Building.
PN381
Then I took you to, in the participation schedule, clause 11.1, that is the clause 11 in the participation schedule, which appears at court book 375. It distinguishes between employer and principal employer. It assumes that there may be a power vested in an employer – that would be Lend Lease Building – to terminate employer contributions, but it also provides that:
PN382
The principal employer -
PN383
that’s the part in brackets –
PN384
- in respect of an employer may terminate, reduce or suspend for any period any payment in respect of the plan.
PN385
My point was LLC has the ability to terminate payments in respect of LLB’s members and that proposition remains good. I apprehend that, Commissioner, you may have some reservations about the structure of contributions being made. If you look at clause 10 immediately above, which is headed Contributions, there is nothing in clause 10 which requires contributions to be made by an employer rather than the principal employer.
PN386
Indeed, there is nothing throughout the document to that effect. The definition of member contributions, which appears at 365, expressly includes contributions from any source approved by the trustee in respect of a member. So a member contribution which satisfies both the legislative, and we say JDA8 obligations of Lend Lease Building – a member contribution is expressly defined to be a contribution from any source accepted by the trustee as a contribution in respect of a member. That appears at page 365 of the participation schedule.
PN387
THE COMMISSIONER: So you're saying to me then, Mr Ward, that ‑ ‑ ‑
PN388
MR WARD: I'm saying that ‑ ‑ ‑
PN389
THE COMMISSIONER: ‑ ‑ ‑ even though LLC is not the employer of these employees ‑ ‑ ‑
PN390
MR WARD: Yes.
PN391
THE COMMISSIONER: ‑ ‑ ‑ if LLB can satisfy its requirements under the superannuation guarantee legislation based on the contribution by a third party?
PN392
MR WARD: Absolutely. The reason for that is there is ‑ ‑ ‑
PN393
THE COMMISSIONER: Hold on.
PN394
MR WARD: ‑ ‑ ‑ no shortfall in respect of the members.
PN395
THE COMMISSIONER: And the third party can then determine to modify unilaterally that part of the contract of employment without recourse to either the employer or the employee?
PN396
MR WARD: Commissioner, that presupposes that you find that the contract of employment is being modified and our entire submission is premised on the construction of 11.2C to the contrary.
PN397
THE COMMISSIONER: I understand the issue in relation to 11.2C.
PN398
MR WARD: It’s reasoning backwards, with respect, because we don’t say what you just put.
PN399
THE COMMISSIONER: Yes.
PN400
MR WARD: What we say is if that were the case, there would obviously be consequences for LLB contractually. What we say is that when you look at the participation schedule and you accept that the participation schedule pre-existed the current version of JDA8, and you accept that JDA8 was negotiated in light of the existence of the participation schedule, which plainly provides that LLC is the principal employer and LLC makes the contributions, and can make the contributions, and that LLC has these powers, it cannot be said that the construction of 11.2C, which my friend would have, is the preferred or correct construction.
PN401
That's the only reason we deal with any of these definitions of employer or principal employer or associated employer. It simply doesn't go further than that. So the case rises or falls ‑ ‑ ‑
PN402
THE COMMISSIONER: No. It comes out how the relation of the principal employer and the employee rests, does it not?
PN403
MR WARD: No. It comes down to – this application comes down solely to a construction of 11.2C(ii).
PN404
THE COMMISSIONER: Sure.
PN405
MR WARD: That's all it comes down to. We say that your construction of that clause will be well and truly enlightened and enlivened by reference to the participation schedule and the acknowledged abilities of the principal employer in the participation schedule.
PN406
THE COMMISSIONER: Thank you.
PN407
MR WARD: I think that covers everything I needed to say.
PN408
MR DOCKING: Commissioner, I should correct something and Mr Ward might want to respond, if I can get leave. Mr Maxwell points out to me that other documents do have a schedule of other named associated employers and LLB is not within that schedule. That schedule is in CB 428. It commences at that page.
PN409
THE COMMISSIONER: Yes.
PN410
MR DOCKING: And LLB is not listed. Then as Mr Ward indicated, and this is why I said I couldn't make a submission with any certainty because it was a confused position, when one looks at CB 342, he’s properly pointed out there’s that third option of employer in the definition, that being the third option:
PN411
And where used in relation to an employee or member means the employer of that employee or member.
PN412
That seems to be consistent with the earlier definition of employer I went to. Might I say, all this frankly doesn't change or have any bearing on clause 7, its proper interpretation. It might be very interesting, if I'm right on the construction, LLB stops making the contributions, doesn't meet its obligation under the enterprise agreement – it might be very interesting to go to a court and somehow for the respondent employer to argue that as a defence.
PN413
With great respect, I do not think it would be a defence when it’s your parent who clearly has its hands all over what’s going here as shown by the enterprise agreement reference to Lend Lease Corporation and exhibit C1 most recently when they're consulting and getting permission about what can be offered. We will only give you the bonus or payment if you accept it and before the CFMEU wins, if it wins.
PN414
These are distractions that can’t modify the approach of the Deputy President on the construction and application of 11.1. At best, it could be – if I use Mr Ward’s expression – a bizarre defence in a court of competent jurisdiction or some sort of mitigating matter that, “My parent closed the company down and I did nothing about it.”
PN415
THE COMMISSIONER: Thank you. Mr Ward?
PN416
MR WARD: Just briefly. My friend has again completely misapprehended the nature of the submission. It’s not that at all. It’s, as I said just five minutes ago, the structure of the corporate holding and the structure of the participation schedule sheds light on the nature of the contractual obligation in 11.2C and its true construction. It’s as simple as that.
PN417
THE COMMISSIONER: Thank you. All right. Thank you for your submissions and evidence. I’ve been requested by Mr Ward to read the transcript of the earlier proceedings. I shall do that and consider the matter. I'll reserve my decision.
ADJOURNED INDEFINITELY [12.00 PM]
LIST OF WITNESSES, EXHIBITS AND MFIs
EXHIBIT #L1 BUNDLE OF MATERIAL FROM THE FIRST PROCEEDINGS, ABBREVIATED AS CB........................................................................................ PN10
EXHIBIT #L2 SUPPLEMENTARY STATEMENT OF MS AMANDA HUGHES PN22
EXHIBIT #C1 LETTER FROM MURRAY COLEMAN, AUSTRALIA BUILDING DATED 09/02/2015................................................................................................................. PN28
MFI #1 BUILDING AND GENERAL CONSTRUCTION ON SITE AWARD 2010 EXTRACT................................................................................................................................... PN34
AMANDA LEE HUGHES, AFFIRMED............................................................. PN39
EXAMINATION-IN-CHIEF BY MR WARD..................................................... PN39
CROSS-EXAMINATION BY MR DOCKING................................................... PN45
RE-EXAMINATION BY MR WARD................................................................ PN147
EXHIBIT #L3 BUNDLE OF CORRESPONDENCE, LETTER FROM THE CFMEU AND A RESPONSE FROM LEND LEASE.................................................................... PN203
FURTHER CROSS-EXAMINATION BY MR DOCKING............................ PN206
THE WITNESS WITHDREW............................................................................ PN239
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/other/FWCTrans/2015/156.html