C2015/2550, Transcript of Proceedings [2015] FWCTrans 350 (16 June 2015)

TRANSCRIPT OF PROCEEDINGS
Fair Work Act 2009 1051912

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SENIOR DEPUTY PRESIDENT DRAKE
DEPUTY PRESIDENT ASBURY
COMMISSIONER CAMBRIDGE

C2015/2550

s.604 - Appeal of decisions

Lend Lease Building Pty Ltd (LLB) v Construction, Forestry, Mining and Energy Union
(C2015/2550)

Sydney

10.13 AM, THURSDAY, 21 MAY 2015

PN1

MR C WARD: May it please the Commission, my name is Ward. I seek leave, I think, to appear for the appellant.

PN2

SENIOR DEPUTY PRESIDENT DRAKE: Thank you.

PN3

MR B DOCKING: May it please the Commission, Docking, initial B. I seek permission to appear for the Construction, Forestry, Mining and Energy Union as the respondent.

PN4

SENIOR DEPUTY PRESIDENT DRAKE: We've already granted permission to appear in this matter to counsel.

PN5

MR DOCKING: I think that may be the case. Yes, thank you, Senior Deputy President.

PN6

SENIOR DEPUTY PRESIDENT DRAKE: I should tell you beforehand that the Bench's wish is to hear you as to permission to appeal and the merits of the appeal together.

PN7

MR WARD: Your Honour, as you are aware this is an appeal from a decision of Commissioner - - -

PN8

SENIOR DEPUTY PRESIDENT DRAKE: Would you wait one minute, Mr Ward. Mr Ward and Mr Docking, I hardly remember it, but having looked at the file it appears that when this matter first came on, I had a conference with the parties where they outlined their arguments. I then didn't have time to deal with the application and I referred it within panel to Gooley DP, and then from Gooley DP to Riordan C, but I don't know if the parties recall that that was an occurrence, but if there is any objection to my early - - -

PN9

MR WARD: It was before my time.

PN10

SENIOR DEPUTY PRESIDENT DRAKE: From before your time, but if there's anything that arises from that, I think now is the time to say so.

PN11

MR WARD: Not from our side, your Honour.

PN12

MR DOCKING: And not on behalf of the respondent.

PN13

SENIOR DEPUTY PRESIDENT DRAKE: All right.

PN14

MR WARD: Thank you very much for raising it. As I said, that was before my time in the proceedings.

PN15

Your Honours, this is an appeal from the decision of Riordan C. I think - I assume that the Commission has had an opportunity to read and review that decision. The nub of the appeal is that the central - in fact, the only argument made before the commissioner related to the interpretation of clause 11.2(a) of the joint development agreement known as JDA-8. I will take the Commission to that clause in a moment.

PN16

That clause, it is said by the respondent, by it's natural and ordinary meaning require Lend Lease Building Pty Ltd to maintain in perpetuity a defined benefit division of the superannuation plan to which Lend Lease Building Pty Ltd employees participate.

PN17

We say now and we said before Riordan C, and again before Gooley DP in the matter that was without jurisdiction, that on no construction of clause 11.2(a) is such an obligation found. It simply does not appear from the words in clause 11.2(a), and there is no other basis to find any obligation upon LLB to maintain in perpetuity a defined benefit division of the superannuation plan.

PN18

The appeal is brought because the Commissioner below is simply does not deal with that question of construction at all. The Commissioner, with respect, has proceeded on a quest to determine whether or not superannuation entitlements are governed by JDA-8, and the Commissioner found that JDA-8 does govern the provision of superannuation entitlements to employees. And with that conclusion, we take no issue. In fact, we took no issue below.

PN19

What we said though, was that that is not the question, and the question is: what is the content and the meaning of the obligation in JDA-8 in relation to the superannuation entitlements of employees of LLB. And that question is simply not addressed at all, with respect, by the Commissioner below.

PN20

Before I take the Commission to those parts of JDA-8 and the relevant trust deeds, could I just first hand up - I have a bundle of authorities. I don't propose to take the Commission this morning to any particular authorities. We have extracted the authorities that we rely upon, particular in relation to permission to appeal in our written submissions and these authorities are extracted in the volume which I've just handed up.

PN21

SENIOR DEPUTY PRESIDENT DRAKE: Thank you.

PN22

MR WARD: Could I start then in relation to the substance of the dispute by taking the Commission first to what was said by Riordan C below. That's found at appeal book volume 1 and if I could start at the paragraph 6 at page 1, the Commissioner at paragraph 6 has accurately extracted clause 11 and has, we say, identified the nature of the dispute; that is, the issue to be determined relates to clause 11 of JDA-8.

PN23

Clause 11.1 provides for the provision of superannuation and the critical paragraph is 11.1(c), which is found at the top of page 2 where the parties recognise and agree that:

PN24

Company obligations in respect of these benefits (except for superannuation) are not granted or regulated by the term of this agreement -

PN25

that is JDA-8,

PN26

but by separate trust deeds, rules and agreements. It is recognise that the terms of those benefits may be altered by the Lend Lease Group or the respective trusts from time to time without reference to this agreement

PN27

There are questions of interpretation that arise from clause 11.1(c) but what is clear is that the company obligations in relation to superannuation are governed by the agreement and the Commissioner, as I'll explain shortly, dealt with - identified that as a question; that is, does JDA-8 govern the relationship between employer and employee in relation to superannuation and answered that question affirmatively, and we agree with that. It's the natural reading of clause 11.1(c).

PN28

Also at page 2 of the judgment, the Commissioner extracts clause 11.2, which is entitled Superannuation, and clause 11.2 is structured, we say, in an entirely clear fashion. Clause 11.2(a) provides that:

PN29

The company will make superannuation contributions to a fund of the employee's choice or to the Lend Lease Superannuation Plan (LLSP) or to CBus, the Construction and Building Industry Superannuation Fund.

PN30

And by paragraph (b):

PN31

If the employee doesn't choose a fund, the default position is membership of LLSP.

PN32

Now, I'm going to take you, I'm afraid to a few provisions of the Lend Lease Superannuation Plan in due course, but the paragraphs then flow to paragraph (c) in clause 11.2(a):

PN33

If the employee is a member of LLSP

PN34

Subparagraph(i):

PN35

For employees joining the company after 1 January 1999 and in that case there is no question but that contributions must be made to the accumulation plan of the LLSP.

PN36

We only concerned with subparagraph (ii), which we say recites an historical fact which is that

PN37

Employees of company prior to 1 January 1999 may be members of the defined benefit plan of the LLSP.

PN38

Now from those words, from that one sentence, the respondent construes or relies upon some obligation that by use of the words "may be members of the defined benefit plan" there is an obligation on the part of LLB to maintain the defined benefit plan in perpetuity.

PN39

We say that no such obligation arises from the words of clause 11.2(a)(ii). The nature of the obligation, instead, is simply to pay - from clause 11.2(a), to pay superannuation contributions to one of the three options. That is, to a fund of the employee's choice; the Lend Lease Superannuation Plan or to CBus, and that in clause 11.2(a)(ii) there is recorded simply as a matter of historical recognition:

PN40

Some employee originally were able to join a defined benefits plan within LLSP.

PN41

Clause 11.2(a) then sets out a mechanism in relation to that happens to those employees for so long as the defined benefit plan continues.

PN42

At the judgment, if I can turn a little further into the judgment at page 5 of the appeal book, paragraph 19, Riordan C starts with consideration of the issues, and if you turn to page 21, the learned Commissioner describes clause 11.1(c). So this is at the foot of page 5 of the appeal book. The Commissioner says:

PN43

Clause 11.1(c) identifies that the benefits of the LLC benefits package are not governed by the terms of the agreement, "except for superannuation,"

PN44

At the top of page 6 of the appeal book:

PN45

The Macquarie Dictionary defines the term "except" to mean "with the exclusion of other than".

PN46

He moves from that to find at paragraph 23 that superannuation entitlements of LLB employees are determined by JDA-8 at clause 11.2. We don't disagree.

PN47

Paragraph 24 is the determinative paragraph in the judgment.

PN48

It therefore follows that members of the DBP -

PN49

That is the defined benefit plan,

PN50

of the LLSP employed by LLB are entitled to remain members of the fund for the life of JDA-8

PN51

That conclusion, with the greatest respect, simply does not follow. It doesn't address at all the substantial written and oral submissions that were made to the Commissioner in relation to the construction question which inherent in clause 11.2(c)(ii) and that is the nub of this case. It is not a question of whether JDA-8 governs the relationship. By it's words, 11.1, it plainly does. The crux of the case below and here is what is meant by clause 11.2(c)(ii).

PN52

The respondent in its written submissions before this hearing suggests that one has to read paragraphs 21 through to 24 collectively to do justice to the Commissioner's reasoning. With the greatest respect to my learned friend there is nothing in paragraphs 21 to 24 that exposes any consideration whatsoever of the primary arguments made in relation to the only issue in the proceedings and the submissions simply do not address the flaw in the reasoning.

PN53

For the reasons that we have given both below and in writing here, there is no obligation in clause 11.2(c)(ii) to maintain in perpetuity a defined benefit division of the LLSP, the plan.

PN54

Can I take you t the underlying documents to make good that proposition and the starting point I think should be a brief reference to the award which is found at tab 26, volume 1.

PN55

The obligation is, at clause 32.2 upon an employer to:

PN56

make such superannuation contribution to a superannuation fund for the benefit of an employee as will avoid the employer begin required to pay the superannuation guarantee charge under superannuation legislation with respect to that employee.

PN57

Riordan C considered that matter and at paragraph 8 of the judgment found uncontroversially that the payments made in relation to the LLSP satisfied the award obligation.

PN58

Could I then take you to the trust deed which appears in volume 2, at page 417, but in fact the detail that I need you to turn to starts at page 430. The starting point for this is that the trustee of the fund is not an entity in any way related to any Lend Lease group company. The trustee is the Plumb Superannuation Trust trustee. The trustee is given powers in this clause 3 which starts at page 428 of the appeal book.

PN59

So the clause 3.1 which starts at page 428 sets out the trustee's powers under the deed. Importantly, at page 430 in paragraph 3.1(15):

PN60

the Trustees powers include the establishment of plans, segments of plans, sub plan and membership divisions et cetera on such terms and in such manner as it determines.

PN61

So the trustee is given extremely broad powers to establish plans and divisions. Now, under the trust deed itself, there is a participation schedule, which I will turn to in a moment, but reference is made to the participation schedule at page 463 of the appeal book and that is clause 4.11 of the trust deed, which provides that the provisions of the rule 4 are subject to any contrary intention expressed in participation schedule.

PN62

So the overriding effect is that the participation schedule sets out, to the exclusion of any contrary rules, the obligation of the members and the superannuation fund. The trust participations schedule is found at page 473 of the appeal books. I'm sorry this is a little dry, but it does set the important background to these proceedings.

PN63

SENIOR DEPUTY PRESIDENT DRAKE: If dry was an exclusion for grounds of appeal we'd never have one here, Mr Ward, so you might as well go on.

PN64

MR WARD: I will keep trudging through it.

PN65

SENIOR DEPUTY PRESIDENT DRAKE: Keep going.

PN66

MR WARD: So the participation schedule is found at page 473. I will just note perhaps for your reference that at page 493 of the appeal book you find Sub-plan Provisions, and the ability of the trustee to define the terms and conditions upon which benefits are paid. And then within those sub plan provisions at page 509 we find clause 11 of the participation schedule.

PN67

Clause 11 provides that:

PN68

An employer or the principal employer -

PN69

and there is in this case a distinction to be drawn between Lend Lease Building, the present appellant as the employer, and Lend Lease Corporation as the principal employer, but nothing turns on it -

PN70

either may terminate, reduce or suspend for any period any payment in respect of the plan relating to all or some members by notice to the trustee.

PN71

That express power is found in clause 11.1. Then clause 33, which is found at page 520 permits the trustee with the consent of the principal employer to terminate the plan or a division of a plan in its absolute discretion. That's found at the top of page 520 of the appeal books.

PN72

Now the structure of those documents is to one consistent effect and that is that the trustee, Plum, may with the consent of Lend Lease Corporation terminate a division within the Lend Lease Superannuation Plan and it may do so at the absolute discretion of the trustee of Plum.

PN73

That is what is proposed to occur. So the relief that was sought below in these proceedings was declaratory relief that there was no obligation upon LLB to maintain in perpetuity a defined benefit division of the Lend Lease Superannuation Plan in circumstances where there was express power to the contrary found in the underlying trust documents, which are carefully drafted and as to which the evidence was that all parties including members and the union representatives were aware of the content of the trust deed and participation schedule at the time of negotiation of JDA-8. For the respondents to succeed, somewhere must be found an obligation upon LLB that override the plain entitlements of LLB under the trust deed and participation schedule.

PN74

Now the only "somewhere" that is put forward by the respondent is clause 11.2(c) of JDA-8. And if you now return back to that clause - and perhaps it helps if you see it in its entirety. It's set out in the appeal books at page 146 and 147. We now see that clause 11.1 provides that there will be comprehensive package of benefits available to Lend Lease Building Corporation employees that this agreement, JDA-8 governs - and I use that word in a particular sense that I will return to, but it governs the superannuation entitlements of employees, but it does so only in relation to the underlying obligation of Lend Lease which is in 11.2(a).

PN75

Clause 11.2(a) simply forms the only obligation on Lend Lease Building. The company will make superannuation contributions to one of those three plans, to the Lend Lease Superannuation Plan; to a fund of the employee's choice or to Cbus. That's the obligation in clause 11. Clause 11.2(b) simply mechanically provides for a default if the employee doesn't select a plan that is either a fund of their own choice or CBus.

PN76

The default position is the Lend Lease Superannuation Plan. This is logical, but it's there for completeness. Then 11.2(c) also mechanically records as a matter of historical fact that prior to 1 January 1999 there was a division within the LLSP called a "defined benefit division" and, as a result, some employees of LLB may be - and the use of the word "may" we say is critical and is simply not addressed in the decision below, "may be members of the define benefit plan." That's 11.2(c)(ii).

PN77

The construction that we contend for is completely consistent with the existence of 11.2(c)(i) which sets out also as a matter of fact that for employees who joined after 1 January 1991 a different mechanism has to be in place because they cannot, under any circumstances, have been members of the defined benefit plan. The defined benefit division was closed to new members on 1 January 1999.

PN78

That also leads to a point of construction in the surrounding circumstances, because it is undoubtedly the case that the plan was legitimately closed to new members on 1 January 1999. That means that there has been a dwindling number of employees within the defined benefits division for many years. There are now 19 members in the defined benefit division, out of an extraordinarily large workforce.

PN79

It could not be the true construction of clause 11.2(c)(ii) that in the absence of any clear language there was an obligation expressly placed on LLB to maintain for all time a defined benefit division with all of the administrative overheads that that entails, as well as the other responsibilities if both the principal employer, LLC, and the trustee otherwise in their absolute discretion are entitled to and wish to close the defined benefit division.

PN80

SENIOR DEPUTY PRESIDENT DRAKE: Why cannot it be? You say it can't possibly be; why can't is possibly be?

PN81

MR WARD: Well, bed the primary submission, your Honour, is that the language of clause 11.2(c)(ii) doesn't achieve it. If it was going to achieve it - - -

PN82

SENIOR DEPUTY PRESIDENT DRAKE: And that's it? That is your argument. I'm not putting your argument down by saying that. I'm trying to confine it. That is your argument that the words "may be members of" can't mean "may continue to be members of"?

PN83

MR WARD: Even "may continue to be" wouldn't get there. It would have to be "and shall maintain in perpetuity" or some language approaching that.

PN84

SENIOR DEPUTY PRESIDENT DRAKE: And that, you say, is the question.

PN85

MR WARD: That's the question. That's the question that was expressly put below.

PN86

SENIOR DEPUTY PRESIDENT DRAKE: All right. Thank you.

PN87

DEPUTY PRESIDENT ASBURY: And why is it "in perpetuity" when the agreement has a life and is to be renegotiated, presumably at some point?

PN88

MR WARD: It certainly would be open to renegotiating that clause and that's obviously a matter for negotiation. So in perpetuity to the end of this agreement.

PN89

DEPUTY PRESIDENT ASBURY: And when is that?

PN90

MR WARD: I think another two years. 26 March.

PN91

DEPUTY PRESIDENT ASBURY: Or until the 19 persons dwindle by natural attrition.

PN92

MR WARD: Well, they will eventually dwindle, but that's the crux of the case.

PN93

DEPUTY PRESIDENT ASBURY: I didn't hear the date, I'm sorry.

PN94

MR WARD: 31 March 2016.

PN95

DEPUTY PRESIDENT ASBURY: Thank you.

PN96

MR WARD: We say that the fact that there are a dwindling number of employees doesn't mean that the obligation on LLB is for that reason a de minimis obligation; it's the contrary. What is now happening is that there is a disproportionate amount of resource being placed into the administration of a defined benefit division which the trustee does not wish to maintain, which the principal employer does not wish to maintain, which costs a lot of money to maintain and which there is no legal foundation upon which to find any obligation to maintain.

PN97

SENIOR DEPUTY PRESIDENT DRAKE: For the same reason that the employees wish to maintain it.

PN98

MR WARD: I'm sorry, I don't understand what - - -

PN99

SENIOR DEPUTY PRESIDENT DRAKE: The financial cross, the benefit of it as compared to some other benefit.

PN100

MR WARD: Well, those financial costs aren't being borne by the employee.

PN101

SENIOR DEPUTY PRESIDENT DRAKE: No, that's the financial benefit to the employees.

PN102

MR WARD: Well, your Honour, there was substantial evidence below about the nature of the benefits to employees and the compensation package that had been offered to them in relation to the changeover. We say that there's no principal basis for this opposition and there is not only no principal basis for it, but there is no legal basis for it.

PN103

Now, your Honour, we have addressed the permission to appeal point in writing. I think it's fair to say that that point largely turns on what the Commission considers to be the strength of the underlying arguments. We say that there is a fundamental obligation on the part of the Commissioner to fully address the crux of the arguments in the case, and the argument in the case was not and is not whether or not JDA-8 governs superannuation. It's the argument which your Honours have heard this morning which is does clause 11.2(c)(ii) provide any obligation in that particular way as is contended for by the respondent.

PN104

That is, we say, a matter of public interest. That is, the public interest is in the Commission correctly identifying and addressing the central arguments. Now, we've said what we say about that in writing and provided the authorities for it. I think at this stage, those would be my submissions-in-chief. There may be things that I wish to address in reply.

PN105

COMMISSIONER CAMBRIDGE: Could I just ask, what work would there be for that clause to do if the defined benefit plan was removed or terminated?

PN106

MR WARD: No, at that point it does no - - -

PN107

SENIOR DEPUTY PRESIDENT DRAKE: So that would render the clause otiose?

PN108

MR WARD: Well, no, it would mean that there's no work for the clause to do in the future, because there it records that although some members may be members, if there are no members in that category the clause has no work to do. We don't shy away from that at all.

PN109

SENIOR DEPUTY PRESIDENT DRAKE: I'm sorry Mr Ward, you're competing with some construction noise behind us, so I lose the second half of your sentence sometimes.

PN110

MR WARD: I simply said that we do not shy away from the proposition that if there are no members as a matter of fact of the defined benefit division of the plan then the mechanism in clause 11.2(c)(ii) no longer has any work to do. We fully accept that that necessarily follows.

PN111

DEPUTY PRESIDENT ASBURY: Because of the nature of the clause on your submission.

PN112

MR WARD: Yes, because the clause only operates as a mechanism in respect of those employees who may at any point in time be members of a defined benefit division.

PN113

COMMISSIONER CAMBRIDGE: But if you removed or you abolish or you terminate that defined benefit plan, then you render the clause otiose.

PN114

MR WARD: Well, yes. There's no work for it to do in the future, although there was as the time it was negotiated.

PN115

COMMISSIONER CAMBRIDGE: So it must have had a purpose when it was put in there?

PN116

MR WARD: It did and it does today. There are today 19 members of the defined benefit division and the clause sets out the mechanism by which their benefits are to be calculated today.

PN117

SENIOR DEPUTY PRESIDENT DRAKE: And so you say the trustee exercises what is its entitlement to change the arrangement.

PN118

MR WARD: Yes, what is described in the documents which actually provide the benefits, what is described as the absolute discretion of the trustee, which is not a Lend Lease entity.

PN119

COMMISSIONER CAMBRIDGE: That has to have the consent of the principal employer.

PN120

MR WARD: Yes, which is also not a party to these proceedings.

PN121

COMMISSIONER CAMBRIDGE: I beg your pardon.

PN122

MR WARD: And the principal employer is not a party to these proceedings. The principal employer is Lend Lease Corporation.

PN123

COMMISSIONER CAMBRIDGE: Yes, and the employer - a party in this proceedings is a wholly-owned subsidiary of that principal employer.

PN124

MR WARD: That's true. That's right.

PN125

COMMISSIONER CAMBRIDGE: It doesn't need a great deal of imagination to wonder what might have been in the minds of people that were putting the agreement together.

PN126

MR WARD: Well, the agreement has been put together, with respect Commissioner, to provide very substantial superannuation benefits to a very large number of employees and what we are now left with is a very small group of employees who remain in an outdated and very expensive plan which is providing them at the moment with benefits which can be matched elsewhere.

PN127

COMMISSIONER CAMBRIDGE: I suppose what the obvious thing is is that when the agreement was made presumably there's a reasonably clear intention that you can infer that this was designed to insure that, for the life of the agreement at least, it was a mechanism to insure that the defined benefit plan entitlements remain.

PN128

MR WARD: Well, Commissioner, if that were the case and there was to be an inference of that type drawn, it would be the subject - that would be a legal conclusion which would require reasoning, analysis and authority, and none of that appears in the decision below. That's the primary complaint that we make.

PN129

COMMISSIONER CAMBRIDGE: Right.

PN130

MR WARD: If there is to be a decision of that type, it has to be a decision based on legal principal and in particular the need to imply into clause 11.2(c)(ii) words that do not appear.

PN131

COMMISSIONER CAMBRIDGE: Well, isn't the inference fairly readily gained from the fact that to terminate the defined benefit plan you render the provision otiose?

PN132

MR WARD: No, we don't agree with that at all. We say that clause 11.2(c)(ii) creates a mechanism which is available for so long as there are members of the defined benefit division, but we don't shy away from the fact that if the defined benefit division closes, that mechanism can no longer operate in that way, but instead the employees would be within the accumulation division which is caught by clause 11.2(c)(i).

PN133

DEPUTY PRESIDENT ASBURY: So there would also have to be an inference that your client, LLB, left open its options with respect to the continuation of the defined benefit plan by framing the clause in what you say is a permissive manner, I suppose, rather than mandatory.

PN134

MR WARD: I wouldn't characterise that as an inference. I would say that that's the necessary conclusion that flows from the true and only construction of clause 11.2(c)(ii). That is, if we're right and there is no obligation in clause 11.2(c)(ii) then LLB and the trustee and the principal employer can behave in the manner that the trust deed participation schedule allow them to behave. And the only exception to that would be if there are words that are clear and mandatory within clause 11.2(c)(ii) and they simply aren't.

PN135

DEPUTY PRESIDENT ASBURY: Then if that's the case, why did you need the clause at all? Because the fact that there were people in the defined benefit plan was a known fact, and if it was a known fact, why did you need to record it in an enterprise agreement at all and particularly in one where it appears that the terms were changed with respect to the reference to superannuation?

PN136

MR WARD: Because clause 11 is setting out the superannuation benefits available to employees and it is recording the alternative mechanisms by which the benefits can be calculated. Clause 11.2(c) records, as a matter of mechanism, that if there are members of the defined benefit plan, this is how their benefit shall be calculated.

PN137

DEPUTY PRESIDENT ASBURY: But it's also setting out entitlements of employees, so it didn't need to be - if your client could do what it contends it can do, it didn't need to record the position of the defined benefit plan employees in the agreement, because - - -

PN138

MR WARD: I agree entirely. Strictly speaking, all that needs to happen in clause 11 is the recording in 11.2(a) of the company's obligation. For the clause to operate appropriately that would have been all that was strictly required, but it doesn't do that and in clause 11.2(c)(i) it sets out a mechanism for the accumulation plan and 11.2(c)(ii) it sets out a mechanism for those employees who may be - and the use of the word "may" is important - may be members of the defined benefit division.

PN139

SENIOR DEPUTY PRESIDENT DRAKE: Why is it important? They were in there. You had already the entitlements you have under the trust deed and the schedule, if that's what it's called, and there's no need to say anything if those documents operated in the way you say they do. It didn't need to be there at all, did it?

PN140

MR WARD: Strictly speaking, there's no need to have a trust deed either, because the superannuation legislation , structures - - -

PN141

SENIOR DEPUTY PRESIDENT DRAKE: There's no need to mention either the superannuation legislation or either of these entitlements if the trust deed and the schedule operate as you say.

PN142

MR WARD: Well, I don't accept that, Commissioner, with respect- - -

PN143

SENIOR DEPUTY PRESIDENT DRAKE: It's your Honour, Mr Ward. Why?

PN144

MR WARD: We say it's entirely proper for JDA-8 to have recorded the nature of the obligations which each party agrees - - -

PN145

SENIOR DEPUTY PRESIDENT DRAKE: I didn't say it was improper, Mr Ward. My question was whether it was necessary. Those things were already set out in the deed and in the schedule. So it was unnecessary.

PN146

MR WARD: Well, your Honour, you've heard my response to that which is, strictly speaking, the balance of clause 11.3 is probably strictly speaking unnecessary.

PN147

SENIOR DEPUTY PRESIDENT DRAKE: Good, thank you. I wanted to make sure that was what you said. Thank you.

PN148

MR WARD: Those are our submissions.

PN149

DEPUTY PRESIDENT ASBURY: Can I also just put to you that perhaps the use of the word "may" was to reflect the entitlement of the employees who were in the defined benefit plan to remain there or to opt to go into the accumulation part of the fund, rather than an obligation on the part of the employer, it might represent an entitlement. The use of the word "may" might relate to the entitlement of an employee to choose whether they wish to remain in the plan or not.

PN150

MR WARD: Commissioner, to read the word "may" in that context, in that way, in our submission goes well beyond he natural meaning of the sentence. I see what - - -

PN151

DEPUTY PRESIDENT ASBURY: Well, the focus of the sentence is on the employees. It's not on the company. The focus of the provision is on the employees. It refers to them. "Employees of the company" - - -

PN152

MR WARD: Yes, "may be members of a" - - -

PN153

DEPUTY PRESIDENT ASBURY: Yes, but the focus of the clause is not on - arguably, by inference, it might put an obligation on the company, but the focus of the clause actually on the employees and their entitlements rather than on the company and its obligations. It wouldn't be unusual to- there's all sorts of terms that are used, "grandfathering" "red ringing", particular employees in particular circumstances.

PN154

MR WARD: Yes, Commissioner, but none of those words are used here. Not one. And this agreement, as the evidence disclosed, was the subject of lengthy negotiation - very lengthy negotiation. This is JDA-8 and there is not a shred of evidence to suggest that those words meant - were intended to have the breadth which you, Commissioner, have not put to me as a possible import. They simply were not intended, on the evidence, to have that meaning and that interpretation.

PN155

I accept that one use of the word "may" could conceivably be - but we say it is not the correct construction of the sentence as a whole - to grant some form of discretion t the employees. But even if that were the case, it does not place an obligation on LLB to maintain the fund. It might - those two operations sit perfectly harmoniously. It may well be, if the Commissioner accepted what you've put to me as to the meaning of the word "may", it is completely consistent to say that the employees may have been able to elect at any time to leave the defined benefit division.

PN156

DEPUTY PRESIDENT ASBURY: But not to elect to stay.

PN157

MR WARD: Well, they could elect to stay up to - for so long as it was open. But what is not there is an obligation on LLB to maintain for all time.

PN158

DEPUTY PRESIDENT ASBURY: When you say there's no evidence for that intention, isn't it the case, and correct me if I'm wrong, that the terms in 11.1(c) were amended so that in this iteration of the agreement so that "except for superannuation" was included?

PN159

MR WARD: Yes, that's correct. That's correct. But saying "except for superannuation" does nothing more, other than say clause 11.2 has work to do. It is, in part, an answer to the proposition that you put to me that this is unnecessary. I can't, myself, understand why it was strictly necessary to go beyond clause 11.2(a). But that having been done, one has to read the words in their natural and ordinary meaning and construe them properly. And there is nothing in clause 11.2(c)(ii) on our construction, which provides anything in the nature of an obligation to LLB to maintain a defined benefit plan.

PN160

DEPUTY PRESIDENT ASBURY: Thank you. I understand your submission.

PN161

MR WARD: Thank you.

PN162

SENIOR DEPUTY PRESIDENT DRAKE: Yes, Mr Docking.

PN163

MR DOCKING: Thank you, members of the Full Bench. I adopt without reading the respondent's outline of submissions. Might I immediately make clear it is not and has not been the respondent's position that it is in perpetuity that the defined benefits scheme would be an enforceable obligation. It is for the life of the enterprise agreement or, for example, if there as an negotiated variance to that enterprise agreement.

PN164

Can I go to Riordan C's decision which is tab 1 in the appeal book to demonstrate the appellant fails to read that decision fairly or as a whole. When one goes through the structure at paragraph 4, the Commissioner made reference to the written submissions of both parties. The approach taken was to adopt the submissions put at the interlocutory stage before Gooley DP to adopt the submissions at the final hearing before Gooley DP and so far as the appellant was concerned - I should say respondent, I have to get used to appearing for respondent - that it just adopted what was put previously because it had been fully argued before Gooley DP.

PN165

Paragraph 6, the Commissioner sets out all of clause 11 and then if one goes to that heading under Consideration, it's unremarkable I submit in paragraph 19 to say that:

PN166

All the matters were taken into account; the contentions, evidence and submissions of the parties from both this and the first proceeding.

PN167

I say that, because that is what the respondent undeniably did and so did the appellant. Then at paragraph 20, when one looks at the expression "the relevant provisions of JDA-8", the Commissioner is not severing 11.1(c) as the appellant does on the appeal from the balance of 11.2(a) and (c)(ii). The respondent always took the position below that one has to read all of those parts of clause 11.1 and 11.2 in conjunction with each other to give a context. This is still on appeal what the appellant fails to do.

PN168

So when the Commissioner has referred in paragraph 20 to "the relevant provisions", he is referring to all of those provisions dealing with superannuation. The Commissioner then deals with, in paragraphs 21 and 22, specific clause 11.1(c). Now, it is quite clear and settled that the insertion of the words "except for superannuation" involves an objective inquiry. It is quite clear for JDA-8 or this enterprise agreement they were inserted to take superannuation out of the general position set out in that provision or to carve out a special position for superannuation.

PN169

It's an unremarkable finding by the Commissioner and it gives the context when one then goes to paragraph 23 where the Commissioner has found that the superannuation entitlements of LLB employees are determined by JDA-8 at clause 11.2. And with respect, the appellant just does not read all of these parts of the decision fairy and in context. And there then follows in the Commissioner's reason, paragraph 24, that they are entitled to remain members of the fund for the life of JDA-8, those being the defined benefit plan employees.

PN170

I do want to go to some of the evidence which will assist, but before doing so, can I say this enterprise agreement allowing for employees their choice to be in a defined benefit scheme is unremarkable, because if you go to the appeal book behind tab 26, volume 1, there is a copy of the relevant award provision. This was reproduced also elsewhere in Mr Maxwell's statement that this is a convenient location for present purposes.

PN171

At page 130, there can be seen 32.4 deals with superannuation fund and when one goes over to the next page, 32.4 paragraph (j) provides in the award that it could be a superannuation fund or scheme which the employee is a defined benefit member of. In other words, the enterprise agreement is harmonious, as has been put out it in the respondent's submissions, with the enterprise agreement to mirror each other.

PN172

I then want to go to some of the evidence, particularly about who makes the contributions because the Commissioner was correct in finding that it wasn't explained in the evidence led by the appellant. If I take the Full Bench to volume 1, tab 3, there's some short cross-examination of the witness, Ms Hughes. I go to page 15, PN51, where Ms Hughes was asked about evidence she gave back on 6 June 2014.

PN173

The Full Bench will see PN51, question:

PN174

And at that stage, you summarised 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.

PN175

PN52:

PN176

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 recharging between group entities.

PN177

PN53:

PN178

You can't shed any light on the nature of - - -?‑‑‑No, I cannot.

PN179

MR WARD: Can you just clarify that that's her, not me, please.

PN180

MR DOCKING: I've been asked to clarify by Mr Ward, I think PN55 attributes the question to him. It would not be - - -

PN181

DEPUTY PRESIDENT ASBURY: It's Ms Hughes.

PN182

MR DOCKING: Yes, and then the answer that follows is that of the witness:

PN183

I don't have an answer to that. Something to do with accounting policy that I'm not involved with.

PN184

And whilst looking at this evidence, there's been a plea again today to what I'd call a second part of Kucks that's set out in the respondent's submission - some notion of it is commercially inconvenient or it would be unfair to let these 19 employees stay in a defined benefits scheme because it will cost something. It ignores that those 19 have clearly chosen that they think the better benefit to them as having a known formula which will give them a defined benefit, if they retire, by way of superannuation.

PN185

I take the Full Bench to page 17, same tab, PN79 where Ms Hughes was asked to identify the amount of funds held in their accounts or their defined benefit scheme and the witness didn't know off the top of her head, but the Full Bench will then see at PN80, by reading that question and answer that she - the very last sentence, she thought it "was around six or seven million, something to that extent."

PN186

So there's six or seven million dollars and the point taken before the Commissioner, if it was relevant, is well, you can hardly complain about some cost when there is that amount of money held on the account of these defined benefits scheme members and it, in turn, would be earning some sort of interest or the like, rather than sitting earning nothing.

PN187

Also, this issue about the absolute discretion of the trustee or principal employer, who I understand the appellant is saying is the parent company needs to be seen in proper context. First, again, it really seems to be the second part of Kucks it's some notion of fairness that would lead to interpreting an enterprise agreement. That, of course, is impermissible. It's got nothing to do with what the members of the Full Bench or Riordan C or Gooley DP thought concerning anterior notions of fairness, but at least that would be thought to be a consideration.

PN188

In that cross-examination, Ms Hughes confirmed - I take the Full Bench to page 19 to PN97. She was asked the question:

PN189

Do you think that it might be that given they're a wholly owned subsidiary of LLC they will prevail upon the LLC to maintain the division for the life of the JDA-8?‑‑‑I don't know what they will do.

PN190

Then there are some further questioning about that. There's confirmation at page 20, PN109, that various people who have been involved in the discussions are actually employed by the parent company LLC, but then I go to page 21 and the Full Bench will see at PN119 to 121, after giving the witness her previous answers back in June, the witness confirmed that they were true and correct as at the date of the new evidence in 2015.

PN191

To understand that that means, I then have to take the Full Bench to volume 4 of the appeal books, to tab 98, page stamped at the top 1620.

PN192

DEPUTY PRESIDENT ASBURY: Sorry, what number of the appeal books was that, Mr Docking?

PN193

MR DOCKING: Tab 98, page stamped 1620. Because it doesn't really present the actual real position vis-a-vis the trustee. The evidence doesn't support the trustee is going to unilaterally decide in any way to close down this defined benefit scheme.

PN194

PN619 on page 162, a question:

PN195

Is it correct that LLC has a right to terminate contributions to the DB division by notice to the trustee?‑‑‑Yes.

PN196

PN620:

PN197

And is it correct that it requires the consent of LLC to terminate; that is, the trustee to terminate the defined benefits division?‑‑‑Yes.

PN198

PN621:

PN199

It wouldn't happen without LLC making those decisions, would it? The closure of the DB division?‑‑‑No, the trustee does not make that decision alone.

PN200

PN622:

PN201

The trustee would not unilaterally decide to close the DB division, would it?‑‑‑No, it requires Lend Lease Corporation to stop making contributions.

PN202

And as was put before Gooley DP and Riordan C, if the parent company wishes to become involved in a contravention of its subsidiary, it will expose itself to the possibility of Federal Court civil penalty proceedings, because as set out before Gooley DP, LLC if it makes the decision can expose itself to LLB's contravention by LLC becoming involved in not meeting the enforceable obligations in the enterprise agreement.

PN203

And whilst I've got that volume 4 of the appeal book open, I do want to go to tab 99 which is Gooley DP's final decision. True it is that - - -

PN204

MR WARD: I object.

PN205

MR DOCKING: Sorry? Mr Ward objects to going to something in an appeal book.

PN206

MR WARD: Well, I hear where it's going. The decision of Gooley DP, for reasons give below, is not a matter to which any regard can be had. It is without effect, it was without jurisdiction, other than in relation to the question of jurisdiction.

PN207

SENIOR DEPUTY PRESIDENT DRAKE: That's a matter you can put in response if you like, Mr Ward. They were matters that were taken into account, the decision of Gooley DP, as I understand it from the decision of Riordan C.

PN208

MR DOCKING: : What the presiding Deputy President member has said, that much is apparent from paragraph 31:

PN209

I note that Gooley DP came to the same conclusion.

PN210

and this was after noting the submission of the appellant at paragraphs 15, 16 and 17. It's a nice point of whether the CFMEU and its employees had followed the disputes procedure. That was the basis upon which it was said there was not jurisdiction.

PN211

As I said to Riordan C, the CFMEU and its employees did not need to appeal or to take any further action, because LLB and LLC had, in effect, agreed not to close down the defined benefits scheme in the meantime. So there was no need for an appeal. But regardless of what the true position was of whether the disputes procedure was followed, at the very least, there is very powerful obiter dicta of Gooley DP concerning the proper construction of the enterprise agreement and members of the Full Bench will find that using the page numbers stamped at the top from 1661, from paragraph 25 onwards and that analysis continues all the way through until paragraph 45 where the Deputy President concluded:

PN212

I therefore find that LLB has an obligation under the agreement to provide the benefits set out in clause 11.2(c)(ii).

PN213

And for the comment or question of Asbury DP, at least the respondent's position is what is set out in paragraph 39 of those reasons applies. It says this:

PN214

The word "may" in clause 11.2(c)(ii) is not used in a permissive sense. It simply acknowledges that some employees are members of the DBD, but as they are not compelled to, their status may change.

PN215

Certainly at the very least there's obiter dicta; the Full Bench would find the analysis of the Deputy President is powerful and stands.

PN216

This really was not a complicated construction exercise as the appellant below and on appeal continues to agitate. With respect, it just required applying both parts of Kucks, Madgwick J's oft cited propositions which as I've set out in the appeal submissions it's been accepted applies not only to interpreting awards and it also applies to enterprise agreements.

PN217

One looks at the words "except for superannuation" in their historical context. I accept that below both Mr Maxwell and the employer witnesses intruded into subjective matters as to what each of them understood. It's really an objective inquiry and those words had a purpose and one applies the first part of Kucks to find that there is a legally enforceable obligation that applies to the 19 employees to be in the defined benefit scheme.

PN218

One does not even need to strain to deal with an injustice as Kucks says is permissible if one needed to, to uphold that last contention. In my submission, it's a plain straightforward interpretation exercise for which this Full Bench should not give permission to appeal and should, if it does give permission to appeal in the alternative, uphold the construction by both Gooley DP and Riordan C.

PN219

The only other evidence, reference, I should provide before concluding is confirming that Riordan C was right about the trust deed having some ambiguity in terms of whether it applies to LLB and LLC. What the Commissioner refers to in his reasons can be found in appeal book volume 2, tab 47. At the page stamped in the middle, 424, there is set out clause 1.1 definitions. The second-last definition on that page says this:

PN220

"Employer" means "the party or parties designated in the participation schedule as the employer", and in relation to a member means "the employer by which that member is employed."

PN221

It's that last reference of "means the employer by which that member is employed" must refer to LLB, not LLC. So the Commissioner understood the evidence. I don't think any appeal point is taken about that part of the reasons, nor could there be, given it accurately reflects what's in the trust deed and no-one disputed that LLB was and is the employer by which that member is employed. Unless there are any questions, they are the submissions for the respondent.

PN222

SENIOR DEPUTY PRESIDENT DRAKE: No, thank you.

PN223

MR WARD: Thank you. Just three matters in response. The first is in relation to that last point, there is no dispute with the characterisation of that definitional provision. Attention needs to be given though to the operation of those defined terms, and I took you, I think, earlier to the operation of the absolute discretion in clause 33 of the participation schedule of the principal employer and the trustee. That is, the trustee to terminate with the consent of the principal employer.

PN224

So it matters not who the employer, lower case, is; in this case LLB. The question is what is done with those defined terms and the defined term refers only to LLC as principal employee. But again nothing, we think, today turns on that.

PN225

In relation to the decision below of Gooley DP, may I say this: Gooley DP's remarks are not obiter. They were made without jurisdiction and on the authority of the Full Bench in Transport Workers Union v Coles Supermarkets [2013] FWFB at 276. The decision is simply of no effect. The remarks are not obiter, no weight can be given to them. They are of no effect and we object to my friend seeking to place weight upon them in these proceedings.

PN226

The only other matter to address is the suggestion that because there is apparently at the moment a surplus in the fund overall; that is, in the Lend Lease Superannuation fund in some way that affects the question of construction of 11.2(c). First of all, we say, as a matter of law and principle it cannot. That is, the existence of a surplus or otherwise is completely irrelevant to the question of construction which is before the Commission and before the Full Bench.

PN227

Even if that were the case, you would find in two places explanations for what is to be done with the surplus. That is, this is not a surplus of the defined benefit plan, this is a surplus within the fund as a whole. The surplus is used to fund ongoing accumulation entitlements, ongoing contributions by LLB and also the insurance premiums for the many thousands of members within the LLSP.

PN228

References to all of that are found in two places, first in transcript at page 31 of appeal book volume 1 and, secondly, at tab 24 where you will find exhibit Level 3 below, which is an exchange of letters, the response to which was admitted without objection and which clearly explains the nature of the surplus and what is to be done with it. Unless there is anything further I can help the Full Bench with, those are our submissions in reply.

PN229

SENIOR DEPUTY PRESIDENT DRAKE: Do the parties agree that all of the materials and submissions before Gooley DP were before Riordan C?

PN230

MR WARD: Yes, and there is no objection to those being into account

PN231

SENIOR DEPUTY PRESIDENT DRAKE: Right. And you say that the decision of Gooley DP was not obiter, that she found she had no jurisdiction. You agree that she had no jurisdiction and the decision is of no effect.

PN232

MR WARD: Yes.

PN233

SENIOR DEPUTY PRESIDENT DRAKE: However, I don't see any reason why - and I am putting this to you since it's my view, and you can persuade me otherwise - whether, despite that, because decisions are made here and in other jurisdictions all of the time where the answer might be the matter is not properly before the Court or the Tribunal. That does not necessarily mean, as I understand it, that the reasoning of a member on a particular issue may not be a matter that can be considered as it would any other decision - any other reasoning in any other decision of any member of the Commission.

PN234

MR WARD: The submission is very simple, your Honour, and that is that if the decision below is without jurisdiction, it is of no effect. To place any - - -

PN235

SENIOR DEPUTY PRESIDENT DRAKE: I didn't say it's effect, I was talking about it's the reasoning within it on a particular question might be a matter that, whilst the answer to the final question might be there's no jurisdiction, the reasoning might be a matter that could be adopted or considered by a Full Bench of this Commission.

PN236

MR WARD: Well, I can't do anything more than say that to give the words or the reasoning that attention does not set comparably with the proposition that the decision is of no effect.

PN237

SENIOR DEPUTY PRESIDENT DRAKE: Thank you.

PN238

MR DOCKING: Can I make my position clear. I can deal with it by what was actually put to Riordan C. I go to appeal book 1, tab 25, page stamped 127, paragraph 7 which said this:

PN239

Alternatively, or in addition, there is no warrant or reason for the private arbitrator as presently constituted to depart from those 11.1(c) and 11.2 findings of Gooley DP.

PN240

In other words, the CFMEU on behalf of its members expressly incorporated those findings and that reasoning of Gooley DP in its submissions. On that basis, of course, it can be taken into account.

PN241

SENIOR DEPUTY PRESIDENT DRAKE: I understand that that's the case. Thank you.

PN242

MR WARD: Simply by way of response, could I refer to page 118 of appeal book 1, which were our submissions in reply, which made it clear that we did not accept that that was a proper way forward.

PN243

SENIOR DEPUTY PRESIDENT DRAKE: Yes. Mr Docking says they were incorporated and you don't sit comparably with that.

PN244

MR WARD: That's right.

PN245

SENIOR DEPUTY PRESIDENT DRAKE: Thank you. Is there any other matter?

PN246

MR DOCKING: Might I just add it would be nonsense if I then had to set out and pretend they were the original submissions of the CFMEU and its members. It's an unremarkable way to incorporate what everyone understood before Riordan C were part of the arguments and contentions of the CFMEU and its members.

PN247

DEPUTY PRESIDENT ASBURY: Can I just say it's not uncommon, Mr Ward, that members of the Commission would deal with a matter where there is a jurisdictional objection and there is a merits argument, and they deal with both matters on the basis that if somebody appeals they've expressed their view and saved everybody a lot of time and effort if it gets sent back to them.

PN248

SENIOR DEPUTY PRESIDENT DRAKE: Yes.

PN249

MR WARD: Well, with respect, Deputy President, that is, if it gets sent back to them.

PN250

DEPUTY PRESIDENT ASBURY: Well, it seems to happen quite a bit these days.

PN251

SENIOR DEPUTY PRESIDENT DRAKE: Is there any other matter, before you both decide to get up again?

PN252

MR WARD: I'm only up at request.

PN253

SENIOR DEPUTY PRESIDENT DRAKE: Right. You can sit then. Thank you. We will reserve our decision.

ADJOURNED INDEFINITELY [11.24 AM]