AG2015/4317, Transcript of Proceedings [2015] FWCTrans 693 (27 November 2015)

TRANSCRIPT OF PROCEEDINGS
Fair Work Act 2009 1052751

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DEPUTY PRESIDENT GOSTENCNIK

AG2015/4317

Sch. 3, Item 16 - Application to terminate collective agreement-based transitional instrument

Uptime Management Services Pty Ltd

and

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)

(AG2015/4317)

Uptime Management Services Pty Ltd and AMWU Geelong Area Agreement 2011 2014

Melbourne

10.59 AM, FRIDAY, 20 NOVEMBER 2015

PN1

THE DEPUTY PRESIDENT: Yes, good morning. Mr McComb, you're appearing for the applicant, is that right?

PN2

MR McCOMB: Yes, Deputy President. The applicant requests that permission be granted for the respondent to be represented subject to - in accordance with section 596 of the Act.

PN3

THE DEPUTY PRESIDENT: I don't think that's contested is it, Mr Terzic? I am satisfied, having regard to the complexity of the matter, the matter will be dealt with more efficiently if I were to grant you permission, Mr McComb, so permission is granted. Mr Terzic, you appear for the AMWU?

PN4

MR TERZIC: Yes. I have with me Mr HEINZ, initial T.

PN5

THE DEPUTY PRESIDENT: All right. Can I firstly thank the parties for the indulgence this morning and the late start. It enable me to do attend the farewell of Marshall J. in the Federal Court, so I am grateful to the parties. Yes, Mr McComb?

PN6

MR McCOMB: Deputy President, the applicant believes there are three substantive issues in reply to the respondent today. One, whether clause 4, date and period of operation, places a fetter on the termination of the agreement by requiring that another agreement must supersede the current agreement.

PN7

The applicant argues that a replacement agreement is just one of three possible outcomes that that clause contemplates and clearly allows for termination of the agreement as a possible outcome.

PN8

Number 2, whether after taking this into account in the circumstances and the very strong view of the union, is it enough to deny the application for termination of this agreement; and 3, whether there is any public interest considerations for the Commission in considering the termination of the agreement.

PN9

Does the termination excite a public interest consideration or does the very strong view of the union excite a public interest consideration?

PN10

THE DEPUTY PRESIDENT: Do you rely upon the evidence that is contained in the witness statement of Miss - is it Hensgen?

PN11

MR McCOMB: Yes, Deputy President.

PN12

THE DEPUTY PRESIDENT: Do you seek to tender that?

PN13

MR McCOMB: I'm sorry?

PN14

THE DEPUTY PRESIDENT: You seek to tender that?

PN15

MR McCOMB: I seek to tender that.

PN16

THE DEPUTY PRESIDENT: I gather, Mr Terzic, that that's not opposed and that you don't intend to cross-examine?

PN17

MR TERZIC: That's correct, Deputy President.

PN18

THE DEPUTY PRESIDENT: Just bear with me for a moment. All right. I will mark the witness statement of Ms Merryn Hensgen, together with the two annexures attached to that statement, the statement is dated 9 October 2015, as Exhibit A.

EXHIBIT #A WITNESS STATEMENT OF MERRYN HENSGEN DATED 09/10/2015.

PN19

THE DEPUTY PRESIDENT: All right. Mr McComb, do you want to say anything else or do you want to deal with whatever the union has to say in reply?

PN20

MR McCOMB: Nothing at the moment, Your Honour - Deputy President.

PN21

THE DEPUTY PRESIDENT: Well, it's your case, so whatever you want to say is principally your case. Now is the time.

PN22

MR McCOMB: Yes, sure. Now, absolutely. Deputy President, the amended submission of the respondent argues that clause 4 reads to require that another agreement must supersede the current agreement. Clause 4 does no such thing. Clause 4 states that the agreement should continue until varied, terminated or replaced by another agreement.

PN23

The respondent also argues that somehow this clause places a fetter on the termination of the agreement. The applicant is in clear disagreement on this point. In fact, we argue the exact opposite. The agreement clearly may be terminated and not replaced past the nominal expiry date. In fact, termination is one of three scenarios contemplated. It says so in black and white in clause 4:

PN24

The agreement commences from 1 July 2011 and it will continue in force until varied, terminated or replaced by agreement of the parties to this agreement.

PN25

Section 226 of the Act states that the agreement must be terminated if the Commission considers it appropriate, taking into account the views and circumstances of the employees, employer and the union. The views of the employer are well known in the circumstances that the employer would not be adversely affected by the termination of the agreement. The employers do not have views or circumstances, nor will any employees be adversely affected since there haven't been any employees covered by this agreement since July.

PN26

How the termination of this agreement will affect the respondent is a matter for them to argue, but I can't see how it can when they don't have any members or they don't have any potential members in the workplace.

PN27

So that just leaves the views of the respondent which are well known, but by placing undue weight on the views of the respondent and not terminating this agreement would be contrary to several objects of the Act including providing a law that is flexible for business, acknowledging the special circumstances of small and medium sized businesses.

PN28

By not terminating this agreement it will have a negative effect on the applicant though, who is simply attempting to clear some of the regulatory burden from his business by tying up the loose ends of an agreement that no longer affects anyone except the applicant.

PN29

The respondent has submitted that the departure from the agreed terms, that being the applicant terminating the agreement contrary to the wishes of the applicant, excites the relevant public interest test. The argument doesn't go to public interest. That argument doesn't. The respondent asserts that the Castricum Brothers decision is on point. That agreement in that matter stated that:

PN30

The parties to this agreement agree that negotiations to renew this agreement will commence not later than six months prior to the expiration of that agreement. Should negotiations not achieve agreement, the wages and conditions of employment shall continue as at the date of expiration.

PN31

That agreement clearly provided for a timeline for negotiations to commence between the parties whereas the agreement we are discussing does not. Further, there are no employees for the union to represent or employees to be covered by a new agreement.

PN32

In the Saraji mine BHP matter the Commission found that if an agreement said, "This agreement will continue in force after its nominal expiry date pursuant to the Act until such time as it is replaced by a new agreement", then it would be contrary to the public interest to terminate the agreement in a way that is contrary to the clear intention of the parties.

PN33

This is not the case here, Deputy President. There was no stipulation that the agreement would remain in force until replaced by another. That was only simply potentially one of three outcomes.

PN34

There is no public interest in denying the application to terminate the agreement, only a strong objection from one of the parties to the agreement. A strong objection in itself does not excite relevant public interest considerations. As the Commissioner said in Kellogg Brown Root v Esso:

PN35

I fail to see how the mutual interest of the parties in the termination of an agreement can relieve the Commission, to some extent, of the statutory obligation to consider if it is not contrary to the public interest to terminate it, yet strong opposition to the termination by one party and the reasons for such opposition excite no public interest considerations.

PN36

Deputy President, public interest are matters such as whether the various objects of the Fair Work Act have been achieved, the levels of employment, the levels of inflation, the maintenance of proper industrial standards. The question is does the termination of this agreement have an effect on any of these matters or anything else that can seriously be considered to excite a public interest test. The applicant submits not and we ask that you grant the application for termination of the agreement. If it please the Commission.

PN37

THE DEPUTY PRESIDENT: Yes, thank you. Mr Terzic?

PN38

MR TERZIC: Well, firstly, Commissioner - Deputy President, I acknowledge that in the outline of submissions that was filed and served by the union dated 6 November there was, for me, an inexplicable error in that the clause reproduced in that submission which was said to be the relevant clause in the agreement subject to this application was incorrect. That was brought to my attention by the applicant's submission in reply and with no opposition we would seek that the outline of submissions that were so filed and served on 6 November be varied to substitute Clause 4 of the relevant agreement. Having said that, it is the submission of the respondent that it really makes no difference to the substance of the argument posited in this matter.

PN39

The argument follows a line of authorities that starts with the BHP Coal matters which were a decision of Bacon C which were then, to some extent, followed by a Full Bench in Castricum Brothers. I have got copies of those authorities.

PN40

THE DEPUTY PRESIDENT: Yes, thank you.

PN41

MR TERZIC: Before I go to those authorities, it should be pointed out, and I don't think it's in any way controversial, that those decisions were handed down in a different legislative context. The relevant section there, 170MH, is, to a large extent, repeated in sections 225 and 226 of the Fair Work Act.

PN42

THE DEPUTY PRESIDENT: Save that they've retained a residual discretion under the form of provisions for those several stances.

PN43

MR TERZIC: Yes, and on my reading of the leading authority on the application of section 226 which is the Aurizon Full Bench matter, it appears that there is very little difference in the way the Commission approaches the test in section 226.

PN44

THE DEPUTY PRESIDENT: That's so, save that there is no requirement now as there was under the Workplace Relations Act to consider additionally, if one is satisfied of the matters set out in 226, whether one should nevertheless terminate whereas the current provisions are mandatory.

PN45

MR TERZIC: Yes. Nonetheless those differences, it's our submission, don't make any material difference in extracting the principles from the BHP case and the Castricum Brothers case.

PN46

So at the commencement of the submission, I would ask the Commission to refer to the BHP case and a copy has been handed up with the relevant citation therein. One can see in that matter that there was before the Commission five agreements that applied to four coalmines in Queensland. Black coalmines in Queensland. The parent company in all of them was BHP and after some rather brutal enterprise bargaining and protracted industrial action, the employer BHP had made an application to terminate the said agreements relying on the analogous provision to that in play in this matter.

PN47

In considering the public interest, which is the key test here, Bacon C referred to what was arguably the leading authority at the time, the Joy Machinery matter which is referred to at paragraph 18, page 5. Commissioner Back then reproduced an extract from the judgment of Munro J in Joy and I would make the observation that sentiments expressed in the reproduced passage from Munro J are largely the same as those that were expressed by the Full Bench in Kellogg Brown & Root and in the Aurizon matter at paragraph 129.

PN48

I will just read what Munro J had to say as reproduced by Bacon C in paragraph 19 of Bacon C decision:

PN49

The concept of public interest does not, in my view, embrace considerations which are essentially derivative from the individual interest of the employer or employees. That is not to deny an individual interest may have an overlapping public interest dimension. The individual interest in freedom of association or in freedom from certain kinds of discrimination is an instance. However, in my view, it is necessary to examine whether a consideration does go in any material or substantive way to the public interest as distinct from the interests of the protagonists before the Commission.

PN50

There is a pause and then the extract continues:

PN51

Considerations which solely affect either or both of the parties may be relevant, but only to the extent that they overlap the public interest. The more fundamental considerations relevant to the public interest must be those which have the most substance to what are perceived to be the interests and welfare of the community.

PN52

Now, in Aurizon something similar was said at paragraph 129 where the Full Bench said:

PN53

It seems to us that a consideration of the public interest will involve something that is distinct from the interests of the persons or bodies covered by the agreement.

PN54

As Munro J said, sometimes the public interest and the interest of the parties may coincide. We say this is one such instance where the interests of a party to the agreement, namely the AMWU, coincide.

PN55

Having said that, one can take a semantic analysis of the term 'parties to an agreement'. That is a term that has been somewhat superseded by the notion of being covered by the agreement, but we say nothing is to be made out of that semantic distinction.

PN56

So taking those considerations on board, Bacon C in the BHP matter was faced with arguments about the conduct of bargaining and the implications of termination of the agreement and none of those seemed to excite the public interest insofar as Bacon C was concerned. Commission Bacon, at paragraph 48, also considered an argument advanced by the relevant union in that matter of illegal behaviour where it was asserted that using the threat of termination somehow invoked the then freedom of association provisions in the Act. That argument didn't find favour with the Commission.

PN57

But then the argument that is advanced in this matter is the one that appears under the sub-heading 'The Saraji Agreement' on page 10 of the decision at paragraph 56. Therein reproduced is the termination clause from the Saraji agreement. It says:

PN58

This agreement will continue in force after its nominal expiry date pursuant to the Act until such time as it is replaced by a new agreement.

PN59

The quote that it's intended would require that replacement agreement be arrived at before the agreement could some way be terminated or disposed of or replaced.

PN60

THE DEPUTY PRESIDENT: But, Mr Terzic, in this case is it not the case that there can't be a replacement agreement at least as things presently stand?

PN61

MR TERZIC: In this matter the agreement at Clause 4 says that it will "continue in force until varied, terminated or replaced" and then it says that "the material part of the clauses by agreement of the parties to this agreement."

PN62

THE DEPUTY PRESIDENT: Yes, I understand that, but just taking the concept of a replacement agreement, it's not possible to have a replacement agreement as this presently stand since there are no employees. You can't make a Greenfields agreement, so how does one give effect to a replacement?

PN63

MR TERZIC: Well, currently there are no employees but there is always the possibility that there could be employees in the future. If it was to be the engagement of employees in the future, then the parties could arrange for the relevant steps to be taken for a replacement agreement to be put up.

PN64

THE DEPUTY PRESIDENT: But there's no present indication that that's a likely possibility and, indeed, isn't the evidence of - the evidence seems to be that there is no intention to resume operations at the Geelong site in the foreseeable future.

PN65

MR TERZIC: Deputy President, there's two ways in which I'll reply to that proposition. The first is that if there is no intention ever to employ anyone in work for what this agreement currently covers it might be said that there is nothing to be gained by terminating it or leaving the agreement on the Commission's books. There is simply nothing to be gained by making this application. It's an arid application, it's a futile application and on that basis, there is nothing in the public interest in having this application refused because it's merely something carried out with no practical purpose - - -

PN66

THE DEPUTY PRESIDENT: But it doesn't have to be in the public interest. It just needs not to be contrary to it.

PN67

MR TERZIC: That's true, but the other argument is that the current application is focused on termination and the Commission should direct its attention to the way in which the existing agreement focuses in on what's required to terminate an agreement and termination of the agreement can be extracted out of clause 4 and then paired with the requirement that there be the agreement of the parties. And if there is to be a termination of this agreement, the way we contend the agreement reads is that there must be agreement. No agreement means that to terminate the agreement would offend the terms of the agreement and that is where it would be contrary to the public interest for the Commission to exercise its jurisdiction so held by Bacon C in the BHP matters. It's a principle that has a broader and larger significance than mere considerations of the interests of any one party at this juncture.

PN68

THE DEPUTY PRESIDENT: So you say that a proper construction of clause 4 is that it reads it will remain in force until varied by agreement, terminated by agreement or replaced by agreement?

PN69

MR TERZIC: Yes, that's how it would be properly construed. It's just been written in that way where the term 'by agreement' is not reproduced three times because that's the shorthand way of writing something but it has the same effect. It's a more economical use of words. 'By agreement' operates on all three of those actions that can be visited upon the agreement; variation, termination or replacement. It means that the parties must be in accord for any one of those three actions. One or the other can be pursued and executed.

PN70

In relation to that proposition where we say that the terms of the Uptime Agreement have an operation that is essentially the same as that that applied in the Saraji Agreement, Bacon C noted at paragraph 58:

PN71

Those words express a clear intention that the agreement will remain in force pursuant to the Act until such time as it is replaced by a new agreement.

PN72

Here, the agreement must either - can either be varied or terminated or replaced but any one of those options, we say, requires the agreement of the parties. Further, at paragraph 59, Bacon C stated that he did not accept the employer's submission that the words of the agreement meant that it remained in place pursuant to the Act until it was replaced by a new agreement or unless it is terminated pursuant to the relevant section of the Act.

PN73

The Commissioner noted that:

PN74

If that was the intention of the parties, then they could have reflected that agreement in the clause.

PN75

They did not and they have not here. There is no warrant to allow for a unilateral variation of agreement under section 225 and 226.

PN76

The Commissioner noted that, "The Act provides a number of ways in which a certified agreement may cease to operate." That's the same here in this current legislative environment; it can be replaced or it can be terminated.

PN77

The bargaining parties to this agreement agreed to limit the ways in which this agreement would cease to operate. The cessation of the operation of this agreement is limited to its replacement by a new agreement. Failing that event, the agreement is to continue to operate pursuant to the Act. It is not for the Commission to now consider the operation of the clause and some of the resultant difficulties that may arise due to the current bargaining circumstances.

PN78

I emphasise the next sentence of Bacon C:

PN79

It is the parties' clause, not the Commission's.

PN80

Deputy President, the parties freely entered into this agreement in accordance with the law and they have sought to put a restriction on the Commission exercising its jurisdiction under section 226 of the Act. That excites a public interest. It is a principle that has a broader application. It goes beyond the direct interests of the parties in this matter. It represents a mechanism by which the parties to an enterprise agreement, here or elsewhere, can ensure that an agreement cannot be unilaterally terminated or replaced where there is not the consent of the parties or varied.

PN81

In terms of a replacement agreement and/or a variation, there still is requirement for accord even after the nominal expiry date and definitely during the nominal expiry date, but it is nonetheless a mechanism that works harmoniously with the Act. It's put in the submission that it's not repugnant to the Act in the sense of the no extra claims clause. It was considered in the Marmara case in the Full Court of the Federal Court. It doesn't seek to exclude the operation of section 226. Indeed, the clause recognises the prospect of unilateral termination in certain circumstances after an agreement's nominal expiry date and it simply closes down that avenue unless the parties are in agreement.

PN82

So returning to the BHP decision at paragraph 60, Bacon C said:

PN83

It would be contrary to the public interest to terminate this agreement in a way that is contrary to the agreed intentions of the parties.

PN84

Deputy President, I commend those sentiments to the Commission in this matter. I add that those sentiments have not been displaced on my research by a Full Bench or by another member of the Commission. They stand, we say, as a persuasive authority and they should be followed in this matter.

PN85

It is the object of the Act that the parties bear the responsibility for their agreement making and that once made, parties abide by their agreements.

PN86

Those are the words of Bacon C. He continues at paragraph 60 about halfway through.

PN87

In my view, BHP, in making this application to terminate the Saraji agreement, is acting in a way that is inconsistent with the agreement and therefore inconsistent with the objects of the Act. It follows that the termination of the agreement would be contrary to the public interest. For the foregoing reasons, it is my conclusion that it would be contrary to the public interest to terminate the Saraji agreement.

PN88

Commissioner, we say those observations are on point. Of course, the decision of Bacon C is a decision under a previous legislative regime even though we say there is no material difference and it is not at Full Bench level.

PN89

The Commissioner also considered the Gregory agreement which had a more equivocal clause going to the maintenance of agreed terms after the agreement's termination.

PN90

Commissioner Bacon thought that equivocation in the terms of the Gregory agreement was sufficiently loose for the principle in Saraji agreement not to apply.

PN91

That distinction was then taken up by Simmonds C in the Castricum Brothers matter and I have handed up a decision, the Castricum Brothers decision, which is an appeal on a decision of Simmonds C where on 12 May 2004, about three years after the BHP matters, Simmonds C saw fit to terminate a certified agreement under the Workplace Relations Act and he did so largely on the basis of aligning the terms of the Castricum Brothers agreement with the terms of the Gregory Coalmine agreement. That notion is found on page 3 of the decision.

PN92

The relevant clause in the Castricum Brothers decision is found on page 3 in an extract from the decision of Simmonds C which was being considered by the Full Bench at paragraph 17. One can see at paragraph 1.3(c) the terms in the relevant agreement there were not as concrete as the terms, we say, in the Saraji agreement nor in the present agreement. In fact, Simmonds C put into contradistinction the terms of the Castricum Brothers agreement with the Saraji agreement at paragraph 22 of his decision.

PN93

THE DEPUTY PRESIDENT: On your construction, Mr Terzic, as things presently stand, the employer could not take any step to vary, terminate or replace the agreement even if the union agreed because "parties" has the meaning presumably given to it by clause 3 which includes the employees.

PN94

MR TERZIC: Well, yes, it would have to be the parties and employees are parties.

PN95

THE DEPUTY PRESIDENT: So as things presently stand, even if the union agreed, there couldn't be a variation, termination or replacement.

PN96

MR TERZIC: Well, Deputy President, it's probably, to some extent, a misnomer or some infelicitous language in the way in which the agreement has been written to refer to the union as a party. Unions - - -

PN97

THE DEPUTY PRESIDENT: Presumably your organisation had a hand in the writing of the agreement?

PN98

MR TERZIC: It did and for perhaps a century in - - -

PN99

THE DEPUTY PRESIDENT: I understand why it was done.

PN100

MR TERZIC: Yes. It's a bad, old habit.

PN101

THE DEPUTY PRESIDENT: Yes, it is.

PN102

MR TERZIC: But what was the intention of the agreement makers and the principle in interpreting an agreement where there is - and I use the word with some reflection to the judgment of Madgwick J in Kucks' case - infelicitous.

PN103

THE DEPUTY PRESIDENT: I understand that, but let's assume, forgetting about what is meant by "parties", as things presently stand, even if the union agreed, it could not - at the very least the agreement couldn't be varied and it couldn't be replaced. So if I read "parties" narrowly in the sense that it's just the employer and the union - - -

PN104

MR TERZIC: Deputy President, to give that construction to the agreement might enliven the repugnancy principle as outlined by the Full Court in the Marmara case.

PN105

THE DEPUTY PRESIDENT: So therefore, if I give it a broader meaning that it's intended to reflect - to be a reference to those persons whom the agreement covers, which is probably what I would do, then none of the three things that are set out in clause 4 can occur.

PN106

MR TERZIC: Maybe not and I will explain why.

PN107

THE DEPUTY PRESIDENT: Well, definitely not because there won't be a valid majority to vary the agreement. I mean there might theoretically be a possibility of termination by agreement. I concede that because the employees don't need to consent to that process, but certainly to replace or vary there would need to be a vote.

PN108

MR TERZIC: There's an important distinction that needs to be made and that is that if an agreement is to operate in a way that is repugnant to the legislation, it will not have force. That was the clear decision of the Full Court in Marmara.

PN109

Here, the Commission's powers are focused in on a discretionary - well, a few discretionary considerations, but the relevant one here is the public interest test and it's the public interest test which means that the Commission must look at the relevant principle and the intent of the parties. If this agreement - - -

PN110

THE DEPUTY PRESIDENT: Let's assume I accept the argument for a moment, Mr Terzic, that one should not allow an agreement to be terminated in circumstances where the parties agreed on a mechanism by which termination or variation or replacement would occur. Let's assume I accept that argument.

PN111

MR TERZIC: Yes.

PN112

THE DEPUTY PRESIDENT: The question is then whether or not it's contrary to public interest in circumstances where none of the three mechanisms chosen are possible. Whether in those circumstances that the - where no employees are covered by the agreement, the employer is denied the opportunity to actually give effect to one of the three mechanisms, whether that's contrary to public interest and termination notwithstanding that the parties agreed on a particular way in which the agreement would end or continued.

PN113

MR TERZIC: Well, if the agreement was to be resuscitated by the engagement of new employees and had real work to do in conferring terms and conditions of employment to employees - and I think the proposition raised in your question, Deputy President, is that what if the employees, as a majority group, wanted to either vary or replace the agreement by the making of a new agreement? Would the union retain its veto power under clause - - -

PN114

THE DEPUTY PRESIDENT: No, no, it's a more simple proposition. As a matter of fact, one of the parties, to use the term loosely, covered by the agreement is not in play and if I read "parties" as meaning persons covered by the agreement, well, to give practical effect under the Act to at least a variation or a replacement, that body politic needs to be present and they're not. A different question on termination granted, because if I read "parties" as persons covered, well, there are no employees covered and that termination can still be given effect on that view between the union and the employer.

PN115

MR TERZIC: Yes. Well, perhaps this might be a reply. The question now is being considered in more of an abstract way in that the public interest is a more amorphous consideration and the consideration that is elevated beyond what's happening on the ground to a matter of principle and the principle is what we say should prevail here. That was the way in which Bacon C dealt with the matter.

PN116

THE DEPUTY PRESIDENT: Well, one can retain or preserve the principle and still find that it's not contrary to public interest in these circumstances because of the impossibility of giving effect to clause 4.

PN117

MR TERZIC: And, Deputy President, while it's not directly relevant to what Mr McComb's client has got to say in all of this, you will probably be faced with a similar argument where there are live bodies on the ground next week. But that's another matter.

PN118

THE DEPUTY PRESIDENT: That may well be so and it's then giving effect to that clause in those circumstances is not a nullity.

PN119

MR TERZIC: We would say that if - - -

PN120

THE DEPUTY PRESIDENT: What's exorcised in my mind is that as I say, even if I accept the argument that it would be contrary to the public interest generally to terminate an agreement in circumstances where the parties agreed to a particular mechanism by which the agreement would continue, whether it's contrary to preserving that to terminate an agreement where the mechanism chosen by the parties proves to be an impossibility has then to stand.

PN121

MR TERZIC: Deputy President, maybe it could be said in this matter everything is abstract because the agreement has no work to do, may not ever have any work to do, but the clause in play provides a vehicle by which this principle can be put to the Commission and the Commission now at a level - - -

PN122

THE DEPUTY PRESIDENT: I understand the argument. I well understand the argument.

PN123

MR TERZIC: It's a vehicle and this will come up again because - Deputy President, I can say this and maybe you can take official notice of this. This is a patent agreement and you will be faced with the same agreement - - -

PN124

THE DEPUTY PRESIDENT: Well, it's an agreement which bears striking similarity to other agreements.

PN125

MR TERZIC: Yes, and there will be other clauses that are materially the same that will come before the Commission.

PN126

THE DEPUTY PRESIDENT: I understand why it is you are putting it, Mr Terzic.

PN127

MR TERZIC: So one can see the force in saying how could it be contrary to public interest to annul something that's already annulled. That argument has - - -

PN128

THE DEPUTY PRESIDENT: Mine is a little bit more nuanced in the sense - yes, well, perhaps using your term, but it's the - one can say in all the circumstances it would be contrary to public interest where an agreement is in operation, covers particular individuals and the parties are able to avail themselves of the mechanisms in the agreement to change it, but in circumstances where it's impossible to give effect to the term of the agreement that it might not be contrary to public interest in that circumstance.

PN129

MR TERZIC: Yes, that's more nuanced and I appreciate the argument. I won't try to repeat that.

PN130

THE DEPUTY PRESIDENT: I am grateful. It's recorded in transcript, so I can look it up later.

PN131

MR TERZIC: It's a difficult thing to put into words, but I appreciate that. Well, at any rate, just returning to Castricum, what the Full Bench did there was reconsider whether Simmonds' C analysis of clause 1.3 was relevantly similar to that in the Gregory agreement that was found not to be sufficient to excite the public interest. Paragraph 14 took the view that clause 1.3 really had an effect of equal force to that in the Saraji agreement. That was said in paragraph 14.

PN132

The argument put by Bacon C in Gregory was that reference to agreement that's not necessarily a registered industrial instrument is an issue that the parties have decided upon and if that agreement has no force, then it's a matter for the parties, not for the Commission.

PN133

The Commission took a slightly different tack and took the view that clause 1.3 was more in line with the Saraji agreement and on that basis they said at paragraph 16:

PN134

We think construction of clause 1.3 of the Castricum agreement makes the material factor weighing against the Commission considering it would not be contrary to the public interest to terminate the Castricum agreement.

PN135

Deputy President, that passage, I do put, is binding on the exercise of the Commission's discretion in this matter.

PN136

But then things go off on a tangent and it appears that the Commission later considers the trading circumstances of the Castricum Brothers meat processing plant, paragraph 24, and raises considerations about its export operations, its difficulty in competing in the current market with the terms of the agreement in play. Some of those considerations are reproduced at paragraph 24. It takes the view that the agreement was a barrier to the abattoir remaining commercial viable on that basis. It said that it would terminate the agreement.

PN137

It appears that the way in which the Full Bench approached the Castricum matter from thereon is at odds with the way in which the public interest test has been revisited in - - -

PN138

THE DEPUTY PRESIDENT: It does seem so at first blush, yes.

PN139

MR TERZIC: Yes. So maybe it was a case of the Commission trying to save the union from itself by keeping the plant more viable than it would be under the terms of the agreement, but we would say that the principle enunciated in paragraph 16 is a clear reflection of Commissioner Bacon's approach to the public interest. Simply that if the parties agree to something, the Commission should not - it would be contrary to the public interest for the Commission to quash that agreement. The parties entered into it - the approach set out by Bacon C is made as eloquently and as forcefully as it could possibly be made. We simply repeat it. We say it is good law. It's been picked up by the Full Bench, it should be followed here although there is a concession that the fact that there are not employees does create an confound impact which might mean that it would not be contrary to public interest. If the Commission pleases.

PN140

THE DEPUTY PRESIDENT: Yes, thank you, Mr Terzic. Mr McComb, anything in reply?

PN141

MR McCOMB: Thank you, Deputy President. We take issue with the contention that clause 4 should be read to require agreement of the parties in order to terminate the agreement. We think the way it's written is - you know, my friend who talks about brevity and it was written in this vary, terminate or replace by agreement of the parties for the purposes of brevity and that what clause actually means is that it can't be varied, terminated except by agreement or replaced by agreement. I've never known an industrial instrument to be written for brevity. We still contend that they are three separate things; varied, terminated or replaced by agreement.

PN142

Mr Terzic talks about Saraji, but Saraji was talking about a termination clause where that agreement would continue until replaced. There was no option to terminate that agreement. It was continue until replaced. Commissioner Bacon talks about public interest not being especially derivative from the individual interest.

PN143

There are no employees covered by this agreement, Deputy President. They don't have an interest. There is no interest. They have no interest in this agreement. They're not a party to this agreement. There are no employees.

PN144

Also, Saraji - it's talked about in the context of bargaining as well. About trying to reach a new agreement. That's not the case here. We're not trying to reach an agreement where there are no employees to reach agreement with.

PN145

Again, in the BHP matter it required that the agreements be replaced. The BHP agreement didn't even contemplate termination.

PN146

THE DEPUTY PRESIDENT: Can I just raise this with you, Mr McComb? It would seem to me that adding the words "by agreement" to apply only to replaced seems to me to be rather tautological.

PN147

MR McCOMB: It seems to be - sorry, Deputy President?

PN148

THE DEPUTY PRESIDENT: Tautological in that an agreement can only be replaced, that is by making a new agreement, by agreement.

PN149

MR McCOMB: Yes, I understand that.

PN150

THE DEPUTY PRESIDENT: Whereas an agreement under the Act can be varied, for example, would remove ambiguity without agreement. Under the Act the agreement can be terminated without agreement. So your argument would require me to confine the words "by agreement" in relation to a mechanism by which agreement is always required. It's the only basis upon which a replacement can occur. I'm just raising that with you. You can make some submissions on it, if you will.

PN151

MR McCOMB: I understand what you're saying. I guess it could be taken that way certainly and it is a bit of a tautology. I understand that.

PN152

THE DEPUTY PRESIDENT: If it were a statute I would certainly read it as meaning by applying the maxim - the Latin phrase which I won't repeat, but it's shortly stated by birds of a feather flock together. That is words which are limited by another word tend to have that same meaning given to them in these circumstances. This is not a statute, but if it were, that's the way I would read it.

PN153

MR McCOMB: I guess, Deputy President, the fact still remains that does it excite a public interest consideration to terminate this agreement. It's the view of the union - a strong view, but the view of one of the parties, or the union - you know, is that enough to excite a public interest consideration? If we do accept that it is against - - -

PN154

THE DEPUTY PRESIDENT: Mr Terzic's argument isn't that it's excited because of the interest of the AMWU. The public interest is enlivened, he says, because the parties should be held to that which they agreed.

PN155

MR McCOMB: Yes, correct. That's true, but it does also go on to say that there's nothing in the CFMEU's submission on this point which would lead to the conclusion that termination of the Gregory agreement would be contrary to the public interest. The Gregory agreement didn't even have a mechanism for termination, only for replacement, unlike this agreement. The fact remains, Deputy President, there are no employees. If it please the Commission.

PN156

THE DEPUTY PRESIDENT: Yes, thank you. I thank the parties for their submissions. I will reserve and I will publish my decision as soon as practicable although given that there are no immediate consequences, I will probably put this decision on the sort of back end of the Commission's benchmarks rather than the front end. Thank you.

ADJOURNED INDEFINITELY [11.59 AM]

LIST OF WITNESSES, EXHIBITS AND MFIs

EXHIBIT #A WITNESS STATEMENT OF MERRYN HENSGEN DATED 09/10/2015. PN18