AG2018/2488, Transcript of Proceedings [2018] FWCTrans 396 (18 October 2018)

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PN1

THE SENIOR DEPUTY PRESIDENT: Yes, thank you. Can I get the appearances, please.

PN2

MR K BROTHERSON: If Commission pleases, Brotherson initial K. I seek permission to appear for Wollongong Coal Limited. I have with me Mr Bell, my instructing solicitor, for whom I also seek permission.

PN3

THE SENIOR DEPUTY PRESIDENT: Yes, thank you.

PN4

MR A WALKADEN: If it pleases the Commission, Walkaden initial A. I'm from the CFMMEU and I'm joined by Ms Salos, who is also a legal officer with the union, and we appear on behalf of the union in the matter, your Honour.

PN5

THE SENIOR DEPUTY PRESIDENT: Thank you. Do you have any objections to well the applicant being represented?

PN6

MR WALKADEN: No, your Honour.

PN7

THE SENIOR DEPUTY PRESIDENT: Yes, so look I think there are a number of - I think it will assist the Commission, given there are some potentially complex issues, it will assist the Commission for the applicant to be legally represented so I grant permission for you to represent them.

PN8

MR BROTHERSON: Thank you, your Honour.

PN9

THE SENIOR DEPUTY PRESIDENT: Well I don't know if you ‑ obviously we've had outlines of submissions. I don't know whether we need - I mean, I assume we can just go into evidence?

PN10

MR BROTHERSON: I'm in your - - -

PN11

THE SENIOR DEPUTY PRESIDENT: But if you do have some opening - look, can I also kind of put you on notice, let me think, a couple of questions I've got that are more ‑ well they are sort of legal issues, I suppose, rather than matters of evidence, and so you might want to think about them for not now necessarily but later on, is there anything legally to stop the applicant making a Greenfields agreement prior to the potential re-opening of the mine?

PN12

Not necessarily asking you to answer that now, you can if you really want to, but it's more to put you on notice that I'd be interested in your views on it maybe at the end, and then the other issue, I haven't really looked at this in any depth myself, but my understanding, I haven't actually gone back and checked the clause itself, but just reading the submissions, there's a clause, apparently there's a clause in the agreement that says something like if the employer, if you like, contracts out the work to a contractor, then they are required to, I think it's something like, either apply the terms of the agreement or have their own enterprise agreement, I think the expression is recognised by the CFMMEU, I'm kind of curious, and again it's a legal - how such a clause, in the event that, in fact, those events happen, I mean it's all speculative in a sense, but if that was to happen, how could such a clause be enforceable?

PN13

Again, I'm not really asking you to answer those questions now but I'd be interested in your views ideally kind of when we get to submissions or, if necessary, even at a later stage so, okay, apart from that I just wanted to put those two questions to you to be answered at some point. Mr Brotherson.

PN14

MR BROTHERSON: I think they probably - certainly your first question, was one I hadn't anticipated.

PN15

THE SENIOR DEPUTY PRESIDENT: No.

PN16

MR BROTHERSON: I'd certainly anticipated questions and addressing you around issues certainly of transfer of business and other options and I may say something about that now.

PN17

THE SENIOR DEPUTY PRESIDENT: All right.

PN18

MR BROTHERSON: But before I do, I'm happy otherwise, I think, your Honour, to, if you're comfortable that there are detailed outline of submissions and in reply and I think my friend's also put on an outline, I think the arguments in this case are really quite clear from those outlines and so probably it is most efficient to then proceed into the evidence.

PN19

THE SENIOR DEPUTY PRESIDENT: Yes, yes.

PN20

MR BROTHERSON: Well before we do that, if I could just attend, in part, to the questions you've raised because I think they do guide where this matter goes and the company's position, as you will have seen from the outlines, is very much that this mine closed in September 2015 and the company's position is, and has been since that time, that there are no employees covered by it.

PN21

There's been no claim of that until perhaps seemingly in Mr Timbs' evidence he seems to hint towards that. We think that's a stretch and so what a lot of the argument seems to be about is clause 24 of the agreement and the agreement's perhaps most conveniently found at annexure 2 of Mr Sharma's statement.

PN22

THE SENIOR DEPUTY PRESIDENT: I have got that, yes. Yes, so, yes, clause 24.

PN23

MR BROTHERSON: I think page one of - - -

PN24

THE SENIOR DEPUTY PRESIDENT: This is the contractor's clause?

PN25

MR BROTHERSON: Page 129, I think, of his statement.

PN26

THE SENIOR DEPUTY PRESIDENT: Right.

PN27

MR BROTHERSON: Where we get to is in the union's outline of submissions, I think it's at paragraph five, they make a statement, and I'm not quoting and I don't have it in front of me at the moment, but it's to the effect that this matter is all about a desire of the company to outsource in the event that it re-opens mining. That really is a transfer of business issue rather than an enterprise agreement issue, the making or termination of an enterprise agreement issue, and, of course, the transfer of business provisions of the Fair Work Act are dependent upon employees transferring.

PN28

In some ways, they're potentially more transfer of employment provisions than transfer of business provisions, as one might have historically understood them, and on the company's premise of there not having been any employees engaged under this agreement since September 2015, if the company did outsource its operation, if it re-commences mining at some point in the future, the position would be, presumably from the outsource provider, it wouldn't really necessarily be an issue for the company in that case, presumably would be well we haven't engaged any employees within three months of their termination by Wollongong Coal Limited so we're not bound by that agreement and the contractor could operate under whatever other terms it might have, obviously subject to a safety net of the relevant award or such enterprise agreement as it might have.

PN29

Where we seem to get to is an argument, and my friend will no doubt elaborate on this further but I think it's worth ventilating it at the start, that this agreement can sit there in perpetuity and still require Wollongong Coal, not as an employer in an ongoing sense, but as an employer in the sense of it once was an employer and it's got an enterprise agreement that sits there, and clause 24 still requires it to impose conditions on contractors and that seems to be the argument that's being made in the second paragraph of clause 24.

PN30

Our position is that that's a collateral purpose. It's not anything to do with enterprise bargaining. It's nothing to do with security of employment for employees of Wollongong Coal, being people under this agreement. It might have something to do with the terms of contractors but that's another issue if they're not employed by Wollongong Coal. Our concern in this matter, and I think it, in part, goes to or is a part of a broader set of your first question about would there be anything to stop Wollongong Coal, in the circumstances that have unfolded, putting in place a Greenfields agreement. Firstly, obviously that would require the agreement of the union - - -

PN31

THE SENIOR DEPUTY PRESIDENT: Agreement of the union, yes.

PN32

MR BROTHERSON: - - - and I think there is an issue, we can attend to it more fully later, but whether this would truly be a Greenfields site in the circumstances, I'm not - - -

PN33

THE SENIOR DEPUTY PRESIDENT: Well I'm interested in your views of that at some stage.

PN34

MR BROTHERSON: Yes. My immediate reaction is that could be difficult but I'm happy to think about that further during the course of the day, but where we do get to is the company could certainly do a number of things. It could have a subsidiary employ people and they wouldn't be covered this agreement.

PN35

THE SENIOR DEPUTY PRESIDENT: They wouldn't?

PN36

MR BROTHERSON: They wouldn't be because of the transfer of business provisions. It could outsource, and the employees of the outsourced provider would not be covered by it. Where we get to is, as I said, that seemingly the union is trying to retain the agreement to try and argue that because it might apply to Wollongong Coal, it has to then impose that on some other employer and we say that's a collateral purpose, if not unlawful, and, of course, we get to the position of section 253 of the Act and permitted matters and to whether this provision could actually even apply in the current circumstances or be of effect.

PN37

THE SENIOR DEPUTY PRESIDENT: That's what I'm asking you is do you think it would apply? Obviously, it's, in a sense, a hypothetical situation but in the broad idea that what the ‑ and I think it's fairly clear that the company says they want to have this as an option, I mean it's a live option for them, is to rather than engaging, if the mine re‑opens, rather than engaging their own workforce they would engage a contractor who would engage employees and the question is in that case, would this agreement have any application or not, as a matter of law.

PN38

MR BROTHERSON: Well we take the view, and I think it is set out in our outline of submissions in reply, but the effect of section 253 would be that absent any employees of Wollongong Coal, to use clause 24, the second paragraph of clause 24, is it seems the union is proposing, absent any mining employees of Wollongong Coal, it can't be about a permitted matter being a matter pertaining to the employment relationship of Wollongong Coal with its employees because it doesn't have any and I can't actually, your Honour, take you to any authority.

PN39

I can't find that this has actually ever been developed before as an argument, but I think it stands as a good proposition that the issue of a permitted matter can be a moving position as circumstances change, even during the life of the agreement. There's certainly cases, and I think even in making this agreement, of course, Commissioner Roberts took the view "Well I've got some concerns about this clause but it doesn't stop the agreement being approved because section 253 will apply".

PN40

There's a decision which I can take you to later in the day where Deputy President Richards considered an issue of how a contractor clause could apply as a security of employment clause. There was a broad list of classifications in the agreement that the employer was saying "Well we're only going to employ forklift drivers" and his view was well to the extent that it might be claimed to cover other than forklift drivers, it can't be of effect because it's not about the security of employment of any employees of the employer.

PN41

In this case, we have a situation where the company, Wollongong Coal, saying "We don't have any mine workers as provided for in this agreement" and one can see the classifications of those set out in the agreement, and it hasn't had any of those employees for three years, how can this clause continue to apply or have effect about a matter pertaining to the employment of Wollongong Coal and its employees.

PN42

It has nothing to do with security of employment of those persons because there are none. Our position is this clause doesn't have effect now and there's been a recent controversy about that between the parties. I think it comes out in some emails annexed to Mr Timbs' statement but our position is that your Honour really doesn't necessarily need to finally resolve that issue to - - -

PN43

THE SENIOR DEPUTY PRESIDENT: No, but it'd be - - -

PN44

MR BROTHERSON: deal with this because well our position to you is this is an argument that doesn't need to be had. We've got an agreement that is so old, with no employees and there are so many other reasons why it's appropriate to terminate it, add to it the fact that we don't need to be tied up in an argument about this. Happy if your Honour wants us to press you to determine that issue but I think you're able to say it's a serious question and one that ultimately probably doesn't need to be finally decided.

PN45

It's an argument between the parties that seems to serve no useful purpose, in the circumstances because the union's position is that - - -

PN46

THE SENIOR DEPUTY PRESIDENT: Well some of the evidence from, I think, both sides, and some of the arguments from both sides, seem to assume that it would actually have an effect and therefore - I mean, I may not have to finally determine it, that's true - technically I can finally determine anything, in terms of what a particular clause means but in practical terms, it's a bit hard to say I shouldn't think about it.

PN47

MR BROTHERSON: I'm not saying don't think about it but, in fact, I've just, I think, spoken to you for the last five minutes or so about think about it in this way, but I think one can take it back to the fundamental principle that the union sets out in its outline of submissions. I think it is at paragraph five and what we have here is an application for termination of an enterprise agreement by Wollongong Coal as an employer, an employer of its employees, but we get to paragraph five, the union is proceeding, and clearly has the view, that, I won't say anything about my friend's style of language, but this comes down to Wollongong Coal wanting to have the ability of re-starting the Russell Vale mine with a completely outsourced workforce.

PN48

The company isn't as categoric as that. It says it wants to be positioning itself to think about being able to re‑open it and that's, of course, subject to a number of other matters such as approval for mining in the first instance, that's a fundamental issue, and then getting into a position where it can do so and then having an option of considering, but the union is opposing this application on the basis it thinks the company wants to outsource and it shouldn't.

PN49

This agreement shouldn't be terminated because of that. In those circumstances, it can only be because they want and are pressuring to keep this agreement because of clause 24 and the second paragraph of clause 24 and we say that is a collateral purpose. It's not directed towards an enterprise agreement between Wollongong Coal and its employees. It's directed towards the terms and conditions of another company that might be contracted by Wollongong Coal to operate its mine at some point in the future. Your Honour, we've probably delved further into your questions than we'd first intended.

PN50

THE SENIOR DEPUTY PRESIDENT: Yes, okay, that's fine.

PN51

MR BROTHERSON: But I think it was helpful to, at least, raise that because that will be the thrust of what we say appears to be the union's position, obviously we haven't heard their evidence or their submissions, but it addresses at least a sub-set, I think, of what your questions were directed to and how we might attend to them later during the day. If your Honour is otherwise content to proceed on the basis that openings have otherwise largely been addressed by the outlines - - -

PN52

THE SENIOR DEPUTY PRESIDENT: Yes, I just - did you want to say something at this point, Mr Walkaden?

PN53

MR WALKADEN: There is one point I think I probably should raise as a matter of fairness. It's probably best to raise it now, your Honour, rather than raise it in my submissions and maybe surprise my friend, so I think it's better I do it now, and the issue has only arisen out of my friend's reply submissions and also the reply statement of Mr Sharma. I'll take you to Mr Sharma's reply statement, which is the four page statement, your Honour, and at paragraph 11, Mr Sharma is responding to what Mr Timbs had said about what the staff employees at the Russell Vale mine have been doing since September 2015 which is, of course, when the last production and engineering employee was made redundant at the mine, and, in particular, we don't propose to challenge paragraph 11(c) of Mr Sharma's statement.

PN54

We accept that a large number of those employees are members of APESMA and we also accept that the CFMMEU hasn't informed Wollongong Coal that it represents, or is eligible to represent, effectively deputies and staff but what we do say is that upon proper construction of the CFMMEU's rules, we are eligible to enrol as members deputies and staff and as a member of a specialist industrial tribunal and member of the relevant panel, you'd be aware, your Honour, of a recent dispute involving the union.

PN55

They might all blur into one. You'd be aware of a dispute between the union and the Helensburgh mine concerning this very issue where Peabody refused to bargain with the union, with Mr Timbs, on behalf of deputies and the matter came before you and it was ultimately resolved through conference but I just would flag that with you. It's a matter that has been ventilated in the Commission on a previous occasion.

PN56

Determining union eligibility is a complicated matter and we don't say that you need to deal with that in this matter. Neither party have come before you equipped to deal with that particular issue so we say you don't need to deal with it but I flag it as an issue - - -

PN57

THE SENIOR DEPUTY PRESIDENT: But are you saying - sorry, you are saying that there are employees covered by the agreement?

PN58

MR WALKADEN: Well I do say that because - - -

PN59

THE SENIOR DEPUTY PRESIDENT: They're company employees, yes.

PN60

MR WALKADEN: - - - you go to the scope of the agreement, and the agreement is found at annexure SS2, and the scope of the agreement is incredibly broad. It's on page 108 of Mr Sharma's first statement, and you'll see, if you're there, your Honour, at clause 3 of the agreement, coverage of the agreement is tied to those who are members or eligible to be members of the union who work at the mine.

PN61

In our submission, which I'm saying you don't need to determine, is that that coverage clause would extend to staff and deputies because those persons are eligible to join the CFMMEU. As I say, we're not inviting you to determine that issue and I'm certainly not going to make any submissions about eligibility because, as I say, it is a complicated matter and ultimately not one that is required to be determined in deciding this matter.

PN62

This issue about what the staff employees are doing or not doing only arises out of my friend's reply submissions about whether clause 24 of the agreement, namely the contractor's clause, is a permitted matter and that was only raised by my friend in the company's reply. That is the first time, on my instructions, that concern has been flagged and as Mr Timbs' evidence discloses, the parties negotiated an agreement for the Wongawilli mine, which was approved by Commissioner Roberts in May 2011, and I'll take this into the evidence but you'll see that Commissioner Roberts flags the issue and says "Does the contractors clause - is it a permitted matter"? and both parties submitted that it was.

PN63

It wasn't just the union. It was the company as well and then six months after that, the company agrees to insert the same clause into this agreement so I just raise this issue as a matter of fairness and say that the issue only arises out of the reply submissions. I don't want my friend to be under the apprehension all day that we concede there are no employees covered by the agreement. We say there are but for the reasons I'll come to in addressing whatever submission my friend makes about whether clause 24, the contractors clause, is a permitted matter, I'll make some submissions about that but I'll be inviting you to resolve that submission in our favour. You aren't required to make any determination as to whether the staff and deputies are eligible to be members of the CFMMEU.

PN64

THE SENIOR DEPUTY PRESIDENT: Well maybe but one problem is if I think they are, I mean I'm supposed to take into account their views.

PN65

MR WALKADEN: Yes, you are.

PN66

THE SENIOR DEPUTY PRESIDENT: I'm still required to, I think.

PN67

MR WALKADEN: You are but there's no material before you as to their views.

PN68

THE SENIOR DEPUTY PRESIDENT: No but - - -

PN69

MR WALKADEN: You're not required - - -

PN70

THE SENIOR DEPUTY PRESIDENT: But I could go and ask for it.

PN71

MR WALKADEN: You're not required to jump in the car and travel down to Wollongong, your Honour, and make that inquiry yourself.

PN72

THE SENIOR DEPUTY PRESIDENT: Well I don't know. Well maybe I'll jump in the car but I would - - -

PN73

MR BROTHERSON: I think, with respect, you'd be obliged to.

PN74

MR WALKADEN: Okay.

PN75

THE SENIOR DEPUTY PRESIDENT: - - - normally I do ask for views.

PN76

MR WALKADEN: Okay, there you go.

PN77

THE SENIOR DEPUTY PRESIDENT: I do normally ask the views of the employees.

PN78

MR WALKADEN: Well look, obviously it's a matter for you then, your Honour, but I just flag that point so there's no misapprehension about position but as I say I'm at pains to suggest that the issue as to eligibility is not one that should be determined without the benefit of both parties, and particularly the union, being given the opportunity to make detailed submissions.

PN79

THE SENIOR DEPUTY PRESIDENT: If, though I'm not going to say this is going to happen, but - - -

PN80

MR WALKADEN: Yes, detailed submissions.

PN81

THE SENIOR DEPUTY PRESIDENT: - - - if I decide that I'm going to have to determine that matter, then I'll need to put you on notice and get some submissions on that.

PN82

MR WALKADEN: Yes, and what we say, as I said, is that for the reasons I've outlined, in responding to my friend's submissions about clause 24, you won't need to determine the question of eligibility but I wanted to make that submission upfront rather than keep it in the back pocket and pull it out in my closing submissions, your Honour.

PN83

THE SENIOR DEPUTY PRESIDENT: Thank you. If we could just have Mr Sharma.

PN84

MR BROTHERSON: Yes but perhaps just before I call Mr Sharma, your Honour, I will say just two short things in response to what my friend's just said. None of what he's put just comes as a surprise. We say the question of coverage of the agreement is more complex than just going to clause 3 and an answer to it also sits in clause 11.1 of the agreement where the classifications are there and I just want to draw your attention to that before we take you to the evidence.

PN85

I won't say any more about it, but page 114 of Mr Sharma's statement, you'll see the classification structure is set out there. They are mine worker classifications. The evidence may disclose more about the question of coverage and perhaps we say more about it and appropriately say more about it at that point, but I don't think - I'd agree with my friend, I don't think we're going to be inviting you to rule on eligibility for membership of the CFMMEU.

PN86

I reserve the position on that but it's not my intention to press that but I think the question of coverage will become clearer once the evidence unfolds, so if we can call Mr Sharma.

PN87

THE ASSOCIATE: Please state your full name and address.

PN88

MR SHARMA: Sanjay Sharma, (address supplied).

<SANJAY SHARMA, AFFIRMED牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� [10.26 AM]

EXAMINATION-IN-CHIEF BY MR BROTHERSON牋牋牋牋牋牋牋牋牋 [10.27 AM]

PN89

MR BROTHERSON: Mr Sharma, you're employed as the company secretary of Wollongong Coal Limited?‑‑‑Yes.

***牋牋牋� SANJAY SHARMA牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� XN MR BROTHERSON

PN90

You've prepared a statement of evidence signed on 9 August 2018, correct?‑‑‑Yes.

PN91

That statement comprises 98 numbered paragraphs and eight annexures?‑‑‑Yes.

PN92

You have a copy of that with you?‑‑‑Yes.

PN93

Do you say that that's a true and accurate account of the evidence you wish to give?‑‑‑Yes.

PN94

I tender that statement.

PN95

THE SENIOR DEPUTY PRESIDENT: Is there any objections?

PN96

MR WALKADEN: No, your Honour.

PN97

THE SENIOR DEPUTY PRESIDENT: Mr Sharma's first exhibit is exhibit 1.

EXHIBIT #1 FIRST WITNESS STATEMENT OF SANJAY SHARMA DATED 09/08/2018

PN98

MR BROTHERSON: Mr Sharma, you prepared a second statement of evidence which was signed by you on 4 October 2018. You have a copy of that in front of you?‑‑‑Yes.

PN99

That consists of 13 numbered paragraphs?‑‑‑Yes.

PN100

You say that that also is a true and accurate account of the evidence you wish to give in the matter?‑‑‑Yes.

PN101

Yes, I tender that.

PN102

MR WALKADEN: No objection, your Honour.

PN103

THE SENIOR DEPUTY PRESIDENT: Yes, and Mr Sharma's second statement is exhibit 2.

EXHIBIT #2 SECOND WITNESS STATEMENT OF SANJAY SHARMA DATED 04/10/2018

PN104

MR BROTHERSON: That's the evidence for Mr Sharma.

PN105

THE SENIOR DEPUTY PRESIDENT: Thank you. Just before you start, just got one question, well one or two questions to ask the witness, I just want to understand, has the company held any discussions with the CFMMEU about what might happen if the mine re-opens? Have you had any discussions with the union about that?‑‑‑I'm not aware of but I believe it's none.

PN106

Well in that case - well I will just sort of state well why not? Why wouldn't you have held discussions?‑‑‑Basically, we are right now focussing on making this company viable again to start operate and we are actually not sure when and how this Russell Vale will be becoming operating.

PN107

Right. I understand that but clearly you've turned your mind to the issue that if the mine does re-open, you've turned your mind to what kind of pay and conditions might theoretically apply because that's why we're here, because obviously - so I'm just wondering why you wouldn't have thought that it might have been useful to have discussions?‑‑‑As I said, like it's a bit premature to worry about that but, of course, we are looking at this ‑ this company had some rough past and we are trying to deal with the getting on with the legacy issues and making sure that the company can start afresh, a viable and a good operating company in future, so that's why we think that it's a bit premature to start conversation about negotiating with union for the pay rates and all at this stage.

PN108

Thanks. Mr Walkaden.

CROSS-EXAMINATION BY MR WALKADEN牋牋牋牋牋牋牋牋牋牋牋牋牋� [10.30 AM]

PN109

MR WALKADEN: Thank you, your Honour. Mr Sharma, you can't say with any degree of certainty that mining will resume at Russell Vale, can you?‑‑‑Can you please repeat the question.

PN110

You can't say with any degree of certainty that mining will resume at Russell Vale, can you?‑‑‑It's - no, there is definitely there is a certainty. The timing is the question, of course.

***牋牋牋� SANJAY SHARMA牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 XXN MR WALKADEN

PN111

You say it's absolutely certain that mining will resume at Russell Vale, do you?‑‑‑Under the current situation we are in, we truly believe that, yes, even truly we will start mining at Russell Vale.

PN112

I'm not concerned about your belief. What I'm concerned about is the fact that you need an approval to mine, don't you?‑‑‑Yes, we do.

PN113

You don't have an approval, do you?‑‑‑We don't.

PN114

You've gone through a long and tortuous process in trying to obtain approval, haven't you?‑‑‑Yes, we do.

PN115

The outcome of any revised EUP, underground expansion program, is unclear, isn't it?‑‑‑To date, yes.

PN116

Well not to date. Has the revised EUP been submitted to the department yet?‑‑‑Not yet.

PN117

The process isn't an automatic process whereby you submit the approval and it automatically gets approved? That's correct, isn't it?‑‑‑No, it's not automatic approval of the process.

PN118

That's right?‑‑‑Yes.

PN119

You would accept my starting proposition, wouldn't you, that you can't say, with any degree of certainty, that mining would definitely resume at Russell Vale, can you?‑‑‑No, there is certainty, some degree of certainty is there. The reason is, I said, like we - yes, we agree that the approval, previous approval, has taken quite a few years and we have not received it, we never received it, but that was based on particular mining method which causes issues with subsidence and water supply and on that basis, considering that the issue, what the means of issue of previous approval not being granted, we changed the mining matter to bord and pillar which basically addresses the issue of subsidence and water supply, risk to the water supply and some others - uncertainties or the (indistinct) and the land surface anomalies. So based on that, we believe that the new mining method, we should be able to get the approval.

PN120

Can I just stop you there and emphasise that you used the word should be approved. You recall that?‑‑‑Yes.

PN121

That's the word you used. You didn't say it will be approved, did you?‑‑‑I am not the technical expert in the approval matter so - but we believe that we are doing our best to get the approval and we received the advice from expert in the area and they believe that we are doing certain thing which should allow us to get the approval, yes.

PN122

Is it fair to say that the application, the revised EUP, will be submitted?‑‑‑Yes, it will be submitted.

PN123

The company's putting its best foot forward, it's using its best endeavours, to obtain the approval?‑‑‑True.

PN124

Your belief is that the approval will be granted?‑‑‑Yes.

PN125

But the outcome is not certain, is it?‑‑‑That's - I agree with that.

PN126

Thank you. You would have to accept, wouldn't you, that there is a degree of uncertainty about whether mining will resume at Russell Vale, wouldn't you?‑‑‑There is some degree.

PN127

Your evidence discloses that the mine was placed on care and maintenance in September 2015?‑‑‑That's correct, yes.

PN128

One of the most significant reasons for the mine being placed on care and maintenance in September 2015 was that the company had mined all long haul coal that it had the approval to mine?‑‑‑Correct.

PN129

At that time, it didn't have approval to mine any more coal, did it?‑‑‑That's correct, yes.

PN130

As we've discussed at the outset, the company has embarked on a fairly tortuous process to obtain approval, hasn't it?‑‑‑It is a long and uncertain process but yes.

PN131

Well it's a process that started in 2009, didn't it?‑‑‑It does, yes.

PN132

The initial application for approval was made in 2009, which is almost 10 years ago?‑‑‑That's correct, yes.

PN133

You explain in your first statement the process that has been undertaken?‑‑‑Yes, what the process is like for approval, yes.

PN134

You do that, don't you, at paragraph 50 of your first statement?‑‑‑Yes, I was explaining in brief - - -

PN135

The process, yes?‑‑‑rough process of what the - - -

PN136

At paragraph 55, you say "Based on previous company experience, the mining approval process is lengthy and uncertain"?‑‑‑That's correct, yes.

PN137

As part of that process, the fairly tortuous process the company's been through, it included proceedings in the Supreme Court of New South Wales?‑‑‑Yes, that's correct.

PN138

Those proceedings were unsuccessful?‑‑‑That's correct, yes.

PN139

The company has ultimately decided to revise and re-submit the EUP?‑‑‑Yes, that's correct.

PN140

I think your evidence, in your second statement at least, is that it's expected to submit the revised EUP with the department in about November 2018?‑‑‑That's correct, yes.

PN141

You can't say with any degree of certainty as to how long it will take for the department to assess the revised EUP, can you?‑‑‑No, I can't.

PN142

Is it fair to say that Wollongong Coal hasn't been the only coal company in New South Wales who's experienced significant delays and issues in getting approval to mine?‑‑‑I'm vaguely - its - I'm not too familiar with the other companies obligations but, yes, I believe that is similar a situation in some cases.

PN143

Not going to ask you about the ins and outs of various projects but you understand that the mining industry in New South Wales has been very critical of the approval process, hasn't it?‑‑‑The process is same for everyone, yes, so.

PN144

Yes, and there's been various projects where the Minerals Council has complained and advocated publicly for a more improved approval process?‑‑‑Yes, I'm aware of that.

PN145

If the revised EUP was to be rejected, is it likely that Wollongong Coal would walk away from Russell Vale?‑‑‑I cannot answer that question. I'm not sure.

PN146

When you say you can't answer it - - -

PN147

MR BROTHERSON: Well perhaps my friend might elaborate what he means by walk away.

PN148

MR WALKADEN: Didn't say - the witness didn't say he had any issues with understanding what that phrase meant.

PN149

MR BROTHERSON: Well you know that my friend's now trying to go further and I think he needs to therefore build a base around what it is he's going to.

PN150

THE SENIOR DEPUTY PRESIDENT: Well yes. Could you just clarify what you mean by walk away.

PN151

MR WALKADEN: Well have you participated in any discussions with other senior managers of the company where there's been consideration given to what the company would do if the revised EUP was rejected?‑‑‑No.

PN152

That possibility hasn't been contemplated?‑‑‑Not in my presence.

PN153

Not to your knowledge?‑‑‑Not to my knowledge, yes.

PN154

Is that the sort of issue that you would be involved in in relation to your general job/duties with the company?‑‑‑I am sure that at some point I'll be involved in such discussions.

PN155

That'd be the discussion taken by the board presumably, wouldn't it?‑‑‑That would be eventually, yes.

PN156

Do you attend board meetings?‑‑‑Yes, I do.

PN157

Obviously you agree that mining can't resume unless the revised EUP was to be approved?‑‑‑Yes, I agree.

PN158

Yes, and whether the agreement, and when I say the agreement I'm referring to the NRE No 1 Colliery Workplace Agreement 2011?‑‑‑I understand.

PN159

You understand that?‑‑‑Yes, I do.

PN160

Whether the agreement is operating or terminated, that will have no bearing upon whether the revised EUP is approved? That is correct, isn't it?‑‑‑Can you please explain the question again, please.

PN161

I can. Whether the agreement is terminated by his Honour, whether it's terminated or whether it remains in operation, that issue will have no bearing upon whether the revised EUP is approved. That's the case, isn't it?‑‑‑To my understanding, it should not have any bearing.

PN162

It's not a relevant consideration that the department will take into account?‑‑‑To what I understand, yes, that's right.

PN163

You'd agree then, wouldn't you, Mr Sharma, that the continued operation of the agreement does not, in any way, increase the likelihood that mining will resume at Russell Vale?‑‑‑It does affect. It does affect.

PN164

It affects - what you're saying, aren't you, is that it affects the company's ultimate decision about whether to resume mining at Russell Vale. That's the case, isn't it?‑‑‑It is one of the factors I would say.

PN165

But mining can't start unless approval is given by the department?‑‑‑That's correct, yes.

PN166

That is the condition that cannot be overcome, correct?‑‑‑That's correct, yes.

PN167

That is the most significant barrier the company faces to resuming mining at Russell Vale, isn't it?‑‑‑Correct.

PN168

You've already agreed with me that the status of the agreement has no bearing upon the approval process?‑‑‑Yes.

PN169

Wouldn't you therefore accept that whilst the status of the agreement might influence the company's decision about whether to resume mining or not, it doesn't, the status of the agreement, doesn't increase the likelihood of the resumption of mining because it plays no role in the approval process?

PN170

MR BROTHERSON: Well I think my friend needs to unravel that a little. I'm not sure whether he's really putting a question or making a submission.

PN171

MR WALKADEN: Well it was a question.

PN172

THE SENIOR DEPUTY PRESIDENT: No, I think it's a question.

PN173

MR WALKADEN: Thank you.

PN174

THE SENIOR DEPUTY PRESIDENT: Do you need to have it repeated though?‑‑‑Yes, I have to, sorry.

PN175

MR WALKADEN: It's a long - I'll give you the - - -

PN176

THE SENIOR DEPUTY PRESIDENT: It is a long question so if you could - yes.

PN177

MR WALKADEN: I'll accept my friend's a long question.

PN178

MR BROTHERSON: Can you remember it?

PN179

MR WALKADEN: Yes, I can. I'll try.

PN180

THE SENIOR DEPUTY PRESIDENT: I'm not sure I do.

PN181

MR WALKADEN: I'll try. Mr Sharma, do you accept that the status of the agreement does not increase the likelihood that mining will resume at Russell Vale?‑‑‑When we say resuming the mining at Russell Vale, if you are talking about specifically if we get approval or not, yes, but there are other factors which this agreement can play a role where mining can resume or not. That's what my point is.

PN182

You see, the company needs to make a ultimate decision about whether mining resumes or not?‑‑‑Correct.

PN183

The status of the agreement is a minor factor in the company's deliberation on that issue. Is that a fair summation?‑‑‑It's one of the critical factors I would say.

PN184

But obviously not as critical as getting the approval?‑‑‑No, approval is ultimately required. Without that, we can't move at all, so approval is the factor, yes.

PN185

Yes, and given you accept that the status of the agreement has no bearing upon whether approval is granted or not and given the significant barrier that approval poses to the resumption of mining, don't you accept that the status of the agreement does not increase the likelihood of mining resuming at Russell Vale?‑‑‑No, I don't accept that. That's what I'm trying to - I'll try to explain a little bit. That right now, we, the company, is going in huge losses and eventually the continuity of this business depends on whether this business can be made viable and profitable or not because shareholders have invested funds since 2004 and then when the company got listed in 2007, 1500 shareholders put their money and they're all expecting some that money the company will eventually be viable, profitable, they will get some return, so, and we are actually relying on continuous support from - funding supports from all major shareholders. So ultimately, it is up to company to prove and find out that if it can be profitable, if it can be produce, produce adequate, and if it can make money or not. So the cost return does matter and that's what I'm saying, so this EA or any other factors which relates to cost is also as important as getting the approval because if we get the approval and if we are not still profitable, then probably investor will not probably put the money into it, so.

PN186

We'll come to that issue in a moment but - - -?‑‑‑Sure.

PN187

- - - is it also fair to summarise your evidence as this, is that wherever possible, the company needs to cut its costs?‑‑‑I agree, yes.

PN188

That's motivating this application, correct?‑‑‑One of the factors is that, yes.

PN189

Well it's the main factor, isn't it?‑‑‑One of the factors.

PN190

Well what are the other main factors other than cutting your costs?‑‑‑Of course, there are, as I said, like company has been looking into all the previous issues. There are ‑ what are the things which are restricting and the ability of the company, flexibility to operate in all of those things, so we have looked into all those issues as well, so.

PN191

Yes, and you've complained about a number of terms in the agreement in your statement, so it was not about cost. If that's a main, one of the main, factors that's motivating this application, you say that flexibility is another motivator?‑‑‑Cost and flexibility both, yes.

PN192

Cost and flexibility?‑‑‑And company's options to choose what is best for it.

PN193

Yes, and so effectively one of the complaints you make about the terms is the hours of work clause?‑‑‑That's right, yes.

PN194

You complained that those clauses require the company to discuss and agree on various matters concerning working hours with its employees and its representatives?‑‑‑Yes.

PN195

The company wants to basically have a complete control about when and where workers at the mine work?‑‑‑It's basically the company would like to have an ability to decide and changes the shifts and rosters and all if and when required, depending upon business needs.

PN196

Not to involve any discussion with its workers and their representatives in that matter?‑‑‑No, it's not the case.

PN197

That's not your complaint?‑‑‑That's not the complaints.

PN198

I see?‑‑‑But it - - -

PN199

You are happy to have some discussions, is that what you're saying?‑‑‑That's right, yes.

PN200

You are happy to reach agreement on some matters, are you?‑‑‑That's right, yes.

PN201

What matters are they?‑‑‑I cannot pinpoint right now unfortunately.

PN202

I see, and coal mining is generally a 24/7 operation?‑‑‑Generally, yes.

PN203

With the exception, your Honour, of perhaps Boxing Day and Christmas Day?

PN204

THE SENIOR DEPUTY PRESIDENT: Sometimes.

PN205

MR WALKADEN: Most mines operate every other day of the year, 24 hours a day seven days a week, don't they?‑‑‑That's correct, yes.

PN206

You can appreciate, can't you, why employees might want to have some say about when and where they're required to work?‑‑‑Yes, I can understand.

PN207

It's not entirely unreasonable, is it?‑‑‑No, I don't think so.

PN208

I see. You touched on this a moment ago, Mr Sharma, now even if the revised UEP was to be approved, there's, of course, no certainty that mining would resume at Russell Vale, is there?‑‑‑Yes.

PN209

You agree with that?‑‑‑Yes, I agree.

PN210

Thank you. Can I just take you to paragraph 67 of your first statement. Have you got that?‑‑‑Yes, it is in front of me.

PN211

Thank you. You say there, paragraph 67 of your first statement, "Operations can only re-commence after a further significant capital investment"?‑‑‑That's correct.

PN212

You estimate that to be $15 million?‑‑‑At this stage, yes.

PN213

At this stage. Could be more, could be less, I guess?‑‑‑Or could be less, yes.

PN214

You go on to describe, in the paragraphs that follow, what that expenditure would cover?‑‑‑That's correct, yes.

PN215

Is it fair to say that Wollongong Coal Limited doesn't have that $15 million in the kitty?‑‑‑Not at this stage.

PN216

It will likely require the majority shareholder, Jindal, to tip in the $15 million?‑‑‑That's correct, yes.

PN217

To your knowledge, have Jindal guaranteed that capital investment?‑‑‑We'll have a support from Jindal to date that they will continue supporting the company for its financial needs but, again, as I said, like each plan has to be before - it's not that we just ask for the fund and we get it, so we have to show them the business plan and the (indistinct) and then that will be so. Yes, but at this stage we believe that we will get the fund when we are ready to mine.

PN218

Is it the case, correct me if I'm wrong, but Jindal have guaranteed - the current guarantee is for a period of 12 months?‑‑‑That's right, yes.

PN219

Yes, so at this stage, there's no guarantee from Jindal Steel past that period of time?‑‑‑Means not at this stage but if you look at from last five years, they have been continuing to extend their support and to date we believe we have their continuous support.

PN220

Yes, but a moment ago, you indicated that for Jindal to be prepared to tip in further money into the operation that understandably the company need to demonstrate that it can control its costs and presumably make a dollar?‑‑‑That's correct actually.

PN221

To date, the company don't have a terribly good track record in that regard, do they?‑‑‑Unfortunately, no.

PN222

In terms of this $15 million capital investment, to your knowledge, Jindal Steel have not made a definite decision about whether to make that investment. That is correct, isn't it?‑‑‑I cannot answer that, that stage, because I think we are discussing our plans with them on a regular basis. They are being made aware of that would be the likelihood of the funds requirement as and when we are ready but it's a bit premature to seek their confirmation on this funding today.

PN223

Is it a bit like the approval process that the company's using its best endeavours to secure the $15 million?‑‑‑Can you repeat that, please.

PN224

Is it a bit like the approval issue we discussed at the outset that the company's using its best endeavours to obtain this further capital investment from Jindal?‑‑‑No, as I said like Jindal, it's - at the end of the day, I cannot answer on behalf of Jindal management what they will decide but we believe that once we are close to getting approval or once there is some certainty of getting the approval, that will be the right time and then probably we will seek their confirmation on the funds.

PN225

Once again, your evidence appears to be that it's your belief that Jindal will make the $15 million or so capital investment that's required?‑‑‑It's not just belief. I also feel that they have invested huge funds in the business and if he can - if company can demonstrate to them that we can operate at Russell Vale, yes, well they should be investing $15 million. They have already invested $600 million in the business in the last five years.

PN226

Can I just pick you up again and draw your attention to the fact you've used the word should not will?‑‑‑Exactly.

PN227

You accept, don't you - - -?‑‑‑I accept that, yes.

PN228

- - - that they have not, to your knowledge, Jindal that is, made a decision about whether to definitely make that investment?‑‑‑I am not sure if they have made a decision or not. I'm not aware of whether the decision has been made or not, so.

PN229

To your knowledge, have Wollongong Coal formally asked for that investment, that $15 million investment, from Jindal?‑‑‑We have shared some plan which shows that this $15 million dollar will be required when we are ready to mine, before we can mine there at Russell Vale, so.

PN230

Can I put it colloquially, you've given them the heads up that the $15 million might be required but you haven't formally asked the money?‑‑‑Exactly, yes.

PN231

Likewise, you're in no position to inform his Honour about whether Jindal have imposed any pre-conditions upon making this $15 million or so capital investment?‑‑‑I'm not aware of any pre-conditions.

PN232

Is it your understanding that that would be a decision taken by the Jindal board?‑‑‑Yes. Jindal management.

PN233

Jindal management, and you don't attend Jindal management meetings or board meetings of Jindal, do you?‑‑‑Not the board meetings but whenever there is a meeting between - in relation to Wollongong Coal, some of the meetings I attend, some of them I don't.

PN234

I see. It's the case, isn't it, Mr Sharma, that the company's financial year ends on 31 March of each calendar year?‑‑‑That's correct.

PN235

I see. For the most recent financial year, namely the period ending 31 March 2018, the company recorded a massive loss, didn't it?‑‑‑That's correct.

PN236

You've attached the most recent annual report for the period ending 31 March 2018?‑‑‑That's correct.

PN237

To your first statement?‑‑‑Yes, I did.

PN238

That's annexure SS1?‑‑‑Yes.

PN239

Starting on page 17?‑‑‑Yes.

PN240

You'll see that the actual result is found on page 21, if you've got that?‑‑‑Yes, it's in front of me.

PN241

It's a loss of $78 million?‑‑‑73(indistinct).

PN242

73, sorry, my mistake. I do apologise. I do need glasses. $73 million, yes?‑‑‑Yes.

PN243

That's up from a - significantly more than the loss incurred for financial year 2017 where the loss was $5 million?‑‑‑That's correct, yes.

PN244

Starting with the annual report, can we go to page 58?‑‑‑On the annual report?

PN245

Yes?‑‑‑Sure.

PN246

When I'm referring to the page numbers, I'm talking about the paginated numbers in the bottom right hand corner?‑‑‑Understood, yes.

PN247

Do you have that, page 58?‑‑‑Yes, it is in front of me.

PN248

Can you see the heading "Note 2"?‑‑‑Yes.

PN249

Can I just draw your attention to the third paragraph there, which reads "The current adverse performance of the consolidated entity was mainly due to" and there's two bullet points listed?‑‑‑Yes.

PN250

The first being no production from Russell Vale?‑‑‑Yes.

PN251

The second being that SPD Services, commonly known as Delta Mining, went into voluntary administration and then liquidation?‑‑‑Correct.

PN252

Delta were the previous contractor at the Wongawilli mine, weren't they?‑‑‑That's right.

PN253

They went into voluntary administration and liquidation?‑‑‑Yes.

PN254

Which resulted in a pause of a few months of production at Wongawilli, did it?‑‑‑That's correct, yes.

PN255

Are you aware that one of the reasons that the directors of Delta said they went into voluntary administration and liquidation was that Wollongong Coal wasn't paying its bills on time?‑‑‑I'm aware they made those allegations.

PN256

Presumably you disagree with them?‑‑‑Yes, sorry?

PN257

Presumably you disagree with them?‑‑‑I totally disagree with them.

PN258

But that was contained in the report that was prepared by the liquidator of Delta Mining, wasn't it?‑‑‑We made a public - basically, in our annual general meeting, we made a statement which - in which clearly refute all the claims made by Delta and if we - I cannot disclose all the details in this hearing unfortunately - - -

PN259

No, no, of course?‑‑‑without checking whether it's okay to disclose, but I'm aware that that was not the case.

PN260

Yes, but that was the allegation. I'm just asking that was the allegation?‑‑‑Allegation, yes. They put the allegation and we also publicly refused it.

PN261

I see. Just staying with those two bullet points on page 58, the company doesn't attribute the current adverse performance to the agreement, does it?‑‑‑Sorry, can you repeat that.

PN262

The company, Wollongong Coal, doesn't attribute the current adverse performance to the agreement, does it?‑‑‑No.

PN263

You'd agree with me, wouldn't you, that the agreement has nothing whatsoever to do with the $73 million loss made by the company in FY18?‑‑‑No, I will - see, one of the reason we have mentioned is that no production at Russell Vale, so, again, from years when we are producing, cost (indistinct) matters, so that's right.

PN264

I accept that but you'd agreed, wouldn't you that the massive loss that the company incurred in FY18 of $73 million, the agreement had nothing to do that loss whatsoever, did it?‑‑‑I can agree with that

PN265

Can we stay with the annual report and go to page 21?‑‑‑Sure.

PN266

I think I drew your attention, Mr Sharma, to the third paragraph from the bottom of page 21 which records the loss of $73 million?‑‑‑Yes.

PN267

Just staying with that paragraph, you'll see the second last sentence of that paragraph starts with a discussion in relation to net current liabilities?‑‑‑Yes.

PN268

Do you see that?‑‑‑Yes, I can see that.

PN269

It talks about borrowings and working capital, et cetera, and says borrowings and working capital of facilities of $781 million which have been entirely classified as current liabilities to comply with the accounting standard ‑ ‑ ‑?‑‑‑Accounting standard.

PN270

- - - there mentioned due to breaches of financial covenants?‑‑‑That's correct.

PN271

Can you just explain to me what financial covenants the company breached?‑‑‑I cannot recall the covenants individually but basically there are certain (indistinct) days of borrowing then we did the borrowing. There were certain owings put in the (indistinct) lending type companies, (indistinct), and all those operating things has to be there so since we were not meeting the (indistinct) and all other things, the covenants not breached, so.

PN272

Effectively - - -?‑‑‑There's a certain financial performance we need to meet and if we don't meet, the covenants is breached, yes.

PN273

I see. In layman's terms, for a non-accountant like myself, is it basically fair to say that what we're discussing here is a loan that the company had with presumably a bank or some other financial provider?‑‑‑No, this loan is through Jindal Steel Australia. It's a (indistinct) but it's through a third party independent lending institutes. That fund is being routed through Jindal Australia, sorry, yes, but it - yes, it's loan is through the third party's independent institutions.

PN274

But there were terms attached to the loan?‑‑‑That's right, yes.

PN275

The company breached those terms, is that correct?‑‑‑Whether it's company's or all financial breach or means performance not meeting the particular target setting as for the lending or whether it was entire Jindal's group's performance, I'm not sure what that, so.

PN276

I see. Staying with the annual report, can we go to page 33?‑‑‑Sure. Yes, I'm here.

PN277

You'll see on page 33, it details proceedings that were commenced by the department?‑‑‑Yes.

PN278

Against Wollongong Coal and it discusses a failure to pay by the company, on two separate occasions, rental fees and administration levies that were owed to New South Wales Resources Regulator?‑‑‑That's correct, yes.

PN279

The second occasion concerned the failure to pay those fees and levies in September and November 2017?‑‑‑Correct.

PN280

That was within FY18?‑‑‑Yes.

PN281

The failure to pay those fines and levies isn't exactly ancient history, is it?‑‑‑No, it's not.

PN282

Can I hand you a copy of Mr Timbs' statement, and I'll just give you the page reference, Mr Sharma?‑‑‑Sure.

PN283

It's page 222, which is the note?‑‑‑Is it annexure RT7?

PN284

That's the one?‑‑‑Yes.

PN285

You'll find on page 223 through to page 227 the enforceable undertaking that is discussed on page 33 of the annual report, correct?‑‑‑Correct.

PN286

I see. We can just go the enforceable undertaking. Can I just take you to point 19, which is on page 226?‑‑‑Yes.

PN287

You'll see there, at that point, the resource regulator notes the unfavourable compliance issue of Wollongong Coal and Wongawilli Coal?‑‑‑Yes.

PN288

On page 224, at points 12 and 13, do you have that?‑‑‑Yes.

PN289

You'll see at point 12 it records a delegate of the secretary has also been considering whether to suspend operations at Wollongong Coal Limited and Wongawilli Coal Pty Limited over concerns about the ongoing financial capacity and ability to meet compliance and payment obligations under the Act?‑‑‑Correct.

PN290

At paragraph 13, it records that the companies were invited to show cause?‑‑‑Correct.

PN291

Are you aware of any other coal mine operator in New South Wales that has been asked by the resource regulator to show cause due to the concerns expressed at clause - - -

PN292

MR BROTHERSON: Well what's the relevance of that?

PN293

MR WALKADEN: Well the relevance, your Honour, is we've made submissions about whether it would be appropriate to terminate the agreement and one of those submissions goes to the company's track record of meeting its obligations. That's a submission we intend to make and this evidence goes squarely to that point.

PN294

THE SENIOR DEPUTY PRESIDENT: Yes, I'm going to allow the question.

PN295

MR WALKADEN: Thank you, your Honour. Mr Sharma, are you aware of any other coal mine operator in New South Wales that has been asked by the resource regulator to show cause due to the concerns expressed, or similar concerns expressed, at point 12 of the enforceable undertaking?‑‑‑I'm not aware but I would like to just make one small point here. When we were discussing this enforceable undertaking format, for like how it should like that, that time I can recall I think our lawyer who was assisting made some comment that this is - this kind of undertaking is forwarded by the companies who have similar issues so I'm not aware of any other company but I would just like to make some - - -

PN296

Well you don't know one way or the other, do you?‑‑‑No, I don't know.

PN297

All right, and did the company have any concern that these matters, which are incredibly serious, aren't they?‑‑‑Sorry, can you repeat the question.

PN298

Would you agree with me it's incredibly serious - - -?‑‑‑It is.

PN299

- - - for the resource regulator to ask a coal mine operator to show cause about whether to suspend operations at their mine?‑‑‑It is serious, yes.

PN300

Incredibly serious?‑‑‑Incredibly serious, yes.

PN301

You can't operate, obviously, if that issue or directive is issued, can you?‑‑‑Sorry, what's that?

PN302

You wouldn't be able to make a dollar if, indeed, the resource regulator suspended operations at your mines, would you?‑‑‑That's correct.

PN303

Did the company have any concern that the matters I've taken you to in the enforceable undertaking, namely the concerns that the resource regulator had, about ongoing financial capacity and ability to meet compliance and payment obligations, did the company have any concerns that those matters might affect whether approval might be granted for the revised UEP?‑‑‑Yes, you are right. That there are concerns about that and that is the reason why we discussed the matter with the department. We gave the enforceable undertaking and to date, I can confirm that we are compliant to that undertaking.

PN304

But the company, as you say, had that concern that look this is very serious. The resource regulator has a significant concern with us and these are matters that might have a negative impact upon getting the approval to mine at Russell Vale. That's your evidence, isn't it?‑‑‑That was one of the concerns we discussed and that's what I'm saying, we gave the undertaking to satisfy resource regulator that we will comply with the terms and will operate in the best manner possible so - and - - -

PN305

I see. I think you've already said that the company's financial position is such that it needs to closely scrutinise its costs?‑‑‑Yes.

PN306

It needs to cut its costs in all areas where possible?‑‑‑That's correct, yes.

PN307

I see, and you'd agree, wouldn't you, that the company's performance for FY18, it can be described as terrible, can't it?‑‑‑It is bad, yes.

PN308

Can we go to page 40 of the annual report?‑‑‑Sure. Yes.

PN309

You'll see there, on page 40, page 40 sets out the remuneration of key personnel?‑‑‑Yes.

PN310

The first box relates to for FY18 and the one below it for FY17?‑‑‑Correct.

PN311

The persons there listed are either members of the board?‑‑‑Yes.

PN312

Or other senior managers or senior executives, whatever terms used - - -?‑‑‑KMPs.

PN313

Sorry?‑‑‑Key management personnel, yes.

PN314

Yes, and found on page 39 of the report you'll see the various position of each of the persons?‑‑‑Yes.

PN315

I see. Mr Oza, he is the chair and chief executive officer of the company?‑‑‑Correct.

PN316

Notwithstanding the bad performance for FY18, Mr Oza was paid over half a million dollars per year?‑‑‑Correct.

PN317

That's pretty good, pretty good income, isn't it?

PN318

MR BROTHERSON: Well what does that mean? That's a meaningless question if, indeed, it is a question.

PN319

THE SENIOR DEPUTY PRESIDENT: Allow for the question.

PN320

MR WALKADEN: Mr Oza took home over half a million dollars per year. Would it surprise you that's just slightly less than the prime minister of Australia?

PN321

MR BROTHERSON: Well again, I mean what's the relevance?‑‑‑I'm not aware how much prime minister is paid.

PN322

What's the relevance of this?

PN323

THE SENIOR DEPUTY PRESIDENT: Yes, can you make sure - - -

PN324

MR WALKADEN: I can. In looking to cut costs, has the company considered reducing the pay of its key personnel?‑‑‑Yes, company has looked at it.

PN325

Looked at it and decided not to?

PN326

MR BROTHERSON: Well my friend needs to - I think if he's going to look at that he needs to look at - he's taken him to Mr Oza and he might actually see that Mr Oza gets less than - - -

PN327

MR WALKADEN: I'm going to come to that.

PN328

THE SENIOR DEPUTY PRESIDENT: Well okay, well, I think he can answer the question. The witness can answer the question.

PN329

MR WALKADEN: Has the company considered significantly reducing the pay of its directors and senior managers?‑‑‑Directors fees were reduced. If you look at few years back, they were getting around $160,000 a year. Now they are getting $50,000, so yes, they have reduced directors fee. You have to go a few years back.

PN330

I see?‑‑‑Three-four years back.

PN331

How long does each board meeting go for?‑‑‑Sorry?

PN332

How long does each board meeting go for?‑‑‑Board meeting?

PN333

Yes?‑‑‑Which - - -

PN334

What's the duration of each board meeting on average?‑‑‑Once a month on an average, yes.

PN335

No, how long do they go for? Half an hour or two hours, all day?‑‑‑Depending on matter.

PN336

Give me an average?‑‑‑I would say an hour to two.

PN337

I see, and page 37 records that it looks like there were nine board meetings held?‑‑‑Yes.

PN338

For FY18?‑‑‑Yes.

PN339

Looks like there were two audit committee meetings held?‑‑‑That's correct.

PN340

A total over the year of, for those who are on the audit committee, 11 meetings?‑‑‑Yes.

PN341

Was that the same a few years back? There were about 11 or so meetings for those on the audit committee?‑‑‑Yes, pretty much same.

PN342

The directors were getting $150,000 a year for attending 11 meetings a year?‑‑‑Correct.

PN343

Went for about an hour or so?‑‑‑It comes with the responsibilities as well of the entire business.

PN344

I see. Mr Oza, his remuneration for the FY2017, his cash salary in fees was the same in FY17 as FY18, wasn't it?‑‑‑Yes, looks like, yes.

PN345

His total was slightly less, about $10,000 or so less between the two years?‑‑‑Yes.

PN346

That's because there was about a $10,000 or so difference, $11,000 or so difference, in the non-monetary benefits?‑‑‑Correct.

PN347

I see. You say that the directors fees have been reduced?‑‑‑Well as I said, like three-four years ago, yes.

PN348

But there's been no reduction in Mr Oza's pay over the last two years, has there?‑‑‑No, no.

PN349

No, and that's notwithstanding, on your own evidence, the bad performance of the company in FY18, correct?‑‑‑Correct.

PN350

As part of this application, the company's looking to terminate the agreement, isn't it?‑‑‑Sorry, what's that?

PN351

As part of this application, well the company's seeking to terminate the enterprise agreement?‑‑‑Correct.

PN352

Complains that the company's operating under a higher cost structure?‑‑‑Yes.

PN353

How many employees are there at Wollongong Coal at the moment?‑‑‑We have around 70-80 employees.

PN354

How many, sorry?‑‑‑70 employees.

PN355

THE SENIOR DEPUTY PRESIDENT: Sorry, I didn't quite catch it?‑‑‑70, seven zero.

PN356

Seven zero, and they're staff and deputies primarily, aren't they?‑‑‑No, I'm talking about all in Wollongong Coal and Wongawilli included so 70.

PN357

That's including Wongawilli.

PN358

MR WALKADEN: Are you including the CAS Mining people there?‑‑‑No.

PN359

No.

PN360

THE SENIOR DEPUTY PRESIDENT: I'm sorry, I just - - -

PN361

MR WALKADEN: I'm sorry, I'll clarify?‑‑‑On - - -

PN362

THE SENIOR DEPUTY PRESIDENT: Does include the people working at Wongawilli?‑‑‑That includes Wongawilli, yes, staff.

PN363

Staff and deputies?‑‑‑Staff and employees.

PN364

MR WALKADEN: I see, and, of course, should the company succeed with the application to terminate the agreement, the company would be looking to reduce the mine worker rate, the pay at the Russell Vale mine, should mining resume?‑‑‑I'm not aware of that thing at this stage.

PN365

Really?‑‑‑Yes.

PN366

Don't you complain at length in your first statement about the high cost structure imposed upon the agreement?‑‑‑That's correct, yes.

PN367

Wouldn't it be a complete waste of time to complain about the higher cost structure imposed by the agreement, seek the termination of the agreement only to pay the same rates if the agreement was terminated?‑‑‑No, I'm not saying that we were looking at paying same rate. What I'm saying is that we have not looked at what business model we will be ‑ how we going to be - when we resume the operation, what type of labour we'll be using it, whether we will be directly employing or whether we'll be outsourcing, so it's a bit - - -

PN368

Of course you have, Mr Sharma?‑‑‑I'm not aware of.

PN369

Wasn't it reported in one of Jindal Steel's annual reports that if the company was to resume mining at Russell Vale it would be with an outsourced workforce?‑‑‑I'm not aware if something was published in Jindal annual report.

PN370

You're not aware of that?‑‑‑Yes, because I don't read Jindal's annual report, to be honest.

PN371

MR BROTHERSON: Well unless my friend can produce it - - -

PN372

THE SENIOR DEPUTY PRESIDENT: Yes, is that going to be in the evidence?

PN373

MR WALKADEN: It's not in the evidence.

PN374

THE SENIOR DEPUTY PRESIDENT: Right, and you - okay.

PN375

MR WALKADEN: The company has outsourced production engineering work at the Wongawilli mine, hasn't it?‑‑‑Yes, we have.

PN376

If the agreement's terminated, the company will outsource mining production engineering work at Russell Vale, won't it?‑‑‑We may.

PN377

You will, won't you?‑‑‑We may.

PN378

You haven't made a decision about that?‑‑‑I'm not aware of that decision if it's made.

PN379

THE SENIOR DEPUTY PRESIDENT: Well you would be aware if the decision had been aware?‑‑‑Yes. No, I - - -

PN380

Are you saying no decision has been - - -?‑‑‑But when I'm saying no decision has been made, and if he's continuously asking me that, then I have to say that if he believes that the decision has been made, I'm not aware of that.

PN381

But you would know if such a decision was made, wouldn't you?‑‑‑I think I would be aware, yes.

PN382

Yes, okay.

PN383

MR WALKADEN: Has there been any consideration of the staffing requirements at the Russell Vale mine should mining resume?‑‑‑Yes, we have worked on some models that how many peoples will be - how many people will require, not peoples, and what their role would be and - but who they will be and how they will be sourced is something I've not looked at.

PN384

No, I'm asking whether you've looked at it. Has it been discussed, to your knowledge?‑‑‑Sourcing has not been discussed but number of people and all has been looked at, yes.

PN385

Has there been any costing done as to the hourly rate?‑‑‑Costing must have been done but I have not seen any.

PN386

Given your complaints that you make in the statement about the high cost structure of the agreement, wouldn't it follow that if the company was to resume mining at Russell Vale, it would look to do so with a lower pay rate?‑‑‑If it can, yes.

PN387

Obviously terminating the agreement is a crucial step in achieving that outcome, isn't it?‑‑‑Yes, you can say that.

PN388

It's fair to say in very broad terms that through this application, the company is looking to reduce the pay rate for a mine worker at the Russell Vale mine, isn't it?‑‑‑Maybe.

PN389

Well yes?‑‑‑Maybe.

PN390

I see, and do you think it's fair to reduce the pay rates for mine workers at the Russell Vale mine but to retain very high salaries for persons such as Mr Oza.

PN391

MR BROTHERSON: I object. It - - -

PN392

THE SENIOR DEPUTY PRESIDENT: Yes, I'm not sure it's going to help me. I mean, it's not in my mind to think about but I'm not sure that Mr Sharma's view is all that relevant.

PN393

MR WALKADEN: Well, your Honour, if we're hearing about the company's to cut its costs in every way possible - - -

PN394

THE SENIOR DEPUTY PRESIDENT: No, no, sure. I'm not saying it's a non-issue. I'm just saying that I'm not sure that Mr Sharma's personal opinion on it's going to be terribly relevant.

PN395

MR BROTHERSON: If it's anything at all, it's a matter for submission. I mean - - -

PN396

THE SENIOR DEPUTY PRESIDENT: Well it's something I might have to think about.

PN397

MR WALKADEN: What's a higher salary? I mean, we - - -

PN398

MR BROTHERSON: Well - - -

PN399

THE SENIOR DEPUTY PRESIDENT: No, no, I'm not saying it's an irrelevant consideration. I'm just saying - - -

PN400

MR WALKADEN: This is a high salary thing.

PN401

THE SENIOR DEPUTY PRESIDENT: - - - I don't think Mr Sharma's personal view on it is relevant. It's not going to affect my decision.

PN402

MR WALKADEN: I see. Can we go to the issue of bonus, which is paragraph 83 of your first statement?‑‑‑83.

PN403

You see that?‑‑‑Of my statement?

PN404

Yes, your first statement?‑‑‑Sure. Yes.

PN405

At paragraph 83 and over the page, you complain about the bonus in the agreement, don't you?‑‑‑Yes, I do.

PN406

One of your complaints is that the payment of the bonus in the agreement isn't linked to the company's or the individual's performance?‑‑‑That's correct.

PN407

It's effectively a fixed bonus, if I can express it that way?‑‑‑That's right.

PN408

THE SENIOR DEPUTY PRESIDENT: You referred to a figure of $478 in 2015. Is this provision in the - do you know what the bonus was last year?‑‑‑No, I'm not aware of last year.

PN409

All right?‑‑‑But it's on an average $450 to $500, in between.

PN410

MR WALKADEN: It's in Mr Timbs' statement, your Honour.

PN411

THE SENIOR DEPUTY PRESIDENT: Is it? Fine, that's fine, okay.

PN412

MR WALKADEN: I can take you to it if you - - -

PN413

THE SENIOR DEPUTY PRESIDENT: Yes, thanks.

PN414

MR WALKADEN: It's on page 23, your - I'm sorry, paragraph 23 of Mr Timbs' statement.

PN415

THE SENIOR DEPUTY PRESIDENT: Yes, thanks a lot.

PN416

MR WALKADEN: Where Mr Timbs explains what the current district average bonus is. As I think you said, Mr Sharma, one of your complaints about the bonus is that it's a fixed bonus?‑‑‑That's correct, yes.

PN417

If I can go over the page to paragraph 85, sorry, paragraph 85 of your first statement, you say that if operations were to commence at Russell Vale, that the company would be open to considering a bonus?‑‑‑Yes.

PN418

But the company would look to tie that to company or individual performance?‑‑‑That's right.

PN419

That's a matter the company has given some consideration to, have they?‑‑‑Yes, basically production linked bonus, you can say.

PN420

Pardon?‑‑‑Production linked bonuses.

PN421

But that's been a matter of some consideration?‑‑‑That's right, yes.

PN422

If we get the approval, if we start back up at Russell Vale, we will introduce a performance based bonus.

PN423

MR BROTHERSON: Well it says consider it. It doesn't say (indistinct).

PN424

MR WALKADEN: Well it says - consider, that's been something the company has thought about, hasn't it?‑‑‑Means if - see what my point in the statement is that the current previous bonus in the - the bonus structure in the EA is not linked to the performance of the company or individual.

PN425

I can read that, yes?‑‑‑However, if the company won't mind looking at an option to link - give some kind of incentives and put a bonus to people who can help the company achieve its targets and performance.

PN426

That model, from going from a fixed to a variable bonus, if I can put it that way?‑‑‑Yes, you can put it that way.

PN427

You understand what I'm talking about?‑‑‑Yes.

PN428

That's been something the company has considered?‑‑‑Company would be willing to consider.

PN429

I see, so you say the company haven't yet considered that, do you?‑‑‑That's right, that's what I'm saying that we'll be happy to look at it.

PN430

I see, but you haven't looked at?‑‑‑No.

PN431

Haven't even thought about it?‑‑‑No.

PN432

I see. If we can just go back to the annual report?‑‑‑Sure. Page?

PN433

Page 41?‑‑‑41. Yes.

PN434

At the top of that page, you'll see the nine key personnel again?‑‑‑Yes.

PN435

You'll see the proportion of their remuneration that's fixed?‑‑‑Yes.

PN436

The proportion that's at risk?‑‑‑Sorry?

PN437

At risk STI which presumably is short term incentive?‑‑‑Yes, yes.

PN438

At risk LTI which presumably is long term incentive?‑‑‑Correct.

PN439

Of those nine persons, for only all bar two of those persons, their remuneration is fixed, isn't it?‑‑‑That's correct, yes.

PN440

For all bar two of those persons, they get their remuneration irrespective of their own performance or the company's performance, don't they?‑‑‑Yes.

PN441

The complaint you have about the bonus in the agreement doesn't apply to these seven board members and managers, does it?

PN442

MR BROTHERSON: Well I object to the question. My friend's conflating some issues there. Firstly, there may be a bonus in the enterprise agreement but there's also fixed remuneration. The fact that some other people may not have any bonus doesn't mean to say that that's a problem. He's conflating the issues. There's a bonus for some people but those people also have their base remuneration. He's confusing fixed remuneration with total remuneration.

PN443

THE SENIOR DEPUTY PRESIDENT: When you say - but in this table that we've been taken to, it indicates that the employee is all but, of the senior employees, all but, is it one of them?

PN444

MR WALKADEN: Two, your Honour.

PN445

THE SENIOR DEPUTY PRESIDENT: Two, okay. Yes, two. One of whom has resigned. Don't have any at risk pay?

PN446

MR WALKADEN: It - - -

PN447

THE SENIOR DEPUTY PRESIDENT: I'm not saying it's a good thing or a bad thing but I don't think that - but the parallel has been - no, well I mean apparently he's drawing the - saying well the employees - well under the agreement on-one's actually getting it, but under the agreement there's a bonus but it's not based on company performance but - - -

PN448

MR WALKADEN: A notional - - -

PN449

THE SENIOR DEPUTY PRESIDENT: - - - Mr Sharma said he was interested in looking at, we would consider, he would prefer, I suppose, a bonus that was based on company performance. Well the question that's being asked by Mr Walkaden is well if you look at the senior employees of the organisation, they don't have a - well most of them don't have a performance linked bonus. They just get fixed remuneration. I can't see what's conflating it.

PN450

MR BROTHERSON: I thought he was trying to conflate it a little bit further than that because if you put a notional mine worker in there, they would also, of course, have fixed remuneration but they'd have an additional component. I thought he was trying to say well you put it altogether and say you're worse off or better off if you don't have any bonus. Well that can't possibly - --

PN451

THE SENIOR DEPUTY PRESIDENT: I don't think he's sort of saying that.

PN452

MR BROTHERSON: Sorry, I may have misunderstood but I ‑ ‑ ‑

PN453

THE SENIOR DEPUTY PRESIDENT: Yes, I don't think he's saying that. Sorry, can you just repeat the question.

PN454

MR BROTHERSON: I think he's trying to draw so many lines perhaps I'm getting cross.

PN455

THE SENIOR DEPUTY PRESIDENT: Do you want to ask the question again, Mr Walkaden.

PN456

MR WALKADEN: Well I'll have to remember it again, your Honour.

PN457

THE SENIOR DEPUTY PRESIDENT: Yes.

PN458

MR WALKADEN: In any event - - -

PN459

MR BROTHERSON: Well with complicated questions.

PN460

MR WALKADEN: That's the trouble with people objecting, Kim.

PN461

THE SENIOR DEPUTY PRESIDENT: I can ask it for you if you want. I mean we could - do you want to have a short break or are you happy to keep on - - -?‑‑‑I don't mind going to a restroom, your Honour.

PN462

Would you? Yes, look we might just have a 10 minute break, that's all right.

PN463

MR WALKADEN: Thank you.

<THE WITNESS WITHDREW牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� [11.26 AM]

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PN464

THE SENIOR DEPUTY PRESIDENT: I think we need Mr Sharma back.

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CROSS-EXAMINATION BY MR WALKADEN, CONTINUING [11.43 AM]

PN465

MR WALKADEN: Thank you, your Honour. Mr Sharma, before the break we were discussing bonus for the mine workers under the agreement and total remuneration for the nine key personnel?‑‑‑Yes.

PN466

Do you recall that?‑‑‑Yes.

PN467

Is it fair to say the company proposes, subject to the agreement being terminated, to tie the total remuneration for mine workers, in part, to individual or company performance?‑‑‑Correct.

PN468

But doesn't adopt the same approach currently for seven of the nine key personnel?‑‑‑Maybe I might just explain little bit in detail into response this question. Previously, there was a production bonus options for the KMPs, few years back, but looking into the company's position, those bonus were pretty much taken off, so they were linked to the production and those were taken off. So what we see here is the fixed pay for individual. They are not at risk, they get paid no matter what the performance is, so there is no bonus structure at this stage for the KMPs.

PN469

In the case of Mr, is it Oza, is that the correct pronunciation?‑‑‑Oza, yes.

PN470

Mr Oza, you'll see that for FY17 and 18, the proportion of his total remuneration was fixed, was 100 percent?‑‑‑That's right, yes.

PN471

In both years, his total remuneration exceeded half a million dollars per year?‑‑‑Correct.

PN472

In those financial years, all Mr Oza had to do was turn up for work and he'd get that pay, is that correct?‑‑‑I don't know how to answer.

PN473

THE SENIOR DEPUTY PRESIDENT: Well presumably he had to do his job, I assume?‑‑‑I don't know how to answer that.

PN474

MR WALKADEN: Well it's a question. I think you can answer it?‑‑‑No, basically I'm not - - -

PN475

THE SENIOR DEPUTY PRESIDENT: I don't think he needs to answer that question.

PN476

MR WALKADEN: What's the difference between the way - or why is there a difference between the way the company's considering remunerating mine workers to seven of the nine key personnel?‑‑‑Sorry, can you explain that, please?

PN477

What's the reason for the proposed different approach, in terms of remunerating mine workers on the one hand, to seven of the nine key personnel on the other hand?‑‑‑Well the mine workers has the fixed pay as well, so.

PN478

Yes, but you don't like it. You want to get rid of it?‑‑‑No, no, no.

PN479

MR BROTHERSON: No, that's never been said.

PN480

MR WALKADEN: Well - - -

PN481

THE SENIOR DEPUTY PRESIDENT: No, no, (indistinct) affects pay. They want to change the bonus?‑‑‑Yes.

PN482

MR WALKADEN: Yes, I'm talking about total remuneration addressing my friend's concern before the break and the company's position is that it's unhappy with the bonus being fixed?‑‑‑No, we feel that if bonus can be linked to production we might get more productivity and they may get more bonus.

PN483

Yes, and at the moment, the agreement does not link the bonus pay to mine workers to production, does it?‑‑‑Sorry, can you - - -

PN484

At the moment, the agreement does not link the bonus to production, does it?‑‑‑No.

PN485

The mine workers, should there be any mine workers employed by the agreement, simply get paid the bonus for turning up to work?‑‑‑Correct.

PN486

Right, and likewise, seven of the nine key personnel also get paid their total remuneration for just turning up to work, in simple terms?‑‑‑Correct, yes. In simple terms, yes.

PN487

Why the difference in approach?

PN488

MR BROTHERSON: Well this is getting, I think, to the silly point where the witness has already explained that at one point these people did have an additional component and it's been taken away. That's just been overlooked in this line of questioning.

PN489

THE SENIOR DEPUTY PRESIDENT: Well I think - - -

PN490

MR BROTHERSON: If the question goes anywhere.

PN491

THE SENIOR DEPUTY PRESIDENT: Well I think the witness can answer the question

PN492

MR WALKADEN: Isn't the philosophy behind a variable bonus, isn't the philosophy being, that if part of a person's remuneration is tied to either their own performance or the company's performance, that they're incentivised to work better or smarter or safer?‑‑‑Correct.

PN493

That's what you say at paragraph 85 of your first statement, don't you?‑‑‑That's correct, yes.

PN494

But that principle doesn't apply to Mr Oza, does it ‑ ‑ ‑?‑‑‑No, at this stage - - -

PN495

- - - and has not for the last two years?‑‑‑Yes, at this stage he does not have any bonus or any at risk component in his pay.

PN496

I see.

PN497

THE SENIOR DEPUTY PRESIDENT: But just to be clear, well when this mine was operating, did the senior people get variable pay?‑‑‑Yes, there was a time when KMPs, including myself, means this KMP might be changing, but KMPs had the performance bonus and depending upon - and we had a risk proportion of company risk - at risk, so, including myself, yes.

PN498

MR WALKADEN: If the mine was to resume operation, you can't say whether, for instance, the company would revert to a model of putting some of the remuneration for the key personnel at risk? You can't say that, can you?‑‑‑At this stage, I can't say that, yes.

PN499

Can I draw your attention, Mr Sharma, to paragraph 22 of your first statement?‑‑‑Sure.

PN500

Do you have that?‑‑‑Yes.

PN501

What you say at paragraph 22 is that the agreement was made during the boom in coal prices?‑‑‑Yes.

PN502

Effectively, the agreement was made 2011 and you say that at that time the coal price was booming?‑‑‑Yes, actually ‑ yes, I should have said a little bit more here. Basically, it was not just the coal price but also where the company was and what it was intending to do and all those things were the factor when this year was negotiated.

PN503

Yes, but in the coal industry, the coal price is obviously a key factor in a coal mine's profitability or otherwise, isn't it?‑‑‑Yes, so coal price is important. So is production.

PN504

Yes, sure, and at the time the agreement was made, the company knew the coal price was booming, didn't it?‑‑‑Yes, we believe that time.

PN505

The company also knew at the same time that the coal price was volatile?‑‑‑Yes, we do.

PN506

The agreement was made for a four year term?‑‑‑Correct.

PN507

In making a four year agreement in the middle of a boom, the company didn't seriously think that the coal price, which it knew to be volatile, would remain sky high for that period of time?‑‑‑No, we didn't. No, we did not but at the same time, we were expecting much larger volume of productions than what we can achieve now.

PN508

I see, and, Mr Sharma, you've been employed by the company since November 2014?‑‑‑Since 2004.

PN509

2004, sorry, my mistake?‑‑‑Yes.

PN510

2004, yes, and going back or staying with paragraph 22 of your first statement, just draw your attention to the last sentence of paragraph 22, FY2011 was the only year during your 14 years employment with the company where the company's made a profit?‑‑‑That's correct, yes.

PN511

There was a boom in the coal price in 2009, wasn't there?‑‑‑If I can recall, 2008 there was a GFC and then the market started reverting something to maybe 2009.

PN512

You've read Mr Colley's statement, haven't you?‑‑‑I have read that.

PN513

Can I hand the witness a copy of Mr Colley's statement. Can I just - have you got Mr Colley's statement with you, Mr Sharma?‑‑‑Yes.

PN514

Can I just take you to page 39 of Mr Colley's statement. Sorry, page 31, I should say to start with so we know where we're referring to?‑‑‑Sure. Yes.

PN515

Sorry, I've got my numbers confused again. It's page 33 of Mr Colley's statement?‑‑‑Yes.

PN516

The numbering in Mr Colley's statement's in the middle. I was looking at the report, but page 33. Do you have that?‑‑‑Yes.

PN517

You'll see that if you turn, sorry to jump around a bit, turn the page over, you'll see this is an extract, one of the reports that the department prepared and Mr Colley refers to in his statement, and you'll see that - can you see figure 5.2, the benchmark contract prices for Australian metallurgical coal?‑‑‑Yes, 5.2 I can see.

PN518

Which is on Mr Colley's numbering page 33?‑‑‑Yes.

PN519

You'll see that it records the benchmark contract price for Australian metallurgical coal from the period of December 2002 through to December 2007?‑‑‑17, yes.

PN520

17, sorry. Do you see that?‑‑‑Yes.

PN521

You'll see that there is a significant boom in 2011?‑‑‑Yes.

PN522

Where the price is around $350 per tonne?‑‑‑Yes.

PN523

But you also see in the period around 2009, the price is at a similar number, around about $350 per tonne?‑‑‑Yes, I can see the graph, yes.

PN524

I think your own recollection was that around that period of time you mentioned the GFC but I think you mentioned that around that time, ie 2008-2009, that - - -?‑‑‑We (indistinct), yes.

PN525

- - - the coal price was sky high, wasn't it?‑‑‑At?

PN526

Was sky high, wasn't it?‑‑‑What time?

PN527

2008-2009?‑‑‑Yes, if I look at the chart, yes, I think - I can't recall, honestly, but if looking at the chart, viewing it, I can agree to that.

PN528

I see.

PN529

MR BROTHERSON: We'll take the term sky high as part of the colloquialism in the proceedings.

PN530

MR WALKADEN: Of course, the period we're talking about here, 2008-2009, that was before the agreement began to operate?‑‑‑Correct.

PN531

Even in that period of time, with the coal price sky high, the company didn't make a profit?‑‑‑Correct.

PN532

Doesn't that demonstrate that the financial results that have been achieved by the company since the commencement of the agreement, namely in November 2011, cannot be attributed to the agreement?‑‑‑Yes, we can say that.

PN533

We've already discussed your complaints about the agreement, I've mentioned that to you and one of your complaints is the higher cost that the agreement imposes upon the company?‑‑‑Yes.

PN534

Has the company quantified what the cost savings would be if the agreement was terminated, mining re-commenced at Russell Vale with those complaints addressed under terms suitable to the company?‑‑‑No.

PN535

You can't say, Mr Sharma, what the cost savings would be in those circumstances?‑‑‑No, I can't.

PN536

You can't say then that termination of the agreement would make a material difference to performance of the company, can you?‑‑‑No, I cannot say that.

PN537

As we have discussed, the loss for FY18 was, I'll get the right number this time, $73 million. Just looking through your shopping list of complaints in your statement that start at paragraph 80, there doesn't appear to be $73 million of savings there, does there?‑‑‑No.

PN538

Can we just go to your second statement, which is the shorter four page statement. This statement, you're primarily responding to what Mr Timbs has said at his statement?‑‑‑Yes.

PN539

I see, and at paragraph five, you discuss the four other mines in the southern district?‑‑‑Correct.

PN540

The Appin, Dendrobium, Metropolitan and Tahmoor mines and you discuss the difference in the mining method?‑‑‑Correct.

PN541

Of course, those four mines operate with a longwall where it's proposed, should approval be given, that Russell Vale, would commence with a bord and pillar method?‑‑‑Yes.

PN542

It's fair to say that a bord and pillar method is an older form of mining?‑‑‑Yes, it is.

PN543

It's certainly rarer, isn't it, these days?‑‑‑Yes, it is rare and, yes, limited mines are doing that and - - -

PN544

Wongawilli's bord and pillar, isn't it?‑‑‑It is, yes.

PN545

For those four mines, and when I say four mines I'm referring to the Appin, Dendrobium, Metropolitan and Tahmoor mines, for those four mines and the Russell Vale, all of those five mines primarily extract metallurgical coal. That's correct, isn't it?‑‑‑Yes, that's correct.

PN546

Albeit that Russell Vale doesn't have a wash plant and sells unwashed coal, or proposes to sell unwashed coal, I think, all five mines would sell their met coal on the same market, correct?‑‑‑Correct.

PN547

It's fair to say that those four mines and the Russell Vale mines are competitors, aren't they?‑‑‑Are?

PN548

Competitors?‑‑‑Yes, you could say that.

PN549

Would you agree that in coal mining, the operating environment between an underground mine and an open cut mine is significantly more different than the difference between an underground mine that operates by way of a longwall and underground mine that operates by way of bord and pillar?‑‑‑Can you please repeat the question?

PN550

The operating environment is far more pronounced when you compare an open cut mine to an underground mine than comparing underground mine that mines by way of a longwall to an underground mine that mines by way of bord and pillar?‑‑‑That's correct, yes.

PN551

You're aware, no doubt, that the Black Coal Mining Industry Award 2010 regulates terms and conditions across the coal industry?‑‑‑Correct.

PN552

Can I hand the witness a copy of the award. Have you got that?‑‑‑Yes.

PN553

Are you familiar with the award? Working knowledge?‑‑‑Little bit.

PN554

You'll see that, if you go to the table of contents, you'll see there's a schedule A. Just on the page two, the table of contents?‑‑‑Yes.

PN555

Do you have that?‑‑‑Yes.

PN556

You'll see there that, when we come to it, that schedule A deals with production and engineering employees?‑‑‑Yes, I can see that.

PN557

Schedule B deals with staff employees?‑‑‑Yes.

PN558

Schedule H deals with mine rescue service employees?‑‑‑Yes.

PN559

I'm only asking to focus upon schedule A, production engineering employees and can I ask you to turn to page 41 of the award?‑‑‑Sure.

PN560

Sorry, I'll take you to page 39 and you'll see schedule A so if you just know where we are in the document?‑‑‑Yes.

PN561

Do you have that?‑‑‑Yes.

PN562

You'll see at schedule A on page 39, it sets out A1, some preamble and principles?‑‑‑Yes.

PN563

At A2, some definitions?‑‑‑Yes.

PN564

At A3, advancement?‑‑‑Yes.

PN565

At A4, minimum rates?‑‑‑Yes.

PN566

A5, indicative competencies?‑‑‑Yes.

PN567

At A4, the minimum rates, you'll see that there are six classifications?‑‑‑Yes.

PN568

You'll see that there's no distinction made in those classifications about whether a mine worker is working at an open cut mine or an underground mine?‑‑‑Correct.

PN569

It certainly doesn't distinguish between a mine worker working in an underground mine by way of a longwall against a mine worker working in an underground mine by way of bord and pillar, does it?‑‑‑Correct, it does not.

PN570

Looking at the indicative competencies, which are at A5, do you see at A5.1 the award does distinguish the open cut mines indicative competencies from A2 the indicative competencies for an underground mine?‑‑‑Yes.

PN571

That distinction is reflected at A5, you see that?‑‑‑Yes.

PN572

Can I ask you to turn over to page 42, A5.2, which is underground mines, and you'll see that we're dealing here with the advanced competencies and you'll see the advance competencies that are listed, starting with face operations?‑‑‑Face operations, yes.

PN573

Going down to cross trade skilling?‑‑‑Correct.

PN574

You'll see that in the second line, there's a reference to both bord - I think it's a typo there, your Honour, you might need to correct that, being the panel head, but you'll see that presumably that's a reference to bord and pillar mining?‑‑‑That's correct, yes.

PN575

You'll see that two along is longwall?‑‑‑Yes.

PN576

It appears that for a mine worker to go from a mine worker to mine worker advanced, the advanced competencies don't distinguish a underground mine worker who's working in bord and pillar from the underground mine worker working in longwall. That's - - -

PN577

MR BROTHERSON: Well it's a very complex question to put to a witness who says he has some knowledge of the award - - -

PN578

MR WALKADEN: I'll withdraw it, your Honour.

PN579

MR BROTHERSON: - - - as to what the competencies - - -

PN580

THE SENIOR DEPUTY PRESIDENT: He's withdrawn the question.

PN581

MR WALKADEN: I'll withdraw the question, yes. Can we go back, Mr Sharma, to your first statement, sorry?‑‑‑Sure.

PN582

At paragraph 81, have you go that?‑‑‑Yes.

PN583

You'll see at paragraph 81 you compare the wage rates in the agreement to those in the award?‑‑‑Yes.

PN584

You'd agree, wouldn't you, that the award rate doesn't reflect a market rate?‑‑‑I agree, yes.

PN585

You're not going to get an underground mine worker to work at Russell Vale on the award and the NES are you, the national employment standards?‑‑‑Maybe not.

PN586

Well definitely not.

PN587

MR BROTHERSON: Well is that a question?

PN588

MR WALKADEN: Well that's what he said.

PN589

MR BROTHERSON: Well I mean the definitely not is a submission at best.

PN590

MR WALKADEN: It was a question, it was answered.

PN591

THE SENIOR DEPUTY PRESIDENT: Yes, yes. No, I'm interested in the answer.

PN592

MR BROTHERSON: No, the first part was answered. The second part possibly - - -

PN593

THE SENIOR DEPUTY PRESIDENT: He agreed that you're not going to - - -

PN594

MR WALKADEN: Well the company's engaged CAS Mining to work at Wongawilli?‑‑‑Yes.

PN595

MR BROTHERSON: Well I think you need to distinguish the company.

PN596

MR WALKADEN: Well Wongawilli Coal Pty Ltd presumably has engaged CAS Mining?‑‑‑Correct.

PN597

Wongawilli Coal Pty Ltd is a subsidiary of Wollongong Coal Limited, isn't it?‑‑‑Correct.

PN598

When I refer to the company, would it confuse you if I was referring to both Wollongong Coal Limited as well as Wongawilli Coal Pty Ltd?‑‑‑No, I think I can manage that.

PN599

It's clear, isn't it?‑‑‑Yes.

PN600

Thank you. The company has engaged CAS Mining to supply production engineering employees at the Wongawilli mine?‑‑‑That's correct.

PN601

Those CAS Mining employees, they're not just remunerated by reference to the award and the national employment standards, are they?‑‑‑No, they are not.

PN602

The employees of CAS Mining are not covered by an enterprise agreement, are they?‑‑‑Yes, they are not.

PN603

You're aware that the union is bargaining with CAS Mining for an agreement?‑‑‑I'm aware and I also read Mr Timbs' statement, so.

PN604

Yes, and the employees of CAS Mining at Wongawilli, they're engaged on a regular ongoing basis to work at Wongawilli?‑‑‑Yes, they are.

PN605

They're working to a fixed roster, aren't they?‑‑‑I'm not aware of the fixed roster or not but they are working on a regular shift.

PN606

When they're rostered to work, the employees of CAS Mining are expected to work, aren't they?‑‑‑Yes.

PN607

There's nothing infrequent or irregular about the working arrangements for the employees of CAS Mining at Wongawilli, is there?‑‑‑Not that I'm aware of.

PN608

The employees of CAS Mining, they're engaged and paid as casual employees, aren't they?‑‑‑I believe so.

PN609

In simple terms, would you agree that it's fair to describe those employees of CAS Mining as permanent casuals?‑‑‑I don't know - - -

PN610

MR BROTHERSON: Well I'm not sure what that term means?‑‑‑I don't know.

PN611

THE SENIOR DEPUTY PRESIDENT: Well especially at the moment. Well first of all, I'm not quite sure what a permanent casual is and I don't know that you - I'm not quite sure why you feel it's appropriate for this witness to answer those sort of questions.

PN612

MR WALKADEN: Well it's a matter that's dealt with in the applicant's submissions, your Honour.

PN613

THE SENIOR DEPUTY PRESIDENT: Well - - -

PN614

MR WALKADEN: I'll take you to them.

PN615

MR BROTHERSON: Well you won't find the phrase "permanent casuals" there.

PN616

MR WALKADEN: No, you won't find that phrase, that's true.

PN617

THE SENIOR DEPUTY PRESIDENT: Where are we - - -

PN618

MR WALKADEN: What you will find, your Honour, in the reply submissions of my friend, it's at paragraph 13(d).

PN619

THE SENIOR DEPUTY PRESIDENT: Sorry, where?

PN620

MR WALKADEN: My friend's reply submissions, paragraph 13(d).

PN621

THE SENIOR DEPUTY PRESIDENT: I don't have a 13(d). Submissions, sorry, I'm sorry, my mistake. Yes, sorry, I'm ‑ first statement. Hang on a sec. Right. I'm still not quite sure.

PN622

MR WALKADEN: Well it's the words after the comma, your Honour, that are going to be the subject of submission.

PN623

THE SENIOR DEPUTY PRESIDENT: Contract employees working at coal mining in the Illawarra on these terms and conditions and the agreement, and no claim that such arrangements are under law for all, right.

PN624

MR WALKADEN: Well there has been a claim that's been made and I propose to address that through this witness.

PN625

THE SENIOR DEPUTY PRESIDENT: All right.

PN626

MR BROTHERSON: Well the claim's not in the evidence as filed.

PN627

MR WALKADEN: Well it will be put to the witness.

PN628

MR BROTHERSON: That's what those submissions in reply and ‑ ‑ ‑

PN629

THE SENIOR DEPUTY PRESIDENT: I'm just

PN630

MR BROTHERSON: - - - deal with.

PN631

THE SENIOR DEPUTY PRESIDENT: Well - - -

PN632

MR BROTHERSON: It's neither the submissions of the union nor Mr Timbs' evidence.

PN633

MR WALKADEN: Well that's because - - -

PN634

MR BROTHERSON: Nor Mr Conkey's evidence.

PN635

MR WALKADEN: Well that's because the claim occurred after Mr Timbs' statement was prepared, your Honour.

PN636

THE SENIOR DEPUTY PRESIDENT: Are you referring to an actual claim? As in - - -

PN637

MR WALKADEN: I am.

PN638

THE SENIOR DEPUTY PRESIDENT: Well can you ask those - can you ask about that rather than for the sort of legal opinion of the witness.

PN639

MR WALKADEN: Well I won't use the phrase permanent casual. I think it's clear enough what everyone in the room would know what it means but I'll avoid controversy about that but you do say, your evidence was, Mr Sharma, that you'd accept that the CAS employees, to your knowledge, were engaged and paid as casuals?‑‑‑Yes.

PN640

Right, and returning to the award, are you aware that the award does not permit production and engineering employees to be engaged on a casual basis?‑‑‑I'm not aware of.

PN641

Can I draw your attention to clause 10.1(c) of the award. Sorry, 10.1(c) of the award?‑‑‑Yes.

PN642

You see at 10.1(c), the clause reads:

PN643

An employer may employ an employee in any classification including this award in any of the following types of employment

PN644

and (c):

PN645

In the case of the classifications in schedule B, staff employees, casual.

PN646

?‑‑‑Yes.

PN647

But you said you're unaware of that provision in the award?‑‑‑Yes, I'm not aware, so.

PN648

Can I hand the witness a document. You should have in front of you a letter from Mr Maher, the general president of the mining and energy division of the CFMMEU, which is addressed to Mr Sly(?) dated 25 September 2018?‑‑‑Yes.

PN649

Have you seen this letter before?‑‑‑Yes.

PN650

I see, and you've read it?‑‑‑Yes, I read it.

PN651

Has the company replied to Mr Maher?‑‑‑Not yet.

PN652

The company's had two weeks to reply?‑‑‑Yes.

PN653

Do you know whether the company's made a decision about whether it proposes to reply to Mr Maher?‑‑‑Still we are talking - taking legal opinion on it.

PN654

I see. Your Honour, I seek to tender the letter of Mr Maher dated 25 September 2018.

PN655

THE SENIOR DEPUTY PRESIDENT: The letter of 25 September from Tony Maher to the operations manager at Wongawilli Mine is exhibit 3.

EXHIBIT #3 LETTER FROM TONY MAHER TO OPERATIONS MANAGER, WONGAWILLI MINE DATED 25/09/2018

PN656

MR WALKADEN: Thank you, your Honour.

PN657

MR BROTHERSON: I should say, your Honour, I don't know that I could object beyond just saying this, that if my friend had intended to rely on this letter, given that there had been directions for the filing and serving of evidence, I think he should have actually provided formal notice to the legal representatives for my instructing solicitors in advance of today of that case.

PN658

THE SENIOR DEPUTY PRESIDENT: Yes. Is there any reason why they weren't notified sooner that you were going to do this?

PN659

MR WALKADEN: Well I didn't believe the directions required me to do so, your Honour.

PN660

THE SENIOR DEPUTY PRESIDENT: Well you're directed to put on your evidence. I mean, this is obviously not - - -

PN661

MR WALKADEN: Well that's true.

PN662

THE SENIOR DEPUTY PRESIDENT: I mean, it's not - presumably this arose after the time for filing of evidence.

PN663

MR WALKADEN: Well - - -

PN664

THE SENIOR DEPUTY PRESIDENT: I can't remember whether they ‑ ‑ ‑

PN665

MR WALKADEN: - - - the directions required the union to file its material by 20 September 2018. Mr Maher's letter is dated 25 September 2018. The witness has seen the letter, taken legal advice about the letter. It's hardly a revelation and I don't propose to ask any further questions about it, so I'm just content to rest on that basis.

PN666

THE SENIOR DEPUTY PRESIDENT: All right.

PN667

MR WALKADEN: As I say, it arose out of my friend's reply submissions. I've taken you to the paragraph.

PN668

THE SENIOR DEPUTY PRESIDENT: Yes, I see.

PN669

MR WALKADEN: Obviously I'll make a submission about that in due course.

PN670

THE SENIOR DEPUTY PRESIDENT: Yes, okay, fine.

PN671

MR WALKADEN: Thank you.

PN672

THE SENIOR DEPUTY PRESIDENT: Sorry, just for my benefit, what's your relationship to Wongawilli mine?‑‑‑Wongawilli mine is ultimate wholly owned subsidiary - - -

PN673

I mean your - yes, I understand the company's relationship but you - - -?‑‑‑I'm company secretary.

PN674

Do you have responsibility for Wongawilli mine as well?‑‑‑I'm company secretary of Wongawilli mine.

PN675

Fine, thanks.

PN676

MR WALKADEN: Can we go, Mr Sharma, to paragraph 96(a) of your first statement?‑‑‑Sure. Yes.

PN677

Do you have that?‑‑‑Yes.

PN678

At paragraph 96(a), you complain about clause 6.3(c) in the agreement which deals with fixed term employees?‑‑‑Correct.

PN679

In effect, you say look that's too restrictive because it restricts the company from engaging a fixed termer?‑‑‑Yes.

PN680

Et cetera. During the life of the agreement, how many fixed term production engineering employees were engaged by the company to work at the Russell Vale mine?‑‑‑I'm not aware and I can't - - -

PN681

None?‑‑‑I can't answer right now.

PN682

You don't know?‑‑‑I don't know, yes.

PN683

You've made a complaint in your statement and you didn't bother to check to see whether there were any fixed term employees - - -?‑‑‑No, we may need it in future.

PN684

Pardon?‑‑‑In future, we may need it.

PN685

But you didn't bother to check to see whether during the - - -

PN686

MR BROTHERSON: With great respect, what obligation was there on him to do it? He's asked this three times now. He's answered why he's put it in.

PN687

MR WALKADEN: Well, you've said a moment ago that you have replied to Mr Timbs' statement?‑‑‑Yes.

PN688

Presumably you read Mr Timbs' statement?‑‑‑Yes, I did.

PN689

You still have a copy of Mr Timbs' statement with you, don't you?‑‑‑Yes, it is with me.

PN690

Can I draw your attention to paragraph 42 of Mr Timbs' statement?‑‑‑Yes.

PN691

You'll see at paragraph 42 to 45, Mr Timbs addresses paragraph 96(a) of your first statement?‑‑‑Okay.

PN692

And in particular, I draw your attention to paragraph 44 of Mr Timbs' statement where he says, Mr Timbs says "I understand that Wollongong Coal have never employed a single fixed term employee under the agreement"?‑‑‑Correct.

PN693

Your evidence is that you read paragraph 44 of Mr Timbs' statement?‑‑‑Yes, I have read it, but again as I said, like it's not that what we have done in the past or whether we have used it in past but disclose could be restrictive in future.

PN694

So, in understanding the complaints that you've made about the agreement, you're not based upon the company's past experience, but an anticipation of what might arise in the future?‑‑‑Maybe.

PN695

I see. Of course the company doesn't employ any fixed term production engineering employees at Wongawilli, does it?‑‑‑I'm not aware at this stage.

PN696

Well, they don't. Because all production engineering employees are employed at CAS Mining. You know that, don't you?‑‑‑Say, what's that?

PN697

You know, don't you, that all production engineering employees at Wongawilli, are employees of CAS Mining. That's something you know?‑‑‑I can't confirm; I'm not aware.

PN698

You don't know that?‑‑‑I don't know.

PN699

You say that there's the possibility that Wollongong Coal, the company may employ some production engineering employees at the Wongawilli Mine, do you?‑‑‑As I said, I don't know whether there is any fixed or - - -

PN700

I'm not asking about fixed term. I'm saying employees.

PN701

THE SENIOR DEPUTY PRESIDENT: Can we - I'm sure he understands the situation. Can you move. I don't think this is very helpful.

PN702

MR WALKADEN: Okay. Has the company made a decision about whether it would - if approval was given, whether it would actually employ any fixed term employees at the Russell Vale Mine?‑‑‑I'm not aware of any decision made about it.

PN703

What about paragraph 96(b) of your first statement?‑‑‑Yes.

PN704

You'll see at paragraph 96(b), you complain about the provision in the agreement that provides for a 10 hour break unless there's a discussion between the mine management and the local check inspector?‑‑‑Yes.

PN705

During the life of the agreement, how many times did the company require a production engineering employee to work without a 10 hour break?‑‑‑I'm not aware.

PN706

How many times during the life of the agreement, did the company try to unsuccessfully contact the local check inspector?‑‑‑I'm not aware.

PN707

Will you accept that the complaint that you make at paragraph 96(b) of your first statement is more imagined than real?‑‑‑As I said, it may be required in future. But if you look at the situation, generally people, if they are asked to come back to work under less than 10 hours, that would be the situation when the company needs it in real need. If local inspector is not available, then that's where the issue is, so yes. That is what we have looked at. That is what my understanding is.

PN708

Would you accept that it's incredibly uncommon for a worker in the coal industry to work without a 10 hour break?

PN709

MR BROTHERSON: Well, that calls for a wide piece of knowledge that I'm not sure that the witness has.

PN710

THE SENIOR DEPUTY PRESIDENT: Well, he's worked in the industry for quite a while.

PN711

MR WALKADEN: He's worked in a staff role, your Honour. But nevertheless, it's something he should know.

PN712

THE SENIOR DEPUTY PRESIDENT: Well, if you don't know, you don't know. But I'll allow the question. Do you want to repeat the question?‑‑‑I'm not aware of it. I can't answer, sorry.

PN713

MR WALKADEN: I see. Now, could I just take you back Mr Sharma to your second statement, in particular paragraph 11(b). Second statement, sorry?‑‑‑Yes.

PN714

Do you have that?‑‑‑Yes.

PN715

Here, you're replying to Mr Timbs again?‑‑‑Yes.

PN716

Have you got Mr Timbs' statement with you?‑‑‑Yes.

PN717

Can I ask you to turn to paragraph 75 of Mr Timbs' statement? Do you have paragraph 75 Mr Sharma?‑‑‑Yes, I have it.

PN718

Can I draw your attention to the third sentence of paragraph 75 of Mr Timbs' statement which starts with "Since September 2015"?‑‑‑Yes.

PN719

And September 2015 being the date on which the final found of production engineering employees at the Russell Vale Mine were made redundant. It's not a trick question?‑‑‑Sorry.

PN720

September 2015?‑‑‑Yes, that's right.

PN721

Being when the last lot of production engineering employees were made redundant at the mine?‑‑‑Yes.

PN722

Just staying with the sentences at paragraph 75 of Mr Timbs' statement that start with since September 2015 and I'm just going on. "Wollongong Coal have had staff employees performing work that had been previously done by employees that were covered by the agreement". You agree with that, don't you?‑‑‑No, I don't agree with that.

PN723

Well, isn't that what you say at paragraph 11(b) of your second statement?‑‑‑No, what I understand that here, my understanding is for a mine to operate and produce. Since September 2015 the mine is put in care and maintenance so there is no work related to production of the mine in any form. There may be some similar work done by people currently employed by the company, but they are incidental to keep the mine in care and maintenance and resolve the assets. So that's where the distinction is.

PN724

I see what you say at paragraph 11(b) about the work being incidental. I'm not going to ask you any questions about the frequency, whether it's all the time or incidental. But what I'm putting to you is at the first sentence of paragraph 11(b) of your second statement, you do seem to suggest that there are some tasks that since September 2015 have been done by staff and prior to September 2015, those tasks were done by production engineering employees.

PN725

MR BROTHERSON: Well, I think there are some very subtle distinction in paragraph 11(b) that my friend is overlooking when he puts that proposition. Those are in the case of the current employees tasked to when the mine was operating. He's left that part out and he's left out the part that people covered by the agreement as part of their mining work. It's not a matter of just saying they did this; they're doing that now. There's very clear distinction in what the witness had put in his statement that's been overlooked in the question.

PN726

MR WALKADEN: When the mine was operating, the example that Mr Timbs refers to at paragraph 75, and one of the examples that you refer to 11(b), is roof bolting?‑‑‑Yes.

PN727

Now, roof bolting is commonly done by a production and engineering employee, isn't it?‑‑‑Correct.

PN728

It's not a task that is commonly performed by a staff employee?‑‑‑Correct.

PN729

Prior to September 2015, the roof bolting was done by production engineering employees, correct?‑‑‑Correct, yes.

PN730

Since September 2015, roof bolting has been by staff, correct?‑‑‑Maybe.

PN731

What do you mean maybe? You say at paragraph 11(b) - - -

PN732

MR BROTHERSON: The witness is trying to answer.

PN733

WITNESS: See, what I'm trying to say is that there is the roof bolting required in order to product to operate the mine. Then there is the roof bolting required when in order to maintain the strata condition. They're two different things, that's what I understand.

PN734

MR WALKADEN: The purpose of the task is different, but the task remains the same, doesn't it?‑‑‑I can agree with that.

PN735

You're using the same tools?‑‑‑I can agree on that.

PN736

And the same materials to bolt the roof, aren't you?‑‑‑Yes, yes.

PN737

That task, prior to September 2015 was done by production engineering employees, wasn't it?‑‑‑Correct.

PN738

Since 2015 when required, it's been done by staff, hasn't it?‑‑‑I agree, yes.

PN739

Thank you. The same can be said about vehicle inspections, can't it?‑‑‑Sorry?

PN740

The same can be said about vehicle inspections, can't it?‑‑‑I cannot say that. I'm not aware, I'm not aware.

PN741

You don't know, do you? That's not within your knowledge?‑‑‑No, it's not within my knowledge.

PN742

It's the case, isn't it, that - and I'll just take you to paragraph 10(e) of your second statement, it is the case that in July 2018, some roof bolting was required to be performed at the Russell Vale mine?‑‑‑Yes.

PN743

You say it was emergency roof bolting; it was roof bolting nonetheless, wasn't it?‑‑‑It was roof bolting, yes.

PN744

You're aware that Mr Timbs has raised concerns with the company about that issue?‑‑‑Yes, I'm aware.

PN745

That's contained in his statement?‑‑‑Yes.

PN746

No doubt, you've had a look at the situation?‑‑‑Yes, I enquired it.

PN747

You can confirm, can't you that it was indeed employees of CAS Mining who performed that roof bolting?‑‑‑I think I have confirmed that in my statement, yes.

PN748

Wasn't there also another occasion when a staff employee performed roof bolting and required a chopper out of the mine because he injured himself?‑‑‑I'm not aware of it.

PN749

No. If I take you to paragraph 7 of your second statement, have you got that?‑‑‑Yes.

PN750

At paragraph 7 of your second statement, you're again responding to Mr Timbs' statement?‑‑‑Right.

PN751

At paragraph 64 to 66 of Mr Timbs' statement, if you've got that?‑‑‑Yes.

PN752

You'll see at paragraph 64 to 66 Mr Timbs is recounting paragraph 64, the company's failure to pay wages and superannuation to employees, and also some late payments of wages?‑‑‑Yes.

PN753

At paragraph 65, some unpaid tax liabilities to the ATO?‑‑‑Yes.

PN754

At paragraph 66, the issue of the rental fees and levies that we've already discussed?‑‑‑Yes.

PN755

At paragraph 7, first sentence, you acknowledge that those issues they were discussed. They were issues?‑‑‑Yes, they issues, yes.

PN756

Just focussing upon the failure to pay wages and I think Mr Timbs says at paragraph 64 that in early 2013, there were three occasions when wages were late?‑‑‑Yes.

PN757

Then goes on to say that most troubling, was a five or six week period in about September/October 2013 when employees performed work, but were simply not paid wages at all?‑‑‑Yes, it was five weeks, yes I recall that.

PN758

At the time, the company wasn't trading insolvent, was it?‑‑‑Directors at that time believed that they were able to arrange the funds needed.

PN759

The company - the directors took the view in this period of time that the company could meet its debts, it's liabilities when they were required?‑‑‑Directors believed that they would be able to arrange the funds when needed, yes.

PN760

But the directors or the company simply chose not to pay the workers in that five or six week period?‑‑‑It's not the case. That time there was a changeover happening. It is the right time, when (indistinct) the previous management and the majority controller were ready to agree to sell their majority stake in control to Jindal Steel and Power. 16 October 2013 was the date when that special general meeting was to be held to approve the transfer of the control. So, under that circumstances, it was directors' belief that if Jindal comes in, they will be able to put enough money in and those issues were resolved successfully after that.

PN761

Sure, but you accepted that the company at that time, wasn't trading insolvent. You've said that?‑‑‑I cannot answer that because as I said, that directors continued operation on a belief that the funds shall be coming to them.

PN762

I see, but the company, notwithstanding that belief in the directors, the company just didn't pay wages as it was required to do?‑‑‑No, the wages - the company didn't have the funds and that's the reason why the company had discussions with the union and we eventually - of course, we dragged this for five weeks the company was not able to pay the wages, but its intentions was to pay and all the employees were paid eventually after.

PN763

I see. And superannuation was unpaid for a very long period of time?‑‑‑That's right, but that was also paid in full with interest.

PN764

But was paid quite late, wasn't it?‑‑‑Yes.

PN765

MR BROTHERSON: What does quite late mean?

PN766

MR WALKADEN: How late?‑‑‑Around nine months subsequently.

PN767

As we've discussed, there's been a failure to pay tax to the Australian Tax Office?‑‑‑That's correct, yes.

PN768

We've discussed the issues in relation to the resource regulator?‑‑‑With the ATO - - -

PN769

MR BROTHERSON: The witness needs to be allowed to answer.

PN770

MR WALKADEN: Okay?‑‑‑With ATO tax liabilities at that time, we discussed with the ATO, we made a payment plan and that payment plan was fulfilled and ATO was fully paid with interest eventually.

PN771

Other than the workers, the ATO and the resource regulator, are there any other institutions where the company just simply didn't pay the bill when required?‑‑‑In that period of time?

PN772

No, during - since 2011, since the commencement of the agreement?‑‑‑There may be cases, yes.

PN773

I see, can you recall?‑‑‑

PN774

MR BROTHERSON: Well, with great respect, I'm not sure what the relevance of this is. I mean, it's a bit like asking any witness, have you paid your water bill on time.

PN775

MR WALKADEN: It's a bit more serious than that.

PN776

MR BROTHERSON: Of course, I'm not trying to trivialise it, but the company has made an acknowledgement of a difficult history. It's part of its case. It's had a difficult history, it still does. I'm not sure what the relevance of asking or digging what other bill didn't you pay on time really is. Because we're not trying to deny the fact that there's been a difficult history, it's acknowledged in the evidence.

PN777

THE SENIOR DEPUTY PRESIDENT: Mr Walkaden.

PN778

MR WALKADEN: I'll put it this way then. You accept, without going through ins and outs of the bills that haven't been paid, you accept don't you, that Wollongong Coal doesn't have a very good track record of meeting its obligations?‑‑‑Financial payment obligations, yes.

PN779

We've already discussed that the company is operating under strict cost control?‑‑‑It is, yes.

PN780

You accept, don't you, that should the agreement be terminated and approval be given, capital investment made and mining resuming at Russell Vale, that the mine workers here engaged, whether they're permanent or contractors, they'll be on inferior terms and conditions to those set out in the agreement?‑‑‑

PN781

MR BROTHERSON: Objection - I don't think there's - well I'm not sure how it's put that there's been that admission.

PN782

MR WALKADEN: Well there hasn't; I'm putting it to him to answer the question. The whole point of this application, is to operate the mine at a lower cost and if increased, managerial prerogative, correct?‑‑‑If it can, yes.

PN783

If it can. You accept, don't you, it's entirely possible that should approval be given, that capital investment be made and mining resumes at the Russell Vale Mine, but the mine workers who are engaged to work at that pit, will be on balance, inferior terms and conditions than those set out in the agreement?‑‑‑I cannot confirm whether that will be the case, because I don't know who will be mining and what conditions and what will be the prices at that time, market price. It depends on a lot of factors.

PN784

I see, but certainly the company's preference is to reduce the cost base of the mine?‑‑‑If it can, yes.

PN785

If it can. In all likelihood, that would be the company's bargaining position with whoever they're bargaining with if they do have employees or whether they're negotiating with the contractor. You'd say well look, the agreement requires us to pay whatever the hourly rate is, $37 odd dollars whatever it may well be. We only want to pay $34, for example.

PN786

MR BROTHERSON: Well, I don't understand and I don't think the witness could understand what he means by the agreement says $37 and you're saying to a contractor you've got to pay something like that. Follow the question, really.

PN787

MR WALKADEN: The ultimate outcome, the desired outcome for the company if mining resumes at Russell Vale, is to do so with less labour costs and more managerial prerogative?‑‑‑Less overall costs you can say.

PN788

Can we go back to the annual report, SS1, page 40?‑‑‑Yes.

PN789

Can we just focus upon - you remember at page 40 I took you to the remuneration paid to the key personnel for FY18 as well as FY17?‑‑‑Yes.

PN790

I want to just focus upon your remuneration in FY17, do you see that?‑‑‑Yes.

PN791

In FY17, you received a cash salary of $185,309?‑‑‑Correct.

PN792

Plus a cash bonus?‑‑‑Correct.

PN793

That appears to have been a late payment?‑‑‑That's right, yes.

PN794

Superannuation, see that, long service leave?‑‑‑Yes.

PN795

Termination benefit?‑‑‑Yes.

PN796

There's also a note two, that says in FY17 that you resigned from a permanent role, but were continuing as a casual?‑‑‑Yes.

PN797

In FY17, you ceased permanent employment and you were paid redundancy presumably?‑‑‑Yes.

PN798

As well as your leave entitlements?‑‑‑Yes.

PN799

Your total remuneration for the year was over half a million dollars?‑‑‑Correct.

PN800

What was the time gap between ceasing permanent employment to starting up as a casual?‑‑‑Roughly around a month.

PN801

A month. You came back and you've been doing the exact same job?‑‑‑A little less, but yes, I'm doing the company secretary role as my primary role, yes.

PN802

There's no real change in the substance to your role, is there?‑‑‑No, initially I started with only two to three days in a week, and I left the business for a personal reason which I don't want to disclose here.

PN803

That's fine?‑‑‑But yes, it was for a personal reason and I had intention to do something else, but in a month's time, I realised that it can't be done and at that time the company requested me and approached me if I can help them for a few months on a casual basis while I'm pursuing something else that I wanted to do. I said that's fine and we agreed on two to three days in a week and after three, four, five months I think - I don't remember the exact time. Maybe four or five months, I realised that there's something else I'm pursuing is not worthwhile and the company also needed me to continue. We had this mutual understanding and I'm still on casual basis, but I'm working full time. But my role is the same.

PN804

But in substance the role is the same?‑‑‑Yes.

PN805

There was a gap of about a month from being made redundant to coming back and doing in substance the same job?‑‑‑Yes, correct, but as I said, intention was this to be stayed for only a couple of months and then I was supposed to leave and go somewhere else, but things did not work out for me.

PN806

Are you back full time?‑‑‑I'm working five days, but I'm still on casual.

PN807

Do you get paid holidays?‑‑‑No.

PN808

The difference in your total remuneration has increased from FY17 to FY18, hasn't it?‑‑‑That depends on two factors. One is that I don't get annual leave, sick leave or any other benefit because I'm casual, so there is a leave loading and then also depends on the number of days if I'm doing. So if you compare I don't have the exact dates, but if I'm doing more - like if I take less off than I do, I might get paid less, but my daily rate is fixed.

PN809

It says that you resigned?‑‑‑Yes.

PN810

So you resigned but you were still paid redundancy?‑‑‑Yes.

PN811

I see?‑‑‑Redundancy, what do you mean by redundancy? This is my entitlements.

PN812

Yes?‑‑‑When we say redundancy, I didn't get anything extra like three weeks per year or anything. Whatever my termination benefit should be, this is my termination thing.

PN813

You were paid as per your contract?‑‑‑As per the contract, yes.

PN814

But in circumstances where you resigned your employment.

PN815

THE SENIOR DEPUTY PRESIDENT: Well, look I don't know whether we really need to pursue this and I don't want to start looking at his contract and stuff and I don't really think that's right.

PN816

MR BROTHERSON: I think there's a real issue with the relevance. It's a publicly listed company that needs a company secretary, I mean.

PN817

MR WALKADEN: That's fine, but I suppose my issue, your Honour, is it doesn't appear to be entirely consistent with keeping costs to a minimum in circumstances where an employee who resigns is paid redundancy and then a month later - - -

PN818

THE SENIOR DEPUTY PRESIDENT: Well, we don't know what his contract provided and I don't really - I mean, for all I know his contract it was an obligation under this contract, but I don't really want to start looking at his contract and working out whether they - - -

PN819

WITNESS: There was no redundancy.

PN820

MR BROTHERSON: Did he quality for that? I mean he answered yes to redundancy, but then explained that he didn't get a package.

PN821

THE SENIOR DEPUTY PRESIDENT: Yes, sure I understand.

PN822

WITNESS: No, sorry I didn't understand when redundancy means - - -

PN823

THE SENIOR DEPUTY PRESIDENT: I understand where you're going, but I think we've gone far enough.

PN824

MR WALKADEN: Your Honour, can I just ask your indulgence to just close the loop on that termination benefit. I think my friend is just in some doubt about the witness' answer on that point.

PN825

THE SENIOR DEPUTY PRESIDENT: Well, I don't know that I care. It depends what his contract says. His contract might have said at the end of your contract, you get paid this much money - I don't know, I don't really want to know.

PN826

MR WALKADEN: Well your Honour, I'll rest on that basis, I'm not going to push against a gale force wind I've got nothing further.

PN827

THE SENIOR DEPUTY PRESIDENT: Thanks very much. So, how long do you think you'll be in re-examination?

PN828

MR BROTHERSON: I would think 10 or so minutes.

PN829

THE SENIOR DEPUTY PRESIDENT: All right.

RE-EXAMINATION BY MR BROTHERSON牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� [12.41 PM]

PN830

MR BROTHERSON: Mr Sharma, you've been asked a lot of questions over quite a long period of time, but can I cast your mind back to early on in the cross-examination and you were asked questions about efforts for the company to be profitable and you referred to the fact that cost per tonne matters?‑‑‑Yes.

PN831

What impacts on the cost per tonne for the company?‑‑‑Basically, how much - what total cost of the business is, what says how much we are able to produce is the cost per tonne. The factors which include are company's finance cost, provisional cost, labour cost, all the fixed employment cost, everything.

PN832

When you were asked further questions about the termination of the agreement, does it impact on the viability of the company, what does it do though to the cost per tonne question?‑‑‑Basically, let's take an example here. If you are able to source labour which is at a better rate than what the AE is enforcing, then our cost per tonne does affect.

PN833

Have you done any sampling as to what that impact could be?‑‑‑I'm not aware of data, but I think some analysts must have done it. So, I'm not aware of.

PN834

You were taken quite extensively to the annual report?‑‑‑Yes.

PN835

Can I ask you go to go that which starts at page 18 of your statement. My friend took you to page 58 and drew your attention to two bullet points. Do you recall those?‑‑‑Yes, I do recall.

PN836

That were identified as being or having contributed to the current adverse performance of the consolidated entity, was mainly due to - what other factors, besides those two factors contributed to the adverse performance?‑‑‑See, we need to look at all of the factors basically. Wollongong was in care and maintenance for quite a long time, so that was also another factor. So Delta only started for a brief period and they shut down. So our financial cost, because we have to continue keep borrowing funds and we have to service the debt. So all those factors have totally combined together and contributed towards the loss of $73 million.

***牋牋牋� SANJAY SHARMA牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 RXN MR BROTHERSON

PN837

Then my friend didn't take you further after those two bullet points that are identified as the main contributors. It says "nevertheless, the directors considered the consolidated entity to be a going concern on the basis of the following", and it sets out a number of factors. One of those factors is cost control. Could I ask you to just explain to the Commission some of the efforts that are going into that issue of cost control to keep the company as a going concern?‑‑‑See, the company is quite mindful that we are not operating profitably, number one. Number two, we are relying heavily on - solely on Jindal to keep finding us. So, any expenses we are incurring, we look at very seriously that what we need to do and if a particular thing is required and if it can be sourced at cheaper price and all the measured contracts, all the rates with suppliers and everything have been - we have been constantly and continuously negotiating to get the better rate so we can reduce the cost per tonne, or our cost to the business to make this company viable in the future.

PN838

If I can then take you back to page 33 where my friend took you to the section on matters subsequent to the end of the financial year. These are in fact, can I put it to you, the matters that are largely addressed by the enforceable undertaking now?‑‑‑Yes.

PN839

In terms of these major payments that needed to be dealt with, what's the company's current position in respect to the undertaking, the ATO?‑‑‑See, we have an arrangement with ATO and that was not - I just want to make sure that - in my previous statement I did mention that there was a time when the company had an outstanding with the ATO which we made a payment arrangement. We paid it before the time of the payment period so it was fully done. This particular current liability I have mentioned is related to 2010 and 2015 period; it is quite old. ATO came and audited us. Their view was different to our view and eventually they tried to impose almost $10 million on the business. But we managed to defend $4 million off it, but $6 million was - so we have arranged a payment plan with ATO and to date, this payment plan is adhered to, it's in compliance. Similarly with the undertaking - all the terms of the undertaking, we are in compliance with the undertaking given to the Department of Planning and Environment.

PN840

To the extent that Wongawilli is currently operational and that at some point in the future, Russell Vale could become operational, what do those arrangements that you've just mentioned with the ATO and the enforceable undertaking, what do they mean for the cost per tonne?‑‑‑Sorry, again.

PN841

What impact do they have on the cost structure on an ongoing basis on the company?‑‑‑These are like commitments. We understand these are our obligation with the Department of Planning and Environment and the company is making sure that we pay on time and this undertaking goes for five years, so if you are in breach we will be in trouble for sure. So, we are taking extra care on that one. The ATO's liability was one off, that will be paid off by the time. If Russell Vale and Wongawilli both start producing and our cost per tonne is at a reasonable price and we are able to make money, then all these payment arrangements will be much easier for us to comply with and we don't have to rely on others to fund us.

PN842

I just want to - - -

PN843

THE SENIOR DEPUTY PRESIDENT: I'm just a little bit confused - I mean, you haven't - you're not able to put a figure on what you - you talk about a more reasonable cost, but you can't put a figure on what that would be? You don't have a number, it sounds like?‑‑‑No, at this stage, no. Because see, depending upon - - -

PN844

I'm not quite sure is at what point, what change would you need to happen for you to be financially in a continuing system to be financially viable then in an ongoing way. I don't know how much change there would need to be?‑‑‑I understand your question, your Honour. I just want to explain that it's a bit of moving factors there. One is how much you are able to produce, what is the coal price.

PN845

It seems hard to believe that you wouldn't have tried to work that out though?‑‑‑No, no, no, we have worked out, but again, as I said, like there was a time when we look at the coal price is it's $200 we look at that. If you produce 72,000 tonne in (indistinct) we should be able to meet our operating expenses and other expenses. But when the coal price goes up then we might be able to do it within 70. So, keeping the cost factor down helps us to become viable quicker.

PN846

I'm sure that's true as a generalised proposition?‑‑‑Generalised, yes.

PN847

It's just that there's no - it's all very, if I can put it this way, it's very vague. I mean, obviously the lower the costs, the more financially successful the company is, I suppose, all other things being equal. But that's just some basic logic. But you don't seem to be able to put any figures on this. How much do you need to reduce your costs by to be - on various assumptions about what the coal price is or other, or interest rates or - - -?‑‑‑We have done some analysis, but as I said like, I have not looked at those more in detail and there is no detail and that this is the price we need to lock it in, because there are certain price we can control and then there are certain costs we can't control as well, so.

PN848

MR BROTHERSON: Can I perhaps, just in following on from what his Honour has just asked you. Back on page 59 of the annual report, perhaps I was remiss in not asking you this a moment ago. Under the heading cost control, you say that - or the report says, that the company continues to operate within a strict budgeted and cost controlled regime. Can you perhaps explain further what that means and in a sense of trying to run the company, what that means, what it looks like on a day by day basis?‑‑‑Basically, as I said like we don't have a luxury of sending the notice to Jindal and get the funds straight away, no. So what we do is, we have to actually demonstrate that what our operating - all our expenses is, and we are constantly asked to reduce it as much we can so we have to look at what are the activities we need to do today, we can't avoid. What are the activities we can avoid for a short period of time, or long period of time? All those activities are done on day to day basis and that's where we are spending time. Control is basically, before spending any dollar, there are certain checks and controls that need to be go through. So before we agree on incurring or committing any expenses, we have to convince our management that this is a must, it's required now and all those. So this means it's hard to explain unless I start explaining in one way one point.

PN849

THE SENIOR DEPUTY PRESIDENT: Can I just ask - the sentence above that, where you say with expected production at current prices, the company is expected to generate sufficient revenues to meet its own costs by the end of financial year 2018. That's presumably only referring to Wongawilli, isn't it? You're saying that if you were able to - when you produced this report, if you were able to produce at Wongawilli at the prices that were then prevailing, you should be at least breaking even by the end of financial year 2018. That's what that means?‑‑‑That's right, because - - -

PN850

That's not about - I mean that's not making any assumptions about Russell is it?‑‑‑No, at this stage we were talking about - yes we are talking about Wongawilli provisional cost and also second was that we anticipated that we would be able to produce 800 somewhat thousand tonnes and we only produce 25 per cent of that in that year.

PN851

Yes, but this is Wongawilli?‑‑‑That's right.

PN852

But you're saying - just to be clear. I think I am clear, but you're saying - that sentence is saying just talking about Wongawilli?‑‑‑Wongawilli and Russell Vale as well.

PN853

Is it assuming - this is to the end of financial year 2018?

PN854

MR BROTHERSON: Financial year 2019 perhaps, is it?

PN855

THE SENIOR DEPUTY PRESIDENT: No, no, I'm looking at the sentence above the heading Cost Control which is talking about the Wongawilli colliery, but just to be clear are you saying that - I appreciate that one of your problems in the last financial year was that Wongawilli - you had all these problems at Wongawilli and it was closed for a lot of the year?‑‑‑That's right.

PN856

So you didn't get its full output. But with the recovery in prices and with the - assuming you can get a full year's production out of Wongawilli?‑‑‑Yes.

PN857

You're saying that the company will be kind of breaking even, you say meeting your costs by the end of financial year 2018?‑‑‑That's what we say.

PN858

You still think that's the case? This is a few months old this report; you still think that's the case?‑‑‑We still think that's the case, but we have slacked behind the production.

PN859

Thanks very much.

PN860

MR BROTHERSON: To what extent does that position that his Honour's just been asking about, depend on the next section headed Cost Control, to be able to meet those targets or meet the costs by end of financial year 2018? How important is the cost control section to that?‑‑‑It is quite important.

PN861

Can you elaborate on that?‑‑‑It is important because as I think I've already explained, that we are not making money. So, in order to keep continuing, getting the continuous support, we have to make sure that we can bring the cost down per tonne to a reasonable level where we can start making - if not making money, at least we can start operating at break even point where Jindal can see some future - at least we can look at some future is there and they continue supporting us.

PN862

You will recall you were taken to some questions about board and killer operation?‑‑‑Yes.

PN863

You were also, as part of that reference to the other four main mines that are operating in the southern region, do you recall a series of questions around that?‑‑‑Yes, I do recall that, yes.

PN864

You answered that another issue for the company is that it sells unwashed coal?‑‑‑Correct.

PN865

Could you explain to the Commission what the effect of that is?‑‑‑Yes. Basically, because we don't have a washing facility, what we are required is, we sell and export unwashed coal so we don't get the full price of the washed coal, so we only get the discounted price and if you take a rough example of say 45 per cent discounted, so 55 per cent of the benchmark price, that 45 per cent is to basically accommodate the rejects, washing coal costs additional washing cost incurred by the buyer and shipping cost of the waste rejects and all those things. Because we are selling unwashed coal, we are the only coal selling unwashed coal, we have a limited - means we can't just go on open market like BHP and all the washed coal. So there is some limited market in which to operate.

PN866

You were asked a question about - to the extent that you are a competitor to those other four mines and you said well, to an extent, or words to that effect?‑‑‑To what extent to you see yourself as a competitor to those other four mines?‑‑‑Basically, we are selling similar thing. I won't say similar product, because ours is unwashed and there's is washed and there's a big difference. But in that way we have no competition. So I accept that we are in the same industry, same region and same quality once our product is washed, so yes, I accepted that they are our competition.

PN867

To what extent is scale an issue?‑‑‑

PN868

MR WALKADEN: Well I'm going to object, your Honour. How does this arise or clarify any questions I asked? My friend is basically saying if this as the topic and we're going to go open slather and just - - -

PN869

MR BROTHERSON: No - - -

PN870

MR WALKADEN: Can I finish my objection?

PN871

MR BROTHERSON: I thought you had actually finished.

PN872

THE SENIOR DEPUTY PRESIDENT: You haven't finished, okay, sorry.

PN873

MR WALKADEN: My friend is basically saying look, you know you were asked a question on this topic and now I'm going to basically examine you upon a whole bunch of things that arise out of that topic. My submission is of course appropriate for matters arising or points of clarification, but not to conduct a wide ranging investigation about matters that were contained in the annexure to the witness' own statement. Whatever Mr Sharma wanted to say about the annual report, explain further points et cetera, it could have been done in his first statement, which is where the document originated from.

PN874

THE SENIOR DEPUTY PRESIDENT: Yes, I'm not - at the moment I'm not concerned that it's strayed unacceptably.

PN875

MR BROTHERSON: I think if that's the case, and with 60 seconds to one o'clock.

PN876

THE SENIOR DEPUTY PRESIDENT: Well I'm going to have to go past one o'clock - I'll be finished.

PN877

MR BROTHERSON: I think your Honour I'm happy to finish the re-examination at that point.

<THE WITNESS WITHDREW牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� [12.58 PM]

PN878

MR WALKADEN: Your Honour, I'm going to clarify what I said at the outset about the scope of the agreement. I accept that the agreement only applies to production engineering employees.

PN879

THE SENIOR DEPUTY PRESIDENT: Right, yes.

PN880

MR WALKADEN: So, the issues about eligibility, having to canvass the staff and deputies don't arise, I was wrong in making that submission.

PN881

THE SENIOR DEPUTY PRESIDENT: So, does that mean, just to be clear, I mean there's some evidence, uncontested evidence that some of the staff do some things and the evidence is that it's incidental. They're not doing it on a major - sorry?

PN882

MR WALKADEN: I didn't challenge Mr Sharman on that.

PN883

THE SENIOR DEPUTY PRESIDENT: So, but do you - I mean I guess it's not a question of - - -

PN884

MR WALKADEN: We're not going to say in submissions that there's an employee who's still covered by this document because he's working at Russell Vale.

PN885

THE SENIOR DEPUTY PRESIDENT: Yes, good, okay. Thank you.

PN886

MR BROTHERSON: Well that perhaps does raise one other issue and I'll just raise it and perhaps we can explore it further after lunch, but that does go to the issues raised by Mr Timbs. I think it's annexures 8 and 9 of his statement where he raises a question about what the contractors that came in to do some roof bolting should have been paid.

PN887

THE SENIOR DEPUTY PRESIDENT: But do we really need to get into that?

PN888

MR BROTHERSON: Well, I was looking to see whether my friend wanted to be - - -

PN889

THE SENIOR DEPUTY PRESIDENT: Well, you mean the suggestion that they should be - I haven't actually read Mr Timbs' statement fully. Is the suggestion somehow that they should actually - that they technically came within the purview of the agreement?

PN890

MR BROTHERSON: No, what we're saying and I don't think it's an issue that you need to concern yourself in determining the matter, but what we say is this. For instance you heard some evidence that there were two employees of CAS Mining who were on the Russell Vale site doing roof bolting work.

PN891

THE SENIOR DEPUTY PRESIDENT: Yes, yes.

PN892

MR BROTHERSON: Now we say an application of clause 24 they should have been paid as per the terms in the agreement.

PN893

THE SENIOR DEPUTY PRESIDENT: Is that relevant to what I need to - - -

PN894

MR BROTHERSON: I don't think so.

PN895

THE SENIOR DEPUTY PRESIDENT: So, can we just not - I don't think we need to cross-examine. Can we have an agreement that it's not necessary to cross-examine because I'm not going to be basing any decision in this matter on that evidence? Is that - I just want to know.

PN896

MR BROTHERSON: I think it comes to the question of 226(b) and the question of is it appropriate in all the circumstances. One issue for the company of course would be that it doesn't want to get tied up in arguments by having this agreement still sit there as to what it should or shouldn't have to do with the contractors.

PN897

THE SENIOR DEPUTY PRESIDENT: Sure.

PN898

MR BROTHERSON: To that extent, I'm not quite prepared to say I'm prepared to accept your Honour's proposition we don't go there.

PN899

THE SENIOR DEPUTY PRESIDENT: Fine, fine.

PN900

MR BROTHERSON: I'd be happy if my friend wants to withdraw that that could be the case, and then we don't need to have it. But I think if it sits there, it's certainly part of our case that these are things that should no longer be the cause of disruption.

PN901

MR WALKADEN: I'm not prepared to withdraw it. I hope my position is clear enough on that point.

PN902

THE SENIOR DEPUTY PRESIDENT: But then you want that to be confused?

PN903

MR WALKADEN: I think I'll rest that, your Honour.

PN904

THE SENIOR DEPUTY PRESIDENT: Well, we'll adjourn till two o'clock.

LUNCHEON ADJOURNMENT牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 [1.02 PM]

RESUMED牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 [2.03 PM]

PN905

THE SENIOR DEPUTY PRESIDENT: So, Mr Brotherson.

PN906

MR BROTHERSON: I think I probably should have added before lunch the ending of the re-examination of Mr Sharma who's also the completion of the company's evidence.

PN907

THE SENIOR DEPUTY PRESIDENT: Yes, I had assumed that, yes.

PN908

MR WALKADEN: Your Honour, I don't propose to make an opening submission. I rely upon our written outline. We have three witnesses, two of those witnesses are not required for cross-examination.

PN909

THE SENIOR DEPUTY PRESIDENT: All right.

PN910

MR WALKADEN: I might deal with the witness statement of Dean Thomas Conkey, which is dated 20 September 2018 and seek to tender that statement, your Honour.

PN911

THE SENIOR DEPUTY PRESIDENT: Mr Conkey's statement is exhibit four.

EXHIBIT #4 WITNESS STATEMENT OF DEAN THOMAS CONKEY DATED 20/09/2018

PN912

MR WALKADEN: I think it is.

PN913

MR BROTHERSON: I should just elaborate, your Honour, when we've said we don't require them for cross-examination, we do make the point it's a statement and we reserve our rights to argue as to weight of anything that's said.

PN914

THE SENIOR DEPUTY PRESIDENT: Right, yes.

PN915

MR BROTHERSON: We've taken the view there's no utility in having him come for questioning.

PN916

THE SENIOR DEPUTY PRESIDENT: And there's Mr Colley.

PN917

MR WALKADEN: Yes, and the second statement we seek to tender is the witness statement of Peter Colley which is dated 18 September 2018.

PN918

THE SENIOR DEPUTY PRESIDENT: Mr Colley statement is exhibit 5.

EXHIBIT #5 WITNESS STATEMENT OF PETER COLLEY WHICH IS DATED 18/09/2018

PN919

MR BROTHERSON: There was a particular issue with Mr Colley's statement which again, in the interests of allowing the matter to move efficiently, we haven't required him for cross-examination. It relates to paragraph 11 of the statement. Rather than require Mr Colley to come in to deal with a small number of questions, I understand that my friend will agree that the evidence of Mr Colley, where it says "with very few exceptions, almost all companies operating coal mines in Australia are making healthy profits". There's no assertion that Wollongong Coal is making a healthy profit.

PN920

THE SENIOR DEPUTY PRESIDENT: No, that would have to be one of the exceptions, I think is the implication.

PN921

MR BROTHERSON: On the basis that that was understood, we didn't require him.

PN922

THE SENIOR DEPUTY PRESIDENT: That's pretty clear, isn't it.

PN923

MR WALKADEN: That's a consent position.

PN924

THE SENIOR DEPUTY PRESIDENT: I don't think anyone thinks they're making lots of money - at the moment anyway.

PN925

MR WALKADEN: Yes, and with that said, our third witness is Mr Timbs who is here and I formally call Mr Timbs.

PN926

THE ASSOCIATE: Please state your full name and address.

PN927

MR TIMBS: Robert John Timbs, (address supplied).

<ROBERT JOHN TIMBS, AFFIRMED牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� [2.05 PM]

EXAMINATION-IN-CHIEF BY MR WALKADEN牋牋牋牋牋牋牋牋牋牋牋牋 [2.05 PM]

PN928

MR WALKADEN: Thank you. Could you please state your full name and address for the record, sir?‑‑‑Robert John Timbs, (address supplied).

PN929

Thank you, and Mr Timbs have you prepared a witness statement in this matter?‑‑‑I have.

PN930

Do you have it with you?‑‑‑I do.

PN931

Does it contain 77 paragraphs?‑‑‑Yes, it does.

PN932

And a number of annexures, the first annexure being RT1 which is found on page 22?‑‑‑Yes.

PN933

The final annexure RT9 which starts on page 233?‑‑‑Yes.

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PN934

And goes to page 236?‑‑‑That's correct.

PN935

Do you say the statement is true and correct to the best of your knowledge and belief?‑‑‑I do.

PN936

Your Honour, I seek to tender the witness statement of Robert Timbs dated 20 September 2018.

PN937

THE SENIOR DEPUTY PRESIDENT: Mr Timbs' statement is exhibit 6.

EXHIBIT #6 WITNESS STATEMENT OF ROBERT TIMBS DATED 20/09/2018

PN938

MR WALKADEN: That's the evidence of this witness.

PN939

THE SENIOR DEPUTY PRESIDENT: Thanks. Mr Brotherson.

CROSS-EXAMINATION BY MR BROTHERSON牋牋牋牋牋牋牋牋牋牋牋牋牋 [2.07 PM]

PN940

MR BROTHERSON: Mr Timbs, you are aware of course, that there's been no mining at the Russell Vale Colliery since September of 2015?‑‑‑Yes, that's correct; I'm aware of that.

PN941

You're aware at present that Wollongong Coal doesn't even have approval to undertake mining at that mine site?‑‑‑I'm not aware of that. I believe first workings they still had approval and not longwall extraction.

PN942

Your understanding is that Wollongong Coal could, if it wished to, undertaking mining on that lease?‑‑‑That was my understanding, yes.

PN943

Mr Sharma's given evidence today that that's not the case?‑‑‑Hm-mm.

PN944

You've got no basis to challenge that, other than that was your belief?‑‑‑Not with me, no, I don't, no.

PN945

Proceeding on the basis that there is no such approval, if that approval was secured and if mining could recommence, you'd agree that that would be a good thing?‑‑‑Absolutely.

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PN946

And it would provide more opportunities for mine workers?‑‑‑Yes.

PN947

More opportunities for those who support the mining operation?‑‑‑Yes.

PN948

And the flow-on benefits to the community if that was all to occur?‑‑‑Yes.

PN949

You don't dispute that Wollongong Coal has had substantial financial difficulties over a number of years?‑‑‑No, I don't dispute that.

PN950

You'd agree with me that it's good, that as a company that could be able to reopen a mine site that it has, it's good that it's trying to reposition itself in order to be able to do so?‑‑‑It is good, but we have some concerns about how the mine may start back up.

PN951

Yes, but it's good that they might be in a position to at least get themselves to a stage where that could be done?‑‑‑Yes, look the union is never unhappy about coal mines operating.

PN952

At paragraph 76 of your statement, if I can go there, you make a claim that the commercial imperative on a company such as Wollongong Coal that supplies its coal presumably you say to its parent shareholder or largest shareholder, is not as great as it might be on other companies?‑‑‑That's right.

PN953

Now, you've seen in his evidence in reply, that Mr Sharma disputes that. You've seen that?‑‑‑Yes.

PN954

It's the case, isn't it, that that's simply a belief you have, but it's not really founded on any economic theory or understanding is it, or knowledge indeed, of how they do operate or sell?‑‑‑Well it is. I've worked with other mines that supply internally and you know, those operations have shared with me, look, we can operate at a higher cost than other mines so long as we supply the product cheaper than what we can buy it on the spot market or by contract.

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PN955

But the fact therefore is, that they have to be as at least competitive as their nearest competitor to be able to do it at a better price?‑‑‑I don't believe so. Most of the other competitors have to sell on the market. They have to make a profit. Whereas this company, and some other companies that I have worked for, supply internally. So, as I said to you, my understanding, my view and what has been shared with me from other operations that are in a similar situation to this mine, is that so long as they can supply it cheaper or at the same price, as what they can buy it on spot market or at contract, happy days.

PN956

A couple of questions I want to put to you about that. Firstly, you'll see Mr Sharma makes the point that from their production currently at Wongawilli, only 50 per cent of that goes to their internal customer if you wish to call them that, correct?‑‑‑I'm unaware of where it actually - - -

PN957

It's in his reply statement. Have you read that?‑‑‑Yes, what's very confusing in our industry is that there's a lot of our coal is sold several times on the way to the destination. I haven't, myself, looked into what holding companies they have. What they do as far as relieving their tax obligations and the like in transferring the coal from Australia to where it ends up.

PN958

Your view about the position of Wollongong Coal and its internal customer, is really based on what some other operator has told you and you think that probably all makes sense, correct?‑‑‑It just makes sense to what I believe was would anyone of sound mind, that you know, if they're supplying it to themselves and it costs them a little bit more to get it out of the ground, so long as it's not costing the more than what they can buy it for, it's got to be beneficial for them.

PN959

The spot price is a market price, isn't it?‑‑‑Yes.

PN960

It's what anybody can go onto the market and buy, correct?‑‑‑Yes.

PN961

So, to beat the spot price, you have to be ensuring that your costs and your production is as efficient as those that are setting the spot, or contributing to the setting of the spot price, don't you?‑‑‑No, I think the question that you put to me was that they have to be as reliable and cost effective as other mines that sell on the market. What I've simply said to you is that it's my belief that that's not the case and I've explained why.

PN962

You were involved in negotiating the agreement that's the subject of these proceedings?‑‑‑Yes.

PN963

You accept that in 2011 when those negotiations were under way the coal industry was, for want of a description, in a buoyant phase?‑‑‑Yes, it was, yes.

PN964

High prices, expectations of profits of coal companies, correct?‑‑‑Not as high as what they got, but I believe they were turning some profits, yes.

***牋牋牋� ROBERT JOHN TIMBS牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 XXN MR BROTHERSON

PN965

You will recall that at the time that the agreement was negotiated in 2011, Wollongong Coal was looking at a significant expansion at Russell Vale?‑‑‑Yes, from memory, yes.

PN966

You may have heard the term, it had a plan called its underground expansion program, where it was looking to significantly expand its level of production at Russell Vale?‑‑‑Yes.

PN967

Because at that time, up until then, it had been working on a bord and pillar operation?‑‑‑No.

PN968

It was moved?‑‑‑Sorry, in 2011 when it was negotiated, yes.

PN969

That's right, yes. It was thinking or looking, subject to the underground expansion program to moving in stages to a longwall program?‑‑‑Yes.

PN970

That movement to longwall programming that was in the air at the time of negotiating the 2011 agreement was going to see production substantially increased if it went ahead, correct?‑‑‑Yes.

PN971

Mr Sharma quotes figures that under its bord and pillar operation and moving into longwall in 2011, it was producing just over 400,000 tonnes per annum?‑‑‑If that's what it is, yes. I don't know.

PN972

Which makes it a relatively small scale coal mine?‑‑‑Well, I believe it might have been a smaller scale mine, but the manning was still up there, yes.

PN973

But in terms of scale of production, compared to say some of the other mines I've referred to?‑‑‑Compared to some of the other mines in town, yes.

PN974

The underground expansion program was going to see that multiply many times up to 3 million tonnes. Do you recall that figure?‑‑‑Yes, I do, yes.

PN975

That was a substantial expansion, you'd agree?‑‑‑Yes.

PN976

It was going to involve that move from bord and pillar which you describe even today as an uncommon older style form of mining?‑‑‑I haven't explained it in that circumstances today.

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PN977

THE SENIOR DEPUTY PRESIDENT: In your statement.

PN978

MR BROTHERSON: In your statement?‑‑‑Sorry, yes, yes.

PN979

So sorry, when I say you've said something?‑‑‑Yes, no, sorry, yes.

PN980

You accept that even today that would still be seen as older style and uncommon, and it was then too?‑‑‑Yes.

PN981

That expansion that was expected to happen at Russell Vale when the agreement was being negotiated, that never really took place, did it?‑‑‑Well, it did for a period of time, yes.

PN982

But it never got up to 3 million tonnes per annum, did it?‑‑‑I'm not sure what the final output of the mine was, no.

PN983

Indeed, not only did the expansion not fully occur, it then ran out of further lease or further approvals to continue with longwall mining?‑‑‑Yes not lease, approvals yes.

PN984

Longwall mining, is as I understand it, generally considered a much more efficient form of mining, allowing for larger scale production?‑‑‑It depends - as far as efficiency on whether it's tonnes per man, see with tonnes per man with longwall mines is they have a high employee ratio. So as far as output tonnes, yes. I would agree that the output tonnes from a lifting mine is probably reduced from a longwall mine.

PN985

Where in your statement you refer to a number of other mines in the southern district, and you refer to Appin Mine, Tahmoor, Metropolitan and Dendrobium. All of those mines continue to operate on a longwall mining process, don't they?‑‑‑Yes.

PN986

All of the agreements that relate to those mines that you've annexed to your statement, were made in 2015 or later, correct?‑‑‑Yes.

PN987

But the agreement we're talking about for Russell Vale was made back in 2011, correct?‑‑‑That's correct. But as I've pointed out in my witness statement, we believe it's still relevant that the terms and conditions haven't greatly changed from 2011 to 2018.

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PN988

All of those other mines that I've just mentioned, they're still currently operational, correct?‑‑‑No, not particularly. Well they are operational; are they cutting coal? Not much. South32 Appin colliery is bound by prohibition last year and this year they've lost a considerable amount of money. I'm currently negotiating agreement with that company. Tahmoor colliery is currently on prohibition. They've had a winder failure other there; they've been out of action for many months. Peabody has had problems with gas bumps, outbursts and currently are on longwall changeout, so there's not much coal coming out of our district at the moment.

PN989

But they have approvals to mine?‑‑‑Limited approvals, yes.

PN990

They have work forces ready to mine when they can deal with the issues that you're talking about?‑‑‑Yes.

PN991

That's vastly different to the situation that applies at Russell Vale, isn't it?‑‑‑Yes.

PN992

All of those other mines that we've just talked about, they also have their own washeries?‑‑‑Yes, they do.

PN993

You're aware that Russell Vale has never had a washery?‑‑‑Yes, they have had a washery at Russell Vale.

PN994

Have they? How long ago was that?‑‑‑Pre-2011.

PN995

Since the making of this agreement, they haven't had a washery?‑‑‑No, they used to export the coal to the Gujarat Coke and Coal ovens over there. They used to take the whole product over there. They used to use the reject for road base.

PN996

You're aware that the sale of unwashed coal is at a lower price than the sale of washed coal?‑‑‑Yes.

PN997

You'd agree with me that where you try and say that there's typical coal agreements, Russell Vale is not typical in the sense that it's proposal, if it was to recommence is on a bord and pillar operation, not longwall. You'd agree that that's not typical?‑‑‑It's not typical for our district. We have one other lifting mine in our district, so predominantly yes, they're longwall mines.

PN998

That's the Clarence Mine, is it?‑‑‑Yes.

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PN999

Why didn't you include the Clarence Mine agreement?‑‑‑It's not a mine that I look after, so I look after the south western district so the mines that I look after I have put them into this. So, it's probably the same question as why didn't I put the Hunter Valley mines in, why didn't I put the Queensland mines in? I don't look after them.

PN1000

I'll put to you did it cross your mind that it might have been relevant to look at the agreement for another mine that operates on a bord and pillar operation?‑‑‑Not particularly, no.

PN1001

Have you look at the Clarence agreement?‑‑‑No, I haven't looked at it, but I'm aware of I suppose that it's not a bad enterprise agreement.

PN1002

Not a bad enterprise agreement, even though the wage rate for a production worker is currently $33.99 per hour?‑‑‑Yes, they've a fairly decent bonus pit up there. From memory, clock up over $500 in bonus. A lot of the mines are either high hourly rates or high bonus, yes.

PN1003

But the hourly rates that I just mentioned, that's substantially than under the current agreement at Russell Vale, isn't it?‑‑‑Yes.

PN1004

It's lower than those other typical mines that you mentioned that use longwall mining that you're directly responsible for?‑‑‑Yes. So, a lot of the longwall mines in that district are in and around the same. They have a very inferior product. They have thermal coal, whereas these mines in the south western district produce coking coal. Coking coal, as you'd be aware with probably some of the research you've done, delivers a lot more per tonne than what thermal coal does.

PN1005

But the task and the operation of bord and pillar, the style of mining, the skillset required is exactly the same, of the miner?‑‑‑Yes.

PN1006

THE SENIOR DEPUTY PRESIDENT: How different would you say the skillset is for somebody working in a longwall mine, working in a bord and pillar?‑‑‑Not a great deal. What it is, is that they need to have more experience.

PN1007

To work?‑‑‑In a board in a pillar mine. That's set down in regulations. So it's probably vastly more dangerous type of extraction and the guys really need to be, I suppose more experienced. But as far as the development and the rest for the lifting panels, it's exactly the same as the longwall mine.

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PN1008

MR BROTHERSON: Can I show you a copy of the Clarence Coal Agreement?‑‑‑Yes.

PN1009

Have you seen this agreement before?‑‑‑Look, I would have, but I obviously look at a lot of agreements, yes.

PN1010

All right, but you accept that this is the agreement that applies to the Clarence Coal mine where a bord and pillar operation is utilised?‑‑‑Yes.

PN1011

If we go to page 11 of that agreement you see the ordinary hourly pay rates?‑‑‑Yes.

PN1012

They're less than the rates under the Russell Vale agreement, as you'd agree?‑‑‑They are less, but as I explained to you previously - - -

PN1013

You have explained that but the simple question was - - -

PN1014

MR WALKADEN: Can he finish his answer? I'd ask my friend to let Mr Timbs finish his answer.

PN1015

THE SENIOR DEPUTY PRESIDENT: I think his question was about the wage rates and I think he had answered.

PN1016

MR BROTHERSON: He was answering the question.

PN1017

THE SENIOR DEPUTY PRESIDENT: He wanted to then add in something about the bonus I assume.

PN1018

MR BROTHERSON: Which I was going to ask him about in a moment?‑‑‑I wasn't going to add in the bonus.

PN1019

THE SENIOR DEPUTY PRESIDENT: Weren't you? Well, we shouldn't all assume then. Sorry, but just on the issue of - I think the question was pretty simple. Are the wage rates in this agreement lower than the ones in the agreement we're looking at?‑‑‑Yes they are.

PN1020

MR BROTHERSON: You'll see that this agreement was made by his Honour in June of 2016.

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PN1021

THE SENIOR DEPUTY PRESIDENT: I don't think I made it.

PN1022

MR BROTHERSON: We're now 24 months after the approval, so the rates are those ones in the final column there, correct?‑‑‑Yes, it would be.

PN1023

But when you talk about a bonus, that's what's provided for if we go to page 34 which doesn't necessarily, like most of these bonus provisions tell us very much about what it actually equates to in monetary terms, does it?‑‑‑No, it doesn't.

PN1024

I tender that agreement.

PN1025

THE SENIOR DEPUTY PRESIDENT: So the Clarence Colliery Enterprise agreement is exhibit 7.

EXHIBIT #7 CLARENCE COLLIERY ENTERPRISE AGREEMENT

PN1026

MR BROTHERSON: Just if I can ask you to go back to appendix one. Again, it's difficult to discern, but it's paid per tonne produced, correct?‑‑‑Yes.

PN1027

That's a different formula than applies in the agreement in southern district, isn't it?‑‑‑No, there's normally combination like well, for instance, Appin Enterprise agreement is $500 fixed bonus with an incentive that runs in the background, anything above the $500. Helensburgh is on meters and tonnes, Tahmoor is on meters and tonnes. So it's normally a combination of meters and tonnes, if it's a variable bonus.

PN1028

Are you aware that Wollongong Coal, through its subsidiary Wongawilli Coal Limited also operates the Wongawilli Coal Mine?‑‑‑Yes.

PN1029

That mine at Wongawilli also ceased mining due to a lack of viability for a period of time between 8 March 2014 and August 2016?‑‑‑I don't know whether it was viability. They buried their longwall, so they had no longwall operations there. So, I wouldn't say viability, no. It was just they buried the longwall there.

PN1030

But it closed because it was in difficult circumstances and at that time, wasn't operating for that extended period of two and a half years or thereabouts?‑‑‑Yes.

PN1031

That mine is now reopened?‑‑‑Yes.

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PN1032

There was at one point an enterprise agreement for that mine and as you say, that was operating on a longwall basis when the agreement was made?‑‑‑Yes.

PN1033

If I ask you to go to annexure 5 of your statement at page 180?‑‑‑Sorry, what was that?

PN1034

Annexure 5 of your statement which is at page 180?‑‑‑Yes.

PN1035

This was the agreement that was made for the Wongawilli Coal Mine in 2011?‑‑‑Yes.

PN1036

At that time it was already operating on a longwall basis?‑‑‑Yes, it was, sorry yes.

PN1037

But after it closed and then reopened in late 2016, it also has resumed on the basis of a bord and pillar operation?‑‑‑That's correct.

PN1038

Now the Wongawilli agreement was approved as you'll see at page 181 by Roberts C on 19 May 2011?‑‑‑Yes.

PN1039

It commenced operation at week later in accordance with the Fair Work Act, correct?‑‑‑Yes.

PN1040

This was made some six months or more before the agreement at Russell Vale, wasn't it?‑‑‑That's right.

PN1041

The agreement for Russell Vale that is the subject of these proceedings and this agreement we're looking at for Wongawilli, are very similar, aren't they?‑‑‑Yes, they are.

PN1042

In fact, with only a couple of very minor exceptions, you'd agree with me, they're almost identical, aren't they?‑‑‑Yes.

PN1043

When you came to negotiate the agreement for Russell Vale later in 2011, this agreement must have been very much, in not just your mind, but the mind of all of those involved in the negotiations?‑‑‑You've lost me sorry, with your question.

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PN1044

I'll try and break it back down. But when you, in later 2011, sought to make an enterprise agreement for Russell Vale, you and the people that you were negotiating with must have had this agreement for Wongawilli very much in mind, given it's almost identical what you then agree with at Russell Vale?‑‑‑Because the predecessor agreements from memory were fairly well aligned as well. So, I don't think there was a great deal of change.

PN1045

You have in your statement referred to the contractor clause in the Russell Vale agreement, you remember doing that?‑‑‑Yes, I do, yes.

PN1046

I won't take you to that just yet, but can I ask you - let's look at the contractor clause in the Wongawilli agreement. If you go to page 207 of your statement?‑‑‑Yes.

PN1047

You say at paragraph 36 of your statement they are virtually identical. The only change between his clause 24 in this agreement and what's clause 24 in the Russell Vale agreement is really the reference in the second paragraph to the Wongawilli, as opposed to Gujarat NRE No 1 Colliery, correct?‑‑‑That's correct.

PN1048

Other than that, they're identical clauses?‑‑‑No, that's correct, but that's not unusual.

PN1049

I didn't ask you whether it's unusual. That's correct? They are virtually identical clauses?‑‑‑Yes.

PN1050

The coverage clause was also the same, wasn't it? The coverage of this agreement was the same as the coverage that was put in place for the Russell Vale?‑‑‑The same apart from one was Wongawilli.

PN1051

Exactly. We've agreed in these proceedings that that coverage is really mining and engineering employees within the scheme of let's say Schedule A of the Black Coal Mining Award? You're not aware that concession has been made by Mr Walkaden?‑‑‑Generally the agreements that we - - -

PN1052

No, no, no, I think you better answer that one?‑‑‑Well, can I read the coverage clause?

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PN1053

No, I think you had better answer this question. Are you aware that the union is accepting that the Russell Vale agreement only applies to people that are mine workers and would come within Schedule A of the Black Coal Mining Industry Award?‑‑‑No.

PN1054

THE SENIOR DEPUTY PRESIDENT: But where do you want to do with that?

PN1055

MR BROTHERSON: I'm not going to go anywhere with it now, but I thought there was a question that I think had raised that he might have a different view about that and I thought it was important just to establish whether he'd been informed of what the union's position in the proceedings was.

PN1056

THE SENIOR DEPUTY PRESIDENT: But you're not going to explore it, I assume.

PN1057

MR BROTHERSON: No.

PN1058

THE SENIOR DEPUTY PRESIDENT: Good.

PN1059

MR BROTHERSON: When the Wongawilli mine was shut down, all employees that were subject to that agreement were made redundant?‑‑‑Yes.

PN1060

That mine site was placed on care and maintenance?‑‑‑Yes.

PN1061

That went from March 2014 to August 2016?‑‑‑I can't recall the dates, but if that's what it is, that's what it is.

PN1062

You'd recall that in April of 2015 Wongawilli Coal Ltd applied to terminate the Wongawilli agreement. Do you recall that?‑‑‑Yes.

PN1063

That agreement that is at annexure 5 to your statement was then terminated?‑‑‑Yes.

PN1064

The union didn't oppose the termination of that agreement, did it?‑‑‑No.

PN1065

But it opposes the termination of the Russell Vale agreement?‑‑‑Yes.

PN1066

They're agreements in identical terms?‑‑‑Yes.

PN1067

In both cases, we've had mines that have been closed for a considerable period of time at the time the question of termination comes up, correct?‑‑‑Yes.

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PN1068

Can I ask you what is the difference in the position now that you're taking in respect of Russell Vale?

PN1069

MR WALKADEN: I object. How is it relevant, your Honour? How is it relevant to your determination of the matter about what position the union took in relation to an application that was decided a number of years ago.

PN1070

THE SENIOR DEPUTY PRESIDENT: I don't know. Why, is there a relevance?

PN1071

MR BROTHERSON: Let me perhaps come back to that question, if I need to in a moment. Since Wongawilli has recommenced mining, there has been a contractor workforce performing the production and engineering work there, correct?‑‑‑Yes.

PN1072

Paragraph 67 of your statement you say that Wongawilli is operating with a total labour hire workforce. See that?‑‑‑Yes, I do.

PN1073

What you mean by that total labour hire workforce is production and engineering employees?‑‑‑Yes.

PN1074

So those persons who would otherwise be covered by Schedule A of the Black Coal Mining Industry Award?‑‑‑Yes.

PN1075

If we come back to look at Russell Vale, we've agreed that mining ceased there in September 2015?‑‑‑Correct.

PN1076

All of the employees of Wollongong Coal that had been employed in accordance with the agreement were made redundant at that time, correct?‑‑‑Yes.

PN1077

That was done subject to discussions with the CFMEU as it then was and other unions that had members on site?‑‑‑Yes, correct.

PN1078

It's why, in your statement, when you talk about the persons that were covered by the agreement, you use words like they were employed or were covered. It's because they were all made redundant. There's been no one covered by that agreement since September 2015?‑‑‑Correct.

PN1079

But you were informed that the mine would be placed in care and maintenance?‑‑‑Yes.

***牋牋牋� ROBERT JOHN TIMBS牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 XXN MR BROTHERSON

PN1080

You know, as an official of long-standing and a miner before that, what that means, don't you?‑‑‑I do, yes.

PN1081

That is that there will still be people on the mine site who go into the mine, inspect things, do the odd task that might be required to be done, effectively in the interests of compliance and asset preservation, correct?‑‑‑Well, a lot further than that. They were actually in there doing production engineering work. They were doing roof support.

PN1082

Who are you talking about now?‑‑‑The staff.

PN1083

When are you saying this happened?‑‑‑Pretty well straight away.

PN1084

You don't say anything about that in your statement?‑‑‑Yes.

PN1085

You know what care and maintenance means as a concept in the coal industry though, don't you?‑‑‑Yes, I do.

PN1086

It is directed towards any compliance inspections and to preserve the asset in case mining can recommence, correct?‑‑‑Yes.

PN1087

You knew that those tasks and have known that those tasks at Russell Vale had been done by remaining staff employees since the persons covered by the agreement were made redundant, correct?‑‑‑Yes, and it was a matter of dispute and in consultation with the company that they should allow and have, people still covered by the agreement to carry out roles at the mine such as statutory inspections, 103 compliance issues and maintenance.

PN1088

When you say it was a subject of dispute, when do you say this dispute was raised?‑‑‑It's a dispute within the consultation process. So, there was a lot of talk with Reece Brett and the managers of the time, about what jobs would still be carried out on care and maintenance. We put the positions forward. It was never formally disputed in the Fair Work Commission, if that's what you're looking at. But when I say it was a matter of dispute, there was a matter of dispute within consultation.

***牋牋牋� ROBERT JOHN TIMBS牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 XXN MR BROTHERSON

PN1089

In September 2015 at the time the mining is stopping and the mine is being placed in care and maintenance, you say you had some arguments with the company about who might do these care and maintenance tasks?‑‑‑We had arguments with the company; we actually - when some of the members were terminated, we actually run unfair dismissal claims for them.

PN1090

But those matters have long since passed and you haven't pursued any dispute about that with the company until perhaps, quite recently, correct?‑‑‑It was only quite recently that I was made aware that there were contract members or contract employees working at the mine.

PN1091

This is the issue of the two CAS employees that you deal with in your statement?‑‑‑Yes.

PN1092

I'll come back to that. You've known, as an official with responsibility for this region that Wollongong Coal, still a company with mine sites in the area has had a mine at Russell Vale and care and maintenance since September 2015?‑‑‑I think I've already agreed with you on that.

PN1093

Yes, you have. Since September 2015, so for over three years, you've not raised any issues with the company until the most recent issue, correct?‑‑‑I raised the issue at the time. I had an in-depth conversation with Mr Walkaden about where we could go with it. Mr Walkaden came in and addressed our members and we've left it.

PN1094

If we look at the fact of the Russell Vale agreement has continued to sit there. You've agreed with me no one's covered by it at the moment, correct?‑‑‑That's correct.

PN1095

So, if the agreement is terminated, you don't have any members that are going to lose their job because of that agreement being terminated, do you?‑‑‑No, we'll have members who won't get their jobs back, potentially.

PN1096

Well, let's work through these things one at a time?‑‑‑Sure.

PN1097

The first thing is, you don't have any member who will lose their job because the agreement's terminated?‑‑‑No.

PN1098

You don't have any member that will earn less money next week if his Honour was to terminate the agreement today, do you?‑‑‑Yes.

***牋牋牋� ROBERT JOHN TIMBS牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 XXN MR BROTHERSON

PN1099

Well, you don't, because there's no one there and there's no mining happening, is there?‑‑‑We would, because at the moment there's a contractor's clause in there that stipulates that if they haven't got an enterprise agreement, they'll be paid in accordance with the mine site agreement. The only contractor that's quite likely to go near the place, is CAS Mining. CAS Mining doesn't have an enterprise agreement. So, if CAS Mining was employed at Russell Vale, I have members. A lot of members with CAS Mining, so yes, they would be paid less.

PN1100

Well, that wasn't the question. No employee of Wollongong Coal will earn less next week, will they?‑‑‑No.

PN1101

No employee of Wollongong Coal has their employment security any longer dependent on what a contractor might get paid under this agreement, do they?‑‑‑No.

PN1102

Now there's no employee of Wollongong Coal doing any work but you claim clause 24 of the Russell Vale agreement should apply to say employees of a contractor, have to be paid in accordance with this agreement?‑‑‑That's right.

PN1103

So, if I ask you to look at the agreement, which I don't think is in your statement, but it's annexure two to Mr Sharma's statement?‑‑‑Yes.

PN1104

If you'd just have a look at page 129 of Mr Sharma's statement?‑‑‑Yes.

PN1105

The contractor's clause is in two parts, isn't it?‑‑‑Yes.

PN1106

The first part - we should perhaps just pay some attention to that. It says the company will not terminate the employment of employees on the grounds of redundancy in order to replace the employee with a contractor or have the job of the employees performed by a contractor. If I just take you back to September of 2015, the employees of Wollongong Coal, weren't terminated to be replaced by contractors, were they?‑‑‑No, they weren't, but they have been now.

PN1107

Well, in September 2015, they were terminated because there was no further mining to be done, correct?‑‑‑Yes.

PN1108

What we then get to, so can I put to you that you'd agree that the first part of that or first paragraph of clause 24 there was really no issue with that back in September 2015, was there?‑‑‑Without a crystal ball, no.

PN1109

We then come to the second paragraph which is what you now rely on in your further exchanges in recent times with the company, correct?‑‑‑Yes.

***牋牋牋� ROBERT JOHN TIMBS牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 XXN MR BROTHERSON

PN1110

Even though there's no employees covered by this agreement, no employees of Wollongong Coal, you say Wollongong Coal still has to tell any contractor you've got to apply this agreement unless they have an agreement recognised by the union?‑‑‑Yes.

PN1111

When we say recognised by the union, or by the CFMEU South Western District, that means you, effectively, doesn't it?‑‑‑No, not particularly. There's four of us, five of us.

PN1112

So it would be a decision by committee would it, or it would be somebody would write to you and you'd say yes that's fine, that can go ahead?‑‑‑What this said was that that decision will be made by myself and what I'd said to you was that maybe not.

PN1113

THE SENIOR DEPUTY PRESIDENT: What does recognised mean? Been given the tick?‑‑‑Yes.

PN1114

So it wouldn't just mean an agreement that was covered, that the CFMEU were covered by?‑‑‑Yes.

PN1115

So, if you were covered, that would automatically mean that you recognise the agreement? Is that your understanding of how it would work?‑‑‑I think from memory Commissioner, and I think those words were around recognise, which was a certified enterprise agreement, rather than - - -

PN1116

I don't think recognised has ever been used in the Act to be honest?‑‑‑No.

PN1117

I think in that respect - oh no, might be wrong, but not in that concept. There were certified agreements that were approved.

PN1118

MR BROTHERSON: Your Honour, if I can impose, look - - -

PN1119

MR WALKADEN: Should the witness be even here? The witness can be excused, if my friend's got a concern with that.

PN1120

MR BROTHERSON: That's a thought.

***牋牋牋� ROBERT JOHN TIMBS牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 XXN MR BROTHERSON

PN1121

THE SENIOR DEPUTY PRESIDENT: Could you just pop outside, thanks Mr Timbs?

PN1122

MR WALKADEN: Now it's a matter of interpretation about what those words mean and I'll make a submission about what they mean and Mr Timbs did negotiate the agreement, he signed it, but his understanding about what those words means might be interesting, might be useful, but aren't determinative.

PN1123

THE SENIOR DEPUTY PRESIDENT: Yes, wouldn't necessarily be binding. It would be interesting though, what do you think they mean?

PN1124

MR WALKADEN: Well, we say it means - - -

PN1125

MR BROTHERSON: He's seeking to invoke the clause, so I think what he thinks it means is very - - -

PN1126

MR WALKADEN: Well it's no Mr Timbs personally, it's the union.

PN1127

THE SENIOR DEPUTY PRESIDENT: If it ended up in a dispute in the Commissioner, the Commission would decide it.

PN1128

MR WALKADEN: Our submission is that it's covered by an agreement to which the union is covered.

PN1129

THE SENIOR DEPUTY PRESIDENT: It could mean that.

PN1130

MR WALKADEN: It falls within that clause, clause 24, that's all it means.

PN1131

THE SENIOR DEPUTY PRESIDENT: That is what he just said as well.

PN1132

MR WALKADEN: It doesn't mean some sort of further process of the company writing and Mr Timbs or some other official sitting around and giving it a tick.

PN1133

THE SENIOR DEPUTY PRESIDENT: Look, I think we could ask him - I think he actually said that already, but I'd just like to clarify. I understand what you're saying that as a matter of law, obviously what he says doesn't have any binding effect. I appreciate - I understand that.

***牋牋牋� ROBERT JOHN TIMBS牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 XXN MR BROTHERSON

PN1134

MR WALKADEN: Correct.

PN1135

THE SENIOR DEPUTY PRESIDENT: However, the reality is that in a practical sense - - -

PN1136

MR WALKADEN: But the Berri decision is quite clear, your Honour which is based - - -

PN1137

THE SENIOR DEPUTY PRESIDENT: Yes, I'm quite aware of that.

PN1138

MR WALKADEN: Yes, as much as I'd like to bowl up an argument, your Honour, that you can interpret any enterprise agreement or what Mr Timbs reckons, I'd be happy with that sort of approach, your Honour.

PN1139

THE SENIOR DEPUTY PRESIDENT: I well understand that. But I would like to understand what he thinks. But indulge me.

PN1140

MR WALKADEN: Yes, I will, your Honour.

PN1141

MR BROTHERSON: I think just to clarify, your Honour, I think it's important, we can have an argument of course, and you can decide what the clause means, but Mr Timbs is an official in the field.

PN1142

THE SENIOR DEPUTY PRESIDENT: Yes, yes, I'm interested in what he thinks it means. I'm not saying that it means that's what it means. So can we get him back in please?

PN1143

Thanks Mr Timbs.

PN1144

MR BROTHERSON: Mr Timbs, we were talking before you went out about in the second paragraph of clause 24, the meaning of an agreement recognised by the CFMEU south western district. Do you recall that?‑‑‑Yes.

PN1145

I think I'd said I put it that means you and you said no, there's four people?‑‑‑Yes.

PN1146

I'll get to where we were, but can you - who are the other people that you had in mind that might be - - -?‑‑‑Other officials of the south western district, CFMEU.

***牋牋牋� ROBERT JOHN TIMBS牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 XXN MR BROTHERSON

PN1147

THE SENIOR DEPUTY PRESIDENT: Can I put the question? What do you understand by the reference to 'recognised by the CFMEU'? What do you - how would you determine whether an agreement was recognised or not? What do you think it means?‑‑‑It might be easier if I explained.

PN1148

For example?‑‑‑Yes, for instance, at the time there was a lot of the dodgy two-man agreements getting around.

PN1149

Correct?‑‑‑Or starting to come about, which was the companies would go out and employ someone for two people to negotiate an inferior enterprise agreement. I think from memory and recollection that it was probably to try and combat some of that.

PN1150

Right, what would it mean to have an agreement recognised as in - I don't want to put words in your mouth - I think you might have already said this, but I mean, if the union is covered by the agreement as a provision under the Act for the union to be covered by an agreement?‑‑‑Yes.

PN1151

Would you think that meant recognised?‑‑‑Yes.

PN1152

MR BROTHERSON: Can I ask you this question, there can be enterprise agreements as you'd be well aware made under the Fair Work Act to which the CFMEU or CFMMEU may not be covered, correct?‑‑‑That's right.

PN1153

Would you say that that would be an agreement recognised by the CFMEU South Western District for the purposes of this clause?‑‑‑Depends on what the conditions are.

PN1154

What do you mean by that?‑‑‑For instance if there was benchmark pay rates conditions.

PN1155

When you say benchmark pay rates, I'll put to you, what you mean is, if it was anything less than is clause 11.1 of this agreement, you wouldn't recognise it, would you?‑‑‑No, that's not true. They could have a better bonus scheme, they might have a different incentive scheme, or their overtime might be paid at double time, there could be other better conditions in the agreement. I suppose it's an holistic look at the enterprise agreement.

***牋牋牋� ROBERT JOHN TIMBS牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 XXN MR BROTHERSON

PN1156

A contract company could legitimately with its employees, without any involvement of the CFMEU, come before the Fair Work Commission and have an agreement approved, correct?‑‑‑Yes.

PN1157

Regardless of what that agreement - and for that agreement to be approved and take effect, it has to pass a better off overall test, correct?‑‑‑Yes.

PN1158

Nods don't show up on the transcript?‑‑‑Yes, sorry.

PN1159

Whatever that agreement is, you would reserve for yourself a right, if that contracting company was coming on to Russell Vale, to say well, we have another right of review of that agreement?‑‑‑Another right of review of their agreement.

PN1160

Yes?‑‑‑I don't know how I'd have the right of review of their agreement.

PN1161

All right, so would you accept a company with an agreement made by the Fair Work Commission, that is a hypothetical example, has hourly rates of $30 an hour?‑‑‑Yes.

PN1162

No bonus?‑‑‑Yes.

PN1163

But it's passed the better off overall test; it's been made in accordance with the Fair Work Act?‑‑‑Yes.

PN1164

And Wollongong Coal proposes to have them perform work at Russell Vale, in the event mining recommences. Would you claim under clause 24 of the agreement, you have a right to recognise or not recognise that agreement?‑‑‑Yes.

PN1165

What might not recognising mean?‑‑‑That they're paid as per the mine site agreement.

PN1166

Or they don't come on site?‑‑‑No, it's not that at all.

PN1167

Well what - of course it means that, doesn't it?‑‑‑It doesn't mean that at all. It means - - -

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PN1168

So, they could come on the site, even though you don't recognise that they could come on the site, and you'd accept that would you?‑‑‑It simply says that they're paid in accordance with the mine site agreement.

PN1169

THE SENIOR DEPUTY PRESIDENT: Your view is if you don't "recognise" the enterprise agreement of the contractor that, as a matter of law, they are obliged to pay what's in this agreement?‑‑‑That's right and that's what they agreed to. Like that was flushed out fairly well in negotiations and the company understood and they agreed with it.

PN1170

MR BROTHERSON: That clause was agreed to provide security of employment for employees of Wollongong Coal, correct?‑‑‑And correct pay rates to contract members. See, you've got to understand that the majority of the contract workers that work are members as well.

PN1171

So at the present time where there's no employees of Wollongong Coal your interest in preserving this clause by preserving the agreement is to protect your contract members, isn't it?‑‑‑The reason why I raise the issue with the company around the contractors is that I've had complaints from former employees and I was duty bound that I understand what the agreement reads and I was just trying to enforce the company who are obliged by their enterprise agreement.

PN1172

Well, can we come back to the question that I've asked?‑‑‑Yes.

PN1173

I'm not trying to be difficult with you, but I need to get an answer to this question. At the present time, and absent any employees of Wollongong Coal, your interest is in the rates of pay of contractors, correct?‑‑‑It's that - all right, yes I agree with that, that it is about the rates of pay for the contractors that are working there, because that's what the agreement says.

PN1174

But you're not protecting the employment of any employee of Wollongong Coal at the present time, are you?‑‑‑There might be a flow-on effect for possible future employees.

PN1175

Have you read the union's submissions in these proceedings?‑‑‑No.

PN1176

The union position as stated in the proceedings is that all this case is about is Wollongong Coal wanting the ability to restart Russell Vale mine with a completely outsourced workforce. Do you believe that to be the case?‑‑‑

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PN1177

MR WALKADEN: Can I object? How is Mr Timbs' view, albeit a full time official of the union, relevant to the submissions that I'm going to make? He's giving evidence as a witness and it's really not appropriate for my friend to seek to chip away at our submissions by extracting some sort of concession or answer from Mr Timbs.

PN1178

MR BROTHERSON: Presumably your submissions are based on evidence.

PN1179

MR WALKADEN: Well, Mr Timbs can answer about what he knows, given his involvement in the agreement or his dealings within the coal industry et cetera, but to ask him does he agree with paragraph X, Y and Z of the submissions, is really inappropriate, in my view.

PN1180

THE SENIOR DEPUTY PRESIDENT: Yes, I can't really see why it's helpful.

PN1181

MR BROTHERSON: If this agreement is terminated, there is nothing that stops the CFMMEU negotiating with any contractor that operates in your region, an enterprise agreement that covers Russell Vale, or anywhere else, is there?‑‑‑The only impediment would be if they already had an agreement in place. Obviously, we would have to wait. You would expect until the expiry of that agreement.

PN1182

But you would accept, I think on your own interpretation of clause 24, if they've - and I think you mention a number of contractors that have agreements with the union. You've got no issue with them coming on to this site with their own agreement as currently made?‑‑‑No.

PN1183

But there's other companies out there that don't have agreements at the moment, correct?‑‑‑You said to me have I got an issue with it, well fundamentally I do have an issue with it, in that you know, that mine was manned with a permanent workforce. When they were made redundant, the company actually promised in front of us all, that if they were going to restart the mine, they would enact the re-employment of hands clause and that the guys would get their jobs back. They stood up in front of them when they put them off, and promised them they'd get their jobs back; they'd be the first ones to get their jobs back. So when you say I haven't got a problem with the contractors coming on there, well fundamentally I do, because the company has broken a promise to us and to the workforce, so yes I do have a problem.

PN1184

Given that the company hasn't yet even got a licence to reopen Russell Vale or to recommence mining there, how do you say it's broken any promise?‑‑‑Well, what you said was that they could just bring on any contractor and I'd be okay with it. Well, like I said, I - - -

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PN1185

No, I don't think I ever put that to you, but anyway, be that as it may?‑‑‑Yes. So, if they're going to start mining again, what the company told us and promised the guys was that when we start mining again, we'll start back up with a permanent workforce and you guys will get your job back under the re-employment and hands clause in this.

PN1186

That was on your evidence in September 2015?‑‑‑That was on my evidence. It don't know if I put it in my evidence.

PN1187

It's in September - well, you were saying that that must have been said in September 2015?‑‑‑Yes, absolutely, yes.

PN1188

So, over three years ago, that was said?‑‑‑Yes.

PN1189

Since that time, a lot of those members have moved on and taken on other work, haven't they?‑‑‑Yes.

PN1190

And according to - you know Mr Conkey?‑‑‑Yes.

PN1191

He's an honest individual?‑‑‑Yes.

PN1192

Where he says that he's kept in touch with a lot of people and a lot of them wouldn't even want to come back, we can accept that as good?‑‑‑They wouldn't want to come back?

PN1193

Yes?‑‑‑I don't know whether it's good or bad.

PN1194

But good evidence on his part. If he says that to be true?‑‑‑I don't know.

PN1195

MR WALKADEN: Your Honour, isn't that a matter for you, I mean we don't want to take your job, your Honour and it's your job to assess the evidence, not Mr Timbs. Once again, if that's going to be the standard approach, I'd be more than happy to run with that course, your Honour, but it's not the way it works.

PN1196

THE SENIOR DEPUTY PRESIDENT: I don't think he can't answer the question though.

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PN1197

MR BROTHERSON: Well, I think the important piece is he accepts Mr Conkey is an honest person and Mr Conkey would have stayed in touch I take it, in your knowledge probably with some of his former colleagues?‑‑‑With some of them, yes.

PN1198

They would discuss presumably things to do with their past employment and their future prospects?‑‑‑I'm not privy to their discussions.

PN1199

Do you know who Mr Conkey works for?‑‑‑He works for CAS Mining. Sorry, he works for RStar Mining.

PN1200

Do they have one of your enterprise agreements?‑‑‑Will have in about a week.

PN1201

You accept that a mine that's been out of operation for as long as Russell Vale, even if approval comes though, there'd be quite a bit of work that would need to be done before it could become productive in the sense of mining recommencing again, correct?‑‑‑No.

PN1202

You think it could be just flick of the switch?‑‑‑I'd have to go there and have a look at their mine plan. So, you know, it's a bit of question. If they've kept it on care and maintenance and they've done a good enough job and you know, they've got the machinery there, well it's nearly a turn key. If they've got the machinery there, jump on the miners and start cutting coal.

PN1203

I've got nothing further for Mr Timbs.

PN1204

MR WALKADEN: Yes, just a short bit of re-examination, your Honour.

RE-EXAMINATION BY MR WALKADEN牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� [3.04 PM]

PN1205

Mr Timbs, my friend asked you some questions about the Clarence agreement?‑‑‑Yes.

PN1206

Do you have a copy of that with you?‑‑‑I do.

PN1207

Where is the Clarence mine?‑‑‑The Clarence mine is up in the Lithgow area.

***牋牋牋� ROBERT JOHN TIMBS牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� RXN MR WALKADEN

PN1208

If I can turn you to the Clarence agreement and ask you to turn to the signatories' page, page 33, you can see that the agreement has been signed firstly on behalf of Clarence Coal Pty Ltd?‑‑‑Yes.

PN1209

Secondly, authorised for it on behalf of Graeme Osborne?‑‑‑Yes.

PN1210

From the CFMEU and it says that Mr Osborne's position is South Western CFMEU Vice President?‑‑‑Yes.

PN1211

Can you explain Mr Osborne's position with the union in comparison to your own position within the union?‑‑‑Yes, so Graeme Osborne is my counterpart who works out of the western part of our district. He's charged with looking after the western mines, along with Andy Honeysett our President and I look after the industrial issues of the southern mines along with Lee Webb the secretary of our south western district.

PN1212

When you say the western mines, what geographical area are you referring to?‑‑‑So anything on the other side of the Blue Mountains for us.

PN1213

Extending out to?‑‑‑Out to Mudgee, the Ulan mines, the Malabon mines, some of the bigger open cuts out there. All predominantly thermal coal mines. Well they are not predominantly, all thermal coal mines.

PN1214

Staying with that point, your evidence was, in response to a question from my friend, that the mineral extracted at the Clarence mine is thermal coal?‑‑‑Yes.

PN1215

Can you explain the difference between thermal coal and metallurgical coal?‑‑‑Yes, probably over $100 a tonne, but the difference is that thermal coal is used for power production of electricity. They use some thermal coals for cement and other types of products and then other coking coal is metalliferous for metal production which is I think why Wollongong Coal, like it because they've got steel mills in India that they're feeding the coal into.

PN1216

Nothing further, your Honour.

PN1217

THE SENIOR DEPUTY PRESIDENT: Thanks very Mr Timbs.

<THE WITNESS WITHDREW牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� [3.06 PM]

PN1218

THE SENIOR DEPUTY PRESIDENT: Are you okay to do submissions this afternoon? Do you want a break now?

PN1219

MR WALKADEN: Half an hour to an hour perhaps.

PN1220

MR BROTHERSON: My friend just says he'll be half an hour to an hour.

PN1221

THE SENIOR DEPUTY PRESIDENT: How long will you be?

PN1222

MR BROTHERSON: I was thinking half an hour to 40 minutes, but that means - - -

PN1223

THE SENIOR DEPUTY PRESIDENT: I mean, I'm happy - I'm okay to keep on going and finishing today. I'd like to finish today if it's okay with you.

PN1224

MR BROTHERSON: It would be good to finish today.

PN1225

THE SENIOR DEPUTY PRESIDENT: But I wouldn't mind just having a short break, five minutes or so.

SHORT ADJOURNMENT牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋� [3.07 PM]

RESUMED牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 [3.23 PM]

PN1226

THE SENIOR DEPUTY PRESIDENT: Yes, Mr Brotherson.

PN1227

MR BROTHERSON: Thank you, your Honour. As you know this is an application by Wollongong Coal to terminate the NRE No 1 Colliery Workplace Agreement [2011.] The company filed an outline of submissions dated 9 August 2018 and filed an outline of submissions in reply on 4 October 2018. My intention, your Honour, is to take those as read - - -

PN1228

THE SENIOR DEPUTY PRESIDENT: Yes, yes.

PN1229

MR BROTHERSON: - - - and not simply recite them. Can I assist your Honour by providing you with a bundle of authorities which I understand my solicitor has discussed with my friend and it's agreed they are the main authorities that are referred to in the respective submissions. I don't think there is anything you're not probably well familiar with in any event. Subject to responding to questions it's probably not my intention to necessarily take you at length through that folder because generally the passages that I think are relevant we have drawn out in the submissions as set out in the outline and the outline in reply.

PN1230

Your Honour posed some questions early in the day which you invited us to think about. I propose to deal with those during this submission. I won't start with those but I will attend them as I go along. The application is made pursuant to section 225 of the Fair Work Act by Wollongong Coal as an employer covered by the agreement and I refer to the agreement to avoid having to restate its full title on each occasion. A copy of the agreement as we've seen during the day is conveniently found at annexure 2 to exhibit 1, the statement of Mr Sharma.

PN1231

It was approved by Commissioner Roberts on 10 November 2011. It took effect on 17 November 2011 and it had a nominal expiry date of 30 September 2015. During the course of the day we have confirmed that the coverage of the agreement which is set out in part in clause 3 of the agreement on page 108 of the Sharma statement, exhibit 1, and subject to the classification structure in clause 11.1 which is at page 114 of exhibit 1 that the agreement - its coverage is confined to product and engineering employees, as those persons are generally found within schedule A of the black coal-mining industry award.

PN1232

Turning to what the Commission needs to consider in assessing this application, they're the matters which are set out in section 226 of the Fair Work Act, and again, they're set out in the outlines and I know your Honour is well familiar with those. But before specifically addressing those there is of course as we've heard during the course of the day a significant history to the workplace to which this agreement applies or covers that is now known as the Russel Vale Colliery, which impacts significantly on the application in our submission.

PN1233

Those matters, if I can just draw some of them out orally, which are set out in paragraph 3 of our outline of submissions, are that mining of coking coal at the Russel Vale Colliery to which the agreement relates ceased in August of 2015 and there have been no employees covered by the agreement since September 2015. To the extent some of the evidence leading into the proceedings perhaps questioned whether there were employees covered by the agreement since that time, as I've already said, that's now resolved so that is, we say, a very important piece of the historical fact and the facts and circumstances of this application.

PN1234

Secondly at 3(b), that any resumption of mining at Russell Bale is still dependent on the company first securing approval for its revised underground expansion plan and the company then undertaking further capital investment and development works in order to be able to recommence mining. Mr Sharma's evidence explains that is still some way down the track. The next application for approval now won't be failed until November. That's a process that could take some six to nine months and then there is a further period of time getting the mine reset.

PN1235

I think Mr Timbs seemed to suggest it's a little bit easier than that. Well, I think Mr Sharma's evidence should be preferred on that and the likelihood is that Mr Sharma's evidence as to the earliest possible date of resumption of mining if approval is granted should be taken as more realistic. So we are still some away from that. Perhaps if I can attend at this point as to one question that might be posed is, well, why does this application need to be made now? I'll deal with this some more a little bit later.

PN1236

One obvious question is the disputes which seem to exist over the contractor issue I think is a very topical reason that is causing issues between the parties and unhelpfully so. The second one - and again, I'll elaborate on this a little bit further as I go through - is the company is attempting to, for want of a term, reset itself. It has had a difficult period of time. It doesn't deny that it has had difficult financial circumstances. It's been in default of certain requirements. But it has resolved all of those and in the process of continuing to resolve those as part of agreed arrangements, for example, with the mining regulator, with the ATO. A company shouldn't be criticised for those efforts to reset itself.

PN1237

In fact, on one level it should be applauded for doing so and if it can do so and move forward as a viable organisation, then that is a positive thing for all. The third significant part of the history that I want to take you to - I do rely on everything set out in paragraph 3 of the outline - but if I can take you to 3(e), the position for the company is that absent any employees it can't do anything with the agreement at the moment, other than what it is doing now. It can't seek to negotiate a variation. Of course it's that long after it's - - -

PN1238

THE SENIOR DEPUTY PRESIDENT: I mean, that's not necessarily completely true. I mean, obviously it couldn't actually get - well, assuming that you - it wouldn't amount to a greenfields scenario and it may not. I mean, I agree - - -

PN1239

MR BROTHERSON: The short answer will be that it will save you - - -

PN1240

THE SENIOR DEPUTY PRESIDENT: Yes, okay, okay - but it could hold discussions with the CFMEU. I mean, it probably couldn't finalise a new agreement and get it approved by the Commission if it's not a greenfields agreement, there's no employees there. But it could - normally, and I agree this is not necessarily a determinative issue in itself, necessarily - but normally when you get these kinds of applications and I've done quite a few, it's usually after a prolonged or relatively prolonged, in some cases, effort to try and negotiate a new agreement. Then, you know, for whatever reason it has been unsuccessful.

PN1241

That history has usually been a rather important factor in determining whether to terminate the agreement. This is kind of unusual in that there are no employees and there have been - not even no negotiations but no discussions at all, as far as I can tell - well, on the evidence. So - while I agree that there probably couldn't have done a new agreement and probably couldn't do a new agreement where there are no employees because it doesn't fit the greenfields definition, that doesn't mean you couldn't talk to the union that, I don't think it's in much doubt, represents the vast majority of workers who are likely to be employed if this mine re-opens.

PN1242

I mean, I'm not saying it's necessarily an obligation but there hasn't been any attempt as far as I can tell.

PN1243

MR BROTHERSON: Well, none came from the evidence.

PN1244

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1245

MR BROTHERSON: Again, I think that reflects the fact that this is a unique circumstance where the other agreements that you've referred to in applications and a lot of them are set out there in the folder, arise when parties are in the midst of bargaining for their next agreement and a lot of the applications seem to arise at a point where bargaining is stalled, for one reason or another.

PN1246

THE SENIOR DEPUTY PRESIDENT: Yes, yes.

PN1247

MR BROTHERSON: Now, not only does this company not have any employees, it doesn't yet even know whether it will re-open this mine because that is dependent on regulatory approval. It is part of its design to reset itself and it's not inappropriate in circumstances where this agreement was negotiated seven years ago. It's way past its nominal expiry date. Notwithstanding your Honour's point about what might be usual, and I don't take issue with that, where a company with an enterprise agreement issue might contact a union that is covered by it. The union covered by it is covered by it primarily because of its interest for employees. There are no employees.

PN1248

THE SENIOR DEPUTY PRESIDENT: But there are, if you like, prospective employees. I mean, you don't know who they are, but - I don't know necessarily mean in the technical, legal sense, the way that is used in the Fair Work Act in relation to the BOOT, for example, but the reality - I mean, unless this is all completely academic there are going to be - you know, it may be that they never re-open the mine, there never are any more employees. But in that case none of this really matters, if I can put it that way, arguably. But you know, if it re-opens the mine there'll be employees.

PN1249

MR BROTHERSON: If it does - - -

PN1250

THE SENIOR DEPUTY PRESIDENT: And they will probably be coal miners.

PN1251

MR BROTHERSON: One would hope so.

PN1252

THE SENIOR DEPUTY PRESIDENT: Exactly, so they are going to be people who are workers in the coal industry, production employees, most of whom realistically belong to the CFMMEU. Well, I don't think they all do, actually.

PN1253

MR BROTHERSON: I think the (indistinct) should be a little bit cautious about that. But notwithstanding what might be a more accepted reality of a situation, the real, legal reality under the Act of course is without employees you can't vary the agreement because you need the agreement of the requisite majority.

PN1254

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1255

MR BROTHERSON: You couldn't make a new agreement, absent being able to - the greenfields situation.

PN1256

THE SENIOR DEPUTY PRESIDENT: Yes, yes.

PN1257

MR BROTHERSON: You couldn't get a vote to terminate the old agreement because, again, you need a requisite majority of employees. So putting aside even the issue of any discussion with the union, which may have landed us where we are now anyway - - -

PN1258

THE SENIOR DEPUTY PRESIDENT: Possibly, but you never know.

PN1259

MR BROTHERSON: - - - and I think from the evidence of Mr Timbs one could suggest quite likely but the reality is the company has no other alternative if it wants to now be rid of the agreement but to make this application. It's a legitimate application and I think Horizon and other cases make it plain that the applications to terminate agreements sit there as part of the scheme of enterprise bargaining. Agreements don't continue in perpetuity and this is an agreement that the perpetuity issue perhaps starts to loom large as well, where it is now seven years old since it was made, three years after the nominal expiry date, three years after anybody has even been covered by it.

PN1260

So I don't challenge your Honour at all on what you've said about what an organisation perhaps might have done but it hasn't been done in this case. The legal reality does remain, what I've just described. We say that those points that I've just taken you to or drawn out from paragraph 3 of the outline of submissions are significant. We also say that the financial position of Wollongong Coal is significant. We've seen a lot today in the evidence draw out of the annual report and the scale of the loss, the scale of its borrowings that it has to service. Some of those relevant issues are set out more fully between paragraphs 29 to 31 of the outline. I don't propose otherwise to take your Honour back into the annual report. I think it's quite clear there.

PN1261

I think it's also quite clear that one of the drivers for the company at the present time as part of this trying to reset itself for the future and what might be possible in the future is this issue of cost control. Mr Sharma described that that is something that is driving them in every area. The union itself accepts in its submissions that if the agreement is terminated, the company probably can operate the mine at a cheaper price and with more managerial prerogative available to it than is available under the agreement. That concession is made in the - its outline of submissions. So I don't think we need to go any further than that and I think it is - can be clearly accepted that there are contractors out there that are working.

PN1262

All right, we've seen one letter today that has emerged in recent times challenging some of those arrangements. When our submissions were written there was nothing in the evidence that suggest any of the arrangements by these contracting companies were unlawful. There was certainly evidence that they paid lower rates, perhaps more flexible - - -

PN1263

THE SENIOR DEPUTY PRESIDENT: I mean, it would be - I'm sure you acknowledge, I mean, as things stand you can't work as a casual under the award. There is no provision for casuals in black coal mining.

PN1264

MR BROTHERSON: Under the award, that's correct - - -

PN1265

THE SENIOR DEPUTY PRESIDENT: You can have an enterprise agreement that allows quite a lot of contractors - a lot of contracts have those. But then there is the issue, obviously, about whether they are casuals under the Fair Work Act. It's another complexity, but - - -

PN1266

MR BROTHERSON: Look, that is something - - -

PN1267

THE SENIOR DEPUTY PRESIDENT: - - - we're not going to go into that.

PN1268

MR BROTHERSON: No, and I think the only important thing to say about that - and again I'll summarise it more fully towards the end but even at this stage what that raises is as part of care and maintenance the company has used contractors and there is a dispute about what the meaning of clause 24 of the agreement means, even to those persons coming on to the site now. So there is a live controversy and the company has a mine that is non-operational, an enterprise agreement that is very dated, but the union is looking to retain it and currently and for the foreseeable future only use it to require regulation of the terms and conditions of contractors.

PN1269

I think Mr Timbs - - -

PN1270

THE SENIOR DEPUTY PRESIDENT: Well, I mean, if the mine was re-opened with a direct labour force and the agreement wasn't terminated then obviously it would govern their terms and conditions of employment. The union is assuming, I think, that actually the company has no intention of engaging people directly but that is their assumption, if you like.

PN1271

MR BROTHERSON: Well, there's two aspects - - -

PN1272

THE SENIOR DEPUTY PRESIDENT: They might be right but it is not necessarily true.

PN1273

MR BROTHERSON: I think there's two aspects to this issue of contractors, your Honour - one is the one you have just identified and that is if mining re-opens and it looks to outsource it wants to use the provision to shore up the conditions it would apply to those contractors. There is the current issue where even without mining happening, and this goes to the matters dealt with by Mr Timbs, and we didn't cross-examine him about that because I think his position on it was clear from his evidence, in any event, where the example is quite recently two employees of a contracting company were brought in to do some roof-bolting work. The claim is that clause 24 applies to those persons.

PN1274

So there are no employees covered by the agreement, haven't been for over three years, but the union is still saying the contractors' clause has effect and continues to have effect to those contractors. It has got nothing to do with security of employment of any employee of Wollongong Coal because there are no employees at Wollongong Coal covered by the agreement. I think I addressed you on that question earlier today. But I think that is the second aspect of the contractor clause and arguably one that should - if - I won't say should be more troubling to the Commission but is a live issue now that whatever might happen with future approvals, future opening of the mine and mining recommencing, which we know will not be within the next 12 months, so one could argue that that is beyond the foreseeable future.

PN1275

What we have in the foreseeable future is there could be more instances where the company needs to call on workers or contractors as part of care and maintenance and it's going to have ongoing disputes about what should apply to them in terms of terms and conditions. They may be contractors working on legitimate agreements approved by the Fair Work Commission. But the union, under clause 24, has this right to recognise them or not and recognise them as we've heard from Mr Timbs today means the rates of pay would be in all probability consistent with this agreement. Their disputes that the company on our submission should be not drawn into or have to grapple with whilst it's in its current care-and-maintenance phase waiting to know whether it even has approval to recommence mining, let along recommence mining.

PN1276

It's an example to us that the - and we would say should be an example to the Commission of a reason why this agreement is not only long past its normal expiry date, the real opposition to it being terminated is for a collateral purpose and that is the regulation in the interim period of contractors. If I can turn, your Honour, to the requirements of section 226 more precisely, clause - sorry, section 226(a) of course is the public interest criteria. The test, of course, is that it must be not contrary to the public interest to terminate the agreement, which is a lower threshold than if it was a positive finding of being in the public interest.

PN1277

The authorities dealing with that are not in dispute between the parties. They are referenced in the outline and I don't propose to take you further to that. We take it from the union's outline of submissions that it doesn't oppose the application on that criteria. We take that from paragraph 16 of my friend's outline, that the challenge is really on the basis of section 226(b), that is they're arguing that it is not appropriate in all the circumstances that the application be granted. Whilst it's obviously still for your Honour to determine that the application is not contrary to the public interest we are submitting that it satisfies that. The union is not opposing it.

PN1278

On that basis we think the Commission could be comfortably satisfied that section 226(a) is met. Unless your Honour requires, I don't propose to address you further on that criteria. We have had - well, to the extent I will, there has been nothing in the evidence that says that this would have a negative impact if the agreement is terminated on employment levels, that anybody is going to be employed on less than a safety net. It's not contrary to the objects of the Act. Indeed, what we have had is to the contrary, that if mining can recommence they would have positive effects on employment, opportunities for employment and the wider community.

PN1279

Turning to section 226(b) of the Act, we submit that it is also appropriate to terminate the agreement, taking into account all of the circumstances, including as required by that provision the views of employees, the employer, the union, each of their circumstances and the likely effect of termination of the agreement on them. This as I've said is the point of contest in the proceedings. Wollongong Coal, as I've just said, submits that it is appropriate. Reasons for that are set out in the submissions and I'll address that further in a moment. If I can just jump to the issue of employees - and you need to take their views and their circumstances and the likely effect into account - as we've heard today, there are none.

PN1280

It's not a matter the Commission need trouble itself too much with. The union, of course, says it's not appropriate and raises a number of grounds including that this enterprise agreement is just a typical agreement for this region and therefore doesn't cause any issue and should remain. It says that the Commission should take into account the views of ex-employees. Now, there is no mandatory requirement to do that under the Act. All we hear of ex-employees is from Mr Conkey, who says he has remained in touch with a number of his former colleagues. The long and the short of Mr Conkey's evidence that apart from him there is no evidence anybody wants to go back and work at Russell Vale.

PN1281

What he says is that a good many of his former colleagues have left the industry and wouldn't even go back to work there if they were offered a job.

PN1282

THE SENIOR DEPUTY PRESIDENT: It's because they're all earning less money, I think, than they used to earn.

PN1283

MR BROTHERSON: Well, that may be, but to the extent the suggestion is the - - -

PN1284

THE SENIOR DEPUTY PRESIDENT: Only one former workmate is now employed on better wages and conditions than their previous job with Wollongong Coal.

PN1285

MR BROTHERSON: But what he was talking about, I think, and what the attempt to rely on is the reduction in hands clauses - - -

PN1286

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1287

MR BROTHERSON: - - - it's called increase in hands clause - is important because people might want to go back. Well, what we get at paragraph 11 is that he has kept in touch with many former workmates, a significant number have moved on into other industries and then the last sentence of that paragraph, even if offered these people would not accept a job back with Wollongong Coal.

PN1288

THE SENIOR DEPUTY PRESIDENT: That seems to be - I know it's a bit hard to work out but I think he means there is about half, you know, his former workmates - obviously it's all very kind of indirect evidence and I wouldn't rely on it enormously but half his former workmates have left the industry and they probably wouldn't come back again but then there is this half that have actually stayed and they have usually got not as good jobs and they probably - I think the implication is that they probably would be interested so I don't think you can say that no one else - I think probably the logic of it, about half of them aren't interested and about half of them would be interested.

PN1289

MR BROTHERSON: Well, he doesn't say they're interested. What he says is that - - -

PN1290

THE SENIOR DEPUTY PRESIDENT: Well - - -

PN1291

MR BROTHERSON: - - - they're not earning what they once were.

PN1292

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1293

MR BROTHERSON: But what that also shows is the point that the company is making is that as it sets about trying to re-establish itself, and reset arrangements, there are opportunities to operate this mine at lower cost.

PN1294

THE SENIOR DEPUTY PRESIDENT: I mean, one of the - again, I guess it's again partly a function of the history but - the unusual history of this matter - but the - normally again there are undertakings given about maintaining certain conditions of employment and that kind of thing and obviously there is nothing like that here. So, I mean, it probably is a matter of reality. There is no way that you can go back and just employ people on the award. But you at least have payment over award rates - - -

PN1295

MR BROTHERSON: Well, I think the law says you could.

PN1296

THE SENIOR DEPUTY PRESIDENT: Yes, you could theoretically - - -

PN1297

MR BROTHERSON: But the reality - - -

PN1298

THE SENIOR DEPUTY PRESIDENT: - - - but the reality is you'd be unlikely you'd get people to do the work for that sort of money.

PN1299

MR BROTHERSON: I think Mr Sharma virtually conceded that.

PN1300

THE SENIOR DEPUTY PRESIDENT: Yes but be that as it may there is no kind of indication as to what they would be paid.

PN1301

MR BROTHERSON: Well, I think one by analogy could say CAS, which is currently performing the work at Wongawilli, is doing it at $34 an hour - - -

PN1302

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1303

MR BROTHERSON: - - - which is some $4 or so per hour less than the agreement would provide for.

PN1304

THE SENIOR DEPUTY PRESIDENT: So are those supposed to be casual rates or - - -

PN1305

MR BROTHERSON: I think there's - - -

PN1306

THE SENIOR DEPUTY PRESIDENT: - - - do you know? I mean, if you don't know or you don't want to make a concession - I don't know.

PN1307

MR BROTHERSON: I don't think I could give you an authoritative answer.

PN1308

THE SENIOR DEPUTY PRESIDENT: All right.

PN1309

MR BROTHERSON: Your Honour, I think there is a mention somewhere in the evidence that - from Mr Timbs, that they're employed by casuals.

PN1310

THE SENIOR DEPUTY PRESIDENT: Yes, because a lot of labour-hire people or contract employees in the coal industry are notionally anyway employed as casuals. It's just there is a hell of a difference between $34 an hour with a 25 per cent loading and $34 an hour.

PN1311

MR BROTHERSON: Indeed, which may take you back not quite to the award rate but what it does show, Mr Conkey's evidence, it re-affirms what Mr Sharma says. There are contractors out there doing this work at less rates and members of the CFMMEU have accepted that work. In fact, Mr Conkey's evidence is other than for working under the agreement he was working on such rates before he went to work for Wollongong Coal and he has gone back and is working for those rates after he has left Wollongong Coal. Mr Conkey of course is a tradesman so he has an additional skillset so he would have had a number of options, potentially. I don't want to speculate too much but tradesmen I think it's generally accepted are marketable when it comes to looking for positions, as a general proposition.

PN1312

But we say the views of employees should be given limited if any weight and such weight as there is is that there is not, as you probably wouldn't expect after three-plus years, a hoard of people that have been sitting at the gate for all that time waiting for the mine to re-open. A good number, according to Mr Conkey, have moved on. Others are employed elsewhere. The union also attacks the company on the basis or seems to try and attack the company - I wait to hear my friend in his submissions - on the basis that it's been a poor corporate citizen of some sort. Well, we have acknowledged that its track record historically has not been perhaps what it should have been but all those issues have been resolved.

PN1313

The company should be praised rather than criticised for what it has now done in terms of things such as the enforceable undertaking, its arrangements with the ATO, but it's associated also with this issue that is emphasised in the annual report, that to remain a viable concern it needs that stringent cost control. This application is entirely consistent with that and being repositioned that if it needs to at some point or if it can at some point recommence mining at Russel Vale because it gets the approval that it proposes to seek, that it can start again, not have the legacy of an agreement that was made seven years, probably eight or more years by the time mining would recommence, at a vastly different time and a vastly different time in terms of not just the issue of the coal price at that time.

PN1314

Coal price, we heard today, is volatile and it is not back where it was but it's closer to it than it's been but what we do know is at that stage we had a mine that was operating - had been operating on bord and pillar arrangements. It was looking at moving to longwall mining and moving from being a mine of 400,000 tons per annum to 300 million tons per annum. It would go back under what's proposed to being a mine of 800,000 tons per annum, according to - - -

PN1315

THE SENIOR DEPUTY PRESIDENT: There is no kind of general principle, if I could put it that way - or is there - that sort of people doing bord and pillar, working in a bord and pillar mine should somehow be paid less than somebody working in another type of underground mine? There might be less - the work itself might be not as - from the point of view of the employer it may be a lot less productive because, you know - but the work that the employees are doing, well, it doesn't sound like it's all that different. It's not like it's a different skillset. The evidence of Mr Timbs was it's probably harder, doing bord and pillar work and you need more experience.

PN1316

MR BROTHERSON: Yes, I think it is a different skillset.

PN1317

THE SENIOR DEPUTY PRESIDENT: Well, but not a lower skillset then, perhaps.

PN1318

MR BROTHERSON: No, perhaps one should just say they're not comparable. I mean, I think the award - we were taken to the competencies within schedule A and there is a whole lot of competencies that are lumped together that are indicative of the task. We can't really take it any higher than that, I think. There is certainly no general principle that says bord and pillar people will be paid less. What we do know, and all you can extract on industry rates, are there appears to have been in the Illawarra or southern region, as it's called, a group of mines that have marched perhaps hand-in-hand for a period. But all those other mines are continuing operations. They might have some issues but they haven't closed in the same sense as Russell Vale.

PN1319

They are all continuing as longwall mines.

PN1320

THE SENIOR DEPUTY PRESIDENT: But there is no - at least I don't think there is any real evidence that the reason why the mine closed has anything to do with the agreement. I mean, just to be - I didn't detect any evidence along those lines. I mean, it's not clear to - I mean, you know, based on - unless I misheard him and I'll go back and check the transcript - but it didn't sound like Mr Sharma was saying that whether the mine re-opens or not has much to do with what happens to the agreement. It's not as if it's got nothing to do with it. That might be going a bit far. But it's more to do with the practical issue of getting the approvals from the relevant authorities to actually, you know, get permission to re-open the mine.

PN1321

MR BROTHERSON: If I can take your Honour - - -

PN1322

THE SENIOR DEPUTY PRESIDENT: And getting the finance, obviously, to be able to re-open the mine.

PN1323

MR BROTHERSON: - - - to page 141 of exhibit 1, we didn't - I think this didn't emerge in the examination of any witnesses but it's there in the evidence - - -

PN1324

THE SENIOR DEPUTY PRESIDENT: Sorry, what was it again?

PN1325

MR BROTHERSON: Page 141 of Mr Sharma's statement, exhibit 1 - this was the memorandum that was issued to employees on 1 September 2015. So effectively it sets out the reasons for the proposed changes, which were to cease mining and make people redundant. I've got to draw to your Honour's attention they were the reasons that they were given at the time - decline of global coking coal price and lack of demand, no longwall coal, shareholder investment and uncertainty on that issue and the significant losses since 2013.

PN1326

So we can't put - and it actually has not been part of the case that the agreement went to the closure - what the company has said and Mr Sharma's evidence says this, is that the agreement might not prevent recommencement of mining but for the company to position itself as it sees it should and feels obliged in the interests of its shareholders, is to be as viable as possible and that means to operate in as cost-effective and flexible way as it can. It seems that - that is where it sees the agreement is an impediment because it knows and Mr Sharma's evidence again deals with this, it knows from its experience with Wongawilli that there are contractors there that it can utilise to operate the mine at a cheaper price than it would have to under the agreement. Whether we look at Mr Timbs' evidence, Mr Conkey's evidence or Mr Sharma's evidence, that is clear. It doesn't really matter what Appen or Dendrobium does or Metropolitan does. This is about Wollongong Coal and enterprise agreements are about the enterprise and this is a business and its annual report confirms that in order to remain a viable, ongoing entity it needs to contain its costs.

PN1327

So yes, the mine could operate but the company has a large debt that it needs to service; not just service the debt but in turn and in time return interest on the investment that its shareholder has made and what it can't control is the coal price. Despite Mr Timb's best efforts to try and explain the imperative for an internal supply is not as great as for an external company, I think Mr Sharma's evidence has to be preferred on that, that it is. In any event, this company doesn't fully rely on its internal supply. It has to sell on the external market. The company needs to contain its costs and that is what it can control.

PN1328

It set about not just containing costs but as I've said, re-establishing itself by resolving where it has debts, fines, penalties. It's done all those things. It has for whatever reason, rightly or wrongly, got itself into a position a bit different to, say, South 32 or some other organisations that are much more viable and understood to be much more viable. Under section 226(b) of the Act you also need to take account of the views of the union and any effect on itself. The views of the union I've dealt with but the termination of this agreement, in our submission, would have absolutely no effect on the CFMMEU. It can still bargain with contractors as it says it's doing and continues to do.

PN1329

In the event that the company was to recommence mining and look to re-engage employees under schedule A of the award, it could bargain on their behalf, picking up what your Honour has I think already raised, that the reality is most of those persons would probably be members of the union in any event. But our submission is that the Commission shouldn't be swayed by what the union says and should be satisfied that it is appropriate to terminate the agreement. I won't restate those matters. I do just want to probably return to clause 24 of the agreement, because as we say in our submissions in reply, it looms large across this matter.

PN1330

It's probably an appropriate time, before I answer that, to more fully answer your Honour's questions of is there anything legally stopping the making of a greenfields agreement. We think there is. That is, a greenfields agreement could be made where there is a genuine new enterprise. That is the requirement of section 172(b)(ii) of the Act, an enterprise being a business activity or project or undertaking. I don't think it could be put that a company continuing to own a mine which hasn't been boarded up and shut up but basically is in care and maintenance, awaiting its future, could be described as a new enterprise. I think that's the short answer to that, so I don't think that is a possibility.

PN1331

Turning to clause 24 itself - and I think your Honour questioned whether such a clause could be enforceable - I rely on what I've said to your Honour in opening this morning, that we have a serious proposition to put that we don't think it is enforceable, and that is it can't be about a permitted matter where currently there are no employees. Provisions such as clause 24 are permitted matters to the extent they relate to the security of employment of employees covered by the agreement. That is the proposition from the Scheffenacker case, which is contained in the folder of authorities at tab 9, which continues to prevail. It was a guiding principle when the Fair Work Act was enacted.

PN1332

The principle can be seen at paragraph 83 beginning, probably, from the second sentence:

PN1333

This is sought to be achieved by obliging Scheffenacker to give that directive to the agencies. Whether that means will be effective or not, the intent is that the relationship between the cost of labour supplied by the agencies and the cost of the labour of Scheffenacker's employees will be relevantly the same after the agreement as it was before. For that reason we think that the sub-clause pertains to the relationship between Scheffenacker and its employees. It direclty concerns the security of employment of the employees covered by the agreement.

PN1334

MR BROTHERSON: There are no employees covered by this agreement. It remains in operation by virtue of the Act but there are no employees covered by it. I mentioned earlier this morning that there is an interesting decision of Senior Deputy President Richards in a CFMEU matter citation [2013] FWC 912, dated 26 February 2013. It was actually an argument about whether an agreement should be approved on the basis of whether a contractor's clause was about security of employment. I think I mentioned that there was a broad suite of classifications in the agreement. I don't have a copy of this for you but I can provide it following the proceedings but - - -

PN1335

THE SENIOR DEPUTY PRESIDENT: I would appreciate that.

PN1336

MR BROTHERSON: I do apologise for that. But there is an interesting section where it says at paragraph 19:

PN1337

Insofar as clause 23 purports to operate in respect of any contractors or subcontractors engaged under classifications other than forklift driver, which is the only classification of employees to be employed under the agreement, it would appear to me at least that the clause arguably would not comprise the permitted matter. This is because the clause would require the company to extend to all contractors and subcontractors the terms and conditions under the agreement in respect of classifications which the company does not employ any employees.

PN1338

MR BROTHERSON: Now, his Honour went on in that matter to actually say he could approve the agreement because he still had the benefit of section 253. So he comes at it from a slightly different angle but we think that the logic holds good here, where in this case we've got an agreement where the company doesn't employ anybody under the agreement and in the foreseeable future it won't employ anybody to perform mining work within the scope of schedule A of the agreement - of the award - under the agreement. But we have claims by the union that notwithstanding that, clause 24 should prevail to impose the terms of the agreement on those contractors and of course reserved to its right - to itself a right that if they're not going to pay it by the agreement, we otherwise need to be able to recognise their terms, if they have an agreement of their own.

PN1339

Now, we say the clause as it is is probably not enforceable. I said at the start of the day it may not be that your Honour necessarily needs to come to a final view about that. We say it's not enforceable. The union - and I'm sure my friend will say something about it - I asked him before lunch to concede the point and he wouldn't so I'm not expecting - - -

PN1340

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1341

MR BROTHERSON: - - - he has changed since. What we have is an enterprise agreement that covers no employees so there is nothing to do with their security. We have an ongoing agreement with a contractor clause and they're the only people it seems to cover. It's causing dispute about the terms that those people should have. Now, of course we have a separate argument somewhere if needs be about what that clause means. But I think I can put it to your Honour - I don't think you need to actually deal with that. The question of the enforceability of the clause could well be determined somewhere else if needs be. What you can see from the evidence is the dispute that exists.

PN1342

There is no employees, there is no issue of security of employment for those employees but there is a claim that the clause can still operate to impose conditions on contractors or through the company, Wollongong Coal, to in turn impose conditions on contractors. Now, if that can be taken further, of course, as we talked about a little while ago, that if the union truly believes the company, even if it's going to operate this mine in the future, won't employ a workforce, it will outsource a workforce, what emerges is the likelihood is the union only wants to retain this agreement for one reason and that is the regulation of contractors.

PN1343

That, as I said earlier in the day, is a collateral purpose. It's got nothing to do with enterprise bargaining. It probably renders the clause unenforceable. But for the purposes of these proceedings and whether it's appropriate to terminate the agreement, we've got a dated agreement long past its nominal expiry date, no employees being used to regulate contractors. That's not an appropriate use of the provisions of the Act. So I think the final point I'd say about that is that even if the provision is enforceable there is a question as to how it operates. Mr Timbs isn't entirely clear about that but he seems to have some measure of control over it, given this issue of recognition.

PN1344

It might be that my friend will make a submission as to what, "recognised," means but again, it just goes to the controversy that we think starts to emerge in the proceedings as to what does the clause mean and how it's being used and all of those factors go, we say, to support that it is appropriate to terminate this agreement and I won't restate the mantra as to why but for reasons which I've gone over a number of times. Your Honour, I otherwise rely on what's in the submissions and obviously to respond to anything put by my friend.

PN1345

THE SENIOR DEPUTY PRESIDENT: Yes, thanks very much, Mr Brotherson.

PN1346

MR WALKADEN: Your Honour, I too rely upon the outline that was filed. In terms of the points I wish to make today I confirm that our opposition to the agreement is not premised upon section 226(a). We say there are neither any positive nor negative public interest considerations that arise in this matter. That has been a matter we've addressed in our submissions. We accept that if mining were to recommence at Russell Vale - which by the way, the union supports - we say that that would have positive public interest considerations, jobs, tax, et cetera but for the reasons addressed in our submissions you must be guided by the likely foreseeable consequence of termination, not speculation, and going to those matters given the issues with approval and the uncertainty with the approval of the revised UEP being granted and then the further step of whether Jindal will make the further capital investment et cetera. You'd be going into speculation if you were to be satisfied that there were positive public interest considerations. We say there's neither positive nor negative public interest considerations and our opposition to the termination of the agreement is premised upon section 226(b).

PN1347

I might then move on to addressing the question in relation to the possibility of a Greenfields agreement. We agree with my friend that it probably wouldn't be an option to make a Greenfields agreement in the circumstances but that's a preliminary view, a tentative view, but that is the view nevertheless. We also accept that given there are no employees who are covered by the agreement that since September 2015 the agreement could not have been varied, nor could have the company made a new enterprise agreement. So we accept that. What we say is that the industrial reality nonetheless is found at paragraph six of Mr Timbs' statement E6, which reads -

PN1348

"CFMMEU membership amongst directly employed production engineering workers at these mines being the mines in the southern district has historically been and continues to be close to 100 per cent. CFMMEU membership, amongst labour hire contractors at these mines is also significant."

PN1349

So the reality is that the underground mines in the southern district you can form the view that it is highly likely that a mine worker, be it a direct employee, or a labour hire employee will be a member of the CFMMEU and in the circumstances, given that is the industrial reality, given that the agreement in question is an agreement negotiated with the union to which the union is covered, the industrial reality is that the company really should have sought to have a discussion with the union prior to making this application.

PN1350

Yes, there's some uncertainty about whether mining will resume and can resume but there would have been nothing stopping the company from seeking to reach a gentleman's agreement, if I can couch it in those terms, to address whatever concerns the company may well have. I am not suggesting that agreement will be reached but a party should at least try, in our submission, to have the discussion to have the negotiation prior to making the application to terminate.

PN1351

That's not a binding principle of course and of course the cases that are contained in the bundle arise in a very different context in the context of contested enterprise bargaining. So we do accept there is a difference but I think that's a reasonable principle to adopt in a circumstance that we're in, given the industrial reality I have alluded to, that would have been a reasonable step for the company to take, to seek to discuss those matters and see whether it's possible that some sort of accommodation could have been reached.

PN1352

The next point I want to deal with arises from the Kellogg Brown and Root case which is found at tab one of the bundle and one of the important points to note about this decision is it was decided by a Full Bench of the Commission, under the Workplace Relations Act in the pre-work choices amendments to that Act, and at that time the relevant test as to whether an agreement should be terminated is set out at paragraph eight of that decision and what the Commission was required to do under the relevant section, 170MH at the time, was to as it explained at two - subsection 2 - was to take such - the Commission must take such steps as to consider as it considers appropriate to obtain the views of the person's bound by the agreement which is similar to the current requirements in section 226(b). However, at (3) the Commission was required to consider whether it was not contrary to the public interest.

PN1353

So that was the legislative framework under which the Kellogg decision was decided and the approach adopted by the Full Bench in Kellogg is explained at paragraph 27 whereby in considering the public interest in very summary terms the Commission should be guided by the likely foreseeable consequences of termination rather than speculation about possible consequences.

PN1354

So what Kellogg stands for is that in a decision determined under the industrial law at that time in approaching whether termination be contrary to the public interest the Commission should only concern itself with the directly foreseeable consequences and disregard any speculation.

PN1355

The test has changed. It changed under the Fair Work Act and the relevant or the most relevant change was the requirement of 226(b) namely the appropriate test was inserted into legislation and at (i) and (ii) the Commission is required to consider the matters set out at (i) and (ii) but, of course, if that is not exhaustive the Commission must take all circumstances into account and this change, I think, was discussed by Vice President Lawler in the Tarmall decision.

PN1356

So I recognise that the legislation under which Kellogg was determined has changed. As I say, Kellogg required consideration of the views of parties bound as well as any negative public interest considerations, the additional requirement in the Fair Work Act, namely to consider whether it's appropriate taking into account all circumstances is an additional requirement.

PN1357

But notwithstanding the change in legislation we say in approaching both 226(a) and (b) of the Fair Work Act the Commission should approach both provisions consistent with the approach taken in Kellogg at paragraph 27 namely, when considering any negative public interest considerations the Commission, as it was, the case in Kellogg should be guided by the likely foreseeable consequence of termination. And likewise the same approach should be applied in approaching section 266(b), namely in determining whether it's appropriate and noting that that is not couched in the negative.

PN1358

The onus is on the applicant to demonstrate the Commission that it is appropriate to terminate, that that provision should be approached in the same way that was taken by the Full Bench at paragraph 27 of Kellogg - namely, don't concern yourself with mere speculation about possible consequences but only consider the likely foreseeable consequences.

PN1359

And if that approach is to be adopted after considering the evidence in this matter the key question that arises is if the agreement if terminated what are the likely foreseeable consequences? And the answer to that is nothing will change, your Honour. Nothing will change. And nothing will change because mining, as we know, cannot recommence until the revised UEP which hasn't yet been submitted is approved by the department.

PN1360

We don't know how long that is going to take and the outcome although Mr Sharma's belief is it will be approved and no doubt the company using their best endeavours to get the tick the situation is the outcome is not predetermined. The department could very well not grant approval. To consider whether the department will grant approval or not is trespassing into the territory that Kellogg cautioned against, namely, mere speculation about possible consequences.

PN1361

Likewise, there's an additional barrier to mining recommencing which is even if approval is given there is significant capital investment around $15 million that is required. Mr Sharma's evidence is that Wollongong Coal Limited does not have that money and will have to ask its majority shareholder Jindal Steel for that money. And Mr Sharma's evidence cannot leave the Commissioner satisfied that that decision of Jindal Steel to guarantee that 15 million or so dollars, that decision doesn't appear to have been made.

PN1362

So once again speculating about whether mining will restart on the evidence before you, you cannot, we say you cannot form a reasonable conclusion that yes, mining will restart at the Russell Vale Mine for those two reasons and what we say is that the likely foreseeable consequence of termination, just say you decide to terminate in a month's time, is that for a very lengthy time thereafter nothing will change.

PN1363

Those two key facts, the issues, the uncertainty around the approval noting that the initial approval was made in 2009. Now, the company is saying well the agreement is seven years old. Well, the approval process - I think I put it to Mr Sharma it's been a tortuous process for the company and undoubtedly it has been. 2009, almost 10 years later your Honour.

PN1364

THE SENIOR DEPUTY PRESIDENT: It's worse than getting an agreement approved in the Fair Work Commission.

PN1365

MR WALKADEN: It is. It is.

PN1366

THE SENIOR DEPUTY PRESIDENT: It's good to know there are people slower than us.

PN1367

MR WALKADEN: It is.

PN1368

MR BROTHERSON: I liken it to a triage process.

PN1369

THE SENIOR DEPUTY PRESIDENT: Yes. It's worse.

PN1370

MR BROTHERSON: I find it's nothing but a triage.

PN1371

THE SENIOR DEPUTY PRESIDENT: Even worse.

PN1372

MR WALKADEN: In any event, for those reasons, if one adopts the approach we're urging - namely to apply section 266 consistent with the approach taking at paragraph 29 of the Kellogg decision and one asks, "What are the likely foreseeable consequence of termination?" We say the correct answer to that question is "Well, nothing will change." On that basis the Commission can't be satisfied it's appropriate to terminate. And as I say section 226(b) isn't cast in the negative. That's cast in the positive. The Commission must be satisfied it's appropriate.

PN1373

Now, that's our submission on that point, but what I'd say is that on that same line of thought for that reason and that reason alone the application should be rejected. It should be dismissed. We say the application is premature. There is nothing to stop the company from making another application once those two key facts change, namely, if the revised UEP is granted and Jindal Steel commit to the 15 million dollar or so capital investment there will still be a period of time, I think on Mr Sharma's evidence, till production would start. That would be the appropriate time on which the company's case would, we concede, be stronger.

PN1374

But that is not the circumstance we're in at the moment and for those reasons, we say, the company cannot satisfy you as they must that it is appropriate at this point in time to terminate the agreement.

PN1375

And in my friend's submissions he's referred to the Russ Mining decision which was a decision that I appeared in and you decided, your Honour, way back in 2014 - some time ago - - -

PN1376

THE SENIOR DEPUTY PRESIDENT: Is it in that bundle?

PN1377

MR WALKADEN: It is in the bundle.

PN1378

THE SENIOR DEPUTY PRESIDENT: I don't think I remember it.

PN1379

MR WALKADEN: I don't. I must say I don't. I have to read it myself, your Honour, to get reacquainted with the facts there but the point being there is that the central issue there was that Russ Mining which was - or which was a labour hire company the submission made was that they had an agreement and they couldn't compete and win work because there were others out there who had lower labour costs.

PN1380

Well, those circumstances are very different from an operator of a coal mine. Mr Smith's evidence, and as an interesting twist of faith, Mr Smith is now involved in CAS Mining, your Honour, which is the contractor at the Wongawilli Mine. Mr Smith's evidence in that decision was that the coal company picked which contractor gets the job on the basis of price. That was his evidence. And obviously labour hire companies compete on price, on costs, labour costs. Circumstances are very different here in terms of forming a view about what the likely foreseeable consequences of termination are. It stands to reason in the Russ Mining scenario if a labour hire company can lower its labour costs by terminating its enterprise agreement well then you formed the view in that decision, your Honour, that the likely foreseeable consequence was that it may well win more work. The same can't be said about Wollongong Coal for the reasons I have outlined because it's not about the resumption of mining isn't contingent upon lowering its labour costs. It's about two factors on which there is tremendous uncertainty, namely, whether the revised UEP will be approved. And, secondly, whether the capital investment that's required will be guaranteed.

PN1381

So that's my primary submission and we say that submission is enough to result in the application being rejected. The second point or third point, I think, is that I wish to make is that it appears that the company's application or the application for termination is motivated by a large degree by desire to lower its labour costs and increase its managerial prerogative. And at paragraph 6(c) of my friend's written outline in reply it says, "Termination of the agreement may allow for lower costs operation at Russell Vale and increased managerial prerogative. This is not disputed in the CFMMEU outline."

PN1382

Well, of course, it's not disputed, your Honour because given the scheme in which the industrial law under which we operate it stands to reason, namely, there's a safety net provided by the NES and the relevant Modern Award and an agreement can only be approved if it leaves employees better off overall. It stands to reason that if that agreement is terminated and conditions fall back to the Modern Award and the NES that it will allow for lower cost operations and most likely allow for increased managerial prerogative. So there's nothing startling or no revelation there. That's just the nature of a decentralised enterprise bargaining system under which we operate.

PN1383

At the heart of the company's case, on our submission, it's complaints about the terms of the agreement. What is surprising and what is a little bit different from this case to the other case is that - or many of the other cases that are referred to in the bundle is that the employer's argument for termination isn't couched in the language of productivity. This isn't the situation. Another case that I was in that you decided which was the Peabody Sedgeman decision. This isn't a situation where the company's key claim was couched in terms of productivity. In that decision the dispute between the union and the company concerned a bonus. The employees had the benefit of fixed bonus and the company wanted to go to the STIP - the variable bonus - it was said to be a productivity enhancer on the part of the company. That was the motivation for the termination application. Ultimately that - - -

PN1384

THE SENIOR DEPUTY PRESIDENT: Well, Mr Sharma did sort of say he wanted to move - you know - if they were going to have a bonus he would rather it be based on performance.

PN1385

MR WALKADEN: Sure. But it was about cost. It wasn't about - the company's case in this instance isn't about productivity and that's said at - you can see that at paragraph seven of the outline in reply. The position of the company confirmed by Mr Sharma is that the motivation is to lower labour costs and increase managerial prerogative, not to improve productivity. That's not the argument put and what I am suggesting to you is that in a number of these decisions that is the argument put by the employer.

PN1386

And, indeed, that was one of the decisive factors in the Horizon decision. So we go to Horizon, which is found at tab three of the bundle, and in particular, paragraph 171. And in particular I draw your attention, your Honour, to the second sentence of paragraph 171 where it says, "These negotiations from Horizon's perspective have sought to remove some restrictive provisions which impede productivity and efficiency. Horizon does not propose to reduce wages indeed it has proposed real wage increases."

PN1387

And I won't read the next sentence - it's not relevant - but the one after, "Horizon is seeking the removal of restrictions on workplace change and other flexibilities so as to enhance its competitive position and improve productivity." So the point I am making is that commonly in a number of decisions in the bundle the motivation for termination is couched in the language of productivity which, of course, is an object of the Fair Work Act. That is not the submission advanced on this occasion. The submissions advanced on this occasion is we need to lower our labour costs and we want to increase our managerial prerogative.

PN1388

And staying with Horizon, one thing that essential or the approach adopted by the Full Bench in Horizon was that other than the legacy provisions and the legacy provisions - I'm sure you're well aware of this, your Honour, in terms of what I am referring to there - but the legacy provisions just to complete the circle are discussed at paragraphs 18 and 19 of the Horizon decision. Legacy, in very simple terms, those terms which are set out at paragraph 42 of the decision. The bullet points are there - no forced redundancies, QR National passes policy et cetera - those are the legacy provisions. They're called legacy provisions for the reasons outlined at paragraphs 18 to 19 of the decision. They were not inserted into those agreements by way of genuine enterprise bargaining. They were effectively imposed by the Queensland State Government during as part of the privatisation process.

PN1389

But the point I want to make about Horizon is this is that what Horizon stands for it stands for the proposition that other than the Full Bench's discussion or consideration of those legacy provisions the proposition is this is that the Full Bench found that it was not appropriate for the Commission to form a view about the terms of the existing agreement.

PN1390

THE SENIOR DEPUTY PRESIDENT: Where is that?

PN1391

MR WALKADEN: Well, that's at paragraph 171 of the decision.

PN1392

THE SENIOR DEPUTY PRESIDENT: But isn't that just a comment about the facts of this case? I mean I don't think that means you could never look at anything else. It seems a strange thing to say because I notice that in your submissions is that it does seem slightly odd to suggest that - you know - the Commission can't, in considering whether it's appropriate, to terminate an agreement not look at the terms in the agreement.

PN1393

MR WALKADEN: Well, I draw your attention to the final sentence at paragraph 171.

PN1394

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1395

MR WALKADEN: Where the Full Bench says, "Save for that with which we have earlier said about the restrictive provisions in the current agreements" which - - -

PN1396

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1397

MR WALKADEN: - - -obviously reference the legacy provisions. It continues, your Honour.

PN1398

THE SENIOR DEPUTY PRESIDENT: Well, I can read it.

PN1399

MR WALKADEN: Yes.

PN1400

THE SENIOR DEPUTY PRESIDENT: But it's whether that somehow means that it's never appropriate.

PN1401

MR WALKADEN: Well, you've got a Full Bench of the Commission - - -

PN1402

THE SENIOR DEPUTY PRESIDENT: No, no, no. But they didn't say - - -

PN1403

MR WALKADEN: - - -which has been routinely followed.

PN1404

THE SENIOR DEPUTY PRESIDENT: Well - - -

PN1405

MR BROTHERSON: I think what it says is that - - -

PN1406

MR WALKADEN: Well, you'll get your chance.

PN1407

THE SENIOR DEPUTY PRESIDENT: I don't know. I'll have to go back and read the whole decision.

PN1408

MR BROTHERSON: But I think you've got to quote what's there. "It is not appropriate that we form a particular view as to the respective merit of the bargaining parties' position- - -

PN1409

MR WALKADEN: Yes.

PN1410

MR BROTHERSON: - - -on such matters", not that they can't consider the terms.

PN1411

MR WALKADEN: Well, what the Bench doesn't do in Horizon is it doesn't go on to consider those terms.

PN1412

THE SENIOR DEPUTY PRESIDENT: No, no. I appreciate it's

PN1413

- - -

PN1414

MR WALKADEN: It goes on to pass judgment.

PN1415

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1416

MR WALKADEN: About the legacy provisions but it doesn't go into detail or doesn't deal with it at all about the other provisions in these 12 enterprise agreements in the way Wollongong Coal has - a shopping list of grievances - and say, "Well, for those reasons it's appropriate to terminate."

PN1417

THE SENIOR DEPUTY PRESIDENT: Mm.

PN1418

MR WALKADEN: So what I say is the approach adopted in Horizon, given it's been routinely followed in the Commission, on my submission, is that you've got a Full Bench who didn't go through the shopping list of grievances approach and form a view about whether clause x,y,z is appropriate or not - this, that and the other.

PN1419

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1420

MR WALKADEN: And you have got this statement here. We just say the approach should be applied in these circumstances that the Commission doesn't need and shouldn't concern itself with a view about whether for instance - whether for instance the fixed term employment clause in the agreement is a good one or a bad one and that's the reason for the agreement being terminated or the fact that there is a provision for a 10-hour break in the - - -

PN1421

THE SENIOR DEPUTY PRESIDENT: Mm.

PN1422

MR WALKADEN: Like we're talking about the minutiae here, your Honour. The matters that - - -

PN1423

THE SENIOR DEPUTY PRESIDENT: Well, I mean it might not be. It may - I suppose what I am questioning is - I mean it may or may not be appropriate to look at those things.

PN1424

MR WALKADEN: Mm.

PN1425

THE SENIOR DEPUTY PRESIDENT: But I am not sure that it necessarily follows anyway from Horizon that somehow I can't - well, the Commission can't in other matters look at other clauses apart from what these particular types of clause is saying.

PN1426

MR WALKADEN: I'm not going to say you can't.

PN1427

THE SENIOR DEPUTY PRESIDENT: Well that it would be inappropriate to do it.

PN1428

MR WALKADEN: I'm not saying you can't because section 226(b).

PN1429

THE SENIOR DEPUTY PRESIDENT: Well, yes it's pretty broad discretion.

PN1430

MR WALKADEN: Taking into account all the relevant circumstances - - -

PN1431

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1432

MR WALKADEN: - - -which has a meaning which would no doubt be understood.

PN1433

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1434

MR WALKADEN: I'm saying you shouldn't. And I'm saying you shouldn't because - - -

PN1435

THE SENIOR DEPUTY PRESIDENT: Well, I'm happy for you to say I shouldn't but what I am querying is whether somehow because of the Horizon Full Bench I shouldn't.

PN1436

MR WALKADEN: I am saying that.

PN1437

THE SENIOR DEPUTY PRESIDENT: I know that is what you're saying but I'm only querying - I'm not - - -

PN1438

MR WALKADEN: I'm saying you shouldn't. I'm saying you shouldn't because of what I've extracted from paragraph 171 as well as the fair reading of that decision.

PN1439

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1440

MR WALKADEN: Where they don't adopt the approach which is at the heart of the company's case, namely, here's our problems with the agreement. We want to reduce our labour costs. We want to increase our managerial prerogative. Could you please terminate the agreement. And my friend takes issue with that submission in his reply submissions at paragraphs 19 to 20 of his outline in reply and in support of a proposition that the approach I am saying you shouldn't adopt is one that you should adopt my friend refers to the Griffin Coal - the AMWU and Griffin Coal decision - and extracts at paragraph 20 of his outline, paragraph 76 of the Griffin Coal decision which was the Full Bench decision in that matter.

PN1441

And I take you to the Griffin Coal which is tab four of the bundle and you go to paragraph 76 of the decision and you will see there contrary to what appears to be suggested in the company's outline in reply at paragraph 76 of the Griffin Coal decision the Full Bench in that decision doesn't form a view about whether it's appropriate or whether the Commission at first instance was correct informing your view about the existing terms of that enterprise agreement. That really goes to the question of a separate question, namely, considering the likely effects of termination but not some sort of analysis as is being urged upon you by the company in its case - - -

PN1442

THE SENIOR DEPUTY PRESIDENT: Well, I mean the Griffin Coal was a very different type of situation.

PN1443

MR WALKADEN: Yes, sure.

PN1444

THE SENIOR DEPUTY PRESIDENT: I mean I think the issue was whether the employer was sustainable without big changes in the agreement.

PN1445

MR WALKADEN: Mm.

PN1446

THE SENIOR DEPUTY PRESIDENT: It was a pretty dramatic situation they were facing I think but the way I read this is that in those circumstances in Griffin Coal they actually did think looking at the conditions of employment - you know - it was a relevant consideration and said it's not the only thing that will affect greater efficiency and improve productivity - blah, blah, blah - but however they say well there are all these other factors. However, it is a reasonable inference that these factors, I assume, the factors includes those - well, the issue of determination - the conditions of employment. The employee's terms and conditions of employment.

PN1447

MR WALKADEN: Well, I read it as saying - - -

PN1448

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1449

MR WALKADEN: I read paragraph 76, your Honour, is concerned about the likely effects of termination, not the approach urged upon you by Wollongong Coal.

PN1450

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1451

MR WALKADEN: Which is to consider the shopping list of grievances.

PN1452

THE SENIOR DEPUTY PRESIDENT: Yes. Well, I mean it was - I mean you've got to look at the particular circumstances.

PN1453

MR WALKADEN: What - - -

PN1454

THE SENIOR DEPUTY PRESIDENT: No, look - - -

PN1455

MR WALKADEN: Yes.

PN1456

THE SENIOR DEPUTY PRESIDENT: - - - I honestly think that it is - I'm not sure that - I'll be frank. I'm not saying that I should or shouldn't. I think it depends - I think it's a very wide discretion.

PN1457

MR WALKADEN: Mm'hm.

PN1458

THE SENIOR DEPUTY PRESIDENT: And you've got to look at all the circumstances and in some circumstances it is going to be relevant to have a regard to the individual provisions in an enterprise agreement and in others it may not be terribly important and it really does depend a bit on the facts.

PN1459

MR WALKADEN: Okay. Well, I've made my submission.

PN1460

THE SENIOR DEPUTY PRESIDENT: Yes. Well, I'll think about it.

PN1461

MR WALKADEN: Yes.

PN1462

THE SENIOR DEPUTY PRESIDENT: But I'll go back and have a look at those decisions but - - -

PN1463

MR WALKADEN: Yes. I'm prepared to move on, your Honour.

PN1464

THE SENIOR DEPUTY PRESIDENT: Yes. Yes.

PN1465

MR WALKADEN: The next submission I want to make is what we say here and it won't come as a great surprise is we say the agreement and I think it's said in Mr Timbs' statement as well as our written outline that this is no more than a typical agreement that applies to a coal mining company, a coal mining operator I should say in the southern district. And you will see that in Mr Timbs' statement he sets out in great detail, starting at paragraph 16 of E6, which is his statement and running through to paragraph 63 commenting upon the various complaints that Mr Sharma makes as well as also undertaking a further comparison between provisions that are found in the agreement which are more restrictive or impose greater costs than those found in the other four agreements that apply to the other coal mine operators in the southern district.

PN1466

So, for instance, you will see that Mr Timbs has highlighted paragraph 61 a number of matters whereby the term of another agreement is either more beneficial to the employees or more restrictive and I won't go through the detail of that. Mr Timbs' evidence on that wasn't contested and nor was Mr Timbs' evidence at paragraph 62 where he concedes that there are some differences between the agreement and other enterprise agreements that currently apply.

PN1467

In some items the agreement is more restrictive or imposes costs not found in one or more of those agreements. However, on overall basis the agreement is not more restrictive or inefficient or does not impose higher costs in any of those enterprise agreements and one has regard to a fairly exhaustive comparison that was undertaken the Commission can be comfortably satisfied with that statement of opinion by Mr Timbs.

PN1468

And the way the company proposes to deal with this is quite unsatisfactory in my friend's outline in reply at paragraph 16 it just says, "It should not be necessary for the company to invest the time and expense to have the argument." Well, that's the matter for them. If they don't want to have the argument that's fine but if you don't put up an argument you can't then complain that your opponent's argument has been accepted.

PN1469

The way they propose to deal with this issue isn't to engage in the comparison and contest the comparison. The way they propose to deal with it is simply to say as they say at paragraph 21 of my friend's written outline of reply, "Well, we're not comparing apples with apples because the differences are stark." And we say that we are comparing apples with apples. We're comparing underground coal mines in the same geographic region.

PN1470

Yes, the mining method is different. We know that where it's proposed to be different because that difference is not reflected in the relevant industry award and I took Mr Sharma to that. If there was this terrible difference in the underlying industrial instrument applies across the industry that would be reflected in the award. It's not.

PN1471

The point of difference is between an open cut mine, an underground mine. Obviously those two operations as conceded by Mr Sharma quite appropriately there is more of a difference, understandably, in those operations but to say that the fact that Wollongong Coal proposed to operate Russell Vale by way of bord and pillar means that you can't compare an apple with an apple with the other mines in the southern district that use a long wall.

PN1472

As I say it doesn't ring true. It's not reflected in the underlying award and the other reason is this is that albeit that Wollongong Coal doesn't have a wash plant and therefore sells its coal unwashed they're selling the same product and as was accepted in cross-examination by Mr Sharma as opposed re-examination, in cross-examination the transcript will show that he agreed with me, that those four mines - the four of the mines in the southern district - are competitors of Wollongong Coal.

PN1473

And it's a fairly fundamental principle that you obviously compare. It is a proper comparison if you're comparing a firm to firm to compare it to its competitors. There's nothing terribly revealing about that process. That's again what Horizon does - compares Horizon to Pacific National. There would surely be some differences in terms of how they operate their trains but their competitors and it's a perfectly appropriate comparison and it is an apple with an apple.

PN1474

What's not an apple with an apple is the faint suggestion, because it wasn't really dealt with in my friend's oral submissions is that somehow you compare the agreement to the Clarence agreement. We say that's completely ludicrous. Not only is there the geographic difference which is relevant but the mines - the two mines - extract a completely different product. The mines in the southern district primarily extract metallurgical coal.

PN1475

As Mr Timbs' evidence disclosed the Clarence mine extracts thermal coal. Mr Timbs explained in re-examination, in very basic terms, the difference of those two minerals and Mr Collie's evidence goes into detailed support Mr Timbs' throwaway comment - I said, "What's the difference at about a hundred bucks a ton."

PN1476

And you will see that reflected in Mr Collie's evidence, and I am going to take you to it. Not all of it but I will take you to page 62 of Mr Collie's evidence which is annexure PC5 and this is the report - the Resource and Energy quarterly for June 2018 so the most recent one. And page 64 you will see under 5.2 the premium hard coke and coal spot price FOB Australia averaged US $191 a ton in the June quarter. We then turn over to page 71 - - -

PN1477

MR BROTHERSON: Sorry, what was that first page?

PN1478

MR WALKADEN: Sixty-four on the middle.

PN1479

MR BROTHERSON: Yes.

PN1480

MR WALKADEN: Seventy-one - you will see - and this is dealing with thermal coal under the heading 6.2, second paragraph, the Newcastle benchmark spot price average US $104 a ton in the June quarter. And you will see if you turn to PC5 - sorry, PC6 - which is an industry publication and you will see the prices table on page 100 you will see the Australian prime hard coke and coal price for the period of August 2018 was $181.44 per ton and the Newcastle spot price which is under the IHS steam coal marker and there's weekly - and it's about seven or so down in Newcastle FOB and that reference of the 600kc, that's explained by Mr Collie at paragraph seven of his witness statement. You will see the price - the spot price - the thermal coal being $113.62 per ton.

PN1481

So to suggest that somehow you can properly compare the proper comparator for the agreement is the Clarence Mine is ridiculous. And, indeed, what you will find in actual fact, your Honour, I did a quick comparison whilst Mr Timbs was giving his evidence you will see that many of the terms complained about by Mr Sharma are found in similar terms to the Clarence agreement.

PN1482

So we'll go through a couple. Paragraph 86(a) of Mr Sharma's first statement the complaint there is the agreement requires overtime to be paid at double time. Well the same provision is found at clause 13.2(a) of the Clarence agreement. All time worked by employees in excess of rostered working hours of any shift to be paid at double time.

PN1483

The complaint at paragraph 86(b) of Mr Sharma's statement that the agreement requires the company to pay, effectively, paid union meetings once a quarter and the employees are paid double time you will see that provision at clause 34.4 of the Clarence agreement is even more beneficial. You will see that that employer is required to provide for 10 union meetings, paid union meetings per year and overtime rates are payable.

PN1484

In terms of the complaint at paragraph 88 about contractors - - -

PN1485

THE SENIOR DEPUTY PRESIDENT: Well, they won't use contractors for coal production. That's what it says.

PN1486

MR WALKADEN: That's exactly right. 31.2 - second sentence - the company will not utilise contractors for coal production except in the circumstances mentioned and there's a guarantee there will be no reduction in permanent fulltime employees as a consequence of contractors at paragraph - of clause 31.3 - so not in identical terms as found in the agreement but in the same ballpark.

PN1487

The complaints made from paragraphs 90 in relation to hours of work. I draw your attention to clause 9.5 of the Clarence agreement which reads "The current method of shift allocation as determined by the employees under this agreement will continue." So what that suggests is that the employees determine which employees are allocated to particular shifts. That's not a complaint Mr Sharma makes because there is no provision in the agreement. But that's a significant restriction on managerial prerogative. It's not the boss who determines where employees are going to go. It's the employees themselves.

PN1488

The complaints at paragraphs 91 to 92 of Mr Sharma's statement about working - about hours of work requiring agreement - I draw your attention to clause 9.2 of the Clarence agreement where there is a restriction upon shift lengths above 10 rostered hours and the only way you can have a shift length greater than 10 hours - 10 rostered hours - will be by way of agreement which is the same complaint made at paragraph 92 - - -

PN1489

THE SENIOR DEPUTY PRESIDENT: Well what does the award say actually? Doesn't the award have something?

PN1490

MR WALKADEN: I'm sorry, your Honour?

PN1491

THE SENIOR DEPUTY PRESIDENT: Does the award allow for employer - - -

PN1492

MR WALKADEN: No. It requires agreement.

PN1493

THE SENIOR DEPUTY PRESIDENT: Yes. To work more than 10 hours.

PN1494

MR WALKADEN: Ten ordinary hours though, your Honour.

PN1495

THE SENIOR DEPUTY PRESIDENT: Sorry?

PN1496

MR WALKADEN: It's 10 ordinary hours the award.

PN1497

THE SENIOR DEPUTY PRESIDENT: Yes. But you can't work more than - can you have a 12-hour shift without agreement under the award?

PN1498

MR WALKADEN: I'll just take you to it, your Honour.

PN1499

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1500

MR WALKADEN: So clause 23.2 of the award the award refers to ordinary hours.

PN1501

THE SENIOR DEPUTY PRESIDENT: So what's the - - -

PN1502

MR WALKADEN: Well, that's a reference to your 35 hours - your 35 ordinary hours.

PN1503

THE SENIOR DEPUTY PRESIDENT: So if you wanted to have a 12-hour shift - - -

PN1504

MR WALKADEN: Well, as long as the shift length didn't exceed 10 ordinary hours. That's what the award appeared to provide for.

PN1505

THE SENIOR DEPUTY PRESIDENT: So what do you mean you can have two hours of overtime?

PN1506

MR WALKADEN: Well, as long as the roster didn't include the shift length in excess of 10 ordinary hours. It would depend on how the roster is configured your Honour under the award.

PN1507

THE SENIOR DEPUTY PRESIDENT: Mm.

PN1508

MR WALKADEN: But the point I am making is this the complaint made by Mr Sharma about not being able to impose by right as opposed to by way of a process of agreement - 12 hour shifts rings true at a supposed comparator namely the Clarence Mine. Likewise, 96 point (a) where Mr Sharma complains about the fixed term employee clause and I just draw your attention to clause 23.1 of the Clarence agreement second paragraph up from page 24 which talks about there'll be a discussion in relation to fixed termers. The second sentence says - "If the continued employment of these individuals is to go beyond a period of greater than 12 months then the parties commit to discussions regarding future employment options." Now not as restrictive as clause 6.3(c) of the agreement but a restriction nonetheless.

PN1509

Workforce reductions which is dealt with at paragraph 96(d) of Mr Sharma's statement. 96(d)A complaint around the process - the company must follow prior to it and being forced retrenchments. You will find at clause 26 of the agreement, of the Clarence agreement, isn't expressed in the same terms but still imposes significant restrictions on managerial prerogative and in particular you will see clause 26.3 which preserved the principal seniority.

PN1510

The complaint around the quantum of redundancy pay which is paragraph 96(d)B you will find that the quantum of redundancy pay under the agreement is the same quantum required to be paid at the Clarence Mine. And I would refer there to clause 27.1 of the Clarence agreement. The increase in hands clause it's complained about at paragraph 96(d) of the Sharma statement. You will see at clause 24.2 there is also increase in hands clause in the Clarence agreement.

PN1511

96(e) the complaint Mr Sharma makes is around the dispute procedure in the agreement and says that it enables one party to unilaterally seek arbitration. Well so does the Clarence agreement - clause 5. And the final complaint being 96(f) management of poor attendance and talks about - and appendix four of the agreement - well, you will find that there is an appendix four of the Clarence agreement that's not expressed in the same terms but on my submission within the ballpark and I draw your attention, in particular, to item five of appendix four where it provides for a cascading process. So the company can't determine the step. It's a cascading process that must follow.

PN1512

Now the point of doing that is to say, well, the Clarence Mine for the reasons I have mentioned, given that it extracts a different product which is sold considerably less than metallurgical coal is not the appropriate comparison. It's like comparing an apple with a sandwich but even if you were minded to undertake that comparison you would see that it is a similar agreement to the agreement that we are considering at the present.

PN1513

And we say that it is a matter you should consider in determining whether it's appropriate. You should consider given that the heart of the company's case is the complaints they make about the terms of the agreement you should consider - you should compare those terms to an appropriate comparator and obviously we say the appropriate comparator is the other four coal mining operators in the southern district.

PN1514

That is, we say, the approach that was adopted or one of the matters that was considered in Horizon. I refer to paragraph 165 of Horizon where the first sentence - the Full Bench says, "Many of the provisions sought to be removed or varied are not common in most enterprise agreements." Well, we think we have established that most or pretty much all of the terms complained about by Wollongong Coal are common in a comparator enterprise agreement contrary to what is put at paragraph 21 of my friend's reply where he says, "Well, those are matters that are always put up but don't worry about it." And he refers there to Griffin Coal and Russ Mining.

PN1515

Neither those - the consideration in either Griffin or Russ cautioned against that sort of approach - Russ Mining which is found at tab eight of the decision. It was the company. It was through Mr Smith who gave evidence on behalf of the company who was the general manager. Paragraph three - the second or final sentence - it was Mr Smith who did the comparison. He contrasted - he being referenced to Mr Smith - he contrasted the terms of the agreement, the ResCo agreement with that of its competitors, Mastermind and Workpac and he complained that the agreement to which his company had to apply was too expensive in comparison to those two agreements.

PN1516

So it wasn't the union saying, as we are saying in this instance, "Don't terminate the agreement because the terms being complained about are standard when you compare, when you undertake the comparator exercise. It was the company in that case." At the heart of their case was "You should terminate because our competitors can pay less under their industrial arrangements." So I don't think the Russ Mining decision helped my friend's submission at all.

PN1517

On the contractor issue which is found at clause 24 of the agreement my friend said, "Well, look one of the reasons that should lead to the determination of the agreement is there is this dispute at the moment between the parties between the company and the union about the engagement of contractors."

PN1518

Now, yes the parties have exchanged correspondence on the issue. That's contained in Mr Timbs' statement but the union's position isn't that clause 24 applies to the staff employees or deputies who are doing production engineering work. So we don't say that when a staff employee is doing the roof bolting or doing a vehicle inspection that was previously done prior to September 2015 by a fitter or an electrician - in other words production engineering work - we don't say that clause 24 has any application. It only applies to contractors which clearly doesn't extend to employees of the company. And what the evidence discloses is that there has only been one occasion since September 2015 where a contractor has come on to the Russell Vale site and performed production engineering work and that is set out at paragraph 10 of Mr Sharma's reply statement.

PN1519

And we see there that there's two workers who performed emergency roof bolting at Russell Vale in early July 2018 and the work ceased in mid-July 2018. So yes there's a disagreement between the parties but it's a very minor disagreement, your Honour. It concerns two workers who were on the site for about two weeks over the course of three years. So it's not of sufficient gravity on our submission to terminate the agreement.

PN1520

In relation to the rest of my friend's submission about clause 24 it does not prohibit - clause 24 does not prohibit the company from operating the Russell Vale Mine with a completely outsourced production engineering workforce. That is not his preference but we don't have veto over these matters unfortunately. That is not our preference. But nonetheless clause 24 permits the company to do that. The only conditions upon that is that the contractor must have an agreement that's recognised by the union. Recognised means covered. It doesn't mean there's some other step whereby the company has got to seek permission or things of that nature.

PN1521

If the contractor has an agreement to which the union is covered they impose - they apply their own agreement and not the site rates if I can put it in those terms. Of course if the preferred contractor does not have an enterprise agreement to which the union is covered well then they have to apply the terms of the agreement. That is our submission.

PN1522

Now that doesn't mean that a contractor cannot come on to site, perform the production engineering work at a cheaper rate than what the agreement provides for. They can as long as they have an enterprise agreement to which the union is covered by it. So that's the first point. They can pay less provided that condition is met.

PN1523

My friend's submissions at paragraph 13 about the clause can all be rejected. 13(a) that's not consistent with the manner in which clause 24 should be applied. 13(b) I have dealt with what "recognise" means. It doesn't mean approve. It just means covered. The same can be said about 13(c). And 13(d) as Exhibit E3 demonstrates and I appreciate that occurred after my friend prepared his and filed his submissions, we do say such a claim has been made. You don't need to determine that issue, your Honour, but that claim has been made.

PN1524

You cannot engage as CAS Mining has done at Wongawilli, you cannot engage a casual production engineering workforce if the terms are regulated by the NES and the award. That is not a lawful arrangement in the coal industry. I won't go into the issues in relation to scheme this isn't the time and place but they obviously are matters that need to be considered and are addressed in Mr Maher's letter.

PN1525

So that's how the clause works. It's not a barrier. It's what I say or what we say is the barrier that is erected is more imagined than real and we say that by reference to the facts of the matter. And I refer there to Mr Timbs' statement, paragraph 68, where he says - and he wasn't challenged on this, Mr Timbs. He says, "At present the largest labour hire company is by reference to employ numbers working on a regular or ongoing basis in the southern districts are" - and he goes on to refer to Mastermine RStar, Nexus, and Southern Colliery Maintenance. And then says, "Other than RStar all of those companies are bound by enterprise agreements which covers the CFMMEU."

PN1526

He then goes on to say "The CFMMEU is currently negotiating enterprise agreement with RStar." And he said in his evidence today he thinks that will be done within a week. Now the point being made is this. This isn't - the clause 24 does not prohibit any of those contractors which are the largest contractors in the area getting on the site and applying their own agreement and that may well be at a lower rate - we don't know - I haven't looked at those agreements - than what's provided by this agreement. But if the company wants to outsource the production engineering workforce if we don't like it we'll make that known to the company but it would be something that would not be prevented by clause 24 of the agreement. And he deals there with the CAS issue which I have already addressed.

PN1527

So the barrier erected by clause 24 is more imagined than real. In relation to the submission my friend makes at paragraph 13 - sorry, in relation to the submission made that clause 24 is not a permitted matter that is a surprising submission for the company to make in this case, and surprising because as Mr Timbs' evidence discloses and as he was taken to in his evidence, clause 24 of the agreement is near identical to I think it's clause 24 of the Wongawilli agreement.

PN1528

THE SENIOR DEPUTY PRESIDENT: Yes, I guess the suggestion is that in these circumstances - I mean it's an interesting proposition - that in these circumstances where there are no employees whose job security could be protected because there simply are no employees that that renders something that might have been a permitted matter when the agreement was filed for approval actually isn't a permitted matter now and it's an interesting argument. I'm not sure I need to decide that but - - -

PN1529

MR WALKADEN: Look, I'm in - - -

PN1530

THE SENIOR DEPUTY PRESIDENT: But in other words it's not actually consistent with what - it's a different argument. You know my understanding - well, I think the logic is well it might have been a permitted matter then because that's what - when they said the company - - -

PN1531

MR WALKADEN: Yes.

PN1532

THE SENIOR DEPUTY PRESIDENT: - - -did argue that it was in the Wongawilli case.

PN1533

MR WALKADEN: Yes.

PN1534

THE SENIOR DEPUTY PRESIDENT: I'm not going to - it's an interesting - - -

PN1535

MR WALKADEN: I'm not going to labour the point. I will just say they have changed their tune.

PN1536

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1537

MR WALKADEN: And you're right maybe circumstances have changed but the tune has changed nevertheless. Now, what I wanted to say about that was that not only has the tune changed but so has the law. Now my friend referred to the Scheffenacker decision and that was decided under a different law and paragraph 47 of that decision which is found at tab nine of the bundle the question there and it's surmised at paragraph 47(c) for a matter to pertain to direct relationship it must be connected with the relationship between the employer in its capacity as an employee and the employees in their capacity as employees. That was the test.

PN1538

Now you will see a similar formation is found at section 172(1)(a) of the Fair Work Act, namely pertaining to relationship between the employer and the employees but unlike the workplace relations at the time that Scheffenacker was decided what was introduced as part of the Fair Work Act was section 172(1)(b) which is matters pertaining to relationship between the employer or employers and the employee organisation or employee organisations that will be covered by the agreement. So the scope of matters that can be included has widened.

PN1539

THE SENIOR DEPUTY PRESIDENT: Yes, that's true but in any way that's relevant - - -

PN1540

MR WALKADEN: It is relevant.

PN1541

THE SENIOR DEPUTY PRESIDENT: In what way?

PN1542

MR WALKADEN: Because what we say there is that the decision my friend is referring to where ultimately the decision was found that the clause in question, which is a different clause by the way, not expressed in the same terms.

PN1543

THE SENIOR DEPUTY PRESIDENT: Sure.

PN1544

MR WALKADEN: Expressed at paragraph 71 of the Scheffenacker decision 17.6 expressed in different terms and ultimately as my friend took you to the paragraph 83 the Full Bench gave it a tick and said, "That is a permitted matter." It was a permitted matter to the equivalent of 172(1)(a), namely, the relationship between the employer and the employees didn't consider because it wasn't - - -

PN1545

THE SENIOR DEPUTY PRESIDENT: Yes, it wasn't in the Act.

PN1546

MR WALKADEN: - - -in the Act at the time. Whether it pertained to a relationship between the employer and the employee organisation it's covered of course.

PN1547

THE SENIOR DEPUTY PRESIDENT: Right. Are you seriously suggesting that that clause - I mean I'm not sure I have to determine this but are you seriously suggesting that somehow that clause relates to and pertains to the relationship between the employer and the union?

PN1548

MR WALKADEN: Well, what I am saying is the legislation has changed.

PN1549

THE SENIOR DEPUTY PRESIDENT: Sure.

PN1550

MR WALKADEN: It's expanded to include that additional requirement.

PN1551

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1552

MR WALKADEN: We're clearly talking about here a matter that goes to the capacity of the union to recognise the agreement. I am just flagging that the legislation has changed.

PN1553

THE SENIOR DEPUTY PRESIDENT: Yes.

PN1554

MR WALKADEN: And what I say is that you don't need to resolve this issue.

PN1555

THE SENIOR DEPUTY PRESIDENT: Mm.

PN1556

MR WALKADEN: You don't need to resolve it because ultimately as my friend said that is - the Commission in the power that it's exercising at the moment can't issue a binding determination of rights. You're not exercising judicial power. It may well be that we find ourselves arguing this point somewhere else. In our view there's little utility in the Commission expressing an advisory opinion on this matter. And I say that because without and I don't concede - it's not a permitted matter. I say there's an argument there. It's arguable is as far as I will go and I will say it's arguably within 172(1)(b). And what I say is that if the company is correct with that caveat and clause 24 in the circumstances is in the permitted matter well then it has no effect. And that's the result of section 253(1) of the Fair Work Act.

PN1557

And what follows from that so the logic is we're not conceding - we're saying that making the suggestion that the clause might be permitted but if the company is right the clause has no effect. That's what follows and therefore one of the essential reasons that the company says the agreement should be terminated, namely, clause 24 is too restrictive we say that for the reasons I have previously outlined given they bear the onus of demonstrating it's appropriate to terminate if it has no effect it cannot possibly be a factor that persuades you that it is appropriate to terminate. If it's a dead letter it's a dead letter.

PN1558

THE SENIOR DEPUTY PRESIDENT: Yes. Yes.

PN1559

MR WALKADEN: That's what I'm saying. That's why I don't need to determine it. If they're right and I say that they're not but if they are it's a dead letter. It can't factor into your considerations about being a positive persuading factor that it is appropriate to terminate. And I might just say this on the contract to point contrary to my friend's submission this - our opposition isn't solely grounded upon the regulating contractors or the like. That's what's been suggested and the circumstances here are a little bit unusual because of the increasing hands clause.

PN1560

Now what we say about the increasing hands clause which is found at clause 18 of the agreement is that as I have explained section 226(b) requires the Commission to expressly consider (i) and (ii) the views, circumstances et cetera of each employee that's covered by the agreement. We concede there are no employees but as I have explained there is - it's entirely appropriate for the Commission to consider the legitimate interests of former employees. The discretion as you've indicated and I agree with you is wide in section 226(b) the requirements are taken without all the circumstances, unlike most circumstances the former employees have a legitimate stake in this agreement remaining because of the increasing hands clause.

PN1561

And my friend took you to Mr Conkey's statement. Mr Conkey goes on - he's worked at the mine for a number of years and for a period of time was a union representative. The fair reading through to paragraphs 18 to 16 is that not all but some of - excuse me - the former employees to which Mr Conkey is in touch with would seek to return to work at the mine. Their interests should be considered. They were parties to the agreement. They were parties to the deal that was struck and part and parcel of that deal, your Honour, was the increasing hands clause which as I have indicated on the company's comparator, namely, the Clarence Mine is there as well.

PN1562

So the point I make is that the interests of those former employees who wish to return which is some but not all is a legitimate consideration to which you should consider and it should be a factor that persuades you that's not appropriate to terminate the agreement.

PN1563

The further submission we make in relation to appropriateness of which is - and it's one we have made in our written submission so I won't labour the point - is that the company's track record of meeting its obligations is poor. It's failed to pay workers and it wasn't just a water bill. Didn't pay wages for five or six weeks. The company wasn't trading insolvent on the view of the directors so it could have met its liabilities. That's the only thing you can take out of Mr Sharma's evidence but didn't. Didn't pay superannuation for a very long period of time. Didn't pay their tax bill. Didn't pay the resource regulator their levies and administrative fees and they appeared on Mr Sharma's evidence to the other bills that haven't been met.

PN1564

So this is a company that has a track record of poor compliance with pretty significant obligations. Tax, wages, superannuation, fees and levies they are a condition of its continuing to extract resources. And in those circumstances where such an employer comes before you or comes before the Commission seeking to reduce worker protections which are what is provided by the agreement the fact that track record should be taken into account and it should be a persuasive factor informing the view that it would not be appropriate for such an employer, who has got such a bad track record, to reduce worker protections at the site. So that's why the track record is relevant.

PN1565

In terms of the company's performance the finding that you can make on the evidence is that termination of the agreement will make no material difference to the company's prosperity or otherwise. That is a finding you can make. And you can make that for a number of reasons. One is that since 2004 for the duration of Mr Sharma's employment with the company the company has made a profit on one of those years and that included when coal prices were booming in 2009 at almost the same level they were being reached during 2011 which is the year they did make a profit. And what that demonstrates is that clearly and we didn't go into it, didn't take a forensic examination but the problems that the company has encountered cannot be attributed to the enterprise agreement.

PN1566

They're not suggested to be the main factors nor could they be in the most recent annual report and what's surprising is that the company has complained about the high cost structure but hasn't quantified what the costs savings would be under its preferred model, whatever that may well be. So having come to the Commission and said, "Look, we need to save $10 million on labour costs per year. If we can get that $10 million we'll be right." Haven't done that. Haven't done the maths at all. So the Commission can't be satisfied that if the agreement is terminated that all will be well and the company will be prosperous.

PN1567

Clearly the problems the company has experienced extend far beyond the agreement. We say the agreement is not a decisive factor in the strife that the company has experienced and termination won't lead to an improvement in that performance. The $73 million loss was experienced in the financial year 2013 on even Mr Sharma's evidence. You're not going to save $73 million by getting rid of a quarterly paid union meeting, your Honour.

PN1568

You're not going to save $73 million by changing the dispute resolution procedure to only allow for arbitration if the employer agrees. In the scheme of things and noting that the award doesn't set the market rate that was conceded by Mr Sharma. CAS is paying $34.00. We don't know whether that includes a loading or not but we say that back of a beer coaster whatever savings that could be achieved in the industrial climate are not enough to make a significant difference to the company and that should also be for the reasons I have outlined that should also be a fairly decisive reason for not terminating the agreement.

PN1569

And I want to pause on this point or two more points, sorry, one is that what the evidence disclose as well is that the company professes that it needs to trim its costs and that costs are being controlled right across the business. We don't see that restraint taken by the managing director. He is paid over a half million dollars per year and has been for the past two years and gets that pay for just turning up at work.

PN1570

Now there's an equity issue here, your Honour. The company grizzles about their production engineering employees having a fixed - effectively a fixed remuneration package, getting a wage and also a fixed bonus for turning up to work, saying it wants to move to a performance based bonus system but doesn't apply the same standard for most of its directors and senior managers and that's a point of fairness that one should consider in coming to a view about these matters.

PN1571

The same can be said about their wages - their remuneration. His pay hasn't increased from FY17 to FY18 but it hasn't been cut either and, effectively, what you can conclude is that is what the company is seeking. They are seeking to reduce the rate of pay paid to mine workers, be it contractor or permanent employees and if as a matter of fairness if the company does want to turn itself around, is serious about controlling its costs then the senior executives need to take a pay cut as well. That's our submission on that point. As a matter of fairness you can't be expecting your workforce to take a haircut but not take one yourself.

PN1572

And the final point I will rest on is page 59 of the annual report and you pointed Mr Sharma to this which is the sentence just above costs control, "The coke and coal prices remain favourable with expected production at current prices the company is expected to generate sufficient revenues to meet its own costs at the end of FY2018." Now, I think if you check the transcript but I think Mr Sharma said that production marks it slightly behind at Wongawilli but the gist of his evidence seemed to be that the company appeared to be on track or in the territory of being on track to break even - if I can put it that way - at the end of FY18 which would be the end of March of next year which isn't that far away. It's a couple of months - four months or so away.

PN1573

So there has been a turnaround. There has been a turnaround with the agreement applying. And what is apparent is the reason for that turnaround is the increase in the coal price. That is the reason for the turnaround and not because of whatever labour costs the company is required. Of course the employer wants to reduce its labour costs. All employers do. It doesn't come as a great surprise. Of course they want to introduce and increase their managerial prerogative. All employers do but those - the fact that they want to do those things and the fact that the agreement has been expired for some time which is effectively all the - when you come to the gist - that's the company's case those are not persuasive or sufficient reasons to make it appropriate to terminate the agreement and those are my submissions.

PN1574

THE SENIOR DEPUTY PRESIDENT: Thanks very much, Mr Walkaden. Anything in response Mr Brotherson?

PN1575

MR BROTHERSON: I'll try and be as efficient as I can be but my friend has covered a fair bit of territory there that I think need to say some things about. He properly identifies the likely foreseeable outcomes as being the test and I thought I'd actually addressed that but to the extent he has reraised it. On the issue of the public interest or the requirement that the termination not be contrary to the public interest the simple fact is - - -

PN1576

THE SENIOR DEPUTY PRESIDENT: Well, I don't think there's any contest on this issue.

PN1577

MR BROTHERSON: There's no contest.

PN1578

THE SENIOR DEPUTY PRESIDENT: No, there's not. All right.

PN1579

MR BROTHERSON: It's probably the hour. I will move on. Let's not labour the matter. But on the issue of appropriateness there are some likely foreseeable consequences of the termination. The first is it lets the company reset what it might do with Russell Vale. That is it can evaluate free of the agreement that if it gets the approvals for mining that's not speculative but it's an operating company that is seeking approval and if it gets it it will need to evaluate. Will we go the way of direct employment or will we go the way of contractors? And that is an outcome.

PN1580

At the moment what it's saying is quite clearly if we're forced to continue to have this agreement it almost certainly will not be contractors - sorry, not direct employees, because there are cheaper options available. And that's been in the company's evidence since Mr Sharma's first statement where he actually deals with that and the question or the issue that he knows from the experience dealing with contractors at Russell Vale - sorry, at Wongawilli - that there are cheaper options available. And he says at paragraph 88 -

PN1581

"If clause 24 of the 2011 agreement requires contractors used by the company to dictate as per the conditions in the 2011 agreement unless the contractor is agreement recognised by the union"

PN1582

which we now know means "covered by the union". Well, that's the submission of my friend and from Mr Timbs I think we can take it probably means rates equivalent to the agreement. The company has no opportunity to utilise certain legitimate and lawful arrangements that the market provides for contracting entities to provide labour at the mine. The company's experience at Wongawilli is that there are contractors such as CAS without such an agreement and this work can be performed under suitable rostering arrangements and at a lower cost.

PN1583

The union in its outline of submissions at paragraph seven and without having to trawl through all the clauses of the agreement that my friend delights in saying Mr Sharma complains about. And we haven't really worked our way through those because ultimately we get to the point at paragraph seven of my friend's outline. An outsourced workforce will presumably reduce labour costs and improve the financial position.

PN1584

And I think the whole proceedings have proceeded on the basis that that will be the case and, yes the CFMEU may have agreement with some of these companies. There's others that doesn't. We don't need to consider their agreements because the presumption throughout the proceedings has been an outsourced workforce would reduce labour costs and provide flexibility.

PN1585

So the likely - my friend tries to say nothing will change - well, what will change is that the company is released of the agreement. What will change is and my friend now tries to minimise the number of examples. Admittedly only one has been produced but early on it looked like there might have been a wider claim of coverage for work that's been done under the agreement since it went into care and maintenance that we now have. He is now trying to say, "Well, there's only one concern that's come up in three years."

PN1586

Well, now it's been raised because the company has proposed to terminate the agreement one wonders how many more we might get because contractors do come on to the site and will have to come on to the site from time to time. I think that's got to be seen as a fact.

PN1587

What is foreseeable is from here. There will be disputes about what clause 24 means. There will be more of the examples that we see at annexures eight and nine of Mr Timb's statement. That is a likely foreseeable consequence and it comes about in circumstances where there are no employees of the company covered by the agreement. Their security of employment is not in issue. So where my friend says, "Nothing will change." things will change and they are foreseeable.

PN1588

He raised also this issue of we don't address the question of productivity. Well we do address the question of productivity in our reply submissions. The simple fact is at Russell Vale there is no productivity at all at the moment. So by terminating the agreement no it doesn't immediately increase productivity because there's no work. It's certainly not going to be - it certainly won't be a negative on productivity but it may assist in productivity. And it's not just cost cutting because there's no production. If production starts it goes up.

PN1589

My friend addressed the Horizon case and I don't want to say too much about it but I continue to say he misquotes Horizon. What was said in Horizon at paragraph 171, and as your Honour has rightfully pointed out to him, all of these cases ultimately look at the circumstances of the factual matrix of the application before it.

PN1590

Why a lot of these cases are relevant, of course, is for the principles that one can discern from it. But to the extent it makes a lot of paragraph 171 and as I did interpose and try and point out to him 171 doesn't say you can't review the terms of the agreement. What the Full Bench said was save for that which we have said earlier and some of these things are unusual about the restrictive provisions in the current agreements it is not appropriate that we forward a particular view as to the respective merit of the bargaining positions on such matters.

PN1591

What they're saying is not about the terms of the agreement but the bargaining positions. We want this clause. We don't want this clause. It shouldn't be here for that reason, not that one can't look at the clause itself in an application for termination and say, "Yes, I think that adds to cost and that's a basis for termination."

PN1592

If one then goes to the Griffin case, and again I think he misrepresented and I don't mean that in a negative sense but what our point about Griffin was, and I think your Honour was attune to this. In Griffin there was a consideration of the terms of the agreement and Commissioner Coghlan I think it was at first instance at 76 is quoted at length about what he says and at his paragraph 144 at first instance says,

PN1593

"Whether termination of the agreement leads to greater efficiency, improved productivity, flexibility, reduced costs and ensures progressively viability of the business is dependent on a number of conditions and not only the employees' terms and conditions of employment."

PN1594

Importantly, though, he then goes on to say,

PN1595

"However it is a reasonable inference that these factors should assist in achieving Griffin's coals objectives of sustainability as well as expanding coal operations and employing more people."

PN1596

At 77 what the Full Bench says is, "They discern no appealable error in the approach of the Commissioner having looked at those terms." He doesn't make conclusions one way or another but he draws an inference - a reasonable inference. And the reasonable inference is if these terms are gone it can be assumed, even if this current case, that it would assist Wollongong Coal in achieving its objectives of sustainability and expanding its coal operations. In exactly the same point Griffin Coal is also informative because my friend continues to press the view of, "This is just a typical enterprise agreement."

PN1597

Now everybody in this room has seen a lot of enterprise agreements and, yes, we can discern in a lot of cases similarities but the Act, of course, requires that they are between the parties to the agreement and they should relate to its enterprise. And as we all know pattern bargaining is a particular concern. I am not saying anything further about that but the aim is that enterprise bargaining is about the participants in that bargain coming up with what is right for its business.

PN1598

And these claims about standard conditions have been raised repeatedly in such cases and one only needs to go to paragraph 12 of Griffin which is at tab four of the bundle where the AMWU had set out exhaustive grounds of appeal but underground three at (d) the agreement reflected the industrial standards that apply to the coal industry in Western Australia. (e) the termination will cause an erosion of the industrial standards of the maintenance workers. (f) the termination results in the maintenance employees no longer being entitled to the level of benefits employed by production workers. (g) the termination results in the maintenance employees no longer being entitled to the terms and conditions enjoyed by other workers in the coal industry in Western Australia.

PN1599

In other words the opposition was because what was sought to be terminated in Griffin was being described, as my friend calls it, a typical agreement. It didn't prevent the agreement being terminated because of the other factors that I have just referred your Honour to.

PN1600

So the claim of this being a typical agreement - yes, he can refer to it but it's not determinative and it certainly shouldn't be persuasive and whatever he says there are differences and they are quite stark. This is a company, an applicant in these proceedings in very difficult financial circumstances. It hasn't operated this mine for three years, hasn't even employed anybody or covered by the agreement for in excess of three years and that in itself raises a question of what the Full Bench does say in Horizon of it's got to be presumed agreements do not continue in perpetuity and they certainly shouldn't continue in perpetuity where nobody is covered by them and the motivations for their coverage becomes questionable.

PN1601

If I can go to paragraph 16 of the outline in reply that we filed? My friend took issue with this and I am not sure why and again I accept he was on the role. But paragraph 16 was not that we shouldn't be having an argument or waste our time on analysing the terms of the agreement, although I do say I don't think we have needed to analyse them in great detail because of the presumption that can be made that to the extent the company desires to control its cost to become more viable there's a resumption, reasonable inference that that will be so.

PN1602

But what paragraph 16 was about was dealing with this question of whether there were existing people covered by the agreement which was a live issue coming in to today and now discounted and the second issue was the contractor's clause. That was all paragraph 16 was about. It wasn't about every provision in the agreement. It said "It should not however be necessary for a company to invest the time and expense to have the argument referred to in paragraph 15." If one goes back to look at paragraph 15 it's directed very much to clause 24.

PN1603

So he overstated that and we do stand by what we say at paragraph 16 that there's clearly a live issue as to the meaning of clause 24, whether it's effective and whether it should remain effective. And absent anything else I continue to press it's a live issue. We've got a dispute at the moment as evidenced in annexures eight and nine of Mr Timbs' statement and it's reasonably foreseeable we'll continue to have disputes about that.

PN1604

I want to also just raise this issue of outsourcing. I think on any reading of clause 24 of the agreement. I've done well all day on our losing documents. On any reading of clause 24 of the agreement I'd put to the Commission it's clearly directed and ought be accepted as being directed towards ensuring the security of employment of employees. That's the effect of Scheffenacker which is still good law. It was relied on in the explanatory memorandum for the Fair Work Act as to what the meaning of pertaining to the employment relationship was about and it's not been overturned.

PN1605

The suggestion and I will just attend to this while I am on that point. The suggestion by my friend that clause 24 might be able to survive by virtue of section 172(1)(b) frankly is just fanciful and I won't say anything more than that. It either survives as a security of employment clause or it doesn't but that's exactly where I wish to go about that. It can be reasonably accepted that it's about where you have got employees on the site working within the coverage of the agreement. They're not going to be terminated and replaced with a contractor. That's the effect of the first paragraph.

PN1606

The second paragraph is again we would say where you have got employees covered by the agreement that any contractor that comes in and does some ancillary work or does perhaps supplements of production crew are going to get the same as the agreement but while you have got employees the issue of outsourcing is something different again.

PN1607

Arguably, the first paragraph whilst you had employees could be read as some sort of purported prohibition on outsourcing well that couldn't have prevailed ultimately because you have got your workplace change provisions. Where we get to outsourcing the Act deals with outsourcing. It doesn't deal with them within the enterprise agreement provisions. It deals them within the transfer of business provisions. I went to this earlier today where, if an employer wants to outsource - if an employer wants to outsource - then it would deal with the introduction of change provisions.

PN1608

It may be that a union or representatives could try and argue there is some prohibition on it through the first paragraph of clause 24 but that's only whilst you have got employees. What we have now is a work site with no right to work as a mine, no employees. It wouldn't be outsourcing in the traditional sense and it wouldn't be outsourcing in the sense provided for in the transfer of business provisions and there is no employee covered by the agreement. And perhaps it is important to have a quick look at section 311.

PN1609

When does a transfer of business occur at one - the employment of an employee of the old employer is terminated. Well, if we take it there's still any people relevant to that question in this instance that was three years ago, (b) within three months after the termination the employee becomes employed by the new employer. Well, that has (c) the work the employee performs for the new employer is the same or substantially the same and there's a connection. Well, we find connection then in the next section and that includes outsourcing.

PN1610

Now, the circumstances for outsourcing aren't met but on my friend's submission he wants to keep the agreement to try and cover it. Well, the Act deals with it. If the intention is to try and preserve this agreement to prevent what's being called "outsourcing" I think the company would say it would be resumption of mining at a much later point with a contracted workforce because it's not going to come within the meaning of outsourcing then they fall over on that argument because the Act otherwise provides for it. It's not there and clause 24 won't save them. And clause 24 shouldn't be saved to deal with that.

PN1611

And I think in answer to a question from your Honour earlier this afternoon I said there's two aspects to their contractor clause. There's the current controversies Mr Timbs is raising where people may come in and do some odd job. And there's the broader issue if mining is to restart and the union is trying to say, "We don't think you're going to use employees but if you're going to outsource we want this."

PN1612

Well, it's not going to work because the outsource provider wouldn't be covered by the enterprise agreement. They can't be because there's no employee going to transfer but the union might turn to the company seemingly and say, "Well, because of this enterprise agreement that doesn't cover anybody you're still going to have to apply this agreement." It actually has nothing to do with enterprise bargaining.

PN1613

THE SENIOR DEPUTY PRESIDENT: I just wonder if - sorry to do this to you - but can you just give me an indication about how much longer you're likely to be?

PN1614

MR BROTHERSON: Three minutes.

PN1615

THE SENIOR DEPUTY PRESIDENT: All right. I won't hold you to three if it goes to four.

PN1616

MR BROTHERSON: My friend also played up the issue of the increase in hands clause. We've got an agreement that was made in 2011, past its nominal expiry date three years ago, employees were terminated three years ago. There has to be a live issue how long commitments like that last good for - even when they're made - and made in good faith as they must have been in 2011 to have the agreement approved. But a lot of water has gone under the bridge since September 2015 and how long does a clause like that continue to hold good to say, "This agreement must stay there for that reason given all of the other circumstances."

PN1617

I do just want to say finally one thing. I think my friend's efforts to refer to the remuneration the managing director, carrying no weight in the matter, it's quite evident that Mr Oza's remuneration by the standards of CEO's and managing directors of publicly listed companies is certainly not at the highest end of the scale.

PN1618

THE SENIOR DEPUTY PRESIDENT: But they haven't made any money for the last how many years.

PN1619

MR BROTHERSON: No, but it's equally - his remuneration is not going up.

PN1620

THE SENIOR DEPUTY PRESIDENT: No.

PN1621

MR BROTHERSON: And nor is he getting the big bonuses that would normally perhaps attract criticism of publicly listed companies in such circumstances. So I mean the reality is a company has to have a board. It has to pay its directors and it needs a managing director and needs to pay enough to get somebody of competence to fill the role. And I don't think any weight should be given to my friend's submissions about that.

PN1622

THE SENIOR DEPUTY PRESIDENT: Thank you very much.

PN1623

MR BROTHERSON: I think that's within three minutes.

PN1624

THE SENIOR DEPUTY PRESIDENT: Thank you. Well, I will reserve my decision.

ADJOURNED INDEFINITELY牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋牋 [5.56 PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

SANJAY SHARMA, AFFIRMED........................................................................ PN88

EXAMINATION-IN-CHIEF BY MR BROTHERSON..................................... PN88

EXHIBIT #1 FIRST WITNESS STATEMENT OF SANJAY SHARMA DATED 09/08/2018................................................................................................................................... PN97

EXHIBIT #2 SECOND WITNESS STATEMENT OF SANJAY SHARMA DATED 04/10/2018................................................................................................................................. PN103

CROSS-EXAMINATION BY MR WALKADEN............................................ PN108

THE WITNESS WITHDREW............................................................................ PN463

SANJAY SHARMA, RECALLED..................................................................... PN464

CROSS-EXAMINATION BY MR WALKADEN, CONTINUING............... PN464

EXHIBIT #3 LETTER FROM TONY MAHER TO OPERATIONS MANAGER, WONGAWILLI MINE DATED 25/09/2018...................................................... PN655

RE-EXAMINATION BY MR BROTHERSON................................................ PN829

THE WITNESS WITHDREW............................................................................ PN877

EXHIBIT #4 WITNESS STATEMENT OF DEAN THOMAS CONKEY DATED 20/09/2018................................................................................................................................. PN911

EXHIBIT #5 WITNESS STATEMENT OF PETER COLLEY WHICH IS DATED 18/09/2018................................................................................................................................. PN918

ROBERT JOHN TIMBS, AFFIRMED.............................................................. PN927

EXAMINATION-IN-CHIEF BY MR WALKADEN....................................... PN927

EXHIBIT #6 WITNESS STATEMENT OF ROBERT TIMBS DATED 20/09/2018� PN937

CROSS-EXAMINATION BY MR BROTHERSON........................................ PN939

EXHIBIT #7 CLARENCE COLLIERY ENTERPRISE AGREEMENT... PN1025

RE-EXAMINATION BY MR WALKADEN.................................................. PN1204

THE WITNESS WITHDREW.......................................................................... PN1217

Fair Work Commission Transcripts

AG2018/2488, Transcript of Proceedings [2018] FWCTrans 396 (18 October 2018)