Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union v Stanwell Corporation Ltd

BETWEEN: COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION

AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION

JUDGE: COLLIER J DATE: 17 FEBRUARY 2014 PLACE: BRISBANE

REASONS FOR JUDGMENT 1 This is an urgent interlocutory application brought by four unions - the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union ("CEPU"), the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union ("AMWU"), the Queensland Services, Industrial Union of Employees ("QSIU") and the Construction, Forestry, Mining and Energy Union ("CFMEU") ("the unions") - against Stanwell Corporation Ltd ("Stanwell"). An amended application was filed in Court at the hearing on 14 February 2014 adding the second, third and fourth applicants to the original originating process. Further, at the hearing the applicants sought to amend the interlocutory relief they sought to restrain the respondent from taking further steps until 7 March 2014 or further order. It is this interlocutory application which the applicants press. 2 Stanwell is a government-owned corporation and listed as such in Sch 2 of the Government Owned Corporations Regulation 2004 (Qld). It owns and operates coal, gas and water assets, primarily for the purpose of generating electricity. In particular for present purposes, it operates Swanbank East Power Station ("Swanbank") and Tarong Power Station ("Tarong"). Swanbank is a gas-fuelled power station employing approximately 40 staff, whereas Tarong is fuelled by coal and has approximately 300 employees. 3 Subject to the usual undertaking as to damages, the unions seek interlocutory injunctive relief in the following terms: Until 7 March 2014 or further order, the Respondent be prohibited from taking any further step in relation to its decision to increase capacity at the Tarong Power Station by requiring additional work from the employees there and the employment of additional contractors until it has complied with clauses 2.11 of the Tarong Power Station Enterprise Agreement 2012 in relation to such decision. 4 This interlocutory application is in the context of an originating process whereby the unions seek the following orders: 1. A declaration that the Respondent has contravened s. 50 of the Fair Work Act 2009 (Cth) (the FW Act) by contravening 2.11 of the Swanbank Power Station Enterprise Agreement 2011 by failing to consult the applicant and affected employees in regard to its decision to withdraw the Swanbank East Power Station from service for a period of up to three years from 1 October 2014. 2. A declaration that the Respondent has contravened s.50 of the FW Act by contravening clause 2.11 of the Tarong Power Station Enterprise Agreement 2012 by failing to consult with the applicant and affected employees about its decision to increase capacity at the Tarong Power Station by requiring additional work from the employees employed there and the employment of additional contractors. 3. An order requiring the respondent to comply with clause 2.11 of the Swanbank Power Station Enterprise Agreement 2011 to consult the applicant and affected employees in regard to its decision to withdraw the Swanbank East Power Station from service for a period of up to three years from 1 October 2014. 4. An order requiring the respondent to comply with clause 2.11 of the Tarong Power Station Enterprise Agreement 2012 by consulting with the applicant and affected employees about its decision to increase capacity at the Tarong Power Station by requiring additional work from the employees employed there and the employment of additional contractors. 5. The imposition of penalties on the Respondent for contraventions of s. 50 of the FW Act. 6. An order pursuant to s 546 of the FW Act that any penalties imposed upon the Respondent be paid to the Applicant. 5 In considering the interlocutory application before the Court it is important to note the relatively low threshold the applicants are required to meet in substantiating their case. Specifically, as explained in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at [19] in circumstances where a plaintiff seeks interlocutory relief, it is necessary to demonstrate that: there is a serious question to be tried as to the plaintiff's entitlement to relief; and the plaintiff is likely to suffer injury for which damages will not be an adequate remedy; and the balance of convenience favours the granting of an interlocutory injunction. 6 In relation to the issue whether there is a "serious question to be tried" in any particular case: it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial: at [65]. it is not necessary that the plaintiff demonstrate more than a 50% chance of ultimate success: at [68]. In that light the issue may be understood as whether the plaintiff has made out a prima facie case for relief: at [65], [70]. The requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought. Particular considerations arise where the grant or refusal of an interlocutory injunction in effect would dispose of the action finally in favour of whichever party succeeded on that application: at [72]. 7 In the circumstances of this case I am satisfied that the Court ought refuse the application for interlocutory relief.

Background 8 Both applicants and respondent have filed numerous affidavits from which the background facts to the current application may be identified. 9 In summary, on 5 February 2014 Stanwell called meetings with its employees at both Swanbank and Tarong: At Swanbank, management informed the employees and the unions that it had made a decision to "mothball" Swanbank from 1 October 2014 for approximately three years, retaining only a skeleton staff of seven employees there, because: o Swanbank is a gas-fuelled power station; o the price of gas has risen; o Stanwell planned to on-sell their gas rather than use it to create electricity; and o Stanwell would profit approximately $50 million by doing so. At Tarong, management informed employees and unions that: o an additional two generator units would commence operation in addition to the existing two generators, in order to ensure sufficient supply of electricity following the closure of Swanbank; o no additional workers would be employed at Tarong; o employees at Swanbank would not be redeployed to Tarong. 10 While in the originating process the unions seek relief concerning both Swanbank and Tarong, the interlocutory relief sought relates solely to Tarong and the substantive relief sought in paragraphs 2 and 4 of the amended originating application. Specifically, the unions complain that they have not been consulted in relation to the decision of Stanwell to use the existing Tarong workforce and to bring in contractors to bring on line generating units 2 and 4 at Tarong. The unions rely on cl 2.11 of the Tarong Power Stations Enterprise Agreement 2012 ("Tarong agreement") which provides as follows: 2.11 Consultation Term 1) This term applies if: (a) the employer has made a preliminary decision to introduce a major change to production, program, organisation, structure or technology in relation to its enterprise; and (b) the change is likely to have a significant effect on employees of the enterprise. 2) The employer must notify the relevant employees and unions covered by this agreement of the preliminary decision to introduce the major change. 3) The relevant employees may appoint a representative for the purposes of the procedures in this term. 4) If: (a) a relevant employee appoints, or relevant employees appoint, a representative for the purposes of consultation; and (b) the employee or employees advise the employer of the identity of the representative; The employer must recognise the representative. 5) As soon as practicable after making its preliminary decision, the employer must: (a) discuss with the relevant employees and unions covered by this agreement: (i) the introduction of the change; and (ii) the effect the change is likely to have on the employees; and (iii) measures the employer is taking to avert or mitigate the adverse effect of the change on the employees; and (b) for the purposes of the discussion - provide, in writing, to the relevant employees and unions covered by this agreement: (i) all relevant information about the change including the nature of the change proposed; and (ii) information about the expected effects of the change on the employees; and (iii) any other matters likely to affect the employees. 6) However, the employer is not required to disclose confidential or commercially sensitive information to the relevant employees and unions covered by this agreement. 7) The employer must give prompt and genuine consideration to matters raised about the major change by the relevant employees and unions covered by this agreement. 8) If a term in the enterprise agreement provides for a major change to production, program, organisation, structure or technology in relation to the enterprise of the employer, the requirements set out in sub clauses (2), (3) and (5) are taken not to apply. 9) In this term, a major change is likely to have a significant effect on employees if it results in: (a) the termination of the employment of employees; or (b) major change to the composition, operation or size of the employer's workforce or to the skills required of employees; or (c) the elimination or diminution of job opportunities (including opportunities for promotion or tenure); or (d) the alteration of hours of work; or (e) the need to retrain employees; or (f) the need to relocate employees to another workplace; or (g) the restructuring of jobs. 10) In this term, relevant employees means the employees who may be affected by the major change.

Submissions of the applicants 11 In summary, the applicants make the following submissions. 12 First, they do not seek to "wind back the clock" in relation to the decision to close Swanbank. 13 Second, the interlocutory relief sought is of narrow compass and should be able to be completed within a very short time. 14 Third, evidence before the Court supports a finding that the effects on the workforce at Tarong of the decision to resume operation of two generators at Tarong would constitute a "major change" within the meaning of cl 2.11(9) of the Tarong agreement. Materially: evidence of Mr Scott Tucker, a Scheduling Process Area Officer employed by Stanwell at Tarong, in his affidavit affirmed 10 February 2014, was that: o the units 2 and 4 at Tarong had previously operated with 130 additional workers; o there is a significant amount of work in reactivating units out of cold storage, requiring several months of work utilizing trade staff like fitters, electricians, power workers, riggers and scaffolders, engineers and operational personnel; o there are currently insufficient staff at Tarong to perform the work to bring the units online; o current staffing levels will not be sufficient to be able to maintain and operate two further units into the future; o management has not discussed with the workers how the reactivation of the units will affect the existing workload. Evidence of Mr Shane Brunker, District Vice President of the Queensland District Branch of the CFMEU, in his affidavit affirmed 14 February 2014, was that members of the union at Tarong are concerned about the ability of the existing staff at Tarong to bring back on line the additional generating units. Evidence of Mr Neil Henderson, the Acting Secretary of the QSIU, in his affidavit affirmed 13 February 2014, was that: o the opening of two units at Tarong and the need for more labour has the potential to create career paths for members of the QSIU who are employed at both Swanbank and Tarong; o he understood that Stanwell was considering either using contractors or increasing the hours and workload of Tarong employees to bring the two units at Tarong back on line; o the QSIU had not been consulted. Evidence of Mr Mark Harding, an Operator Technician at Swanbank and a co-delegate of the CEPU, in his affidavit affirmed 10 February 2014, was that management had informed the meeting at Swanbank on 5 February 2014 that there were unlikely to be additional full time positions at Tarong notwithstanding that two additional generating units would be brought back on line. Evidence of Mr Stuart Traill, a State Organiser with the CEPU, in his affidavit affirmed 10 February 2014, was that management had informed the workers at Swanbank that Stanwell would continue to use contractors at Tarong. Evidence of Mr Terry Bradley, assistant secretary of the Queensland Branch of the AMWU, in his affidavit affirmed 13 February 2014, was that: o during 2012 and 2013 Tarong closed down two generating units at Tarong, which resulted in a significant number of redundancies at Tarong; o given his knowledge of those redundancies, he knows that in order to bring those units back on line and maintain them into the future a significant amount of labour would be required; o the current staffing levels at Tarong would not be sufficient to bring the units back on line; o members of the AMWU are concerned that in order to bring the units on Stanwell will either increase or change their workload or engage contractors. Evidence of Mr Jason Young, a State Organiser with the CEPU, in his affidavits affirmed 10 February 2014 and 13 February 2014, was that: o in order to bring the units back on line there would need to be a significant investment of time and resources; o current staffing levels at Tarong would not be able to either bring the units back on line or provide maintenance and operation of those units into the future; o workers were not consulted about the future needs of Tarong; o Stanwell is in the process of repairing the rotor blades at each of the units at Tarong, and this work is being given priority. 15 Fourth, the balance of convenience sits with the applicants because: they are seeking a delay of work of two weeks only, to permit consultation; this delay would not prevent maintenance already planned at Tarong; the delay would place a temporary halt on engagement of contractors; the inconvenience to the respondent is small. Although the respondent has quantified its loss in the event of a two week delay of up to $2 million, this is small for an entity the size of Stanwell; if the applicants lose the opportunity to be consulted at this point, they will not regain it.

Submissions of the respondent 16 In summary Stanwell makes the following submissions. 17 First, the applicants' material does not demonstrate an arguable case that Stanwell has breached its consultation obligations under the Tarong agreement. No actual or probable impact - far less a "significant effect" as required by cl 2.11 of the Tarong agreement - has been identified in respect of any of Stanwell's employees at Tarong. 18 Second, the respondent has provided evidence supporting its claim that no significant effect on workers so as to trigger the consultation obligations imposed by cl 2.11 of the Tarong agreement will arise from the reactivation of the two units at Tarong. The respondent relies upon the detailed affidavit of Mr Dennis Franklin, the Site Manager of Tarong, affirmed 14 February 2014, as well as Mr Franklin's oral evidence given at the hearing on Friday. Mr Franklin is also a qualified mechanical engineer, and has overall responsibility for all operations of Taronga and its staff. Materially, his evidence was that: Prior to October 2012 each of Tarong's four units were running at very low capacity because of low demand within the electricity market, however the cost of maintaining each unit was almost the same regardless of the capacity at which they were operating. In October 2012 management decided to place units 2 and 4 into "cold storage" pending a time when electricity demand rose. Following this decision, Tarong's workforce was reduced by 64 positions. In March 2013 an operations review was conducted of Stanwell's entire business. The review proceeded on the assumption that all four of the generating units would eventually be operational. The management team considered what operational changes could occur so that Tarong continued to have the capacity to operate all four of its units. As a result of the operations review extensive measures were implemented, including: o overhaul of the management structure; o significant reductions of the size of work teams. Previously maintenance teams were made up of approximately 35 workers; they have now been reduced to between 9 and 14 workers; o introduction of the maintainer-operator model to Tarong; o centralised planning and scheduling; o introduction of the Siemens T3000 system, which is an advanced control system operating each of Tarong's generators. This has increased the operators' productivity at the plant by 50%; o relocation of the engineering team; o change in start times, such that all workers now commence work at 7 am. Following the implementation of the operations review, Tarong's workforce was reduced from around 220 positions to 162 positions. In his opinion Tarong's staffing levels per unit prior to October 2012 were significantly greater than required. Further, in his view the plant can operate all four generating units with the existing level of manpower. No "major change" to the composition, operation or size of Stanwell's workforce, or to the skills required of employees, will result from the reactivation of generating units 2 and 4 at Tarong because: o each worker will continue doing the same tasks which they currently perform, or can reasonably be required to perform at any time; o the units themselves are somewhat like a car, in that they do not require much day to day maintenance, with the result that the recommissioning of units 2 and 4 will not add much, if at all, to the daily tasks performed by Tarong's maintenance employees; o the units are operated on a daily basis by operators based in the operations control room, which is done by a control panel. The duties of Tarong's existing operations employees will not alter once units 2 and 4 are recommissioned; o while operations may from time to time have to perform a small number of duties outside the operations control room, and while the recommissioning of units 2 and 4 may slightly increase the volume of work, Mr Franklin is of the view that each shift is sufficiently resourced to accommodate the small amount of additional work; o there will be no reductions to the workforce; o there will be no alteration in any workers' hours of work; o there will not be a need to retrain employees or restructure jobs; o there will not be a need to relocate any employees to another workplace; o while there will be a requirement for Tarong to use temporary contractors for some of the work this is "business as usual" at Tarong, where contractors are sometimes used to carry out specialised work and to cater for temporary "spikes" in labour requirements. 19 Third, the respondent will be significantly inconvenienced if the interlocutory injunction is granted. In particular: Mr Franklin deposes that delays to the recommissioning of unit 4 may have "knock-on" effects across the entire Stanwell portfolio. Stanwell will not be in a position to sell electricity generated by unit 4 for an additional period of several months. Ms Tanya Mills, the Acting Executive General Manager- Energy Trading and Commercial Strategy of Stanwell, gave oral evidence that a two week delay as contemplated by the interlocutory relief sought by the applicants would result in financial costs to Stanwell in the region of $1.2 million-$1.8 million.

Consideration 20 In my view the Court should not grant the interlocutory relief sought. I take this view for the following reasons. 21 As Logan J observed in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Ltd (2010) 198 IR 382 at 395 the right to be consulted is a valuable right. Clause 2.11 of the Tarong agreement requires the respondent to consult with relevant employees and unions in circumstances where a preliminary decision has been made to introduce a major change to production, program, organisation, structure, or technology in relation to its enterprise. 22 "Preliminary decision" is not defined by cl 2.11, however "major change" is defined by cl 2.11(9). Mr Friend SC for the applicants submitted that in this case there had been a preliminary decision, and indeed possibly a final decision, to reactivate the two generating units at Tarong in light of the decision to "mothball" Swanbank. If a "preliminary decision" is one where the employer informs the workers of a proposal, then on the facts of this case it does appear that, indeed, a final decision has been made by Stanwell to reactivate the two units at Tarong, as it was clear from the evidence of both Mr Franklin and Ms Mills that Stanwell is committed to the recommissioning of units 2 and 4 at Tarong rather than merely considering that possibility. No submission was made by Ms Moody for the respondent to suggest that the decision in respect of the reactivation of the units is anything but final, particularly in light of the evidence as to the financial loss the respondent may suffer in the event of delay in its strategy to reactivate those units. 23 If the respondent has made a final decision without consultation in circumstances which trigger cl 2.11 of the Tarong agreement, it is in breach of that agreement. A key question for the Court however at the moment is whether, in the circumstances of this case, the applicants have demonstrated that there is a serious question to be tried - namely, that the decision made by the respondent will introduce a major change and will have a significant effect on employees at Tarong. 24 Mr Friend SC for the applicants submitted that the Court did not need to resolve any conflict in the evidence at this point, that there was more than enough evidence to establish a serious issue to be tried, and that according to Mr Tucker's evidence Mr Franklin accepted that there will need to be a change in the way things are done at Tarong (which is sufficient to trigger cl 2.11). I accept these submissions to a degree. It is true that the Court does not need to resolve any conflict in evidence at this point. However, it is necessary for the Court to consider the evidence put on by the parties at this point to determine whether there is a serious question to be tried, such that the applicant has shown a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. 25 In my view there is not. 26 It is clear that the reactivation of units 2 and 4 at Tarong will result in some change in operations at Tarong. Indeed, any claim that the reactivation of those units would result in no change to operations at Tarong would be peculiar. However the plan to reactivate those units does not, of itself, mean that there will be a major change to production, program, organisation, structure or technology in relation to Tarong within the meaning of cl 2.11(9). 27 Numerous affidavits were filed by the applicants in support of their interlocutory application. In my view the statements in these affidavits, to the extent that they seek to sustain a claim of "major change", are in the nature of assertions rather than evidence. Overall I find the evidence filed by the applicants weak and speculative. In respect of certain aspects of evidence of Mr Brunker, Mr Henderson, Mr Bradley and Mr Young, their statements are unsupported opinion evidence. At its highest, the essence of the evidence of the applicants can be distilled as: 1. Stanwell proposes to "mothball" Swanbank, and some workers at Swanbank are interested in being redeployed to Tarong. 2. Two currently "mothballed" generators at Tarong will be reactivated, which will necessarily require more workers, or more hours by existing workers, or changed hours of existing workers. 3. The necessity of more workers or more/different hours of the existing workforce is based upon the fact that there were many redundancies following the decommissioning of the two units in 2012 and 2013. 28 However in light of the strong and credible evidence of Mr Franklin for the respondents, it does not follow - for the purposes of consideration of whether the applicants have established a prima facie case and a serious question to be tried - that simply because there were redundancies following events in 2012 and 2013, the reactivation of the units will automatically require a major change to the composition, operation or size of the workforce, their hours of work or the restructuring of jobs currently at Tarong. In the context of this application I accept Mr Franklin's evidence that following the decommissioning of units 2 and 4 in 2012 and 2013 there were major operational changes at Tarong as well as organisational changes to the workforce structure at Tarong, with the result that the current reconstituted workforce at Tarong will be able to cope with the recommissioning of the two units without major change. Mr Franklin's evidence, founded on his clear experience and a depth of knowledge of operational matters and procedures at Tarong, supports a conclusion that the plans concerning units 2 and 4 will not have a significant effect on employees at Tarong. I agree with the submission of Ms Moody for the respondent that the circumstances currently before the Court are, to that extent, clearly distinguishable from the case in CEPU v QR Ltd, where the employer was required to consult the workers in respect of any proposed changes that would impact on their terms and conditions of employment. I consider that the evidence of Mr Franklin in particular effectively refutes the assertions and claims of the applicants. 29 The applicants have filed evidence in support of their claim for interlocutory relief, and to that extent have raised a question for consideration by the Court in respect of their claim. However if any evidence filed by an applicant for interlocutory relief sufficed to warrant the grant of an interlocutory injunction there would be no role for the Court in assessing the material before it, and no place for the test explained by the High Court in O'Neill. In this case I do not accept the submission of the applicants that the prospect of a change in the way things are done at Tarong triggers cl 2.11 of the Tarong agreement, or that the evidence of the applicants supports a finding by this Court that there is a serious question to be tried justifying the grant of interlocutory injunctive relief. 30 Further, even if I considered that there was a serious question to be tried, I consider that the balance of convenience is clearly tilted in favour of the respondent. 31 Mr Friend SC argued strongly that if the Court did not grant the opportunity for consultation over the next two weeks it would be lost. The logical conclusion to draw from this submission is that the applicants would be irretrievably prejudiced if the interlocutory relief they sought were refused. However no specific detriment to the applicants was identified should the interlocutory relief be refused (and in this context I note the submission of the respondent that no industrial dispute has been raised by the applicants, and no application made to the Fair Work Commission in respect of any absence of consultation). On the other hand, I consider that there would be very real prejudice to the respondent should the interlocutory relief sought by the applicants be granted. Ms Mills gave evidence that the loss to the respondent from even a two week delay would be in the realm of $1.2 million-$1.8 million. I accept her evidence to this effect. I do not accept the submission of the applicants that such sums should be brushed aside as inconsequential for an organisation like Stanwell. 32 The appropriate order is to dismiss the interlocutory application. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.