Construction, Forestry, Maritime, Mining and Energy Union v One Key Workforce Pty Ltd

1. The parties are to bring in Short Minutes of Orders to give effect to these reasons within seven days. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT 1 This matter has its origins in an Originating Application filed in this Court in November 2016. The Construction, Forestry, Mining and Energy Union - now the Construction, Forestry, Maritime, Mining and Energy Union ("CFMMEU") - sought to impugn the RECS (QLD) Pty Ltd Enterprise Agreement 2015 (the "Agreement"). The Fair Work Commission (the "Commission") had approved the Agreement in October 2015 and it ostensibly commenced operation in November 2015. The Respondent was One Key Workforce Pty Ltd ("One Key"), a company within the One Key Resources group of companies which ran a labour hire business. Employees were on-hired to a range of industries including the black coal mining industry. 2 The relief which was sought was a declaration that the approval by the Commission was "void and of no effect". In the alternative, a writ of certiorari was sought quashing the approval of the Agreement by the Commission and a further order for a writ of mandamus directing the Commission to reconsider whether the Agreement should be approved. 3 On 8 November 2017, the Court as presently constituted concluded that the Agreement was not capable of approval under the Fair Work Act 2009 (Cth): Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd [2017] FCA 1266, (2017) 270 IR 410. The only order then made was that the parties were to bring in Short Minutes of Orders to give effect to the reasons. 4 The question as to the status of the Agreement assumed importance to the CFMMEU and those of its members who were ostensibly covered by it because the terms of the Agreement were said to be less beneficial than the terms previously set forth in a variety of awards. Employees of One Key were generally employed as casual employees. Most of the employees of present relevance had been covered by Schedule A of the Black Coal Mining Industry Award 2010 (the "Award") and casual employment was not permitted under Schedule A. 5 The setting aside of the Agreement had the consequence that employees became entitled to accrued unpaid entitlements, to annual leave and potentially other payments under the Award. 6 On 23 November 2017, a declaration was made that "the approval by the Fair Work Commission of the RECS (QLD) Pty Ltd Enterprise Agreement 2015 on 30 October 2015 in proceedings AG 2015/5383 as recorded in [2015] FWCA 7516 is void and of no effect". 7 An appeal was filed by One Key on 27 November 2017. 8 Pending the hearing of the appeal, concerns were expressed as to whether orders should be made to protect the interests of employees in the event that One Key went into liquidation. At about that time, the parties acknowledged the very real risk that the payment of employee entitlements under the Award would result in One Key entering into voluntary administration. On 21 December 2017, further orders were made by consent, including the following: 2. On or before 31 December 2017, there is to be paid, by the Appellant or by another person on its behalf, into an interest bearing trust account administered by Ashurst Australia, the sum of $1 million. 3. Subject to any other order of the Court, the monies held in trust (including all interest thereon) pursuant to order 2 be dealt with only as follows: (a) in the event that the Appellant's appeal is allowed, and order 1 of the orders of 23 November 2017 in proceedings NSD2058/2016 is set aside and in its place the proceedings are dismissed, then the said monies be released from trust to the Appellant. (b) in the event that the Appellant's appeal is dismissed or discontinued, the monies be distributed to members of the First Respondent as at the date of determination or discontinuance of the appeal claiming an interest therein in accordance with further orders of the Court. The CFMMEU had initially sought the provision of "security" in the sum of $3.5 million in an attempt to secure the entitlements of all employees but ultimately agreed to the sum of $1 million on condition that it was to be applied only for the benefit of its employee members. A schedule of those "members … claiming an interest" is Annexure B-8 to the affidavit of Mr Branko Bukarica affirmed on 18 October 2018. That Annexure details "the amounts to be distributed to each of those members". 9 One Key went into voluntary administration in August 2018 and went into liquidation in September 2018. 10 In May 2018, the Full Court published its reasons for decision: One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77, (2018) 277 IR 23. In summarising its conclusions, the Full Court said (at 73): [234] In short, although he made some errors, the primary judge was correct to find that the Commissioner fell into jurisdictional error by failing to have regard to the content and terms of the explanation [One Key] purportedly gave the three employees when reaching his satisfaction that s 180(5) had been complied with. The primary judge was also correct to find that the Commissioner had not reached the requisite state of satisfaction that the Agreement had been genuinely agreed to by the employees covered by it. Consequently, the basis for the exercise of the power conferred on the Commission to approve the Agreement was absent. It follows that the declaration the primary judge made should be set aside and different relief granted, but the appeal should otherwise be dismissed. On 28 August 2018, the Full Court made orders giving effect to its reasons. The declaration was set aside but the Full Court ordered that the Agreement be quashed. One issue of concern to the Full Court was the fate of the monies held in trust in accordance with Order 3 as made on 21 December 2017. In addressing that concern, the orders made by the Full Court on 28 August 2018 of present relevance are the following: 5. Order 3 of the orders made by the primary judge on 21 December 2017 be set aside and, until further order, the monies referred to in order 2 of those orders remain in the trust account administered by Ashurst Australia. 6. The question of what further orders are to be made arising from order 5 be remitted to the primary judge for determination. One of the concerns of the Full Court would appear to be that the order made in December 2017 confined the deployment of monies to "members of the [CFMMEU] … claiming an interest therein", namely the employees of One Key who were also members of the CFMMEU. Confined in that manner, the employees of One Key who were not members of the CFMMEU - but who also would have accrued entitlements - would not benefit from the deployment of the $1 million trust monies. 11 If the $1 million is confined to the CFMMEU employees, those employees will not receive their full entitlements; if the $1 million is to be deployed to all employees, the amount each employee would receive is comparatively negligible. 12 The CFMMEU now seeks an order that the monies be distributed to its members who are identified in Annexure B-8 to Mr Bukarica's affidavit and distributed in the amounts there specified. The liquidators of One Key seek orders that the monies held in trust be distributed either to: One Key to be dealt with by its liquidators in accordance with their statutory responsibilities; or all former employees of One Key who have outstanding entitlements under the Award. It is concluded that the former order sought by the liquidators should be made. 13 The position advocated on behalf of the CFMMEU was said to be supported by the fact that (inter alia): the order sought by the CFMMEU is consistent with the terms of the relevant order made in December 2017; the Orders made in December 2017 were made by consent, including (relevantly) the consent of the CFMMEU which was given after discussions between the parties and given on condition that the $1 million be applied solely to satisfy the entitlements of its members; and the insolvency of One Key is not properly characterised as any kind of changed circumstances for the purpose of determining how the money should be distributed, for the simple reason that it was the imminent insolvency of One Key that was the very reason the security was sought and provided. Counsel on behalf of the CFMMEU further contended that the making of the order it sought: was not unfair or prejudicial to those former employees of One Key who would not benefit from the distribution. It was open to those remaining employees to have either commenced their own proceeding (or presumably to have sought to join in the same proceeding). The proceeding which was prosecuted by the CFMMEU was funded by it and expressly prosecuted by it on behalf of its members. 14 Notwithstanding the force of such submissions, it is nevertheless concluded that the position advocated on behalf of the liquidators should prevail. Such a conclusion has been reached for a number of reasons. First, and a matter not without fundamental importance, the fact is that: Order 3 of the Orders made in December 2017 was set aside by the Full Court, with that Court expressing concerns going beyond the form of the order then made. Second, the proceeding - it should be recalled - was from the outset: not properly characterised as litigation in which only the parties to the proceeding had an immediate interest. If the Agreement was set aside, being in substance the order sought in the Originating Application, that relief would benefit not only the CFMMEU employees but other employees as well; and not in the nature of a "recovery proceeding" in which the CFMMEU was seeking a quantifiable amount of money said to be due and payable to its member employees. Third, the December 2017 Order, it should also be recalled, was: ultimately made by consent but without the benefit of such assistance as may have been gained from an independent advocate voicing the concerns of the non-CFMMEU employees - such a position not then being surprising given the fact that such employees were not parties to the proceeding; and made without any consideration being given to the potential that the securing of monies for distribution to one group of employees and not others could potentially give rise to a contravention of s 596AB of the Corporations Act 2001 (Cth). Section 596AB provides that a person must not enter into an agreement or a transaction with the intention of "preventing the recovery of the entitlements of employees of a company" or "significantly reducing the amount of the entitlements of employees of a company". With respect to this provision and concerns as to whether the requisite "intention" existed in the present case, concurrence is expressed with a submission made on behalf of the contradictor to the Full Court that "on the scant material available" the Court "could not in the present circumstances dismiss such concerns out of hand as being unfounded or fanciful". 15 A summary of these competing considerations has been considered prudent if for no other purpose than to expose the fact that the decision as to the fate of the monies held in trust has not proved easy to resolve. In the end, it is respectfully considered that the resolution of the dispute comes down to an exercise of the Court's discretion. It is in the exercise of that discretion that the conclusion has been reached that the case advanced on behalf of the liquidator should prevail. 16 Any question arising from the prospect of separate proceedings being commenced seeking to establish that another company within the One Key Resources group was the "true employer" of the One Key employees and hence liable to the employees for unpaid entitlements, it is respectfully considered, assumes little if any relevance to the fate of the money ordered to be held in trust in the present proceeding.