Construction, Forestry, Mining and Energy Union (New South Wales Branch) v Port Kembla Coal Terminal Limited

Industrial Relations Commission (NSW)|2006-03-27|Before: Walton J, Boland J, Backman J

CITATION: Construction, Forestry, Mining and Energy Union (New South Wales Branch) v Port Kembla Coal Terminal Limited [2007] NSWIRComm 296

APPLICANT Construction, Forestry, Mining and Energy Union (New South Wales Branch)

PARTIES: RESPONDENT Port Kembla Coal Terminal Limited

CORAM: Walton J Vice-President; Boland J; Backman J

CONSTITUTIONAL LAW - Application by registered organisation of employees on behalf of members for relief under s 106 of the Industrial Relations Act 1996 - Alleged misrepresentation by respondent employer as to superannuation entitlements - Notice of motion by respondent employer that Industrial Court had no jurisdiction to hear claim - Alleged inconsistency between State law and law of the Commonwealth - Whether there was a direct inconsistency between the provisions of a Preserved Collective State Agreement and orders claimed under s 106 of the Industrial Relations Act - Whether regulation 1.2(5) of the Workplace Relations Regulation 2006 (Cth) was invalid thereby having the effect of bringing to an end unfair contract proceedings on foot as at 27 March 2006 because they would be inconsistent with provisions of the Workplace Relations Act 1996 (Cth) - Held that respondent had not discharged the onus of showing that no conceivable order could be made under s 106 that would not be inconsistent with the relevant Commonwealth law - Held regulation 1.2(5) not invalid - Notice of motion dismissed - Costs CATCHWORDS: UNFAIR CONTRACT - Application by registered organisation of employees on behalf of members for relief under s 106 of the Industrial Relations Act 1996 - Alleged misrepresentation by respondent employer as to superannuation entitlements - Notice of motion by respondent employer that Industrial Court had no jurisdiction to hear claim - Alleged inconsistency between State law and law of the Commonwealth - Whether there was a direct inconsistency between the provisions of a Preserved Collective State Agreement and orders claimed under s 106 of the Industrial Relations Act - Whether regulation 1.2(5) of the Workplace Relations Regulation 2006 (Cth) was invalid thereby having the effect of bringing to an end unfair contract proceedings on foot as at 27 March 2006 because they would be inconsistent with provisions of the Workplace Relations Act 1996 (Cth) - Held that respondent had not discharged the onus of showing that no conceivable order could be made under s 106 that would not be inconsistent with the relevant Commonwealth law - Held regulation 1.2(5) not invalid - Notice of motion dismissed - Costs

Acts Interpretation Act 1901 (Cth) s 15AA Industrial Arbitration Act 1940 s 88F Industrial Relations Act 1996 s 106 Judiciary Act 1903 (Cth) s 78B LEGISLATION CITED: Legislative Instruments Act 2003 (Cth) s 13 The Constitution s 109 Workplace Relations Act 1996 (Cth) ss 4, 4(1), 5(1), 6(1), 16(1), 16(1)(a), 16(1)(b), 16(1)(c), 16(1)(d), 16(1)(e), 16(2), 16(2)(a), 16(2)(b), 16(2)(c), 16(3), 16(4), 16(5), 152(1), 846, 846(1)(a), 846(2), sch 8 Workplace Relations Amendment (Work Choices) Act 2005 (Cth) sch 4 Workplace Relations Regulations 2006 reg 1.2(5)

Blackley v Devondale Cream (Vic.) Pty. Ltd. (1968) 117 CLR 253 Burgess v Mount Thorley Operations Pty Ltd (2003) 132 IR 400 CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 Clyde Engineering Company Limited v Cowburn (1926) 37 CLR 466 Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389 Construction, Forestry, Mining and Energy Union (NSW Branch) v Newcrest Mining Ltd (2005) 139 IR 50 Donald F Hagans v Old UGC, Inc and ors [2006] NSWIRComm 329 CASES CITED: East Coast Brokers Pty Ltd v Commonwealth (Department of Defence) (2005) 146 IR 218 Ex parte McLean (1930) 43 CLR 472 Holburn v Shig Pty Ltd (2007) 163 IR 457 Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd and Others (1991) 28 NSWLR 443 Metal Trades Industry Association of Australia and Others v The Amalgamated Metal Workers' and Shipwrights' Union and Others (1983) 152 CLR 632 Project Blue Sky Inc and Others v Australian Broadcasting Authority (1998) 194 CLR 355 Russell v Brisbane City Council [1955] St R Qd 419 Telstra Corporation Limited v Worthing and Another (1999) 197 CLR 61 Unions NSW v Carter Holt Harvey Wood Products Australia Pty Ltd (2006) 149 IR 361

APPLICANT Mr R Reitano of counsel Solicitor: Mr P Pasfield Slater & Gordon Lawyers

RESPONDENT LEGAL REPRESENTATIVES: Mr R C Kenzie SC with Mr S E J Prince of counsel Solicitor: Mr S Woodbury Blake Dawson Waldron Lawyers

INTERVENOR Mr I Taylor of counsel Solicitor: Ms K Mattes Crown Solicitors Office

CORAM: WALTON J, Vice-President BOLAND J BACKMAN J

Construction, Forestry, Mining and Energy Union (New South Wales Branch) v Port Kembla Coal Terminal Limited

Application under s 106 of the Industrial Relations Act 1996

INTRODUCTION 1 This matter is yet another example to come before this Court of the additional layer of complexity introduced by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) that industrial parties find it necessary to address in seeking to resolve disputes over employment rights and obligations. A party has sought relief in this Court from what it alleges are unfair contracts. The opposing party claims the relief is not available because this Court has no jurisdiction to hear the proceedings for the reason that any order made by the Court would be inconsistent with the Workplace Relations Act 1996 (Cth) ('WR Act'). 2 The Construction, Forestry, Mining and Energy Union (New South Wales Branch) ('CFMEU') has alleged that contracts of employment and employment arrangements between some 78 members of the Union ('the Employees') and their employer, the Port Kembla Coal Terminal Limited ('PKCT'), were unfair. The unfairness, it was contended, arose out of alleged misrepresentations by PKCT and others as to future superannuation benefits that would accumulate for each employee following PKCT's take over in 1990 of ownership and control of the coal terminal at Port Kembla, previously operated by the Maritime Services Board ('MSB'). The Employees had been employed by the MSB and had been entitled to superannuation benefits under the State Authorities Superannuation Scheme ('SASS'), a defined benefit scheme. Upon taking up employment with PKCT the Employees agreed to transfer to an accumulation superannuation scheme to be established by the respondent on the basis, it was alleged, that it had been represented to the Employees that the entitlements under the new superannuation scheme would be at least equal to those provided by SASS. It was further alleged that the promised benefits under the respondent's accumulation scheme did not materialise. 3 On 12 December 2005 the CFMEU filed a summons on behalf of its members under s 106 of the Industrial Relations Act 1996 ('IR Act') seeking the following relief: 1. An order varying in whole or in part from its commencement or from some other time the contracts of employment and the employment arrangement between each of the members of the Applicant employed by the Respondent (the "Members") and the Respondent whereby the Members performed work in the coal handling and loading industry.

An order varying the contracts of employment or the employment arrangement between each of the Members and the Respondent so as to insert a term to the following effect: "On and from 1 July 1990 the Respondent shall be required to make superannuation contributions on behalf of each of its employees who transferred to its employment on or about 1 July 1990 to the PKCT Superannuation Fund or any successor fund thereto a basic contribution equivalent to 15% of fund salary in addition to a 3% productivity award contribution. To avoid doubt contributions made on behalf of employees since 1 July 1990 may be offset against the contributions required by this term". 3. Further, in addition, an order that the Respondent pay the Members in connection with the contract and the arrangement so varied by the Commission an amount of money as the Commission considers just in the circumstances.

Further, in addition, an order that the Respondent pay interest on the sum of money referred to in Order 3 (or from such other date as the Commission may determine) calculated pursuant to section 94 of the Supreme Court Act.

An order that the Respondent pay the Applicant's costs of and incidental to these proceedings.

Such further or other orders as the Commission considers just in the circumstances. 4 The summons was amended on 26 March 2007, but only as to matters of fact and law. No amendments were made to the form of relief sought.

5 The history of the industrial regulation of the Employees was explained by PKCT without demur from the CFMEU. 6 From 1 July 1990 to the present, PKCT has been bound by a series of industrial instruments, the most recent being the Port Kembla Coal Terminal Limited Enterprise Agreement 2005-2008, an Agreement made between PKCT and the CFMEU under Ch 2, Pt 2 of the IR Act. The Industrial Relations Commission of New South Wales approved the Agreement under s 35 of the IR Act on 5 September 2005.

7 On and from 27 March 2006, upon commencement of the Workplace Relations Amendment (Work Choices) Act, PKCT became bound by a Preserved Collective State Agreement ('PCSA') in the same terms as the Agreement, in accordance with clause 10 of Pt 2 of Schedule 8 of the WR Act. On and from 27 March 2006, collective agreements made or approved under a State or Territory law, such as the Port Kembla Coal Terminal Agreement, ceased to apply to constitutional corporations. PKCT is a constitutional corporation. 8 The PCSA has a nominal expiry date of 31 May 2008 and expressly provides that it applies to, and binds, the Employees as persons employed in respect of the operations at Port Kembla Coal Terminal in Wollongong. The PCSA contains specific provisions which deal with the superannuation entitlements of the Employees as follows: 18. SUPERANNUATION

(i) Agreed Fund The Superannuation Fund applicable for all purposes to Employees covered by this Agreement shall be AUSCOAL Super as agreed. Contributions to the Fund will meet statutory levels set by government. Details of contribution levels are included in appendix 10. (ii) Superannuation Salary Sacrifice In addition to historical salary sacrifice arrangements, employees can elect to make additional superannuation contributions through salary sacrifice, as an employer contribution, subject to applicable legislation. These additional contributions will not attract matching employer contributions. The amount of salary sacrifice must be nominated at the beginning of each June for effect on July 1. Contributions can stop or change only once per twelve month period. Contributions can be up to or no greater than the limit allowable under the Income Tax Assessment Act. Appendix 10 of the PCSA provides: Port Kembla Coal Terminal Superannuation Contributory members will contribute a minimum of 8.00% of superannuable salary to the Fund and PKCT will contribute 1.75 times this amount or 14.00% plus an additional 3%.

Contributory members may also elect to contribute a further 2.00% for any consecutive six year period (this has been referred to as "flexing" in previous agreements.) Accordingly, this becomes a 10.00% member contribution and PKCT will contribute 1.75 times this amount of 17.50% plus an additional 3.00%.

Pursuant to the 1997 Enterprise Agreement all member contributions became deductible from pre-tax earnings which means all superannuation contributions are now employer contributions.

In order that the above member contributions are matched the pre-tax deduction rates are 9.41% to meet the 8.00% and 11.45% to meet the 10.00%.

Should the employee wish to make any additional contributions via salary sacrifice PKCT will not make further contributions as a result of these additional contributions by the employee. 9 PKCT submitted that the foregoing provisions were a complete and prescriptive statement of the rights and obligations of PKCT and the Employees with respect to the amount of superannuation contributions that are to be made to the Employees, by reason of the terms of Schedule 8 of the WR Act. Jurisdictional challenge

10 On 28 June 2007, the respondent filed a notice of motion challenging the Court's jurisdiction to deal with the applicant's summons for relief. The motion was referred to the President for his consideration under s 193 of the Act as to whether or not a Full Bench should deal with the motion. The President determined in the affirmative and a Full Bench of the Court was duly constituted. 11 There are two limbs to the respondent's jurisdictional challenge. The first is that the orders sought would give rise to a direct inconsistency in that an order that the employment contracts were unfair, in the way sought by the CFMEU in the amended summons, would involve making orders providing for greater superannuation entitlements than those the respondent was obliged to pay under the PCSA. Such an order would involve making the respondent "liable to pay [an amount] in circumstances 'beyond those specified in the Award as the basis for entitlement'" and further that, "The orders sought would have required the respondents to provide a benefit beyond, or in excess of, what the relevant Federal instrument prescribed": Burgess v Mount Thorley Operations Pty Ltd (2003) 132 IR 400 at [161]. Such an outcome, it was submitted, would give rise to a direct inconsistency between the relevant State law and the relevant Commonwealth law: Telstra Corporation Limited v Worthing and Another (1999) 197 CLR 61 at 76. 12 The second limb relates to reg 1.2(5) of the Workplace Relations Regulations 2006. That regulation limits the effect of s 16(1) of the WR Act in a manner that would preserve s 106 proceedings commenced prior to 27 March 2006.

13 It was contended for the respondent that reg 1.2(5) was invalid in so far as it purported to prescribe part of a law, and was of no effect. If this submission be correct it would mean, on the respondent's arguments, that s 16(1)(d) of the WR Act, which excludes a State law "providing for the variation or setting aside of rights and obligations arising under a contract of employment, or another arrangement for employment, that a court or tribunal finds is unfair", would have the effect of bringing to an end s 106 proceedings on foot as at 27 March 2006 because they would be inconsistent with s 16(1)(d) and, therefore, invalid. 14 Given the nature of the respondent's challenge, notices under s 78B of the Judiciary Act 1903 (Cth) were issued on 13 August 2007 and the Attorney General of New South Wales intervened in the proceedings to support the position of the applicant. WHETHER THERE IS AN INCONSISTENCY BETWEEN THE RELEVANT COMMONWEALTH AND STATE LAWS

15 The Constitution provides in s 109 that: When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid. 16 The relevant State law may be found in Ch 2, Pt 9 of the IR Act and, specifically, s 106, which is in the following terms: 106 Power of Commission to declare contracts void or varied

(1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract.

(2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason.

(2A) A contract that is a related condition or collateral arrangement may be declared void or varied even though it does not relate to the performance by a person of work in an industry, so long as: (a) the contract to which it is related or collateral is a contract whereby the person performs work in an industry, and

(b) the performance of work is a significant purpose of the contractual arrangements made by the person. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time.

(4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force.

(5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case.

(6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss. 17 The PCSA, per se, could not be regarded as a law of the Commonwealth for the same reason that a federal award or agreement is not a law of the Commonwealth: see Ex parte McLean (1930) 43 CLR 472 at 479 per Isaacs CJ and Starke J and Dixon J at 484; Metal Trades Industry Association of Australia and Others v The Amalgamated Metal Workers' and Shipwrights' Union and Others (1983) 152 CLR 632 ("MTIA Case") at 641 per Gibbs CJ, Wilson and Dawson JJ and 648 per Mason, Brennan and Deane JJ; Construction, Forestry, Mining and Energy Union (NSW Branch) v Newcrest Mining Ltd (2005) 139 IR 50 at [22]. 18 The relevant Commonwealth law may be found in those provisions of the WR Act that create the PCSA. These provisions are contained in Schedule 8 of the WR Act, which take effect by virtue of s 8 of the WR Act. The PCSA may be accepted as a federal industrial instrument by virtue of the provisions of Schedule 8 to the WR Act.

19 The effect and operation of PCSAs under the WR Act is provided for in Division 2A of Schedule 8. Section 15C of Schedule 8 provides: 15C(1) Except as provided in or under this Part, or otherwise in or under this Act, a preserved State agreement has effect according to its terms. 15C(2) This Part has effect despite the terms of the preserved State agreement itself, or any State award or law of a State or Territory. 15C(3) None of the terms and conditions of employment included in the preserved State agreement are enforceable under the law of a State or Territory. 20 Section 16 in Division 3 of Schedule 8 provides for the variation of a PCSA as follows: A preserved State agreement may only be varied on or after the reform commencement in accordance with this Division.

21 Sections 17, 18 and 19 of Schedule 8 provide that a PCSA may be varied to remove ambiguity or uncertainty, to remove discrimination or to remove prohibited content. As the respondent noted, there is no provision for the variation of a PCSA to give effect to orders made pursuant to a State law, including s 106 of the IR Act. Tests for inconsistency 22 This Court has, in four recent cases, considered the relevant tests for inconsistency: see Newcrest Mining Limited (2005) 139 IR 50; East Coast Brokers Pty Ltd v Commonwealth (Department of Defence) (2005) 146 IR 218; Unions NSW v Carter Holt Harvey Wood Products Australia Pty Ltd (2006) 149 IR 361; and Holburn v Shig Pty Ltd (2007) 163 IR 457. In East Coast Brokers it was observed at [28]-[30]: [28] The tests for inconsistency are well known and were identified in Barry v Australian Broadcasting Corporation (2002) 112 IR 33 at [20] and in Metrocall Inc v Electronic Tracking Systems Pty Ltd (2000) 52 NSWLR 1 (2000) 101 IR 66 at [39]-[40]. In Barry the Full Bench of the Commission in Court Session referred to the Victorian Court of Appeal's enunciation of the tests in Felman v Law Institute of Victoria (1997) 142 FLR 362 at 381 as drawn from High Court authorities and there is no reason to consider there has been any change to those tests since they were cited with approval in Barry.

[29] Hence, a law of a State will be inconsistent with a law of the Commonwealth where: (1) it is impossible to obey both laws (e.g., R v Licensing Court of Brisbane; Ex parte Daniell (1920) 28 CLR 23); (2) the law of a State takes away or varies a right, privilege, duty, power or immunity conferred by a law of the Commonwealth or, conversely, a law of the Commonwealth takes away or varies a right, privilege, duty, power or immunity conferred by law of a State (e.g., Colvin v Bradley Brothers Pty Ltd (1943) 68 CLR 151; Australian Mutual Provident Society v Goulden (1986)160 CLR 330); or, (3) the law of a State invades a field that the law of the Commonwealth was intended to cover exhaustively (e.g., Ex parte McLean (1930) 43 CLR 472; Viskauskas v Niland (1983) 153 CLR 280). [30] Inconsistency established by the first and second tests is known as direct inconsistency. But even where there is no direct contradiction between the two enactments, where the Commonwealth law evinces an intention to 'cover the field', s 109 may still apply because of an indirect inconsistency and this is encapsulated in the third test. The Commonwealth in these proceedings relied on the second and third tests. 23 On the question of inconsistency, the High Court in Telstra v Worthing at [27]-[28] stated: [27] The applicable principles are well settled. Cases still arise where one law requires what the other forbids. It was held in Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388 at 389 that a State law which incorporated into certain contracts a term which a law of the Commonwealth forbad was invalid. However, it is clearly established that there may be inconsistency within the meaning of s 109 although it is possible to obey both the Commonwealth law and the State law ( Viskauskas v Niland (1983) 153 CLR 280 at 291-292). Further, there will be what Barwick CJ identified as "direct collision" where the State law, if allowed to operate, would impose an obligation greater than that for which the federal law has provided ( Blackley v Devondale Cream (Vic) Pty Ltd (1968) 117 CLR 253 at 258-259; see also at 270 per Taylor J; at 272 per Menzies J; Australian Broadcasting Commission v Industrial Court (SA) (1977) 138 CLR 399 at 406; Dao v Australian Postal Commission (1987) 162 CLR 317 at 335, 338-339). Thus, in Australian Mutual Provident Society v Goulden (1986) 160 CLR 330 at 339, in a joint judgment, the Court determined the issue before it by stating that the provision of the State law in question "would qualify, impair and, in a significant respect, negate the essential legislative scheme of the Commonwealth Life Insurance Act ". A different result obtains if the Commonwealth law operates within the setting of other laws so that it is supplementary to or cumulative upon the State law in question ( Ex parte McLean (1930) 43 CLR 472 at 483; Commercial Radio Coffs Harbour v Fuller (1986) 161 CLR 47 at 57-58. But that is not this case.

[28] In Victoria v The Commonwealth , Dixon J stated two propositions which are presently material. The first was: "When a State law, if valid, would alter, impair or detract from the operation of a law of the Commonwealth Parliament, then to that extent it is invalid." The second, which followed immediately in the same passage, was: "Moreover, if it appears from the terms, the nature or the subject matter of a Federal enactment that it was intended as a complete statement of the law governing a particular matter or set of rights and duties, then for a State law to regulate or apply to the same matter or relation is regarded as a detraction from the full operation of the Commonwealth law and so as inconsistent." The second proposition may apply in a given case where the first does not, yet, contrary to the approach taken in the Court of Appeal, if the first proposition applies, then s 109 of the Constitution operates even if, and without the occasion to consider whether, the second proposition applies. Consideration 24 It was submitted for PKCT that the inconsistency, which the orders sought in this case would create, would lead to the conclusion that such orders would involve an inconsistency with federal law of the nature described in Telstra v Worthing; Blackley v Devondale Cream (Vic.) Pty. Ltd. (1968) 117 CLR 253 at 258-259; Clyde Engineering Company Limited v Cowburn (1926) 37 CLR 466 at 525 per Starke J; and Burgess v Mt Thorley (2003) 132 IR 400 at [166]. 25 The respondent made particular reference to the decision of the Full Bench of the Court in Burgess. That case involved, inter alia, the question whether orders that were sought under s 106 of the IR Act were inconsistent with the terms of federal industrial instruments applicable to the employment of the appellants. In finding there was a direct inconsistency the Full Bench stated at [158]-[159] and [166]-[168]: [158] The appellants also seek relief in the form of orders A4 and A6 of the summonses. That relief would involve the making of orders providing for greater periods of notice and payment in lieu of notice and higher payments on termination of employment than those the respondent was obliged to pay under the EA and the 1990 Award.

[159] That is, an order to the effect of orders A4(a) and (b) or order A6 in the summonses would impose on the respondent legal obligations that it did not carry under the terms of the 1990 Award or the EA in circumstances of termination of employment and the monies to be paid on termination. It would also involve making an order (order A4(c)) that termination of employment shall not be harsh, unjust or unreasonable in circumstances where the Award provides in cl 5(f) a provision that "Termination of employment by an employer shall not be harsh, unjust or unreasonable" and a regime for dealing with disputes relating to unfair dismissals…

… [166] Having regard to the claims in order A4(a) and (b) of the summonses, which seek greater notice of termination or payment in lieu and higher redundancy benefits than what the respondent is required to provide under the 1990 Award and EA, inevitably the conclusion must be that order A4(a) and (b) would be inconsistent with cl 7(d) as to notice of termination, cl 30 as to redundancy, cl 31 as to severance and retrenchment of the EA and cl 5 Contract of Employment and cl 26 Severance and Retrenchment Pay of the 1990 Award. Accordingly, there is no jurisdiction to entertain the claims in order A4(a) and (b) of the summonses.

[167] As to order A6, the claim was that "the respondent pay the applicant such amount of money in connection with the contract of employment so avoided or varied as may appear just in the circumstances of the case." This claim was particularised in each of the summonses. In Mr Burgess' case the particulars referred to 30 months' payment in lieu of notice and a redundancy payment at the rate of four weeks' pay per year of service. In addition, the particulars referred to "Loss of COSAF Superannuation" … The particulars relating to the other appellants also referred to pay in lieu of notice, redundancy pay and superannuation but, of course, the amounts claimed in each case differed.

[168] For the same reasons we expressed as to the inconsistency in relation to order A4, the claim in order A6, in so far as it involves money orders relating to payment in lieu of notice and redundancy pay, also leads to direct inconsistency with the relevant Award and EA provisions… 26 The nature of the inconsistency in the present proceedings was submitted by the respondent to be as follows: All of the relief which is sought by the applicants and which may otherwise be granted by this Court is dependent on an order in the nature of that sought at prayer 2 of the Amended Summons, namely to vary each employee's employment contract or arrangement by inserting a term requiring the Respondent to make a " basic contribution equivalent to 15% of fund salary in addition to a 3% productivity award contribution…. "

In this case, clause 18 and Appendix 10 of the PSCA expressly provide for the superannuation entitlements of the Employees and, in particular, specify the contribution that is to be made to the Superannuation Scheme on their behalf.

A PCSA may only be varied in accordance with the procedure provided for in Schedule 8 of the WR Act. However, the orders sought under s106 seek to vary the provisions of the PCSA to provide different superannuation entitlements to those provided for in accordance with the provisions of clause 18 and Appendix 10 of the PCSA.

Further, any order made under s106 to give effect to the Claim would require a variation to the PCSA by means other than that provided for in Schedule 8 and accordingly, would have the effect of altering, impairing or detracting from the operation of the WR Act.

An inconsistency therefore arises between Part 9 of the IR Act and the PCSA and, accordingly, the WR Act .

Accordingly, s 109 of the Commonwealth Constitution renders Part 9 of the IR Act inoperative in respect of employees of constitutional corporations so that the Court does not have jurisdiction to entertain the Applicant's claims. 27 We agree with this assessment. The conclusion is inescapable that an order under s 106 of the IR Act, in the terms of prayer 2 of the CFMEU's amended summons, would be directly inconsistent with the provisions of cl 18 and Appendix 10 of the PCSA. If an order were to be made in such terms it would impose an obligation greater than that for which the federal law has provided: Blackley v Devondale Cream at 258-259. The applicant, however, contended that the respondent had overlooked the first of the orders sought in the amended summons, namely: An order varying in whole or in part from its commencement or from some other time the contracts of employment and the employment arrangement between each of the members of the Applicant employed by the Respondent (the "Members") and the Respondent whereby the Members performed work in the coal handling and loading industry. 28 Not being a court of strict pleading (see Burgess at [90]-[92]) the CFMEU submitted that it remained open to the Court in the circumstances considered in Burgess for the applicant to amend its claim to introduce more precision into what it was seeking in the first of the orders in the amended summons. So that, for instance, it was open to the applicant, pursuant to claimed order 1, to seek a variation of the relevant contracts in the following terms: In the event that what you are told (in writing or orally) before entering into your contract of employment with PKCT is incorrect, PKCT will pay you an amount of compensation that will place you in the same position you would be in if what you had been told was correct. 29 The applicant put this submission to illustrate the contention that it was conceivable that the Court may make orders that did not conflict with the Commonwealth law and that it was, therefore, premature to determine whether there was any direct conflict. In Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd and Others (1991) 28 NSWLR 443; 39 IR 169 the Court of Appeal considered a similar situation in circumstances where the summons for relief under s 88F of the Industrial Arbitration Act 1940 (a predecessor provision to s 106) was also before the Court. At 461-462; 185-186, Mahoney JA stated: Therefore, essentially the claim made by Majik in this case is that the possibility of such an order being made creates an inconsistency under s 109 with the Federal Act. At the present stage of the Commission's proceedings, Majik cannot, of course, claim that an order made by it does in fact create a relevant conflict or inconsistency with the operation of the Federal Act: its claim is and must be that it is possible an order will be made which will create such an inconsistency with the Federal Act and that that possibility gives rise at this stage to an inconsistency which prevents s 88F operating to grant jurisdiction in the present matters to the Commission. ... Thus, the Commission may, under s 88F, consider a franchise agreement which has been drawn so as to comply with the provisions of the Federal Act. It may conclude that, because of the particular factual circumstances affecting the transaction, the "total remuneration" to be derived by the franchisee is less than the relevant employee would obtain within s 88F(1)(d). It is possible that, under s 88F, orders may be made which will not contravene the provisions of the franchise which are based upon or drawn to accord with the provisions of the Federal Act.

30 Handley JA stated at 465; 189: The Commission has not heard and determined the applications and no substantive orders have been made. Accordingly the claimant, by seeking to restrain the Commission from proceeding with the hearing has undertaken a heavy onus...

The possibility that the Commission might make particular orders which exceeded its jurisdiction is no sufficient reason for prohibiting it from dealing with the applications: see Re Manufacturing Grocers' Employees Federation of Australia; Ex parte Australian Chamber of Manufactures (1986) 160 CLR 341 at 355. The claimant therefore must establish that no order can be made which would be within jurisdiction. In other words it must establish that no order can be made that would not be inconsistent with the Federal Act.

At 469; 192 his Honour further stated: In my opinion therefore the claimant has not established that the effect of the Federal Act is that no order can be made by the Commission in these cases that would be within its jurisdiction. This leaves open the possibility that orders may be made which conflict with the Federal Act and are therefore beyond jurisdiction. However as I have already held the mere possibility that this could occur does not entitle the claimant to relief in these proceedings.

31 At 449-450; 173-174 Kirby P stated: At this stage, no order has been made under the State Act. Accordingly, it is only to the terms of the two statutes themselves that this Court has addressed its attention. We have not been concerned to anticipate whether particular orders, made by the Commission pursuant to the State Act might, in their terms and operation, amount to a State law purportedly taking away a right or privilege conferred by or under the Federal Act. That issue remains for the future. 32 We have serious reservations about whether the Court could make orders in this matter that did not conflict with the relevant federal law. The CFMEU's whole case is centred on the allegation that its members were misled as to their future superannuation entitlements under the accumulation scheme operated by the respondent. What the applicant seeks in one form or another is, inter alia, an order that compensates for the shortfall between what its members are entitled to under the terms of the PCSA and what they would have been entitled to had the alleged representations made to them about their future superannuation entitlements been true and accurate. In other words, the relief, in whatever terms it might be framed, would seem to involve the making of orders imposing an obligation on the respondent to make payments in respect of superannuation in excess of the respondent's obligation under the PCSA. That such compensation might not be described in any amended claim as being connected with superannuation, runs the risk of it being regarded as a mere artifice. 33 Nevertheless, in order to succeed on the motion the respondent must establish that no order could be made that would not be inconsistent with the Commonwealth law. Given our observations in the preceding paragraph it is quite possible that no such order could be made. But as Handley JA noted in Majik Markets "the mere possibility that this could occur does not entitle the claimant to relief in these proceedings." Kirby P observed in the same case that as no orders had been made, the question of inconsistency was a matter for the future.

34 The Court has a wide discretion under s 106 and is not limited to making the orders sought. Moreover, it remains open to the applicant to seek leave to amend the summons for relief. We are not, at this stage, satisfied to the extent necessary that the respondent has discharged what Handley JA described in Majik Markets as a "heavy onus" that no conceivable order could be made that would be within jurisdiction. WHETHER REGULATION 1.2(5) IS INVALID

35 As we earlier observed, the respondent contended that reg 1.2(5) in Division 2 of Chapter 2 of the Workplace Relations Regulations was invalid. If this contention be right then, as counsel for the Attorney General of New South Wales submitted, the WR Act, on being amended on 27 March 2006, had the effect of "bringing to an end most s 106 proceedings then on foot, including those part-heard and those heard and pending determination". 36 If, however, the contention be wrong then as the proceedings initiated by the CFMEU had commenced prior to the relevant amendments to the WR Act, the exclusion of Ch 2, Pt 9 of the IR Act by s 16(1) does not apply and the applicant is entitled to proceed with its application for relief. Relevant legislation 37 Before turning to the respondent's arguments regarding the invalidity of reg 1.2(5), we should set out the relevant legislation. 38 Section 16(1) of the WR Act relevantly provides: This Act is intended to apply to the exclusion of all the following laws of a State or Territory so far as they would otherwise apply in relation to an employee or employer: (a) a State or Territory industrial law; … (d) a law providing for the variation or setting aside of rights and obligations arising under a contract of employment, or another arrangement for employment, that a court or tribunal finds is unfair… 39 "Employee" is defined in section 5(1) of the WR Act as "an individual so far as he or she is employed, or usually employed, as described in the definition of employer in subsection 6(1), by an employer, except on a vocational placement". "Employer" is defined in section 6(1) as including, inter alia, "a constitutional corporation, so far as it employs, or usually employs, an individual". Accordingly it may be accepted that the Employees, being employed by PKCT, a constitutional corporation, come within the jurisdiction of the WR Act. "State or Territory industrial law" is defined in s 4(1) of the WR Act to include the IR Act. 40 Section 16(2) provides: However, subsection (1) does not apply to a law of a State or Territory so far as: (a) the law deals with the prevention of discrimination, the promotion of EEO or both, and is neither a State or Territory industrial law nor contained in such a law;

(b) the law is prescribed by the regulations as a law to which subsection (1) does not apply; or

41 Section 16(3) provides: The non-excluded matters are as follows: (a) superannuation;

(c) occupational health and safety (including entry of a representative of a trade union to premises for a purpose connected with occupational health and safety);

(d) matters relating to outworkers (including entry of a representative of a trade union to premises for a purpose connected with outworkers);

(g) the observance of a public holiday, except the rate of payment of an employee for the public holiday;

(k) industrial action (within the ordinary meaning of the expression) affecting essential services;

(m) regulation of any of the following: (i) associations of employees;

(iii) members of associations of employees or of associations of employers. 42 Section 16(4) provides: This Act is intended to apply to the exclusion of a law of a State or Territory that is prescribed by the regulations for the purposes of this subsection. 43 Section 16(5) provides: To avoid doubt, subsection (4) has effect even if the law is covered by subsection (2) (so that subsection (1) does not apply to the law). This subsection does not limit subsection (4). 44 Section 846(1) of the WR Act provides: The Governor-General may make regulations, not inconsistent with this Act, prescribing all matters: (a) required or permitted by this Act to be prescribed; or

(b) necessary or convenient to be prescribed for carrying out or giving effect to this Act. 45 Section 846(2) provides: The matters in relation to which the Governor-General may make regulations include, but are not limited to: (a) the manner in which, and the time within which, applications, submissions and objections under this Act may be made and dealt with; and

(b) the practice and procedure of the Commission; and

(d) the duties of the Industrial Registrar, the Deputy Industrial Registrars and any officers of the Commission; and

(e) the exhibiting, on the premises of an employer bound by an award, an order of the Commission or a workplace agreement, of any of the terms of the award, order or agreement; and

(f) penalties for offences against the regulations, not exceeding 10 penalty units; and

(g) civil penalties for contraventions of the regulations, not exceeding: (i) 5 penalty units for an individual; or (ii) 25 penalty units for a body corporate. 46 Regulation 1.2(1) of the Workplace Relations Regulations provides: For paragraph 16(2)(b) of the Act, subsection 16(1) of the Act does not apply to a law of a State or Territory of a kind that is mentioned in this regulation. 47 Regulation 1.2(5) of the Workplace Relations Regulations provides: Subsection 16(1) does not apply to a law of a State or Territory (including a law relating to appeals) to the extent to which it: (a) relates to proceedings that commenced before the reform commencement; and

(b) provides for the variation or setting aside of rights and obligations arising under (i) a contract of employment; or

(ii) another arrangement for employment; that a court or tribunal finds is unfair. 48 We should also refer to cl 1 of Schedule 4 - Transitional and Other Provisions of the Workplace Relations Amendment (Workchoices) Act, which provides: (1) The Governor-General may make regulations dealing with matters of a transitional, saving or application nature relating to amendments made by this Act.

(2) Despite subsection 12(2) of the Legislative Instruments Act 2003, regulations made under this item may be expressed to take effect from a date before the regulations are registered under that Act.

(3) In this item: amendments made by this Act includes amendments made by regulations under item 2. Contentions of the parties and intervenor 49 The essential elements of the respondent's contentions regarding the invalidity of reg 1.2(5) were as follows: · The effect of section 16(2) was to validly allow Regulations to except certain laws which were described in s 16(1) (and prescribed by s 16(4) subject to s 16(5)) and so limited the operation of s 16(1). · The reason that Regulations may modify the effect of s 16(1) was only because of the regime allowed by the Commonwealth Parliament in s 16(2). Accordingly, the Regulations would not affect s 16(1) unless their terms answer the description prescribed in s 16(2)(b). · Regulation 1.2(5) depended for its validity on s 16(2)(b). Clause 1 of Schedule 4 of the Amendment Act was not applicable. · The proposition, apparently approved in Donald F Hagans v Old UGC, Inc and ors [2006] NSWIRComm 329, that regulation 1.2(5) did not prescribe a 'law' by merely identifying a law by name, but prescribed a law to the extent to which it provided for certain matters and related to certain proceedings, should not be accepted. Such a proposition imported the use of the term 'a matter' from s 846(1)(a) into s 16(2)(b). There was no room for expanding the clear terms of s 16(2)(b) in this way. Section 846(1)(a) was simply a power to make a regulation. Whether regulation 1.2(5) limited the operation of s 16(1) depended only on the terms of s 16(2)(b), not s 846(1)(a). · In any event, the argument that s 846 (a general power) allowed reg 1.2(5) to prescribe 'a matter' did not extend to allow prescription of "certain matters and related to certain proceedings" as submitted by the Commonwealth in Hagans. · The attempt to extend the scope of s 16(2)(b) to prescription of 'certain proceedings' revealed the fundamental problem with the validity and effect of the regulation. The regulation prescribed certain proceedings. For the regulation to be valid, s 16(2)(b) needed to be read as "the matters or proceedings are prescribed by the Regulations as matters or proceedings to which subsection (1) does not apply". Such a construction would represent a departure from the scheme of the section. · The meaning of a "law" was used consistently throughout s 16. In the present case, the relevant "law" for s 16(1) was Chapter 2 Part 9 of the IR Act. Further, s 16(2) must be read consistently with s 16(1) and s 16(4), which exclude state law only in respect of the relations of employers and employees as defined in ss 5(1) and 6(1). No other limitation of subject matter is placed on the laws described in s 16(1)(a)-(e). · It should not be accepted, as it appeared to have been in Hagans, that the words "so far as" in s 16(2)(b) enlarge the words "law prescribed by the Regulations" in that section. The words "so far as" do no more than qualify the words "subsection (1) does not apply to a law of a state…" · The provision for the making of regulations which prescribe "laws" as opposed to "matters" is significant and can be contrasted with the use of the term "matter" in section 16(3). · A regulation, being subordinate legislation, cannot subvert or interfere with the operation of the principal Act. · There is nothing in s 16 expressly authorising the Governor-General to make reg 1.2(5) and s 846(1)(a) does not support the making of a regulation that prescribes additional matters or topics not prescribed in s 16(2)(a) and (c). · There is no other provision of the WR Act that enables the making of regulations which authorise the exclusion of matters additional to those matters listed in s 16(3) from the operation of s 16(1). · The making of reg 1.2(5) cannot be said to otherwise be necessary to give effect or meaning to anything in the WR Act in accordance with s 846(2). On the contrary, it would appear to be against the intention to "cover the field" in s 16. 50 Accordingly, it was contended for the respondent that reg 1.2(5) was invalid insofar as it purported to prescribe part of a law, and was of no effect. That meant, it was submitted, that s 16(1) had the effect of declaring the operation of the WR Act to cover the field in respect of "a law providing for the variation or setting aside of rights and obligations arising under a contract of employment, or another arrangement, that a court or tribunal finds is unfair". As such, the WR Act did, in fact, reveal an intention to exhaustively and exclusively regulate the matters dealt with in Ch 2, Pt 9 of the IR Act to the exclusion of that Part in respect of employees of constitutional corporations. 51 Senior counsel for the respondent submitted: Where a Federal statute shows an intention to cover a subject matter and provide what the law upon it shall be, there is a conclusive test of inconsistency as far as the State statute assumes to enter, to any extent, upon the same field ( Clyde Engineering Co Ltd v Cowburn (1926) 37 CLR 466 at 489; Ex parte McLean (1930) 43 CLR 472 at 483). Accordingly, s 109 of the Commonwealth Constitution renders Ch 2 Pt 9 of the IR Act inoperative in respect of employees of constitutional corporations so that the Court does not have jurisdiction to hear the applicant's claim. 52 The applicant, and counsel for the Attorney, relied largely on what Haylen J decided in Hagans. In that case his Honour upheld the submissions of the Commonwealth to the effect that reg 1.2(5) was a valid regulation. Consideration 53 Section 846 of the WR Act is one source of power for the making of the Workplace Relations Regulations. The other is cl 1 of Schedule 4 - Transitional and Other Provisions of the Workplace Relations Amendment (Work Choices) Act, but we do not consider the provisions of this clause are relevant to the question we are required to determine in these proceedings. Section 846(1)(a) provides that the Governor-General may make regulations not inconsistent with the Act, prescribing all matters required or permitted by the Act to be prescribed. Section 846(1)(b) provides that the Governor-General may make regulations not inconsistent with the Act, prescribing all matters necessary or convenient to be prescribed for carrying out or giving effect to the WR Act. Section 846(2) describes the matters in relation to which the Governor-General may make regulations. We note the list of matters in that subsection does not purport to be exhaustive. 54 Section 16(2)(b) of the WR Act has the effect of excluding from s 16(1) the relevant law of the State or Territory so far as it is prescribed by the regulations. Thus, consistent with s 846(1)(a), s 16(2)(b) permits the regulations to prescribe laws to which s 16(1) does not apply. 55 The respondent contended, however, that s 16(2)(b), as the direct source of power for the making of reg 1.2(5), only permits the prescription of "laws" and not matters, or proceedings, or parts of laws. In other words, the respondent contended that the delegated legislation, which is the regulation, dealt with matters not within the scope of the power provided by the empowering Act. So that, on the respondent's argument, a regulation permitted by s 16(2)(b) could, relevantly, only exclude from s 16(1) of the WR Act, Ch 2, Pt 9 of the IR Act in respect of employees of constitutional corporations. It could not, according to the respondent, exclude from the application of s 16(1) of the WR Act, Ch 2, Pt 9 of the IR Act to the extent to which it related to proceedings involving a contract of employment or employment arrangement that commenced before 27 March 2006. That reg 1.2(5) did so, rendered it invalid as being beyond the scope of operation permitted by s 16(2)(b). 56 The limits the respondent seeks to have imposed on the extent to which s 16(2)(b) permits the making of a regulation prescribing laws that are excluded from the application of s 16(1), are too restrictive and are not consistent with the obvious intention of the legislature. 57 The principles relating to the interpretation of statutes are also applicable to the interpretation of delegated legislation: Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389 at 398. Further, s 15AA of the Acts Interpretation Act 1901 (Cth) provides: 15AA Regard to be had to purpose or object of Act (1) In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.

See also CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408 and Project Blue Sky Inc and Others v Australian Broadcasting Authority (1998) 194 CLR 355 at 381. 58 Section 15AA applies also to the interpretation of delegated legislation made under a Commonwealth Act: s 13 of the Legislative Instruments Act 2003 (Cth).

59 Section 16(1) of the WR Act expresses an intention to apply to the exclusion of the nominated laws of a State or Territory so far as they would otherwise apply in relation to an employee or employer. Section 16(1)(d) identifies one of those laws as: a law providing for the variation or setting aside of rights and obligations arising under a contract of employment, or another arrangement for employment, that a court or tribunal finds is unfair; …

It will be noted that s 16(1)(d) encapsulates the law in Ch2, Pt 9 of the IR Act and is, in substance, in the same terms as the exclusion referred to in reg 1.2(5) of the Regulations. 60 Section 16(2) removes from the application of s 16(1) certain State and Territory laws, including, in s 16(2)(b), so far as "the law is prescribed by the regulations as a law to which subsection (1) does not apply". 61 It is apparent that the legislature was seeking the flexibility, through the application of delegated legislation, to permit State and Territory laws that would otherwise be excluded, to continue to have application. The respondent, we understand, does not cavil with this proposition. However, the respondent maintained that given the terms of s 16(2)(b), reg 1.2(5) could only remove from the scope of s 16(1), the law that is Ch 2, Pt 9 of the IR Act, without addition or qualification. 62 In addressing that contention we note first that the legislature has gone to the extent of specifically identifying in s 16(1)(d) what is, in effect, Ch 2, Pt 9 of the IR Act as a law excluded by the operation of s 16(1). Arguably, this was done more by the way of emphasis, given that s 16(1)(a) already excludes a State or Territory industrial law, which is defined in s 4 of the WR Act as including the IR Act. 63 If one were to accept the respondent's submission it would mean this: that s 16(1)(d) specifically rendered Ch 2, Pt 9 of the IR Act inoperable as a State law but s 16(2)(b) immediately permitted the whole of that law to be restored by allowing it to be prescribed under the regulations as a law to which s 16(1) did not apply. That could not have been the legislature's intention; it would create an obvious incongruity. 64 The better explanation as to the purpose of s 16(2)(b) is that the legislature was concerned to render Ch 2, Pt 9 of the IR Act inoperable by virtue of the provisions of s 109 of the Constitution, but at the same time to preserve the operation of State law for existing litigants who had accrued a right to have their applications in unfair contract proceedings heard and determined. Such an intention is consistent with the presumption against retrospectivity, namely, in the absence of some clear statement to the contrary, an Act will not be assumed to have retrospective operation so as to exclude accrued rights. Here, the clear statement as to the legislature's intention is that an applicant who commenced unfair contract proceedings under Ch 2, Pt 9 of the IR Act prior to 27 March 2006 is entitled to maintain those proceedings, notwithstanding s 16(1) of the WR Act. 65 In this respect, we agree with what Haylen J said in Hagans at [55]: The regulation [1.2(5)] thereby recognises in a quite unexceptional way the inconvenience and injustice that might flow from s 16 having immediate effect in relation to often longstanding litigation that is frequently brought by an individual at potentially substantial personal cost in relation to arrangements whereby work is performed in an industry as distinct from the award matters brought by employer or employee institutions. 66 We do not consider that the terms of reg 1.2(5) strains the meaning of s 16(2)(b), or is in any way inconsistent with it. That section of the WR Act provides for a law to be prescribed by the regulations as a law to which s 16(1) does not apply. Relevantly, and to paraphrase the regulation, reg 1.2(5) provides that s 16(1) does not apply to a law, that is, Ch 2, Pt 9 of the IR Act, to the extent to which it relates to proceedings involving a contract of employment or employment arrangement that commenced before 27 March 2006. Regulation 1.2(5) does what s 16(2)(b) allows, but in doing so it limits, in an unexceptional way, the extent to which the operation of the law (Ch 2, Pt 9 of the IR Act) is excluded from s 16(1). Section 16(2)(b) should be treated as an enabling provision, not a restrictive one and does not prohibit a regulation from qualifying the extent to which a law may be excluded from the application of s 16(1): see Russell v Brisbane City Council [1955] St R Qd 419. 67 We observe that the question of the validity of reg 1.2(5) was the subject of proceedings in Hagans, where Haylen J found, inter alia, that the regulation was valid. For reasons that are not entirely dissimilar to those that found favour with his Honour, we also find that the regulation is valid. Accordingly, we propose to dismiss the respondent's notice of motion. ORDERS

(1) The respondent's notice of motion is dismissed.

(2) Costs are reserved. _______________________________________

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Workplace Relations Regulation 2006(Cth)

Workplace Relations Act 1996(Cth)ss 4, 4(1), 5(1), 6(1), 16(1), 16(1)(a), 16(1)(b), 16(1)(c), 16(1)(d), 16(1)(e), 16(2), 16(2)(a), 16(2)(b), 16(2)(c), 16(3), 16(4), 16(5), 152(1), 846, 846(1)(a), 846(2), sch

Costs Acts Interpretation Act 1901(Cth)s 15AA

Legislative Instruments Act 2003(Cth)s 13

Workplace Relations Amendment (Work Choices) Act 2005(Cth)sch 4

At a glance

Court

Decision date

Before

Source

Judgment (81 paragraphs)

Parties

Legislation Cited (7)

Cases Cited (28)

Cited By (4)