75 Further, any variation of the agreement must, by order, be approved by the AIRC, which must refuse to approve it in certain circumstances: see s 170MD(3). In Kilpatrick Green Pty Ltd v The Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Anor [1998] FCA 559, Ryan J observed that a suggestion that the AIRC had countenanced the variation, perhaps very substantially, of a certified agreement without such a variation being certified, would 'implicate the Commission in an improper delegation or abdication of its duty of certification.'
76 Subject to a possible exception in respect of 'facilitative provisions' (to which I later refer), the cumulative effect of the above provisions is such that it is an implicit, if not explicit, requirement of the statutory scheme for certification that the agreement being certified contain all of the terms that are to have effect as a certified agreement as a result of the certification. If the position were otherwise, the AIRC could not satisfy itself of the requirements in respect of the matters set out in ss 170LE, 170LI, 170LK, 170LT, 170LU, 170MD and 170XA. Thus, those terms must both be in existence and be considered by the AIRC prior to it certifying the agreement. It would be antithetical to that scheme for the AIRC to be empowered to validly certify an agreement when it had no knowledge of the terms of the cl 12 agreement that will ultimately be binding on the employer and the employees as if it were an agreement certified under the WR Act. More specifically, it is self-evident that a consequence of the certification of the CommSec Agreement, including cl 12, is that a cl 12 agreement may be given effect to as if it were a certified agreement notwithstanding that:
(a) a valid majority of employees may never have considered, let alone approved, its terms;
(b) the agreement may contain terms that do not pertain to the employee-employer relationship;
(c) the agreement may contain inconsistent, discriminatory and objectionable provisions;
(d) the AIRC, as opposed to the contracting parties, has not considered whether the agreement passes the 'no-disadvantage' test;
(e) the agreement may exclude the operation of the dispute prevention or settlement procedures in the CommSec Agreement; and
(f) the agreement varies the certified agreement without the variation being considered, let alone approved, by the AIRC.
77 I referred above to a possible exception in respect of 'facilitative provisions' which the AIRC has permitted to enable 'agreement at enterprise level to determine the manner in which [a] clause is applied at the enterprise': see Safety Net Adjustments and Review - September 1994 (1994) 56 IR 114 ('Safety Net') at 136. The AIRC (at 137) contrasted such provisions with 'a built-in contracting-out provision in an award, which should not occur' because, if the parties wish to divest themselves of their obligations, 'they should do so in accordance with the processes provided by the Act.'
78 A facilitative provision, which provides for the parties to agree upon the details of the manner in which a particular clause is to operate at the enterprise level, is unlikely to affect the AIRC's ability to be satisfied that the pre-conditions to certification have been met. Also, such a provision is unlikely to result in a variation of the agreement (for the purposes of s 170MD) in the event that agreement is subsequently reached upon the details of the operation of the clause at an enterprise level. In that regard, a facilitative provision may therefore fall within the marginal note to s 170MD(7), which states that the sub-section 'would not apply to an agreement in so far as the obligations under the agreement can change because of the terms of the agreement itself.' Although s 13(3) of the Acts Interpretation Act 1901 (Cth) provides that such notes are not to be taken to be part of the Act, the note indicates an intention that provisions such as facilitative provisions may not be regarded as variations for the purposes of s 170MD. Whether a facilitative provision is permissible may depend upon the width of the provision and, also, whether it purports to merely provide for the agreement made pursuant to it to operate between the parties, but not to become a provision of the award or certified agreement (as the case may be).
79 It is obvious that the purpose of the provisions to which I have referred is that the AIRC is to determine whether all of the terms of the agreement, which might be relevant to the statutory duties of the AIRC to which I have referred and which are to have effect as terms of a certified agreement during the period of its operation, satisfy the relevant statutory requirements. The cl 12 agreements, made pursuant to cl 12 of the CommSec Agreement, exclude all of the terms of the CommSec Agreement and substitute their terms as the terms and conditions of employment that are to have effect as if they were terms of the CommSec Agreement. It is clear that the cl 12 agreements and, it must follow, cl 12 of the CommSec Agreement which authorises those agreements, not only undermine the certification role of the AIRC under the WR Act, but also defeat the purpose of the statutory provisions to which I have referred. The Court should not construe the relevant provisions to produce those consequences if a construction that gives effect to the legislative purpose is reasonably open: see s 15AA of the Acts Interpretation Act 1901 (Cth) and Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 423, approved in Bropho v State of Western Australia (1990) 171 CLR 1 at 20. As Lord Diplock observed in 'The Courts as Legislators' in The Lawyer and Justice (1978) 263 at 274:
'if … the Courts can identify the target of Parliamentary legislation their proper function is to see that it is hit; not merely to record that it has been missed'.
80 In my view, subject to a probable exception in respect of facilitative provisions, it is an implicit requirement of the statutory provisions to which I have referred that the agreement being certified contain all of the terms that are to have effect as a certified agreement as a result of the certification. That construction gives effect to the purpose of the relevant provisions, is reasonably open and should be adopted.
81 However, it does not follow that every failure by the AIRC to satisfy the requirements of WR Act will result in invalidity. In Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355 ('Project Blue Sky') McHugh, Gummow, Kirby and Hayne JJ stated at 389 [92]:
'Traditionally, the courts have distinguished between acts done in breach of an essential preliminary to the exercise of a statutory power or authority and acts done in breach of a procedural condition for the exercise of a statutory power or authority. Cases falling within the first category are regarded as going to the jurisdiction of the person or body exercising the power or authority. Compliance with the condition is regarded as mandatory, and failure to comply with the condition will result in the invalidity of an act done in breach of the condition. Cases falling within the second category are traditionally classified as directory rather than mandatory.' (footnotes omitted)
82 See also SAAP & Anor v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 215 ALR 162 ('SAAP') at 183 [77] per McHugh J, 203 [173] per Kirby J and 211 [208] per Hayne J.
83 When regard is had to the significance of the requirement that the agreement being certified contain all of the terms that are to have effect as a certified agreement as a result of the certification; to the mandatory requirements that must be satisfied for certification; and to the consequences of certification; the conclusion is inevitable that the requirement is one that is an 'essential preliminary' to certification or, as was suggested in SAAP, an imperative requirement of non-compliance with which will result in invalidity.
84 The same result can also be reached by a simpler route. Section 170MD(2) provides that a variation to a certified agreement has no effect unless the AIRC approves it. Section s 170MD(7) provides that a certified agreement is not able to be varied except in accordance with s 170MD and certain other specified provisions of the WR Act. A cl 12 agreement, by excluding all of the terms of the CommSec Agreement, is plainly a variation of that agreement. In so far as cl 12 of the CommSec Agreement purports to give effect to a cl 12 agreement as if it were a certified agreement, it cannot have that effect by reason of ss 170MD(2) and 170MD(7) CBA and CommSec contended that cl 12 permits the CommSec Agreement to be varied and for the varied agreement to have effect as a certified agreement. However, the WR Act does not empower the AIRC to override the imperative statutory requirements of s 170MD. Therefore, any exercise of power by the AIRC purporting to do so is ultra vires and of no effect.
85 CommSec and CBA contended that cl 12 was analogous to a 'facilitative provision' in the sense that that term is used by the AIRC. It was a brave contention. Clause 12 was undoubtedly facilitative of CBA and CommSec's desire to opt out of all of the obligations imposed by the CommSec Agreement but, as the AIRC pointed out in Safety Net, if there is to be a divesture of the obligations imposed on the parties by the agreement, that can only be done in accordance with the statutory processes that provide for such changes; in the present context, s 170MD. Clause 12 enabled, and the cl 12 agreements provided for, a divestiture of all of the obligations imposed by the CommSec Agreement. Accordingly, cl 12 does not fall within the possible exception in respect of facilitative provisions.
86 For the above reasons, I have concluded that the inclusion of cl 12 in the CommSec Agreement resulted in the invalidity of the certification of the CommSec Agreement by the AIRC. As was made clear in Electrolux, it is not to the point that all of the provisions of the CommSec Agreement, other than cl 12, are provisions that may be the subject of a certified agreement. It is also not to the point that the cl 12 agreements may not in fact have contained conditions prohibited by the WR Act. The issue is whether the AIRC had jurisdiction to certify the CommSec Agreement and I have found that it did not have that jurisdiction. It must follow that the certification of the CommSec Agreement is invalid and also the cl 12 agreements, being variations of the CommSec Agreement which do not comply with s 170MD, do not have effect as if they were certified agreements under the Act.
87 CBA and CommSec contended that, if I concluded that the AIRC did not have jurisdiction to certify the CommSec Agreement by reason of cl 12, the agreement, save for cl 12, is validated by s 170NHA of the WR Act.
88 Section 170NHA provides:
'If:
(a) application was purportedly made to the Commission to certify an agreement under Division 2 (including that Division as applied by subsection 5AA(2) or (3) or subsection 494(2)) or Division 3; and
(b) the Commission purported to certify the agreement on or before 2 September 2004 under Division 4 (including that Division as so applied); and
(c) the agreement, as purportedly certified, deals with one or more matters that are not permitted matters; and
(d) the application and certification were (but for this section) invalid because the agreement deals with matters that are not permitted matters, and for no other reason;
then, to the extent only that the agreement deals with permitted matters, the fact that the agreement deals with matters that are not permitted matters is taken for all purposes not to affect, and never to have affected, the validity of the application or certification.'
89 Section 170NHC(1), relevantly, defines a 'permitted matter' in respect of an agreement purportedly made under Div 2 of Pt VIB as a matter pertaining to the relationship of an employer and the persons in the single business, or part thereof, whose employment is subject to the agreement.
90 Section 170NHA requires severance of the clauses that deal with 'matters that are not permitted matters' so that the certification of the agreement is validated in so far as it relates to 'permitted matters'. However, it is clear that the validation is only to occur where the invalidity has arisen 'because the agreement deals with matters that are not permitted matters', namely matters that do not pertain to the employer/employee relationship and therefore fail to comply with s 170LI. As was explained in the Explanatory Memorandum in respect of the Workplace Relations Amendment (Agreement Validation) Bill 2004, s 170NHA came about as a result of the High Court decision in Electrolux and s 170NHA:
'… places the parties in the position they would have been in had their agreement complied with the Electrolux decision at the time it was certified, approved or varied.'
The Explanatory Memorandum also stated:
'The Bill will not validate those parts of an agreement that do not pertain to the employment relationship. Nor will the Bill remedy other defects in the certification process. If an agreement is invalid as a result of some other flaw in its making, certification or approval, this Bill will not render it valid.'
91 On the basis of my reasoning in relation to invalidity, it is clear that the reason for invalidity of the certification is that the agreement contains cl 12. While one defect in cl 12 is that it does not restrict a cl 12 agreement to matters that pertain to the employer/employee relationship, the invalidity comes about because of flaws in the certification of the CommSec Agreement that travel well beyond any failure to comply with s 170LI. Thus, in the present case, the invalidity is not because the certified agreement deals with matters that are not 'permitted matters' as defined or, put another way, the invalidity did not arise because the CommSec Agreement did not satisfy the employer/employee relationship requirement in s 170LI. Rather, the invalidity has arisen because:
(a) the AIRC did not have the power to certify the CommSec Agreement because it did not have before it, and did not consider, all of the terms of the agreement that are to have effect as a certified agreement; and
(b) cl 12 impermissibly provides for a variation of the CommSec Agreement to have effect as a certified agreement without compliance with s 170MD.
92 Accordingly, s 170NHA does not validate the CommSec Agreement.