Fair Work Act 2009

s.604 - Appeal of decision

Appeal against decision [2020] FWC 6006 of Deputy President Binet at Perth on 14 December 2020 in matter number B2020/286 - majority support determination - appealable error re fairly chosen finding - decision quashed - application dismissed.

[1] INPEX Australia Pty Ltd (INPEX) has appealed a decision[1] of Deputy President Binet made on 14 December 2020. The Deputy President's decision relates to an application for a majority support determination made by the Australian Workers' Union (AWU) under s 236 of the Fair Work Act 2009 (Cth) (Act). In her decision, the Deputy President determined that the group of employees who would be covered by the AWU's proposed enterprise agreement was fairly chosen within the meaning of s 237(2)(c) of the Act. The Decision includes findings in relation to whether INPEX should be given access to unredacted copies of petitions obtained by the AWU from relevant employees, the method that should be used to determine whether a majority of employees want to bargain, and the time at which the majority is to be determined. The Deputy President also made directions on 14 December 2020 in relation to the conduct of the balance of the proceedings before her. By consent of the parties, those directions were vacated and the whole of the Deputy President's decision was stayed, pending the hearing and determination of this appeal.[2]

[2] INPEX relies on seven grounds of appeal. Grounds 1 and 2 contend error in relation to the Deputy President's findings that the group of employees to be covered by the proposed enterprise agreement (a) is geographically, operationally, and organisationally distinct and (b) was fairly chosen. Ground 3 relates to the Deputy President's finding that the AWU had standing to make an application under s 236 of the Act. Grounds 4 and 5 concern the Deputy President's refusal to permit INPEX to inspect and address the content of the petitions. Ground 6 relates to the Deputy President's findings in relation to the method to be used to work out whether a majority of employees want to bargain. Ground 7 contends that the Deputy President erred in making determinations for the purposes of s 237(2)(a)(i) of the Act.

[3] The AWU contends that there is no appealable error in the Deputy President's decision, and it is not in the public interest to grant permission to appeal. It is contended by the AWU that INPEX has filed its notice of appeal simply because it does not like the decision made by the Deputy President and would prefer a different outcome.

[4] INPEX operates facilities for the extraction and processing of natural gas off the coast of Western Australia, and an onshore facility in the Northern Territory. In 2014, INPEX and its employees in the classifications of Operations Technician (Trade and Processing) and Operations Technician (Services) made the Ichthys Operations Multi Location Agreement 2014 (Agreement). The Agreement passed its nominal expiry date in October 2018 but continues to operate.

[5] At the time the Agreement was made, the project by which INPEX proposed to extract and process natural gas from off the Western Australian coast was in its construction phase. The work performed by employees who voted on the Agreement in 2014 was primarily directed to planning for and preparing the various tasks which would be necessary for the construction phase and transition to steady state operations. This included performing many duties which are no longer performed by any INPEX employees.

[6] The project is now in the operations phase and the employees who are covered by the Agreement perform substantially different work to that performed by the employees who were covered by the Agreement at the time it was made.

[7] On 3 March 2020, the AWU wrote to INPEX and proposed to commence bargaining for a new enterprise agreement. The AWU proposed that the same classifications of employees who are covered by the Agreement be covered by the new proposed agreement. These employees work at one of three facilities: (1) the Ichthys Explorer central processing facility, which is located about 220km off the coast of Western Australia; (2) the Ichthys Venturer floating production, storage and offloading facility, which is moored about 3.5km away from the Ichthys Explorer central processing facility; and (3) the Ichthys LNG onshore processing facilities at Bladin Point, Northern Territory.

[8] There is no dispute that the AWU's proposed enterprise agreement will not cover all of INPEX's employees.

[9] On 23 April 2020, INPEX informed the AWU that it did not agree to bargain. On 25 May 2020, the AWU filed its application under s 236 of the Act for a majority support determination. The application stated that the AWU had received signed individual petitions from a majority of INPEX's relevant employees, and that it would provide these petitions to the Commission on a confidential basis to enable the Commission to confirm that a majority of relevant employees have indicated a desire to bargain.

[10] By directions dated 23 June 2020, the Deputy President identified two questions to be answered prior to the determination of the application. The first was the method by which the Commission should determine whether a majority of relevant employees want to bargain for an enterprise agreement. The second was whether the group of employees who would be covered by the AWU's proposed agreement was fairly chosen. The parties were given an opportunity to file and serve evidentiary material and submissions in relation to these questions. The AWU did not file any evidence in relation to the fairly chosen question and did not make any submissions as to whether the group of employees to be covered by the proposed agreement is geographically, operationally, or organisationally distinct. The two questions identified by the Deputy President were determined on the papers by consent of the parties.

[11] In her initial decision of 24 August 2020,[3] the Deputy President determined, at [50], that a ballot of the relevant employees, conducted by the AEC, was the most appropriate way to determine whether a majority of employees want to bargain; and at [60], that she was satisfied that the group of employees to be covered by the proposed agreement was fairly chosen. On the same day, the Deputy President made an order for the conduct of the ballot. On 26 August 2020, INPEX filed an appeal against the Deputy President's initial decision and the orders associated with it.

[12] On 7 October 2020, a Full Bench of the Commission granted permission to appeal from the Deputy President's initial decision, quashed that decision and the associated orders, and remitted the application to Deputy President Binet for redetermination.[4] The Full Bench concluded that the Deputy President had erred in failing to make a finding as to whether the group of employees is geographically, operationally or organisationally distinct, ordering the AEC to conduct a ballot, and making orders for a ballot without inspecting the petitions.

[13] On 15 October 2020, the Deputy President made directions which required, inter alia, the AWU to "file with the FWC further submissions and evidence with respect to whether the group of employees who will be covered by the Proposed Agreement is fairly chosen" by 4pm on 22 October 2020. The AWU filed submissions dated 22 October 2020, which addressed whether the group of employees is geographically, operationally, or organisationally distinct, in addition to the overall question as to whether the group was fairly chosen. The AWU also filed a statement of Mr Douglas Heath, Organiser, in relation to the steps taken to obtain signed petitions from relevant employees. Mr Heath's statement did not address the fairly chosen question. The AWU did not file any evidentiary material in relation to that question or the anterior question of whether the group of employees is geographically, operationally, or organisationally distinct.

[14] By written submissions dated 22 October 2020, INPEX pointed out that there was no evidence or material before the Commission which could enable determination of the question of whether the group of employees is geographically, operationally, or organisationally distinct. INPEX made the same point in its written submissions in reply dated 29 October 2020 and its submissions (by email) dated 16 November 2020. In its 29 October 2020 submissions INPEX also responded to the AWU's specific submissions concerning the question of geographical, operational, or organisational distinctiveness. As to geographical distinctiveness, INPEX submitted that many of its employees who would not be covered by the AWU's proposed enterprise agreement worked at the same three locations as the employees who would be covered by it.[5] That submission was not challenged by the AWU.

[15] On 29 October 2020, the AWU filed further written submissions in which it stated that it relied on its earlier submissions filed on 2 July 2020 and 22 October 2020 in relation to the fairly chosen question.

[16] On 13 November 2020, INPEX filed further written submissions in which it contended that it was necessary for there to be material before the Commission as to the geographical location, organisation, and operational responsibilities of the employees who would not be covered by the proposed agreement, so that the questions of distinctiveness under s 237(3A) of the Act could be assessed. In circumstances where there was no such material before the Commission, INPEX contended that it was not open for the Commission to make findings about whether the group of employees is geographically, operationally, or organisationally distinct, and the application should be dismissed.

[17] The Deputy President determined the fairly chosen question, as well as the other matters addressed in her decision dated 14 December 2020, on the papers.

[18] By ground 2, INPEX contends that the Deputy President's finding, at [39], that the group of employees is geographically, operationally, and organisationally distinct within the meaning of s 237(3A) was erroneous in three respects.

[19] First, INPEX submits that the Deputy President made the finding in the absence of rationally probative material or, in the alternative, drew inferences from material which was not reasonably capable of supporting the inferences made, in a way that constitutes jurisdictional error. Further, or in the alternative, INPEX contends that it was irrational or illogical for the Deputy President to make the finding on the basis of the material before her.

[20] Secondly, INPEX submits that the Deputy President reversed the correct onus. It is contended that an applicant in a majority support determination application bears the onus of satisfying the Commission that a majority of employees want to bargain. The Deputy President made a determination as to a state of satisfaction under s 237(3A) after identifying, at [38], that INPEX had not filed any evidence to suggest that the AWU's submissions with respect to the operational, organisational, or geographic distinctiveness of the group of employees was "untrue". The Deputy President did so in circumstances where the AWU had chosen not to file any evidence in support of its submissions, and where the Deputy President did not refer to or give weight to this failure in her reasons. In doing so, INPEX contends that the Deputy President effectively reversed the onus of proof, and erroneously treated the fact that an asserted fact was not contradicted as a sufficient basis to be satisfied of the asserted fact.

[21] Thirdly, INPEX submits that it was unreasonable for the Deputy President to make the finding that the group of employees is geographically, operationally, and organisationally distinct. In the absence of any evidence of the question of distinctiveness filed by either party, INPEX submits that the Deputy President preferred the AWU's written submissions to those filed by INPEX. The reason for the Deputy President's preference, so INPEX contends, appears to be that INPEX failed to file evidence that rebutted the AWU's written submissions or suggested that they were "untrue". However, INPEX submits that this was either or both arbitrary and capricious where:

• (a) The Deputy President did not draw any adverse inference from the AWU's decision not to file evidence as to distinctiveness on two separate occasions, despite being directed to do so, and without giving an explanation for the decision. It is submitted that the inference that should have been drawn was that the AWU could not produce any evidence of geographical, operational, or organisational distinctiveness that would have assisted its case.

• (b) The AWU's forensic decision to refrain from filing evidence as to distinctiveness deprived INPEX of any opportunity to test, through cross examination, the matters which were simply asserted in the AWU's written submissions as establishing geographic, operational, and organisational distinctiveness.

• (c) The circumstances in (a) and (b) should have operated together to deprive the AWU's submissions of any probative value.

[22] INPEX further submits that the Deputy President's erroneous findings as to the geographical, operational, and organisational distinctiveness of the group of employees materially infected her ultimate finding that the group was fairly chosen as, if the group is not geographically, operationally, or organisationally distinct, it becomes necessary to identify what, if any, factors outweigh the absence of such characteristics and also give significant weight to the lack of distinctiveness in determining whether the group was fairly chosen.

[23] The AWU submits that INPEX's second ground of appeal is without merit and must be dismissed.

[24] The AWU contends that, for the purposes of making a finding in relation to s 237(3A), the Deputy President had regard not only to the submissions of the AWU dated 22 October 2020, but to the submissions and evidence of INPEX and the finding in 2014 by Commissioner Cloghan that the group of employees covered by the Agreement was fairly chosen. Taken together, the AWU submits that this materially is reasonably probative to support a finding that the employee group is geographically, operationally, and organisationally distinct.

[25] The AWU submits that INPEX's proposed level of required evidence and submissions runs completely counter to the requirement in s 577(b) of the Act for the Commission to perform its functions and exercise its powers in a manner that is "quick, informal and avoids unnecessary technicalities". The AWU also contends that INPEX ignores the existence of s 591 of the Act, in that INPEX appears to be trying to persuade the Commission that it must be bound by the rules of evidence in its consideration of s 237(3A). The AWU also submits that the required level of evidence asserted by INPEX for a positive finding to be made regarding distinctiveness is well beyond that ordinarily and routinely filed and accepted in both majority support determination applications and enterprise agreement approval applications.

[26] The AWU contends that INPEX's submissions concerning the supposed reversal of the onus are without merit. It contends that a relevant factor in the Commission's consideration of whether a group of employees was fairly chosen includes whether the employer has identified any groups of employees that ought to be included or excluded in order for the group to be fairly chosen.

[27] The AWU submits that INPEX's suggestion that it was unreasonable for the Deputy President to find that the group of employees was distinct is incorrect. It is submitted that the Deputy President made findings on distinctiveness after having regard to the submissions from both the AWU and INPEX, evidence from INPEX, and the fairly chosen determination made by Commissioner Cloghan in 2014.

[28] The AWU contends that the Deputy President made no errors in her finding as to the distinctiveness of the group of employees, or in being satisfied that the group was fairly chosen. It contends that INPEX is merely dissatisfied with the decision and would prefer a different outcome.

[29] The Commission is not a court. It is not bound by the rules of evidence.[6] It is required to perform its functions and exercise its powers in a manner that is quick, informal and avoids unnecessary technicalities.[7] But when the Commission makes a finding of fact, it must proceed by reference to rationally probative material.[8] That material may include, inter alia, evidence or, in an appropriate case, submissions. For example, it may be appropriate for a finding of fact to be made on the basis of an unchallenged submission made by one party, particularly when the other party is legally represented.

[30] The exercise of a statutory power of an administrative character, including a power that is discretionary in nature, will usually be beyond jurisdiction unless the implied conditions of rationality, reasonableness and fairness are complied with.[9] We consider that the discretionary power to make a majority support determination under ss 236-237 of the Act is such a power.

[31] Irrationality and illogicality have emerged from the implied condition of reasonableness.[10] Justices Crennan and Bell explained these concepts in Minister for Immigration and Citizenship v SZMDS:[11]

"... Whilst there may be varieties of illogicality and irrationality, a decision will not be illogical or irrational if there is room for a logical or rational person to reach the same decision on the material before the decision maker. A decision might be said to be illogical or irrational if only one conclusion is open on the evidence, and the decision maker does not come to that conclusion, or if the decision to which the decision maker came was simply not open on the evidence or if there was no logical connection between the evidence and the inferences or conclusions drawn."

[32] On the question of geographical distinctiveness, at first instance the AWU did not adduce any evidence but it submitted that the group of employees to be covered by the proposed agreement is geographically distinct from other INPEX employees because the employees within the group are engaged to perform work at three identifiable workplaces and only these workplaces. Further, the AWU contended that these workplaces are intrinsically connected and together form the Ichthys LNG project. Two of the workplaces are located offshore and nearby to one another. The third is located onshore but is connected to one of the others by a physical pipeline. INPEX did not challenge the factual matters contained in these submissions. INPEX did, however, submit that many of its employees who will not be covered by the proposed agreement also work at these three locations. The AWU did not challenge or contradict this submission.

[33] We agree with INPEX's submission that distinctiveness within the meaning of s 237(3A) of the Act is necessarily a relative, not absolute, concept, and necessarily requires a comparison between the employees who will be covered by the proposed agreement and those who will not.

[34] The only material before the Deputy President concerning the geographical location of INPEX's employees who would not be covered by the proposed agreement was INPEX's unchallenged submission that many of those employees also work at the three locations where the employees to be covered by the proposed agreement work. Taking that information into account, it was not open on the material before the Deputy President to find that the group of employees to be covered by the proposed agreement is geographically distinct. The same conclusion must also be reached even if INPEX's unchallenged submission concerning the work locations of its employees who would not be covered by the agreement were put to one side. On that assumption, there was no material before the Deputy President as to where employees who would not be covered by the proposed agreement work. Absent probative material as to the geographical work location of employees who would not be covered by the proposed agreement, it is not possible to compare the geographical work locations of those covered by the agreement with the geographical work location(s) of employees not so covered and it is not open to find that the employees covered by the proposed agreement is geographically distinct. The Deputy President erred by so finding.

[35] As to operational distinctiveness, the term "operational" refers to an industrial or productive activity.[12] The performance of a different role, task, skill or function is not sufficient to establish operational distinctiveness.[13]

[36] At first instance the AWU did not adduce any evidence in relation to operational distinctiveness but submitted that the employees covered by the proposed agreement are engaged in the discrete industrial or productive activity of production, transmission, and processing of liquified natural gas - specifically in connection with the Ichthys LNG project. The AWU submitted that the group of employees is operationally distinct on this basis and all employees of INPEX engaged in this industrial activity are included in the group of employees covered by the proposed agreement. INPEX did not challenge or contradict the factual aspects of these submissions. An inference which may be drawn from the AWU's submissions is that all of INPEX's employees who would not be covered by the proposed agreement are not engaged in the industrial or productive activity of production, transmission, and processing of liquified natural gas. The drawing of this inference makes possible a comparison between the operational activities of the group of employees covered by the proposed agreement and the employees not so covered. In circumstances where one group of employees is involved in the industrial or productive activity of production, transmission, and processing of liquified natural gas and none of the employer's other employees are engaged in this activity, a finding of operational distinctness is available. Although the Deputy President did not explain her reasoning for finding that the group of employees covered by the proposed agreement is operationally distinct, we consider that this finding was open on the probative material before the Commission.

[37] As to organisational distinctness, the term "organisation" refers to the manner in which the employer has organised its enterprise in order to conduct its operations.[14] The performance by a group of employees of duties which are qualitatively different from duties performed by other employees may weigh in favour of a conclusion that the group is organisationally distinct; however, the mere performance by a group of employees of different tasks or roles to others may not be sufficient to render it organisationally distinct where the employees work in an integrated way with other employees to perform a particular business function.[15]

[38] At first instance the AWU did not adduce any evidence in relation to organisational distinctiveness but submitted that the group of employees is organisationally distinct because they are employed in "blue collar" or "hands on" classifications, as opposed to "white collar" or management positions. At first instance INPEX contested these submissions and contended that the historical delineations between "blue collar" and "white collar" workers are inappropriate to its operations where its workforce operates complex plant and equipment.

[39] At first instance the AWU made no submissions, and led no evidence, as to the way in which INPEX has organised its enterprise, including in relation to the degree, if any, of integration between employees covered by the proposed agreement and employees not so covered. There was no material before the Deputy President that explicitly identified the existence of the so called "white collar" or management positions within INPEX's workforce, and no material as to the positions, duties or responsibilities of the employees who would not be covered by the proposed agreement. Further, in circumstances where the employees to be covered by the proposed agreement work at the same geographical locations as many employees not so covered and INPEX's workforce operates complex plant and equipment, the AWU's submissions - unsupported by evidence or other probative material - concerning the labels "blue collar" and "white collar" were vague and had little meaningful content. Even if it could be inferred that there were qualitative differences in the duties, tasks or roles performed by "blue collar" employees and "white collar" employees within INPEX's workplace, that would not in itself be sufficient to establish organisational distinctness in the absence of any material concerning the degree of integration between the two groups. For these reasons, we consider that it was not open on the material before the Deputy President to find that the group of employees to be covered by the proposed agreement is organisationally distinct. The Deputy President erred by making such a finding.

[40] For the reasons given, we uphold ground 2. Further, as INPEX submits, it is clear from paragraph [47] of the decision that the Deputy President's finding that the group of employees is geographically, operationally, and organisationally distinct infected her ultimate finding that the group was fairly chosen. This is a sufficient and appropriate basis to uphold the appeal and quash the decision. We therefore do not need to consider the balance of the appeal grounds.

[41] We have decided to grant permission to appeal in the public interest, because the decision is affected by significant errors.

[42] We make the following orders:

(3) The decision ( [2020] FWC 6006) is quashed.

[43] In addition, pursuant to s 607(3)(b) of the Act, we consider it appropriate to make a further decision in relation to the matter that is the subject of the appeal. Our decision in that regard is to dismiss the AWU's application for a majority support determination. We have made that decision for a number of reasons. First, the AWU has been given multiple opportunities to put before the Commission evidence and other probative material in relation to the fairly chosen question and the anterior question of whether the group of employees is geographically, organisationally, or operationally distinct. The AWU has repeatedly made a forensic decision not to file any evidence in relation to these matters. It has filed submissions, but the material contained within those submissions includes very limited information in relation to the group of employees who will not be covered by the proposed agreement. Secondly, on the material before the Commission we accept that the group of employees is operationally distinct, for the reasons set out above. But, for the reasons we have given, it is not open on the material before the Commission to find that the group of employees is geographically or organisationally distinct. Further, on the basis of the very limited probative material before the Commission we are not satisfied that the group of employees was fairly chosen. It follows that a majority support determination cannot be made (s 237(1) and (2) of the Act).

[44] INPEX accepts, correctly in our view, that the dismissal of the AWU's present application will not prevent the AWU from filing a new application for a majority support determination. If such a new application is filed, it will no doubt be necessary to obtain up to date information from the relevant employees as to whether they want to bargain with INPEX for an enterprise agreement, particularly having regard to recent redundancies and new employees being hired by INPEX, together with the fact that some of the petitions obtained from the employees are more than two years old.

Mr I Neil SC and Ms R. Kumar of counsel for INPEX Australia Pty Ltd

[1] [2020] FWC 6006

[2] PR725882

[3] [2020] FWC 3843

[4] [2020] FWCFB 5321

[6] Section 591 of the Act

[7] Section 577(b) of the Act

[8] Assistant Minister for Immigration and Border Protection v Splendido [2019] FCAFC 132 at [107]- [108]

[10] Mt Arthur Coal Pty Ltd v Goodall [2016] FWCFB 5492 at [51]

[11] (2010) 240 CLR 611 at [135]; applied in Mt Arthur Coal Pty Ltd v Goodall [2016] FWCFB 5492 at [52]

[12] QGC v AWU [2017] FWCFB 1165 at [44]

[15] Ibid at [44]-[45]; Aerocare Flight Support Pty Ltd v TWU (2017) IR 385 at [27]

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