Local Government Engineers' Association of New South Wales v MidCoast Council

Industrial Relations Commission (NSW)|2022-06-21

NSW o/b Ferns v Fire and Rescue NSW [2018] NSWIRComm 1014 Recorded Media Industry Union of New South Wales v Summit Technology Australia Pty Ltd [2006] NSWIRComm 270 State Transit Authority of New South Wales v Australian Rail, Tram and Bus Industry Union, New South Wales Branch, Bus and Tram Division [2014] NSWIRComm 41 Texts Cited: Nil Category: Principal judgment Parties: Local Government Engineers' Association of New South Wales (First Appellant) New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union (Second Appellant) MidCoast Council (Respondent) Representation: Counsel: L Saunders (First Appellant) A Britt (Respondent) Other: P Marzato, LGEA (First Appellant) N Martin, USU (Second Appellant) R Nassif, LGNSW (Respondent) File Number(s): 2022/17220 Publication restriction: No Decision under appeal Court or tribunal: Industrial Relations Commission of New South Wales Citation: [2021] NSWIRComm 1081 Date of Decision: 25 October 2021 Before: Commissioner Muir File Number(s): 2020/194302

decision

This is an appeal from the decision of Commissioner Muir in Local Government Engineers Association of New South Wales v MidCoast Council [2021] NSWIRComm 1081 ("Decision").
The Application for Leave to Appeal and Appeal identified both the Local Government Engineers' Association of New South Wales ("LGEA") and the New South Wales Local Government, Clerical, Administrative, Energy, Airlines & Utilities Union ("USU") as the appellants. However, while the USU appeared at the hearing, it did not separately file or make submissions. Written and oral submissions were advanced by the LGEA. It follows that while we will reference in this decision the position put by the LGEA, we have not overlooked the interest of the USU in these proceedings. We have assumed that the USU supports the position advanced by the LGEA.

Background

The matter concerns a cohort of employees of the MidCoast Council ("Council") who had previously been employed by the MidCoast County Council ("Relevant Employees"). During their employment with the MidCoast County Council the Relevant Employees came to be entitled to have superannuation contributions made on their behalf "at a rate above the statutory minimum rate" with the entitlement "expressed to be at a rate relative to, and above, the statutory minimum rate". [1]
Effective from 1 July 2017 the functions of the MidCoast County Council were absorbed by the Council. The Relevant Employees maintained their superannuation entitlements. At that time, they were entitled to superannuation contributions at the rate of 15.5%, when the statutory minimum rate was 9.5%.
In 2018 the Council entered into negotiations with the LGEA, the USU and other unions for an enterprise agreement to cover some of the Council's employees, including the Relevant Employees. A disagreement arose as to the Relevant Employees' entitlement to superannuation, in light of the Federal Government's announcement that it would increase the statutory minimum rates of contribution. The disagreement was distilled into the question of whether the Relevant Employees were entitled to superannuation: 1. at a rate fixed at 6% above the minimum statutory rate; or 2. at the rate of 15.5%, with any increases to the minimum statutory rate being absorbed into that rate.
The parties invoked the assistance of the Commission. The parties were unable to reach agreement on the question of the Relevant Employees' superannuation entitlements.
In the event, the parties made the MidCoast Council Water Services Enterprise Agreement 2019 ("Enterprise Agreement"). It included the following provision: "33. Grand-parenting 33.1 Upon commencement of this Agreement, Council will write to all employees…and advise the following: a. An employee's entitlement to 15.5% superannuation shall remain with the employee whilst they remain continuously employed with MidCoast Council. The matter of absorbability will be dealt with by the NSW Industrial Relations Commission by way of arbitration. …"
There is no contest that the "matter of absorbability" in cl 33.1.a of the Enterprise Agreement refers to the question set out at [5] above.
Schedule C to the Enterprise Agreement is titled "Dispute Resolution Procedure". It permits the Industrial Registrar to be advised of the existence of a dispute "at any stage of this procedure" (cll C8 and C10) and allows for disputes to be resolved through "consideration, negotiation, conciliation and/or arbitration" (cl C6).
On 30 June 2020 the LGEA notified the Industrial Registrar of an industrial dispute pursuant to s 130 of the Industrial Relations Act 1996 ("Act"). Put simply, the LGEA sought the Commission's assistance to determine the "matter of absorbability".

The Decision

A threshold issue arose before Commissioner Muir as to the Commission's powers in arbitrating a dispute as contained in s 136(1) of the Act. That section is in these terms: 136 Arbitration of dispute (1) The Commission may, in arbitration proceedings, do any one or more of the following - (a) make a recommendation or give a direction to the parties to the industrial dispute, (b) make or vary an award under Part 1 of Chapter 2, (c) make a dispute order under Part 2, (d) make any other kind of order it is authorised to make (including an order made on an interim basis).
The Decision summarised the issues as follows: "3. It is agreed between the parties that the Commission should 'arbitrate' to resolve the dispute. 4. It is not agreed what the Commission may do to conclude that arbitration, and therefore the basis on which the superannuation dispute between the parties will be resolved. 5. In short, the applicant contends that it was the intention of the parties, set out in an enterprise agreement, that the Commission arbitrate a final outcome, and that this enlivens s 136(1)(d) of the Act such that the Commission may make an order in arbitrating the matter. Alternatively, the Commission may give a direction, pursuant to s 136(1)(a) of the Act, in arbitrating the matter. 6. The respondent contends that the Commission may only make an award, pursuant to s 136(1)(b) of the Act in arbitrating the matter. The applicant accepts that the Commission may make such an award but observes that such an award would need to comply with the wage fixing principles. 7. This is a procedural ruling determining what the Commission is empowered, by s 136 of the Act, to do in arbitration proceedings concerning the industrial dispute notified to the Commission by the applicant on 30 June 2020."
In the Decision, Commissioner Muir noted the following matters, none of which were challenged on appeal: "47. It was common ground that: (1) The parties could not agree on whether any increases in the statutory minimum rate of superannuation would be absorbed into the prevailing rate of 15.5% paid to the relevant employees; (2) In order to have the Commission approve the Enterprise Agreement, this question was deferred; (3) The question was to be resolved by arbitration, that is by the Commission deciding which outcome would prevail; and (4) The parties did not give detailed, or perhaps any, consideration to the process by which the Commission would decide the question. 48. To the extent that it was suggested that the Commission may never need to address the question of absorbability, this misses the point of the agreement between the parties. Whether because the statutory minimum rate was raised, or because the applicant asked the Commission to address the question in advance of such a rise, it is clear that the parties intended the Commission to decide the question of absorbability. 49. The plain text of cl 33.1.a. of the Enterprise Agreement makes this clear on its face by use of the words 'will be dealt with by the NSW Industrial Relations Commission by way of arbitration'. The evidence of both Mr Marzato and Mr Nassif was that the Commission would decide the question by 'arbitration'. 50. In context, and to the extent it is relevant to the current issue before the Commission, this can only mean a process where the outcome, although likely informed by submissions of the parties, is a binding decision of the Commission outside the power of the parties to determine, negotiate or veto. 51. The wording of cl 33.1.a. of the Enterprise Agreement made clear that the parties did not expect conciliation would resolve the question, and this was also clear from the evidence."
The question before Commissioner Muir, and his findings, were set out in the Decision as follows: "53. The question is whether, in resolving the superannuation dispute, the Commission: (1) May make an order pursuant to s 136(1)(d) or give a direction pursuant to s 136(1)(a); or (2) Is confined to making an award pursuant to s 136(1)(b). … Section 136(1)(d) 55. The parties agreed that the Commission's power to make orders pursuant to s 136(1)(d) in the resolution of industrial disputes is not 'at large'; some source of authority outside s 136 is required. … 59. All of the authorities cited proceeded on the basis that some legislative authority is required as the source for the Commission's power to make an order pursuant to s 136(1)(d). I agree that some legislative basis must ultimately be the source of that power. 60. Neither party referred the Commission to an express authority to make an order based on the intention of the parties as expressed in the Enterprise Agreement. I can find no such express authority. … 63. The Act needs to be read in its full context, taking into account the objects of the Act and specifically the clear purpose of s 136 generally being directed to the resolution of industrial disputes. A meaning which would give effect to these outcomes should doubtless be preferred over one which does not give such effect. However, that outcome must be one that the words of the Act are capable of bearing. 64. There exists in s 136(1)(b) an appropriate power to set a condition of employment, and so it is not necessary, or obvious, that the Commission should have an implied power pursuant to s 136(1)(d) to set a condition of employment, based on an express referral by parties in an approved enterprise agreement. 65. It was not the subject of any submission, but I note that the definition of 'award' in the Act provides that an award '…includes any order of the Commission under this Act that sets conditions of employment'. Accordingly it must be that any order purportedly made under s 136(1)(d) which sets the rate of superannuation would, by definition, be an award. While somewhat circular logic, this does reinforce that the appropriate process in this matter is the making of an award pursuant to s 136(1)(b). 66. It is clear to me that even if the parties had expressly articulated an agreement to have their dispute resolved by the Commission making an order pursuant to s 136(1)(d), the Commission would not have the power to make such an order. Section 136(1)(a) … 69. The applicant submitted that the Commission's power to give directions, while different from an order, could in, this case, extend to a direction which would determine the appropriate superannuation to be paid to the relevant employees. … 71. In both written and oral submissions, the applicant posited that it would be a bizarre outcome that a recommendation could be made under s 136(1)(a), but a direction in essentially the same terms, and pursuant to the same section, could not be given. I do not see why this would be a bizarre outcome. 72. In s 136 generally, and in the remainder of the Act, the Commission has been given a range of tools to resolve industrial disputes. These include the tools in s 136(1)(b) and (c), which it might be said are fundamental to a tribunal such as the Commission, but also expressly include the more flexible tools in s 136(1)(a). … 81. To the extent that the Commission has the power to give a direction pursuant to s 136(1)(a) for matters beyond administrative and facilitative matters, and the cited Full Bench decision suggests this is at least a possibility, it is sufficient for current purposes to determine that it is too great a stretch that the power extends to a direction which would set conditions of employment. 82. It follows that the only option open to the Commission in arbitrating the superannuation dispute is to make an award pursuant to s 136(1)(b)." (Italics in original, footnote omitted)

The Appeal

The Application for Leave to Appeal and Appeal states: "F. The questions raised by the appeal are: a) Do the terms of the Midcoast Council Water Services Enterprise Agreement 2019, and in particular cl.33.1(a) which by agreement referred an outstanding question as to superannuation to the Commission to be 'dealt with by...arbitration' authorise the Commission to make an order in respect of that question for the purposes of s.136(1)(d)? b) Does the Commission, in exercising its powers to resolve an industrial dispute to finality by way of arbitration, have the power to make a direction in respect of matters of substance ie in resolution of the dispute per s.136(1)(a)? G. Reasons why leave to appeal should be granted: a) The matter gives rise to questions of general importance and application, about which there is a diversity of authority at first instance and no conclusive Full Bench guidance, and it is in the public interest that this question be considered by a Full Bench. b) The decision below is attended by sufficient error to warrant its reconsideration. H. Grounds of the appeal are: a) The Commissioner erred in determining that the Commission did not have power to issue an order resolving the dispute under s.136(1)(d). b) The Commissioner erred in determining that the Commission did not have power to issue a direction resolving the dispute under s.136(1)(a)." (Reproduced verbatim)
The grounds of appeal do not accurately reflect the Decision, or the questions said to be raised by the appeal. Rather, they rest on the premise that an order or direction could only "resolve the dispute" if it was in the terms sought by the LGEA; that is, that the Council be ordered, or in the alternative directed, not to absorb increases in the statutory superannuation rate into the 15.5% rate currently enjoyed by the Relevant Employees. The Appeal does not appear to contemplate the possibility that the Commission might "deal with" the matter of absorbability in a different manner.
Commissioner Muir did not find that the Commission was unable to make an order pursuant to s 136(1)(d) or a direction pursuant to s 136(1)(a) to resolve the dispute. Rather, he found that the Commission's powers under those provisions did not extend to making an order or direction in the terms sought by the LGEA. This is made clear at [66] and [81] of the Decision, reproduced at [14] above.
We have approached the Appeal by construing the grounds of appeal as being consistent with what are contended to be the questions raised by the appeal. This requires the determination as to whether the Commissioner erred, including in particular in making the findings at [66] and [81] of the Decision.

Principles on appeal

Pursuant to s 188 of the Act, an appeal to a Full Bench of the Commission may be made only with the leave of the Full Bench. The Full Bench is to grant leave to appeal if, in its opinion, the matter is of such importance that, in the public interest, leave should be granted.
An appeal to a Full Bench "is not by way of a new hearing" (s 191(1) of the Act) and the Full Bench "cannot merely substitute its decision on the matter, but must follow the principles applying to appeals from discretionary decisions, whether or not further evidence is received" (s 191(3) of the Act).
The principles to apply on an appeal are well-established. They were summarised in Public Service Association and Professional Officers Association Amalgamated Union of New South Wales v Roads and Maritime Services [2015] NSWIRComm 16 at [10]-[11], in passages that have been cited in numerous subsequent Full Bench decisions. It is not necessary that they be reproduced or further paraphrased in this decision.
We also have regard to the observations of the Full Bench in Industrial Relations Secretary v Wattie [2017] NSWIRComm 1007 at [12]-[14]. Once again, it is not necessary for present purposes that those passages be reproduced.

Statutory construction

The Appeal raises questions as to the proper construction of s 136(1) of the Act
The principles of statutory construction are well settled. They were helpfully summarised in Certain Lloyds Underwriters Subscribing to Contract Number IH00AAQS v Cross [2012] HCA 56. French CJ and Hayne J outlined the relevant principles at [23]-[26]. We will not reproduce those passages in their entirety but we note, in particular, the following observations made by their Honours: "24. The context and purpose of a provision are important to its proper construction because, as the plurality said in Project Blue Sky Inc v Australian Broadcasting Authority, '[t]he primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute' (emphasis added). That is, statutory construction requires deciding what is the legal meaning of the relevant provision 'by reference to the language of the instrument viewed as a whole', and 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed'. 25. Determination of the purpose of a statute or of particular provisions in a statute may be based upon an express statement of purpose in the statute itself, inference from its text and structure and, where appropriate, reference to extrinsic materials. The purpose of a statute resides in its text and structure. …'[T]he duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have' (emphasis added). And as the plurality went on to say in Project Blue Sky: 'Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.'" (Footnotes omitted)
In the same case, Keifel J (as her Honour then was) stated: "88. The fundamental object of statutory construction is to ascertain legislative intention, understood as the intention that the courts will impute to the legislature by a process of construction, by reference to the language of the statute viewed as a whole. The starting point for this process of construction is the words of the provision in question read in the context of the statute. Context is also spoken of in a broader sense as including the general purpose and policy of the legislation, in particular the mischief to which the statute is directed and which the legislature intended to remedy. 89. It is legitimate to resort to materials outside the statute, but it is necessary to bear in mind the purpose of doing so and the process of construction to which it is directed. That purpose is, generally speaking, to identify the policy of the statute in order to better understand the language and intended operation of the statute. An understanding of legislative policy by these means does not provide a warrant for departing from the process of statutory construction and attributing a wider operation to a statute than its language and evident operation permit." (Footnotes omitted)

Leave to appeal

We have determined to grant leave to appeal. The questions arising from the appeal relate to the Commission's powers under s 136 of the Act, including the scope of "directions" that the Commission may make under s 136(1)(a) and the sources of power that will "authorise" the making of an order pursuant to s 136(1)(d). These are substantial issues going to the Commission's jurisdiction which have implications for the jurisprudence of the Commission that extend beyond the scope of the present dispute.

The construction of s 136(1) - general observations

The outcome sought by the LGEA in the proceedings before Commissioner Muir is that there be no absorption of the rate of superannuation contributions made on behalf of the Relevant Employees. That is, that their contributions remain at a rate fixed at 6% above the minimum statutory rate. The LGEA seeks an order under s 136(1)(d), or in the alternative a direction under s 136(1)(a), that increases to superannuation not be absorbed, whilst acknowledging the possibility of an award being made pursuant to s 136(1)(b). [2]
The premise of the LGEA's position, in the proceedings below and on appeal, is that in the context of s 136(1), an order, a direction or an award can all be used to achieve the same result. The effect of the Decision is that Commissioner Muir rejected that premise. We see no error in him doing so.
In the first place, we do not accept that the legislature would have used different terms in the one provision that were either interchangeable or even, depending on the circumstances, largely synonymous. As Commissioner Muir observed in the Decision, the Dictionary to the Act defines "award" as including "any order of the Commission under this Act that sets conditions of employment". By definition, an order of the kind sought by the LGEA would be an award. However, on its construction, s 136(1)(d) can be invoked as an alternative to s 136(1)(b), whilst achieving fundamentally the same outcome.
Second, and consequently, the LGEA's proposed construction is inconsistent with the language of the provision itself and with the Act as a whole. By way of explanation and example, an award made pursuant to s 136(1)(b) must meet the requirements of Ch 2 Pt 1 of the Act. By describing the relief as an "order" or a "direction" these requirements could be wholly circumvented. This is essentially the outcome sought by the LGEA.
Further, an order pursuant to s 136(1)(d) must be of a kind that the Commission is "authorised to make". If the relief is described as a "direction", the need for such a source of power may be obviated. In any event, the conditions precedent to the making of what otherwise would be an "order" may be said no longer to apply. This would extend to any order which the Commission is empowered by statute to make.
The Commission has previously determined that parties should not be permitted to bypass the requirements of the Act in the manner contemplated by the LGEA's position. In Johnston v Department of Mineral Resources (1997) 73 IR 267 at 274-275, Schmidt J observed: "If a dismissal is pursued in a dispute notification lodged under s 130 of the Act, rather than in an application under s 84, the same result follows. In an arbitration in relation to the dispute, the Commission is empowered by s 136(1)(d) to order reinstatement, that being an order which the Commission is authorised to make under s 89. In my view that power must however be read as being confined by the provisions of s 90, in the same way as the power is confined when an application for reinstatement is brought directly under s 84. The limitations imposed by s 90 upon the Commission's power to make reinstatement orders cannot be avoided by reinstatement being pursued by way of dispute notification, rather than by way of a direct reinstatement application."
This passage was cited with approval by Boland J in Police Association v NSW Police (No 2) [2005] NSWIRComm 70 as follows: "29 In the event that the applicant is unable to show constructive dismissal it relies, inter alia, on the Commission's powers to make an award pursuant to s 136(1)(b) or an order under s 136(1)(d) of the 1996 Act. I do not decide whether power exists under s 136(1)(b) to make an award to require the respondent to reinstate or re-employ Mr Walpole because of the view I have taken in relation to s 136(1)(d). However, on one view, on the authorities of Wallis and Downey, the Commission would not have the power to make such an award. The consequences of assuming power to do so may be to enable Pt 6 of Ch 2 of the Act to be effectively bypassed and that does not seem to me to be consistent with the legislature's intention. Alternatively, the Commission does have power to make an award but that power must be read as being confined by the provisions of s 90 of the 1996 Act, in the same way as the power is confined when an application for reinstatement is brought directly under s 84: see Bronwyn Johnston v Department of Mineral Resources (1997) 73 IR 267 at 274. As Schmidt J observed in that case, 'The limitations imposed by s 90 upon the Commission's power to make reinstatement orders cannot be avoided by reinstatement being pursued by way of dispute notification, rather than by way of a direct reinstatement application.'" (Emphasis added)
The Commission's powers in s 136(1) may be used concurrently. We do not accept that they can operate interchangeably in the manner asserted by the LGEA. This conclusion is borne out further by the discussion which follows regarding the grounds of appeal.

Appeal Ground a) - The Commission's powers to make orders pursuant to s 136(1)(d)

The LGEA's first ground of appeal contends that Commissioner Muir erred in determining that the Commission did not have power to issue an order to resolve the dispute under s 136(1)(d) of the Act.
It is useful to observe at the outset that it is common ground that the Commission's powers to make orders under s 136(1)(d) is not "at large": New South Wales Teachers Federation v Department of Education and Training (2003) 121 IR 177; [2003] NSWIRComm 145 ("Teachers Federation") at [31]. There must be a source of power external to the provision itself.

Outline of submissions

The LGEA contends that the source of power "authorising" the making of an order pursuant to s 136(1)(d) is the Enterprise Agreement. The LGEA's arguments may be distilled to the following propositions: 1. The source of authority for the making of an order under s 136(1)(d) may be within the Act, or elsewhere. 2. The power can be express or implied. By way of illustration, a power to make status quo orders can be implied from the Commission's power to control its own processes and obligation to ensure fairness: NSW Local Government, Clerical, Administrative, Energy, Airlines and Utilities Union v Warringah Council [2015] NSWIRComm 1012 ("Warringah Council") at [53]; Health Services Union v Central Coast Local Health District [2013] NSWIRComm 44 ("Central Coast Local Health District"). 3. The Enterprise Agreement is a proper source of authority for the purposes of s 136(1)(d) in that: 1. clause 33.1.a of the Enterprise Agreement reflects an agreement between the parties to submit the "matter of absorbability" to the Commission for final determination, akin to an agreement for private arbitration; and 2. it has statutory force under the Act due to its status as an approved enterprise agreement. (The LGEA placed some reliance on the fact that cl 33.1.a was developed in conciliation conducted by Commissioner Stanton, meaning that at the time the Enterprise Agreement was made the Commission itself must have been regarded as raising no obstacle to the proposition that it would deal with the matter). 1. Two parties can, by consent, confer power on a third party arbitrator to deal with their particular disputes and that such consent and referrals are binding. The question is whether that third party, particularly when it is a statutory tribunal, is entitled to accept the referral. 2. Section 136(1)(d) allows the Commission to accept the referral. The "matter of absorbability" is an "industrial matter" within the meaning of s 6 of the Act, and the disagreement between the parties in respect of that matter is an "industrial dispute" as defined in the Dictionary to the Act. 3. The text of cl 33.1.a reflects an intention to outsource one question for final determination by an independent arbitrator. There is no reference in the clause, and nor can one be implied, that in determining the question the Commission should have regard to wage fixing principles most commonly used in collective, industry-wide disputes rather than matters affecting a sub-cohort of employees. However, that would be the effect of confining the Commission's powers to the making of an award pursuant to s 136(1)(b).
In opposing this ground of appeal, the Council makes the following contentions: 1. The Act requires that prior to the Commission arbitrating a dispute pursuant to s 136, it must first attempt to resolve the dispute by conciliation: s 133. That conciliation is to be conducted in accordance with s 134. As the Enterprise Agreement does not contemplate conciliation, it could never have been the intention that the "matter of absorbability" would be determined pursuant to Ch 3 Pt 1 of the Act. As such, the Enterprise Agreement does not provide for any arbitration pursuant to s 136. 2. There is no authority for the proposition that a source of power for the purposes of s 136(1)(d) can be found other than in legislation. 3. The Commission is entirely a creature of statute, and its powers and functions must be exclusively found from that source. It has no general jurisdiction: Beck v Commissioner of Police [2016] NSWIRComm 9 at [58]. The Commission will either have the jurisdiction to make an order or not. The parties cannot extend that jurisdiction by agreement.

Consideration

We are not persuaded that cl 33.1.a of the Enterprise Agreement "authorises" the Commission to make an order for the purposes of s 136(1)(d). This is principally for two reasons. First, as the Council submits, there is no authority for the proposition that a source of power for the purposes of s 136(1)(d) can be found other than in legislation. Second, the parties cannot confer on the Commission a jurisdiction that is not conferred on it by the legislature.

Statutory source of authority

The preponderance of authorities suggest that the authority is to be derived from the legislation conferring jurisdiction on it. As the Full Bench in Beck v Commissioner of Police observed: "58. The Commission is entirely a creature of statute and its powers and functions must be exclusively found from that source. It has no general jurisdiction."
In Police Association v NSW Police (No 3) [2005] NSWIRComm 243 ("Police Association (No 3)") Boland J observed: "59. As I earlier found, a 'decision' includes an order. But is an order reinstating or re-employing an employee, the making of which relies on the vehicle provided by s 136(1)(d), an order under Pt 6 of Ch 2 or an order under s 136(1)(d)? I take the view that an order referred to under s 136(1)(d) would be an order made pursuant to the relevant express power. So that if the Commission, pursuant to s 136(1)(d), was to make an order for the conduct of a secret ballot, the order would be an order under s 172 of the Act. Section 136(1)(d) is merely facilitative; it directs the Commission to the relevant express power in the statute under which the order may be made. Similarly, in arbitration proceedings, any order reinstating an employee (other than a dispute order under Pt 2 of Ch 3) would be an order under s 89 of the Act or, in other words, a 'decision of the Commission under Part 6 of Chapter 2'." (Emphasis added)
In State Transit Authority of New South Wales v Australian Rail, Tram and Bus Industry Union, New South Wales Branch, Bus and Tram Division [2014] NSWIRComm 41 ("State Transit Authority") the Full Bench observed: "157. The determinations made by the primary judge, purportedly pursuant to s 136, could not be regarded as a recommendation or direction, they did not constitute the making of an award or variation of an award and they were not dispute orders. Section 136(1)(d) provides that the Commission may make any other kind of order it is authorised to make (including an order made on an interim basis). Section 136(1)(d), however, is merely facilitative; it directs the Commission to the relevant express power in the statute under which the order may be made: Police Association v NSW Police (No 3) [2005] NSWIRComm 243; (2005) 144 IR 150. It does not appear to us that the determinations fall under any other express power in the Act other than, of course, s 175."
In Fire Brigade Employees' Union of New South Wales (on behalf of Rampling) v Industrial Relations Secretary (Fire & Rescue NSW) (No 2) [2020] NSWIRComm 1060 Commissioner Sloan observed: "11. … The Commission's jurisdiction is derived from statute. The relevant legislation in the present matter is the Industrial Relations Act. The Act empowers the Commission to make interim orders of a kind it is 'authorised to make'. 12. In my opinion, the word 'authorised' is key. The legislature did not use words such as 'necessary' or 'appropriate', but 'authorised'. In the context of a tribunal such as the Commission, which is a creature of statute, the word 'authorised' must be referrable to a power conferred by legislation, whether the Industrial Relations Act or one of the other acts conferring jurisdiction on it."
Other cases have drawn attention to, and only to, the orders which the Commission is empowered to make under the Act: see for example, Teachers Federation at [32]; Construction, Forestry, Mining and Energy Union (New South Wales Branch) v South Western Sydney Local Health District [2016] NSWIRComm 1047 at [40].
We are mindful that a broader approach to s 136(1)(d) was taken in Central Coast Local Health District and Warringah Council, to which the LGEA drew our attention. In the former, Harrison DP found that a policy that the respondent in that case had sought to introduce was "grossly unfair and [held] strong potential to act as an impediment to co-operation and productivity in the workplace" (at [54]). His Honour determined that the remedy sought by the applicant - namely, a variation to the policy - was "an appropriate cure" which was "properly effected by order pursuant to s 136(1)(d)" (at [55]).
There is nothing on the face of the decision in Central Coast Local Health District to indicate that the parties raised any argument that s 136(1)(d) could not be invoked in the manner adopted by the Deputy President. There is no discussion in the decision as to how the order made by his Honour was relevantly "authorised". In light of the authorities referred to at [40]-[44] above, we consider that the approach taken by his Honour was in error and ought not be followed.
In Warringah Council, Commissioner Newall observed: "53. However, in my view the Commission is authorised to make an order that the parties to an industrial dispute maintain the status quo ante in relation to, for example, terms and conditions of employment that have operated between them: Broken Hill Chamber of Commerce and CFMEU (NSW Branch) [2002] NSWIRComm 244. The Commission is equally able to make an order that operates to provide fairness: Health Services Union NSW and Central Coast Local Health District re Regrade Policy [2013] NSWIRComm 44, which in this case would hold parties to representations they have made to each other in relation to the subject matter of a dispute. Were I wrong about that, the Commission has in my view power to make orders as it sees appropriate to fulfil the Objects of the Act, in this case particularly the Objects set out in subs 3 (a), (g) and (h)."
There are several observations to make in respect of this passage. First, we have already examined Central Coast Local Health District. To the extent that it informed Commissioner Newall's views, he may have been led into error.
Second, we do not consider that Broken Hill Chamber of Commerce and CFMEU (NSW Branch) [2002] NSWIRComm 244 ("Broken Hill Chamber of Commerce") stands as authority for the proposition posited by Commissioner Newall. Some explanation is required.
In Barrier Industrial Council dispute with Broken Hill Chamber of Commerce and Others re Breach of Award and The Construction, Forestry, Mining and Energy Union (New South Wales Branch) dispute with Broken Hill Chamber of Commerce and Others re alleged breach of Award [2002] NSWIRComm 232 Sams DP determined "that the Commission has the power to make an order requiring the status quo to be maintained while the substance and merits of a dispute are heard and determined by the Commission" (at [23]). While his Honour examined some authorities that explored the rationale for the making of interim orders, he did not provide any authority in support of the contention that such an order was permitted under s 136(1)(d). In any event, his Honour proceeded to make an interim order pursuant to that section.
That decision was appealed, and the appellant sought a stay of the decision and interim orders made by Sams DP. The decision in Broken Hill Chamber of Commerce concerned the application for a stay. The decision notes (at [8]) that one of the questions being raised on the appeal, as identified in the application for leave to appeal, was "[the] scope and extent of interim dispute orders under Section 136(1)(d) of the Industrial Relations Act 1996". The Full Bench did not consider that question. While it refused to grant the stay, the Full Bench did not dismiss the appeal.
Third, the objects set out in s 3 of the Act do not on their terms "authorise" the making of orders in the sense described in Police Association (No 3) and State Transit Authority. They certainly cannot be said to confer on the Commission the "power to make such orders as it sees appropriate".
It is noteworthy that in a subsequent decision, Public Service Association of NSW o/b Ferns v Fire and Rescue NSW [2018] NSWIRComm 1014, Commissioner Newall referred (at [20]) to the "ample authority for the proposition that 'any other order the Commission is authorised to make' under the Act means one of the orders specifically set out in the statute".

Parties cannot confer jurisdiction on the Commission

In Construction, Forestry, Maritime, Mining and Energy Union & others v Falcon Mining Pty Ltd [2022] FWCFB 93 the Full Bench of the Fair Work Commission observed, in comments apposite to this Commission's jurisdiction: "[59] It is trite to say that the Commission is a creature of statute, and its powers are conferred and limited by the terms of the FW Act (or any other statute relating to its powers and functions). To the extent that it has power to arbitrate disputes, the source of that power must necessarily be located in the FW Act. Private parties cannot by agreement confer such a power on the Commission absent statutory authority to do so. As the Federal Court (Colvin J) stated in Maersk Crewing Australia Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union: '… the nature and extent of the arbitral appointments that the FWC may undertake are also confined by the extent of the statutory authority to act as arbitrator conferred on the FWC by the Act. Whereas a natural person can accept an appointment to resolve any dispute, the FWC can only do so for the purpose of performance of its statutory functions.' [60] The respondent's submission appears to proceed from a misunderstanding of the judicial characterisation of the power exercised under s 739(4) [of the Fair Work Act 2009 (Cth)] as being one of private arbitration. … [61] The reference to 'private arbitration' in the above passage has sometimes been misunderstood as meaning that when the AIRC (and the Commission under the FW Act) engages in arbitration pursuant to an agreed dispute resolution procedure, it is exercising a private, non-statutory function. However, the above passage (in [32]) makes clear that the authority to engage in private arbitration ultimately emanates from the governing statute. This point was further clarified by the High Court, by reference to [31] in the above passage, in TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia as follows: 'The context of that articulation puts its reference to "private arbitration" in appropriate perspective. The context was that of a challenge to the capacity of a statutory body consistently with Ch III of the Constitution to exercise a statutory function to settle a dispute where so empowered by an agreement entered into as a result of statutory processes. The reference to "private arbitration" was not to a private function, as distinct from a public function, but rather to a function the existence and scope of which is founded on agreement as distinct from coercion.' (underlining added) [62] Therefore, to the extent that a dispute resolution procedure in an enterprise agreement confers, conditions or limits the Commission's power to arbitrate disputes, that conferral, condition or limitation is not effective by virtue of the operation of the agreement itself. An enterprise agreement is not a law and therefore cannot of its own force delimit the powers of the Commission. Rather (as submitted by the appellants), it is s 739(4) which gives effect to an agreement by parties for the arbitration of a dispute by the Commission pursuant to a dispute resolution term of a type described in s 738, and it is s 739(3) which limits the powers of the Commission to deal with the dispute by reference to any such limitations contained in the relevant dispute resolution term. Therefore, the scope of the authority of the Commission to engage in arbitration of disputes pursuant to a dispute resolution term is ultimately a question of statutory construction although, in a particular case, the application of the statutory provisions will be affected by the terms of the relevant dispute resolution procedure." (Footnotes omitted)
The LGEA disputes that it is attempting to confer on the Commission a jurisdiction which is not found in the Act. Its position may be summarised as follows: through cl 33.1.a of the Enterprise Agreement, the parties have agreed to refer the "matter of absorbability" to the Commission for final resolution; that is a "conventional referral to private arbitration"; [3] the matter is properly one falling to be dealt with under Ch 3 of the Act; the provisions of Ch 3 empower the Commission to accept the referral; the parties have by their consent authorised the Commission to make final orders; and, this enlivens the Commission's powers under s 136(1)(d).
The Enterprise Agreement does not articulate how the Commission is to resolve the dispute or the powers it may exercise in doing so. Clause 33.1.a of the Enterprise Agreement simply provides that the "matter of absorbability will be dealt with by the NSW Industrial Relations Commission by way of arbitration". While it is clear that the intention of the Enterprise Agreement is that the Commission resolve the dispute to finality (and in so doing "deal with" the superannuation question), it does not require a particular approach to that resolution being adopted by the Commission. It is not possible to construe the provision as invoking s 136(1)(d) or the making by the Commission of "final orders".
Further, in answer to the Council's submissions summarised at [38(1)] above, the LGEA submitted: "7. It is not to the point that…cl.33.1(a) does not contemplate the pre-arbitration steps; these are requirements imposed by the Commission's strictures. Parties who refer matters to a tribunal for private arbitration are presumed to take that tribunal as they find it, such that its own internal rules are applicable even where the referral instrument is silent: see, e.g. DP World Brisbane v Maritime Union of Australia (2013) 237 IR 180 at [48]."
We accept these submissions. (We put to one side the question as to whether the position taken by the Council at [38(1)] above would be to rob cl 33.1.a of any practical utility; this seems properly to be a matter for consideration of the dispute between the parties on the merits.)
However, it is curious that the LGEA would accept that the referral under cl 33.1.a would be subject to the Commission complying with the pre-arbitration steps required by Ch 3 Pt 1 of the Act, but that in exercising its arbitral function the Commission could invoke its powers under s 136(1) without regard to the "requirements imposed by the Commission's strictures".
The Commission's powers to make orders pursuant to s 136(1)(d) are constrained in the manner described at [40]-[53] above. An attempt by parties to remove those constraints by agreement would have the effect of conferring a jurisdiction on the Commission which it does not possess. We fail to see how that conclusion is altered by the fact that the agreement is contained in an enterprise agreement.

Appeal Ground b) - The Commission's powers to issue directions pursuant to s 136(1)(a)

A question said to be arising on appeal is whether the Commission's powers under s 136(1)(a) extend to making directions in respect of "matters of substance". The LGEA contends that Commissioner Muir "erred in determining that the Commission did not have power to issue a direction resolving the dispute under s 136(1)(a)".

Outline of submissions

To place the submissions of the parties into context, it is useful to start by referring to Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v Secretary for Industrial Relations [2018] NSWIRComm 1061 ("PSA Case"). This case was referred to in the Decision, and its implications were obviously the subject of contention before Commissioner Muir.
In the PSA Case the Full Bench observed: "86. This Full Bench acknowledges that the Commission may make directions pursuant to s 136(1)(a) of the Act which have coercive force, in the sense that a failure to comply may give rise to proceedings for contempt of the Commission, much in the same way as a failure to comply with a summons to appear and/or produce documents may have that consequence. As already indicated, such directions will, in most cases, be of an administrative or facilitative kind, such as a direction to an individual to attend a compulsory conference, a direction that the parties to a dispute confer or a direction that certain individuals take steps to ensure publication and compliance with dispute orders made by the Commission. 87. Directions of that kind are qualitatively different from a direction that an employer pay money to an employee. Further where such an outcome is not permitted by way of a dispute order (subs 137(3)), or the Commission's powers to order an employer to pay money to an employee as specifically provided for by way of the small claims procedure (ss 379 and 380), it appears to us that the legislature did not intend the directions power in s 136(1)(a) to extend that far."
Underpinning the parties' submissions was the question as to the extent to which directions made under s 136(1)(a) could be more than "administrative or facilitative".
The LGEA submitted: 1. The word "direction" is inherently mandatory. In the context of the Act, it should be construed as extending to directions of substance with coercive effect. This is consistent with its juxtaposition with "recommendation" in the provision itself, and by appearing in the section setting out the Commission's powers in resolving industrial disputes through arbitration. Further, s 136(1)(a) is to be contrasted with s 134(2) of the Act, which provides that non-compliance with a direction "may not be penalised". The absence of such a qualifier in s 136(1)(a) suggests that non-compliance with a direction could be so penalised. 2. Predecessor legislation to the Act, namely the Industrial Arbitration Act 1940 and the Industrial Relations Act 1991, used the word "direction" to refer to a mandatory obligation dealing with matters of substance. To the extent that the language of the Act was changed from that appearing in the earlier legislation, it was "surface redrafting" that should not be interpreted as generating a significant alteration to the meaning of the text. 3. Commissioner Muir's decision "leads to a range of situations where the Commission's hands are, for no good reason, simply tied". [4] Further in this regard: [5] "10. The evident purpose of Chapter 3 Part 1 is to empower the Commission to resolve industrial disputes. As a starting point, an interpretation that leaves the Commission, in the plethora of matters in which an Award is not suitable, unable to do more than make a strongly worded recommendation, is unlikely to be correct." 1. Further, the Commissioner failed to appreciate the significant restrictions on the making of awards imposed by the wage fixing principles.
The Council submitted: 1. The language of s 136(1) suggests that there must be a practical difference between "orders" and "directions". However, on the LGEA's case there is no such distinction. Indeed, the Commission would be at large to act as it saw fit if it labelled the relief it granted as a direction. This is inconsistent with the section itself and the Act as a whole. 2. The use of the word "direction" elsewhere in the Act is consistent with it being confined, and not extending to the setting of terms and conditions of employment. 3. The language of both ss 134 and 136, referring to the Commission "giving a direction" in the context of a provision that also contemplates the Commission "making of a recommendation", suggests that the reference is more appropriately viewed as a power to make a procedural style direction rather than the Commission determining a condition of employment. Such an interpretation is consistent with both the ejusdem generis rule and noscitur a sociis rule. The consistency in language between those provisions argues against any difference in approach to the meaning or effect of the terms used.

Consideration

We are not persuaded that s 136(1)(a) empowers the Commission to make a direction of the kind sought by the LGEA.
Our discussion at [27]-[34] above is particularly pertinent to this ground of the Appeal. The legislative history of the Act to which the LGEA directed us does not alter the views we expressed in those passages.
We have in mind the observations of the Full Bench in the PSA Case. In respect of those observations, in Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales v Secretary of the Department of Education (COVID-19 Protocols) [2022] NSWIRComm 1063 Commissioner Sloan observed: "17. Further, care should be taken not to place too much significance on the Full Bench's caveat ('in most cases') at [86] in the PSA Case. Read properly, at [86]-[87] the Full Bench identified that directions under s 136(1)(a) would in the usual course be administrative or facilitative in nature. The Full Bench allowed for the possibility of what I would call 'exceptions to the rule', although I observe parenthetically that it did not identify any. That the Full Bench allowed for such exceptions should not distract or detract from its articulation as to what it anticipated would be the situation 'in most cases'. There is no basis for construing the observations of the Full Bench as allowing for s 136(1)(a) to be interpreted as conferring an 'at large' jurisdiction on the Commission to make such directions as it sees fit."
We also observe that the distinction between "orders" and "directions", with the latter being facilitative in nature, appears elsewhere in the Act, for example, in s 172. This reinforces the view expressed at [34] above that the Commission's powers under s 136(1) may be used concurrently, but are not interchangeable or synonymous.
The LGEA sought to distinguish the PSA Case, on the basis that the Full Bench was there dealing with the enforcement of an existing entitlement, which is to be contrasted with the question presently before the Commission. We do not, however, consider that the observations of the Full Bench reproduced at [63] lose their relevance to the current matter as a consequence.
The Commission's powers to make directions pursuant to s 136(1)(a) have otherwise been the subject of some consideration by the Commission. In Police Association (No 3), Boland J observed: "61. Returning to s 405 of the Industrial Relations Act, I do not consider there is any doubt that the Commission would have the power to make a recommendation or give a direction to reinstate or re-employ a person pursuant to s 136(1)(a). Section 405 is only concerned with inconsistent awards and orders. Recommendations and directions are not orders or awards and so no inconsistency can arise. Of course, recommendations and directions are not enforceable and their acceptance relies to a large extent on the parties' common sense and goodwill and the perception they have as to whether the Commission, in making the recommendation or direction, has given adequate consideration to the merits of their case. …" (Emphasis added)
In Recorded Media Industry Union of New South Wales v Summit Technology Australia Pty Ltd [2006] NSWIRComm 270 Sams DP observed: "55. Mr Rudd submitted that a direction of the Commission under s 136(1)(a) is final and binding on the parties. He alluded to, and later provided authority, for that proposition in Australian Workers' Union (Technical, Administrative Professional Staff Branch) v BlueScope Steel (AIS) Pty Limited [2006] NSWIRComm 1080, where I presume the following comment of Connor C at paras 34 and 35 was apposite: 34 In the unreported decision of the Full Bench of the Commission (Wright J - President, Walton J - Vice President and Connor C) in the Teacher's Case [Matter No. IRC 6326 of 1999] interlocutory directions were made at first instance under S.134(2), ie in the conciliation phase of an industrial dispute (and consequently ahead of the issuing of the S.135 certificate of attempted conciliation). Those directions nevertheless grounded an appeal, with respect to which leave was not granted. By contrast, in Construction, Forestry, Mining and Energy Union v. Newcrest Mining Limited (2005) 139 IR 50 at p.65 the Full Bench of the Commission (Walton J - Vice President, Boland and Staff JJ) observed that a recommendation (and by implication, a direction) made under S.134(2) was neither an award, part of an award, nor a binding instrument, ie it was no more than a part of the processes of conciliation. 35 But, in any event, this matter falls under S.136(1) and not S.134(2), ie in the arbitration phase of the dispute. The upshot of that position, to my mind, is that any decision taking the form of a direction that I make on a matter before me after I have issued a S.135 certificate of attempted conciliation and entered the arbitral phase of a dispute, is a final determination of the issue in dispute and, subject to a right of appeal, binding on the parties to the dispute. 56. Although directions of the Commission have been the subject of appeal in the past, I am unclear whether the question of their finality or binding effect has been determined at Full Bench level. Nevertheless, and notwithstanding the attraction of Connor C's opinion, the fact remains that there is no power, either expressed or implied, to be found in the Act to enforce a direction under s 136(1)(a) - a position distinguishable from enforceability of an award or the possibility of penalty under s 139 for the contravention of a dispute order under s 137. 57. However, on the state of the material before me, I do not feel disposed to [opine] a concluded view on this question. …"
These authorities argue against the Commission having the power to make directions under s 136(1)(a) which would set terms and conditions of employment, and which would be final and binding in the sense of being made in resolution of the substantive issues raised in the matter.
We do not consider that the LGEA has established that there is a "plethora of matters in which an award is not suitable". We accept that a party may have to meet the requirements of the wage fixing principles in order to enable the Commission to make an award under s 136(1)(b). However, and without expressing a concluded view in respect of this or any other matter, we have difficulty envisaging a situation where the principles, and in particular the special case sub-principle, would not be met when the parties have committed to referring a matter to the Commission for resolution under the terms of an enterprise agreement.

Other matter arising

We observe for completeness that the LGEA submitted that Commissioner Muir's observations at [65] of the Decision, reproduced at [14] above, demonstrate an error in approach. In particular, in determining that "the appropriate process in this matter is the making of an award", the Commissioner was not determining the question before him, that is, the powers available to him. The question of what is "appropriate" is for later determination.
Read in the context of the Decision as a whole, and in particular the Commissioner's conclusion at [82], we do not consider that much turns on his use of the word "appropriate". The Commissioner clearly found that the power to make a direction under s 136(1)(a) did not extend to the setting of terms and conditions in a manner that was in all but name an award. His use of the adjective "appropriate" was clearly directed towards differentiating between the separate powers conferred on the Commission by s 136(1).

Determination

For the reasons set out above, we are not persuaded that the LGEA has demonstrated any appellable error in the Decision.

Endnotes

Decision at [11]
Appeal Book, Tab 2, at pars 3-4
Appellant's Outline of Submissions in Reply, 15 June 2022, at par 5
Appellant's Outline of Submissions, 3 May 2022, at par 30
Appellant's Outline of Submissions in Reply, 15 June 2022 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. Decision last updated: 23 August 2022

At a glance

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Judgment (20 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (26)

Cited By (8)