s.604 - Appeal of decision

Appeal against decision [2022] FWC 2110 of Deputy President Clancy at Melbourne on 9 August 2022 in matter number C2022/1104 - stay application - stay order granted.

• [1] McCain Foods (Aust) Pty Ltd (McCain) has lodged an appeal, for which permission is required, against a decision made by Deputy President Clancy on 9 August 2022.[1] The decision concerned an application by the Australian Manufacturing Workers' Union (AMWU) under s 739 of the Fair Work Act 2009 (FW Act) for the Commission to deal with a dispute concerning the proper interpretation of provisions concerning staffing levels under the McCain Foods (Aust) Pty Ltd Ballarat Production Enterprise Agreement 2019 (Agreement). Clauses 16.1-16.2 of Appendix 1 of the Agreement provide:

16.1 Prior to the commencement of this Agreement, crewing levels have been established to reflect workloads, rosters and business needs. Crewing levels for the Potato Products Plant are as follows

• Potato Processing 7 roles
• Raw/Frozen Inspection 5 roles
• Quality Control 3 roles
• Potato Packing 11 roles
• Production Put Away 3 roles

16.2 Planned crewing levels may be subject to change due to changes in investment in capability and technology from those in place at the date of commencement of this Agreement. Any such change will be subject to consultation under clause 10 of the Agreement.

• [2] The AMWU contended before the Deputy President that clause 16.1, on its plain meaning, required that 11 positions be staffed in the potato packing area of McCain's plant, in circumstances where McCain was currently only operating with 9 positions. McCain contended that the provision was ambiguous, that the staffing level had been reduced below 11 in January 2018 pursuant to a provision in the same terms as clause 16.2 under the predecessor enterprise agreement, and that clause 16.1 should not be construed as constituting an operational requirement under the Agreement to restore the staffing number to 11.

• [3] The Deputy President determined that clause 16.1 had a plain and unambiguous meaning which required McCain to allocate 11 crew members per shift to the potato packing area.

• [4] In its notice of appeal, McCain contends that the Deputy President's construction of clauses 16.1 and 16.2 of Appendix 1 of the Agreement was in error on the following grounds (in summary):

(1) The Deputy President erred in finding that clause 16.1 was not ambiguous, since ambiguity arises from a conflict between the first, second and third sentences of clause 16.1 and the first sentence of clause 16.2, having regard to the objective background circumstances concerning the change to the crewing level prior to the Agreement being made.

(2) The Deputy President erred in finding that clause 16 required McCain to allocate 11 crew members per shift to the potato packing area in circumstances where clause 16.1, on its proper construction, imposes no obligation to maintain the role numbers expressed in its subjoined dot points.

(3) Alternatively, the Deputy President erred in finding that clause 16 required McCain to allocate 11 crew members per shift to the potato packing area in circumstances where clauses 16.1 and 16.2, on their proper construction, required McCain to maintain (subject to any further changes following consultation) the crewing levels which, prior to the commencement of the 2019 Agreement, were established to reflect workloads, rosters and business needs and those crewing levels in place at the commencement of the Agreement (in both cases being 8 roles).

(4) The Deputy President erred in determining the matter in absolute terms, in circumstances where clause 16.2 permits McCain to allocate different crew numbers to shifts in accordance with cl 16.2.

• [5] In its notice of appeal, McCain seeks a stay of the decision pending the hearing and determination of its appeal. The AMWU opposes the grant of a stay. This decision is concerned with the contested stay application.

• [6] The principles applying to the determination of stay applications which are usually applied by the Commission are as stated in the decision of the Australian Industrial Relations Commission in Kellow-Falkiner Motors Pty Ltd v Edghill.[2] Paragraph [5] of that decision states:

"[5] In determining whether to grant a stay application the Commission must be satisfied that there is an arguable case, with some reasonable prospects of success, in respect of both the question of leave to appeal and the substantive merits of the appeal. In addition, the balance of convenience must weigh in favour of the order subject to appeal being stayed. Each of the two elements referred to must be established before a stay order will be granted."

• [7] In assessing for the purpose of a stay application whether an appeal has the requisite prospects of success, the Commission necessarily engages in an assessment of the merits that is preliminary in nature, since the Commission will not have had the benefit of hearing the appellant's full argument and usually will not have had the opportunity to properly peruse the case materials.[3]

• [8] The application of the above principles is subject to the applicant for a stay demonstrating at the outset that there is an operative decision with ongoing effect that is capable of being stayed. The refusal or dismissal of an application does not usually give rise to anything capable of being stayed pending an appeal.[4]

• [9] Having heard a brief outline of the case that McCain intends to advance in the appeal, I am satisfied that it has an arguable case with some reasonable prospects of success. It is not appropriate at this state of the appeal proceedings to analyse the contested issue of the proper construction of clauses 16.1 and 16.2 of Appendix 1 of the Agreement in any depth. It is sufficient to say that, notwithstanding the difficulty which McCain will face in the appeal in overcoming the seemingly plain meaning of clause 16.1, the combination of the objective background facts concerning the prior reduction in the staffing level in the potato packing area, the reference in clause 16.1 to the establishment of crewing levels "[p]rior to the commencement of this Agreement", and the title of Appendix 1 prescribed by clause 1 as being "the McCain Foods Ballarat Production Employees 7-Day Continuous Shift Roster Agreement 2014", render it reasonably arguable that clause 16.1 is ambiguous and susceptible to a different construction than that preferred by the Deputy President.

• [10] As for the balance of convenience, I am persuaded that this positively weighs in favour of the grant of a stay. In support of its stay application, McCain relied upon a statement of evidence made by Mr Desmond Carter, who holds the position of Human Resources Specialist with McCain, signed on today's date. In this statement, Mr McCain gave evidence that a requirement to allocate 11 crew members would cost approximately $2.6 million per annum, and it would be necessary for McCain to identify and train the additional employees for the roles. Mr Carter estimated that the training would take 10 weeks for an internal hire and 12 weeks for an external hire. Mr Carter also referred in his statement to correspondence McCain had received from the AMWU on 15 August 2022. This correspondence stated (omitting formal parts):

"As you are aware, Deputy President Clancy handed down decision [2022] FWC 2110 in C2022/1104 on 9 August 2022. The decision clarified that McCains in required to allocate 11 crew members per shift to the potato packing area in the potato products plant. I am instructed that this requirement is not being met.

We seek the immediate allocation of 11 crew members per shift in the relevant area. Any failure to meet the minimum crewing level is a breach of the McCain Foods (Aust) Pty Ltd Ballarat Production Enterprise Agreement 2019.

We put you on notice that if McCains continue to breach the Agreement the AMWU will initiate legal proceedings without further correspondence.

Please inform me in writing by 5.00pm on 16 August 2022 what action you intend to take in this matter."

• [11] Mr Carter's statement also annexed further correspondence from the AMWU dated 18 August 2022 in which the AMWU warned that, unless McCain indicated it would allocate 11 staff per shift to the potato packing area by the following day, it "will initiate action in the Federal Court for breach of the Agreement without any further correspondence".

• [12] Mr Carter's evidence persuades me that, if a stay is not granted, it will have to commence to undertake recruitment and training activities, and to begin paying additional wages, which may ultimately prove to be unnecessary if its appeal succeeds. There is also the possibility, having regard to the AMWU's correspondence, that the AMWU will commence litigation in a court concerning the contested staffing issue unless a stay of the decision is granted. As to this matter, the AMWU submitted that it has an independent right to enforce the terms of the Agreement in a court and this would not be affected by the grant of a stay. That submission cannot be accepted in the unequivocal terms in which it was put, since it is well-established that where parties to an enterprise agreement have agreed that the Fair Work Commission, acting as private arbitrator, is to resolve disputes about the application of the agreement, then the Commission has the power to make a final determination on questions of fact and law which is binding on the parties to the dispute. This proposition encompasses any appeal proceedings for which the agreement provides or permits.[5] Thus the AMWU, having accessed the dispute resolution procedure in the Agreement to resolve the dispute which it has raised concerning the proper interpretation of clause 16.1 of Appendix 1 to the Agreement, is not at large to commence collateral litigation in a court to seek an outcome alternative to that which might ultimately be determined by the Commission pursuant to that procedure. Therefore, I consider that the grant of a stay would be likely to dispel the prospect of court litigation prior to the determination of the appeal.

• [13] I do not consider that any discernible prejudice will accrue to the AMWU and its members if a stay is granted. The appeal is listed for hearing in approximately seven weeks' time, so the period of operation of the stay is likely to be comparatively short. In this respect, I note that the staffing level of the potato packing area was reduced from 11 to 8 in January 2018, then increased to 9 from 15 August 2020 following the issue of a provisional improvement notice under the Occupational Health and Safety Act 2004 (Vic) by an AMWU representative. This notice was subsequently affirmed by a WorkSafe inspector on 30 April 2021. The Agreement came into effect on 14 October 2019, but the contention that clause 16.1 required a staffing level of 11 was not agitated by the AMWU until late 2021, with the AMWU filing its s 739 application in this matter on 14 February 2022. In that temporal context, the period of the operation of a stay order for some weeks is not likely to be of practical significance. Further, the Deputy President made no finding that a staffing level of 11 is required for health and safety reasons or to avoid an unduly onerous workload, since he determined the dispute purely on the basis of the proper construction of clause 16.1. Indeed, on the material before me, it may be inferred that a staffing level of 9 is what was independently determined in 2021 as appropriate to meet McCain's statutory health and safety obligations.

• [14] Finally, I note for completeness the AMWU's submission that there is "nothing to stay" in this case. That submission is rejected. Although the Deputy President did not make an order in terms requiring McCain to increase the staffing level to 11, it is plain that both parties regard this as the necessary legal consequence of his decision.

• [15] For the above reasons, I grant McCain's application for an order staying the decision the subject of the appeal until the appeal has been heard and determined. The stay order will be issued in conjunction with this decision.

Sydney and Melbourne by video link using Microsoft Teams:

[1] [2022] FWC 2110

[2] [2000] AIRC 785, Print S2639

[3] Supreme Caravans Pty Ltd v Pham [2013] FWC 4766 at [9]

[4] Construction, Forestry, Mining, and Energy Union v Collinsville Coal Operations Pty Limited [2014] FWC 4276 at [11]; Bahonko v Sterjov [2007] FCA 1717 at [50]

[5] See e,g, Linfox Australia Pty Ltd v Transport Workers' Union of Australia [2013] FCA 659, 213 FCR 479; Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd [2015] FCAFC 123, (2015) 235 FCR 305

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