National Tertiary Education Industry Union v Swinburne University of Technology

IN THE FEDERAL COURT OF AUSTRALIA MELBOURNE DISTRICT REGISTRY GENERAL DIVISION VID 1127 of 2013

BETWEEN: NATIONAL TERTIARY EDUCATION INDUSTRY UNION

JUDGE: MORTIMER J DATE: 12 june 2014 PLACE: MELBOURNE

INTRODUCTION AND SUMMARY 1 By an application dated 15 April 2014, the applicant, the National Tertiary Education Industry Union (the union), applied pursuant to rr 8.21 and 16.53 of the Federal Court Rules 2011 (Cth) for leave to amend its originating application and statement of claim in this proceeding, and for an order pursuant to r 9.05 to join Swinburne College Pty Ltd (SCPL) as a respondent to this proceeding. The present respondent, Swinburne University of Technology (Swinburne), opposes both applications. It has also made its own application that this proceeding be either stayed or adjourned because of what it submits is the effect of the union's position taken before the Fair Work Commission in respect of an industrial agreement related to the one which is the subject of this proceeding. 2 For the reasons which follow, the union will have the leave sought, and the proceedings will be neither stayed, nor adjourned.

THE CURRENT PROCEEDING 3 Broadly, this proceeding concerns some decision-making by Swinburne about how the structure, organisation and delivery of certain courses and programs might be changed, the effects these changes are said by the union to have had on some of Swinburne's employees, and the way in which Swinburne, in considering and making those changes, is said to have contravened relevant industrial agreements. 4 Swinburne offers Foundation Studies and Unilink Diploma courses (collectively known as Pathways courses), as well as English Language Intensive Courses for Overseas Students (bearing the acronym "ELICOS"). Historically, the programs have been delivered through Swinburne College, which is accepted by the parties to be an "organisational department" of Swinburne. 5 The current enterprise agreement accepted by the parties to apply to Swinburne, and to the conduct which is the subject of the current proceeding, is the Swinburne University of Technology Academic & General Staff Enterprise Agreement 2009 (the 2009 agreement), which commenced operation on 30 March 2010. There is a dispute between the parties on the pleadings in relation to the coverage of the 2009 agreement: specifically, whether employees engaged to perform work in Swinburne College delivering the Pathways and ELICOS courses are covered by the 2009 agreement. 6 The union alleges that in 2011 Swinburne considered and proposed the transfer or outsourcing of the delivery of ELICOS and associated courses to a new entity, Swinburne College Pty Ltd (SCPL). Such changes, the union alleges, were likely to have significant effects on employees so as to require consultation pursuant to cl 53 of the 2009 agreement. The union then alleges that Swinburne's subsequent decision to in fact transfer or outsource the delivery of these teaching programs and courses, and the implementation of that decision, also constituted contraventions of cl 53 of the 2009 agreement. 7 Swinburne admits to considering the possibility of conducting ELICOS and Pathways courses through SCPL but otherwise denies taking further steps about this proposal. Its defence also contends that it was not obliged by cl 53 to consult affected staff as the union alleges. It denies that it has made a decision about implementing any proposal to transfer or outsource these operations to SCPL. On that basis it says there has been no contravention of the 2009 agreement. In the alternative it says that, even if it is obliged to consult, that obligation can be discharged at any time prior to when it makes a decision about implementation and, since there has been no decision to implement, then there can be no extant contravention of cl 53. 8 As initially formulated, the union sought declaratory relief and penalties on the basis that the alleged contraventions of cl 53 of the 2009 agreement constituted a contravention of an enterprise agreement, contrary to s 50 of the Fair Work Act 2009 (Cth) (FW Act). The matter has been subject to directions in preparation for a trial listed at the end of July 2014.

THE UNION'S ARGUMENTS 9 The union seeks leave to further amend its statement of claim in a fundamental way. It seeks to introduce a claim under the general protections provisions in Part 3-1 of the FW Act, alleging Swinburne had engaged in adverse action contrary to s 340 of the FW Act. The amendment seeks to allege that Swinburne decided to establish SCPL in about November or December 2009 and to transfer to it over time the operations of Swinburne College so that it could deliver the ELICOS and Pathways courses through that entity instead of through Swinburne College. 10 The workplace rights of the affected staff, in the proposed amended pleading, are alleged to arise from two further industrial instruments as well as the 2009 agreement: namely the Victorian TAFE Teaching Staff Multi-Business Agreement 2009 (the MBA) and the Swinburne University of Technology Academic & General Staff Certified Agreement 2006-2008 (the 2006 agreement). 11 In taking what it describes in the proposed further amended statement of claim as the "transfer decision", the union alleges Swinburne took adverse action by diminishing or removing the security of employment, the prospects of advancement, transfer or promotion and the prospects of future engagement of its employees, because of, or to prevent the exercise of, their workplace rights to consultation under the MBA, and the 2006 and 2009 agreements. 12 The amendments also propose some refinements of, and additions to, the existing claims about failure to consult. However, it was clear in oral and written submissions that the principal concern of Swinburne is the amendment dealing with the new adverse action claim, not least because of the operation of the reverse onus provided for in s 361 of the FW Act. 13 The union submits the amendments have come about because of discovery given to the union by Swinburne pursuant to orders made on 6 December 2013. Swinburne does not appear to dispute that as the occasion for the amendments and, indeed, relies on that fact in its arguments to resist both the amendments and the continuation of the proceeding on a timetable to trial. 14 The nature of the relief sought in the proposed amended application remains the same, although its scope has expanded. Declaratory relief is sought in respect of contraventions of the 2006 and 2009 agreements and the adverse action claim. Penalties, payable to the union, are sought in respect of the contraventions and the alleged adverse action.

SWINBURNE'S ARGUMENTS 15 In response to the proposed amendments, and to some extent independently of them, Swinburne raises three contentions. Its contentions arise out of developments between the parties in the Fair Work Commission. Swinburne has sought approval under s 186 of the FW Act of a new enterprise agreement with its employees, the Swinburne University of Technology Academic & General Staff Agreement 2014 (the 2014 agreement). By proceeding AG2014/3960, the union has opposed approval of the 2014 agreement. The grounds of its opposition are said by Swinburne to have consequences for this proceeding. Essentially, those grounds are, first, a challenge to the validity of some of the votes cast by the employees in the approval ballot, such that the agreement cannot be said to have been "genuinely agreed to" pursuant to s 188 and, second, a challenge to the coverage of the 2014 agreement, on the basis that several categories of staff - essentially casual employees teaching ELICOS or Pathways programs - should have been included in the agreement, so that, the union contends, the group of employees covered by the agreement cannot be said to have been "fairly chosen". These elements, which the union contends have not been met, form part of the criteria required to be met by the agreement before it can be approved by the Commission: see s 186. 16 The union's challenge has been referred to a Full Bench of the Fair Work Commission and, at the time of hearing of this interlocutory application, had not yet been allocated a hearing date. 17 Swinburne seeks a stay or an adjournment of this proceeding on the grounds that, by reason of the arguments put by the union in the Commission proceeding, this proceeding has become an abuse of the processes of this Court. The abuse is said by Swinburne to arise because the union's arguments are inconsistent with the arguments it seeks to put before this Court. The inconsistency concerns the union's arguments about the reasons the 2014 agreement should not be approved. If those arguments are correct and accepted, Swinburne contends, the result is the agreement has not validly been approved by the Commission for the purposes of s 186 of the FW Act, and this, Swinburne contends, must logically result in the 2009 agreement suffering from the same legal infirmities. 18 The union seeks relief in this proceeding on the basis of contraventions of the 2009 agreement, contrary to s 50 of the FW Act. A person can only be said to have obligations under an enterprise agreement, and be said to contravene an enterprise agreement, when that agreement "applies to the person": s 51. An enterprise agreement only applies to a person when the agreement is "in operation", which requires that the agreement be approved by the Commission: s 54. Swinburne contends the union relies on the 2009 agreement's legal effectiveness in this proceeding, while putting an argument to the Commission which would render the 2009 agreement legally ineffective. That, Swinburne contends, is approbation and reprobation. 19 In support of this contention Swinburne relies on the remarks of French J (as his Honour then was) in Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 at 279-280, where his Honour said: Underlying the power that courts have assumed to stay or dismiss proceedings for abuse of process is a policy of preventing waste of judicial resources and their use for purposes unrelated to the determination of genuine disputes. There is, in my opinion, another element to be considered and that is the necessity to maintain confidence in and respect for the authority of the courts. If a party in litigation in this court makes a formal and public allegation by way of its pleading which is inconsistent with a formal and public allegation in another forum, then such an issue may arise. No doubt most questions of statements made by a party out of court inconsistent with its plea in court are to be resolved as matters of evidence going to credit and not upon an application for summary disposition. In most such cases there will, in any event, be room for debate about the precise extent and significance of the alleged inconsistency which can only be resolved by a consideration of all the evidence and the circumstances surrounding the alleged inconsistent statement. 20 Swinburne also relies on the proceedings in the Commission as the basis for a submission that the Court should adjourn this proceeding until after the conclusion of the Commission proceeding, either because Swinburne is prejudiced by having to conduct both proceedings, or because the outcome in the Commission proceeding is likely to determine the outcome of this proceeding. 21 Swinburne resists the application for leave to further amend the statement of claim on the basis it is contrary to the efficient and effective administration of justice to allow the union to expand its claims and raise new causes of action. Swinburne identifies two reasons. First, because the expansion and addition of claims arose from inspection of documents discovered in this proceeding, and Swinburne submits the amendment would constitute a collateral or ulterior purpose for the use of documents discovered. Second, because of the challenge in the Commission to the approval of the 2014 agreement, the possible implications for the validity of the 2009 agreement of this challenge, and the approbation and reprobation argument Swinburne invokes to seek a stay. Swinburne submits this also provides a foundation to refuse leave to the union to amend its pleading. 22 Finally, Swinburne made submissions that SCPL is not a proper respondent to this proceeding and leave to join it should be refused, since no relief is sought against it.

CONSIDERATION 23 Swinburne's submissions depended to a significant extent on the proposition that the arguments being raised by the union in the Commission were inconsistent with the way it put its case in this proceeding. As that contention was developed in oral submissions, Swinburne accepted there was not yet an inconsistency, in terms of any express submissions put by the union to the Commission: rather, Swinburne identifies a potential or ultimate inconsistency. Swinburne submits the inconsistency is inevitable if the union's challenge to the approval of the 2014 agreement succeeds. 24 In my opinion, once the nature of the alleged inconsistency is identified, it can be seen that Swinburne's contentions are at best premature, and there is no present obstacle to this proceeding continuing on a timetable to trial. In order to understand why that is so, something more must be said of the proceedings in the Commission. As Swinburne stated in its submissions: Paragraph 172(2)(a) of the Fair Work Act relevantly provides that an employer may make an enterprise agreement with "the employees who are employed at the time the agreement is made and who will be covered by the agreement". Sub-sections 181(1) and 182(1) set out the mechanics of how the agreement is made. Section 186 sets down the jurisdictional prerequisites of which the Commission must be satisfied before it can approve an enterprise agreement. Relevantly, by s.186(2)(a) it must be satisfied that the agreement is "genuinely agreed by the employees covered by the agreement". The phrase "genuinely agreed" is given meaning by s.188. Paragraph 188(b) directs attention back to s.182(1). Paragraph 188(c) provides that the Commission must be satisfied that there are "no other reasonable grounds" for believing that the agreement has not been genuinely agreed. 25 Swinburne sees the issue in the Commission, or at least one of the issues, as revolving around the question whether the 2014 agreement was made with people who were not employed in the business at the time the agreement was made. If that fact were established it would mean, Swinburne submits, that the 2014 agreement is not an "agreement" for the purposes of Part 2-4 of the FW Act: Construction, Forestry, Mining Energy Union v Australian Industrial Relations Commission (1999) 93 FCR 317; [1999] FCA 847 at [121]-[123] per Wilcox and Madgwick JJ. 26 The debate about which staff were qualified to vote in the ballot to approve the 2014 agreement is, on the evidence and submissions, critical to the proceedings in the Commission because the margin approving the agreement in 2014 was small. Based on the evidence adduced by Swinburne in support of this application, the union submitted the evidence revealed the following: a. In relation to the ballot for the 2009 Agreement (Nicolazzo MN4, p55, 61) • Total number of employees to be covered: 3,506 • No. of the employees to be covered who are casual: 1,777 • Number of employees who cast a valid vote: 978 • Number of employees who voted in support of the agreement: 957 b. In relation to the ballot for the 2014 Agreement (Nicolazzo MN1, p15) • Total number of employees to be covered: 3,158 • No. of the employees to be covered who are casual: 1,317 • Number of employees who cast a valid vote: 2005 • Number of employees who voted to approve the agreement: 1031 27 In its submissions, the union drew the following conclusions from that evidence, which were not the subject of challenge at a factual level by Swinburne. The following conclusions emerge from the above data: a. 63.4% of employees voted in the ballot for the 2014 Agreement compared to only 27.8% in the ballot for the 2009 Agreement. b. The 2014 Agreement was approved by a very small majority (51.4% of those who cast a valid vote (ie; 1031 approved, 974 did not)), whereas the 2009 Agreement was approved by an overwhelming majority (97.9% of those who cast a valid vote). 28 In that sense, as the union submitted, a relatively small number of ineligible voters in the 2014 ballot could affect the result, and, therefore, the ability of the Commission to approve the 2014 agreement, because it is not an agreement "genuinely agreed to" by the employees covered by the agreement within the meaning of s 188 of the FW Act, read especially in the present case with s 182(1). 29 On the basis of the numbers which are in evidence, the circumstances were quite different with the 2009 agreement. Even if the Commission were to find that the casual employees who voted in the 2014 ballot were not entitled to do so, and even if that reasoning were to be applied to the voting in 2009, it seems unlikely that the result in the ballot for the 2009 agreement could be affected. The union referred in its submissions to the common law authorities on the circumstances in which irregularities in voting might render an election result void. The effect of those authorities is that the irregularity must be of a nature and extent so as to have been capable of affecting the result: see Woodward v Sarsons (1875) LR 10 CP 733 at 743-744, 750 per Lord Coleridge CJ; Bridge v Bowen (1916) 21 CLR 582 at 616, 624 per Isaacs J. I accept that submission. These differences between the 2009 and 2014 agreements, on the evidence as it currently stands, confirm my opinion that Swinburne's contentions about inconsistencies are, at best, premature. 30 There is a further problem. Counsel for Swinburne conceded in argument that, even if, contrary to the union's submission and the position which obtains on the authorities, the effect of any invalidity of the 2014 agreement could apply to the 2009 agreement, then a decision on that question would have to be made by this Court. In other words, it was a matter which Swinburne would need to plead and prove in its defence in this proceeding, as an argument why the union could not succeed on claims in this Court in respect of any contraventions of the 2009 agreement. It would be a plea by way of defence about the legal character of the 2009 agreement, depending on an application of the outcome and reasoning in the Commission proceedings. 31 As counsel also frankly conceded, any outcome of those Commission proceedings might take some time to finalise. Even if the matter were to proceed to hearing and determination by the Full Bench this year, there would likely be proceedings under the FW Act and the Judiciary Act 1903 (Cth) in this Court to review the Commission's decision, and possibly further appeals. Swinburne conceded the question of whether the 2014 agreement can be approved by the Commission may not finally be resolved until well into 2015. These concessions also implicitly recognised, in my opinion, that in circumstances where Swinburne would be the party pleading in this Court the invalidity of the 2009 agreement, there would not be any relevant inconsistency in the position taken by the union in the Commission and in this Court so as to bring into operation the principles discussed by French J in Sea Culture International 32 FCR 275. 32 Even if that were not the case, I am not satisfied the inconsistency could be characterised as Swinburne has sought to do. I accept the union's submission that, where an application for leave to amend a pleading is opposed on the basis of claimed approbation and reprobation, leave to amend should not be refused unless the Court is satisfied that the principles of law relating to approbation and reprobation clearly preclude the making of the proposed claims: Apotex Pty Ltd v Sanofi [2013] FCA 1425 at [27] per Nicholas J. 33 As the union submitted, these are two different industrial instruments, with relevantly different terms, at least expressly. The 2009 agreement did not expressly exclude ELICOS staff, and it is part of the union's case in this proceeding that those staff were included and needed to be consulted. It is also, it appears, part of the union's case on the proposed amended pleadings that those staff were the subject of the adverse action it alleges was undertaken by Swinburne in making the SCPL transfer decision. 34 In the 2014 agreement, those casual staff are expressly excluded. While the union concedes it is challenging the express exclusion in the Commission, it does so on a different basis before a different forum, where the statutory task of the Commission is quite different from that of this Court in the present proceeding. Critically, it seems to me for Swinburne's inconsistency argument, the position that the union is taking in each proceeding is that the casual ELICOS staff are, or should be, included in both the 2009 agreement and the 2014 agreement. That is a consistent position, not an inconsistent one. 35 For those reasons I am satisfied that the proceeding in this Court is not an abuse of the processes of this Court by reason of the arguments the union seeks to put in the Commission about the 2014 agreement. Accordingly, I do not need to consider the union's further submission about whether the union has enjoyed the necessary "benefit" from any approbation and reprobation, nor whether the order in which the "rights" have been asserted by the union removes the application of the inconsistency principles. 36 As to the application to amend the originating application and statement of claim, in my opinion it is in the interests of the administration of justice to grant leave to the union to amend its originating application and pleading in the form proposed. 37 Section 22 of the Federal Court of Australia Act 1976 (Cth) requires that: The Court shall, in every matter before the Court, grant, either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided. 38 The Court's overriding concern in a proceeding such as this, therefore, should be to dispose of the matters in contention between the parties as fully and finally as it can, so as to avoid a multiplicity of proceedings: Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 161 per Gibbs CJ, Mason, Stephen and Wilson JJ; Strong Wise Ltd v Esso Australia Resources Pty Ltd and Others (No 2) (2010) 185 FCR 237; [2010] FCA 575 at [53]-[55] per Rares J. This objective is not fulfilled in circumstances where the union could commence separate and new proceedings to raise the adverse action claims, although it might well be met with an argument about Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589: see Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [33] per French CJ. 39 That the union encountered the evidentiary basis for the adverse action allegations during discovery in this proceeding is no bar to the amendment, and does not constitute an improper or collateral use of documents produced on discovery. I accept the union's submission that it will not be a collateral or ulterior use of a document disclosed in the course of a proceeding to use that document for the purpose of a joinder of a new party or for amendment of a pleading: Allstate Life Insurance Co v Australian and New Zealand Banking Group Ltd (1995) 57 FCR 360 at 378-379 per Hill J; Pinara Group Pty Ltd v Whiting [2013] FCA 1378 at [27]-[34] per Besanko J. 40 The union made two further submissions in support of the connections between the new pleadings and the current ones: There is a close nexus between the claims currently pleaded and those proposed to be advanced in the FASOC. a. The substantive new "General protections" claim sought to be advanced by the Applicant under Part 3-1 of the FW Act attacks the very restructure of the Respondent's operations about which the Respondent was required to, but did not, consult. b. In the proceeding as presently constituted, in the event that the Court finds that the Respondent did breach the consultation provisions of the 2009 Agreement as alleged, it would be open to the Applicant to seek to rely on the information contained in the discovered documents as the matters there revealed would be relevant to penalty. 41 I accept those submissions. The underlying sub-stratum of facts is the same in relation to the allegations of contravention of cl 53 and the adverse action allegations. Both concern the proposed restructure and outsourcing of Swinburne's ELICOS and Pathways programs in a way which affected the employment of casual staff. Both concern the impact of a proposed restructure of Swinburne's ELICOS and Pathways programs on the approximately 130 employees identified in the proposed further amended statement of claim as the teaching staff at Swinburne College. 42 Swinburne did not contend that the amendments raised arguments which were so hopeless they were bound to fail, and did not submit they could be rejected on that basis. 43 Swinburne is correct to submit that there will be an additional burden placed on it by reason of these amendments, in particular because of the reversal of the onus of proof in s 361 of the FW Act. It is a burden it would have faced if a fresh proceeding had been commenced, and indeed the costs and resources burden is likely to have been greater. That factor in my opinion is not sufficient to outweigh the interest in choosing the most effective means finally to resolve all of the disputes between the parties about what is alleged to be the proposed restructure of Swinburne's ELICOS and Pathways programs. The most effective means is to allow all these allegations to be ventilated in one proceeding. The proceeding has not been in the Court for very long, there is no history of delay or non-compliance by the union with the Court's orders, and this is the second amendment to the pleadings. Those factors tend to support leave being granted. 44 On the question of joinder of SCPL, Swinburne is correct that there is no relief sought against SCPL in the proposed further amended statement of claim. However, there are clear allegations made against it in that document, including allegations concerning the role of the Board of SCPL in decision-making about the transfer of Swinburne College operations to SCPL. The adverse action claims will require an inquiry into the reasons for the transfer decision, which in turn will require an inquiry into the decision-making by those individuals responsible for such decision-making within both Swinburne and SCPL. Effective and efficient conduct of the proceeding could in my opinion be significantly hampered if SCPL were not a party. It is also appropriate that SCPL be bound by any judgment given on this issue. I consider it should be joined. 45 Leave will be granted to amend the originating application and statement of claim in the form proposed. Both parties accepted this will involve a vacation of the trial date, currently listed in late July 2014. They also agreed the trial will be significantly longer than previously estimated. In terms of overall efficiency and effective resolution of all issues, in my view there is no doubt the vacation of the trial date is necessary. The matter can be timetabled for trial in early 2015, which is still likely to precede the final resolution of matters in the Commission. Taking into account the terms of s 570 of the FW Act, there was no application for costs made by Swinburne on this application. The parties will be directed to confer and to file agreed proposed directions for the future conduct of the matter which reflect the Court's decision. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mortimer .