The liability judgment and resulting order in the form of a declaration
26 The liability judgment is lengthy and detailed. This summary is confined to capturing the essence of what the primary judge decided and how in order to contextualise the competing arguments advanced in this Court.
27 The primary judge, after describing the case in general, addressed in detail a number of important preliminary issues, including the difficulties occasioned both for the competing cases and for the assessment of the evidence by the reliance of the parties on affidavit evidence in chief rather than oral evidence. While his Honour expressed a general preference for contemporaneous documentary evidence, that was qualified by the way in which that record, and the affidavit evidence by which it was presented, appeared to have been prepared. His Honour described each of five Qantas witnesses in terms of their role and their general credit.
28 It is only necessary to refer to that witness assessment for Mr Paul Jones, Mr Colin Hughes and Mr Andrew David and not that assessment for Mr Paul Nicholas or Mr Andrew Finch. However, it is convenient to state here their respective roles:
(a) Mr Jones was the Chief Operating Officer of Qantas Airlines, and before taking on that position in mid-2020 was Executive Manager of Freight & Australian Airports.
(b) Mr Hughes was the Executive Manager, Qantas Airports from September 2019 to February 2021.
(c) Mr Nicholas was the Head of Strategic Business Planning, and his role included the design of initiatives and methods to improve cost efficiencies in the Australian Airports business.
(d) Mr Finch is a solicitor and was employed as the General Counsel & Group Executive, Office of the Chief Executive Officer and Company Secretary.
(e) Mr David was the Chief Executive Officer of Qantas Domestic and International.
29 The primary judge found that Mr Jones was an unimpressive witness. This conclusion infused his Honour's assessment of that evidence in its context. His Honour gave a specific, detailed and important, but non-exhaustive, example of why that conclusion had been reached by reference to an important contemporaneous document for a meeting of the group management committee (GMC) that had been hand-annotated by Mr Jones, addressed in more detail below. That document was not referred to in Mr Jones' affidavit, but made the subject of cross-examination in which he was observed by his Honour to be uncomfortable, and his manner unpersuasive. The conclusion his Honour reached was that Mr Jones was feigning a lack of recollection as to what was in his mind when he made the annotations which went directly to the issue of the reasons for the outsourcing decision, casting doubt on his evidence on that topic more generally. Mr Jones was found to be willing to fashion his evidence to suit what he perceived to be the forensic advantage to Qantas Airways, and therefore his Honour did not consider it safe to place any significant reliance upon that evidence. These findings reflected the advantages enjoyed in the assessment of evidence as it unfolded that it is almost impossible for an appeal court to gainsay. Qantas made no serious attempt to do so.
30 The primary judge found Mr Hughes to be a somewhat more impressive witness than Mr Jones, but found his desire not to depart from his affidavit evidence in some respects less than compelling. His Honour gave two examples, and indicated they could be supplemented, which resulted in his Honour having difficulty in accepting that Mr Hughes was always doing his best to give candid answers.
31 In relation to Mr David, the primary judge rejected a TWU submission that he attempted to mislead the Court deliberately in all material respects, with aspects being found to have a "crystal-clear ring of clarity" which was absent from other witnesses in relation to a process called an in-house bid and the likelihood that outsourcing would occur. The IHB was put forward as an alternative to outsourcing, but on the evidence as considered by his Honour was plainly never considered by Qantas Airways to have been a serious financial alternative to outsourcing. His Honour found that while Mr David was more realistic than others in this aspect of his evidence, that did not mean that in all respects his evidence was satisfactory. In particular, referring to the benefit of seeing the cross-examination on the topic of the level of union membership in Qantas Airways and QGS and the influence of the TWU, his Honour had real difficulty in accepting, as effectively asserted in that evidence, that Mr David did not hold a view or belief as to whether that union membership was closer to 1% or 99%, or needed assistance in understanding what the word "influential" meant. His Honour regarded this evidence as being indicative of a perceived desire not to make concessions. His Honour returned to the credibility of Mr David's evidence when making the ultimate findings, addressed below.
32 The primary judge then made detailed findings as to what had occurred from early 2020 until the making of the outsourcing decision on 30 November 2020, starting with the emergence of an outsourcing decision as an option in early 2020 and culminating in that decision being made and its implementation being announced on 30 November 2020. Key aspects of that chronological set of findings can be summarised as follows.
33 As at January 2020, Qantas Airways intended that there be no foreseeable change to its ground handling operations at the 10 airports where that had been historically performed by employees like the affected employees.
34 In early February 2020, progressive restrictions on travel were being imposed as a result of the COVID-19 pandemic, first for international travel and then for domestic travel.
35 In late April 2020, Mr Hughes had discussions with Mr Jones, who informed him that Qantas Airways management had begun to grapple with the potential impact of the pandemic and that significant changes were needed to remain viable, with Mr Hughes being aware from this time that Qantas Airways was starting to think about transformation opportunities in the context of the pandemic.
36 On 1 May 2020, a GMC meeting was held, with the slides for that meeting under the heading "Operational Transformation" including on a list of "Prioritisation Criteria" the items "vanishing window of opportunity", "value" and "feasibility". The evidence of Mr Hughes was that "vanishing window of opportunity" was a reference to the pandemic causing almost complete reduction in flights and consequentially lower operational risk of outsourcing. Prior to any financial targets being set on 20 May 2020, the prevailing operating environment presented the first opportunity to outsource ground handling.
37 It was only on 20 May 2020, after the outsourcing decision had been raised as an option, that the financial targets were set. On that morning, Mr Hughes emailed himself notes from a conversation with Mr Jones. A few minutes later Mr Hughes forwarded those notes onto Mr Nicholas (the head of strategic planning) with that document including a handwritten annotation from Mr Jones (Voice-over annotation):
Voice-over labour Gov Lockin benefits + open EBAs 2020 DEC
38 The primary judge rejected the evidence of Mr Jones that he did not recollect what was in his mind when he made the above Voice-over annotation and did not accept that he could not recall what was later discussed relevant to the annotation at the GMC meeting. His Honour found it was much more probable than not, given Mr Jones thought it worthwhile to make the annotation proposing a voice-over, that a presentation to that effect was made by him to the GMC. His Honour found that when Mr Jones wrote "+ open EBAs 2020 DEC" that was meant to relate to a dot point on the document which read:
Evaluation of how options are superior to solving the current state. Why they are different for Customer vs Ground Ops.
39 His Honour accepted a TWU submission that this was a record of Mr Jones' view that the option of outsourcing was superior given that the two enterprise agreements would be open from the end of December 2020. Among other findings, his Honour was reasonably satisfied that when Mr Jones wrote "+ open EBAs 2020 DEC", he believed one reason for pursuing outsourcing in 2020 was to avoid Qantas Airways being in a position where it had to bargain with the TWU and its members from December 2020 and face the prospect of industrial action, just when he considered that flights might be getting back to some degree of normality in 2021.
40 Apart from the annotation and where it was written and his concerns about the credibility of Mr Jones, the primary judge was fortified in those conclusions for a least three reasons, being that:
(a) Mr Hughes agreed that the annotation was a reference to the fact that the Qantas Airways enterprise agreement would pass its nominal expiry date at the end of December 2020 and he had discussed this with Mr Jones;
(b) another "AA restart summary" presented to the GMC on 15 June 2020 demonstrated that Mr Jones was well aware about the opening of that enterprise agreement and that there was a risk this would concentrate power back into the TWU early in 2021 when Qantas Airways was growing domestic demand back and Virgin Airlines was potentially up on its feet and that the longer the decision was deferred the greater the increase in operational continuity risk, with Qantas Airways being unlikely to make any significant change in 2021 with an open enterprise agreement; and
(c) it seemed that Mr Jones considered it expedient to convey these views orally, which was more likely to be to prevent them being recorded, but even if that was not so, it was likely to reflect his candid views.
41 A slide presentation at a GMC meeting on 29 May 2020 included "Pathway to cost base requires TWU agreement and appears difficult", which his Honour found reflected the views each of Messrs David, Jones, Hughes and Nicholas, being a meeting that involved an assessment of options "below the wing", meaning ground services.
42 A slide presentation at a GMC meeting on 2 June 2020 included information from which the primary judge found that Messrs David, Jones and Hughes believed outsourcing was preferable to "rightsizing" the workforce, with the only real issue being whether it was too risky. The precise meaning of "rightsizing" does not appear to matter because it was an alternative to outsourcing that was not pursued. The primary judge at LJ [248] quoted from the evidence to indicate that it meant "surplus management savings in term of stand downs, leave burn and other flexibilities", indicating that this was reference to achieving savings on employee costs in other ways.
43 On 11 June 2020, Qantas Airways received detailed advice from industrial relations consultants about the industrial risks of outsourcing, with that document being discovered, admitted into evidence and partially reproduced in the liability judgment. The advice detailed the likely reaction of the TWU to outsourcing, including utilising every legal avenue to delay it and having nothing to lose in taking Qantas Airways on, opining that it would succeed if legal and commercial reasons supported it, but that the environment in which it took place needed to be carefully considered, both in term of the impact on the timing of achieving it and current government and public attitudes. The advice noted that under the Qantas Airways enterprise agreement consultation was required on major decisions and that the agreement required the application of a protocol for pre-decision consultation and an IHB where Qantas Airways is considering outsourcing. The advice stated that the TWU will "undoubtedly use all these provisions to frustrate and attempt to delay the process".
44 In a telephone conversation between one of the consultants and Mr Jones, he was told that the outsourcing proposal was high risk and the consultant was a proponent of reducing the risk, including by only partial downsizing.
45 In considering the evidence of the consultants' advice, the primary judge's strong impression was that an outsourcing option continued to be preferred in June 2020 by Mr David, Mr Jones and Mr Hughes, subject to detailed consideration of the sort of industrial risks identified by those consultants, and the legal risks for which expert advice was being sought from highly experienced industrial solicitors. His Honour noted that irrespective of any conditional preference to outsource of Mr David, Mr Jones and Mr Hughes, no decision could be made before the "IHB timeline risk" was managed and Qantas Airways had ensured, consistently with the warning given by the industrial consultants, that the TWU did not use the provisions requiring the IHB to frustrate and attempt to delay the outsourcing process.
46 After further consideration of the advice from the consultants, on 13 June 2020 Mr Hughes emailed to Mr David and Mr Jones a documents with a draft of Mr David's talking points for the 15 June 2020 GMC meeting. That document was described by Mr David in an email the next day as "Excellent job. Read it thoroughly. Nothing I would change or add", was in evidence and was substantially reproduced in the liability judgment. The document outlined the reason to consider a "full exit", being outsourcing, and two alternative options. The document as reproduced included a description of financial benefits and industrial risks of outsourcing. The discussion of one of the other options referred to the risk of the two enterprise agreements being open simultaneously, which would concentrate power back in the TWU early in 2021, again referred to growing domestic demand back and Virgin Airlines being potentially on its feet. The primary judge said that the terms of this document fortified his Honour's view that Messrs David, Jones and Hughes, who were at the GMC meeting, considered that a one-off and vanishing opportunity was being presented to adopt outsourcing and that operational risk would increase in 2021 in circumstances of open enterprise agreements.
47 A further draft of the document was sent by Mr Jones to Mr David on 14 June 2020, which was supplemented with more information under the heading "The timing", reproduced by his Honour. The primary judge considered that this document was consistent with the views that Mr Jones held at that time that the operational consequences of the pandemic presented a limited opportunity to outsource, that the described necessity driven by COVID-19 provided a justification that could be deployed inside and outside Qantas Airways which would weaken over time and significant change in 2021 would not be likely for reasons that included the Qantas Airways enterprise agreement passing its nominal expiry date. His Honour regarded Mr Jones' evidence in cross-examination on this document, reproducing transcript extracts, as a further example of his evidence being troubling. His Honour had no doubt that the most significant risk to operational disruption was because PIA may be able to be taken by employees and had no doubt that was one of the reasons in the mind of Mr Jones when he had formed and communicated the view that if outsourcing was to be done, it was best done quickly.
48 On 19 June 2020, a Qantas Airways board meeting was held at which discussion took place about the development of a three-year plan to guide the way through the pandemic to recovery. A slide show presentation, partially reproduced by his Honour, included an item headed "Industrial Risk Assessment", with one item with a high-risk rating referring to "[b]elow the wing", which stated:
TWU response to strategic review. Expected legal challenge and public brand campaign. Delays to in-house bid [IHB] process. QGS EA open. QAL [Qantas Airways] EA to open 1 January 21. PIA possible.
49 The Board meeting minutes, in recording a resolution that a Qantas Group three-year financial plan was approved, relevantly included a reference to the GMC and Mr Jones leading a detailed discussion on the manpower aspect of the proposed recovery plan. This was described as including details of the reduction of employee numbers, potential restructuring opportunities for below the wing ground operations, and identifying significant risks including potential industrial action, legal challenges, political consequences, and brand/reputational damage, and the management of those risks by a sub-group of GMC, reporting back to the Board.
50 Mr Jones' 15 June 2020 speaking notes for that Board meeting, partially reproduced by his Honour, relevantly included a reference to a significant opportunity beyond rightsizing to drive fundamental transformation below the wing though outsourcing the entire function, describing that as a non-core part of the business, with there being many specialist companies performing this work, and 58 out of 68 ports having that arrangement. The speaking notes said that while a lot of clear "pros" were outlined, there were a number of "critical risks that need to [be] weighed up carefully before making a decision", in context a reference to an outsourcing decision. The risks noted in the notes as reproduced by his Honour included in particular references to the TWU and to the current planning for a decision prior to 20 August, and what needed to be done before that, including the IHB process. The notes canvassed the alternative of a phased approach involving only Sydney international operations, describing that as a much longer term strategy and process given the lack of growth potential, and the "legacy EBA" with the TWU opening in early 2021 "significantly increasing the operational risks with any transitions".
51 The primary judge noted two points. First, Qantas Airways rightly observed that it was important not to decontextualise what was occurring in relation to any option as to ground handling operation, noting that its affirmative case was that the outsourcing decision was made for the three imperative reasons, but the fulfilment of them was only a part of the much bigger picture of the recovery plan. His Honour did not regard it as "intuitively odd" that the Board and GMC would devolve responsibility not just for implementing such changes, but also deciding upon them, rejecting a contrary TWU submission. This observation went to the issue as to who the decision-maker was, with his Honour ultimately finding it to be Mr David.
52 Secondly, the primary judge noted, as his Honour found to be reflected in a portion of Mr Jones's speaking notes, that he did not think that there was any doubt in the mind of Mr Jones, Mr David or Mr Hughes that there were clear "pros" of outsourcing the entirety of Qantas Airways ground handling function and that was to be preferred to rightsizing, that the attempt by Qantas Airways by reference to the evidence of Mr Jones and Mr Hughes to paint them as agnostic between those two options was entirely unpersuasive, and that it was no overstatement to remark that they were facing a business calamity. Provided it was feasible, they wished to implement the overall financial outcome best perceived to assist the recovery of a business under extreme pressure. This involved seeking and obtaining expert advice so that industrial and legal risks could eventually be weighed against the estimated rewards. That was consistent with the decision best facilitating the three commercial imperatives, provided it was open to do so. Messrs Jones, David and Hughes wanted to outsource ground operations because they believed it was best for the bottom line. Properly understood in the context of the rest of his Honour's reasons, this was an acknowledgment of the benefit reasons for the outsourcing decision, but with the qualifications of feasibility, including countervailing risks. It would be a serious distortion of his Honour's reasons to contend that these findings necessarily, or even realistically, precluded there being any other reason for the outsourcing decision. Yet, as considered below, that is a cornerstone of the Qantas argument for overturning the declaration.
53 In the period from 29 June to 11 August 2020, a detailed timeline was planned, and associated actions taken, contemplating a decision about outsourcing being made by the end of 2020, which included the key outstanding risks to be assessed. By those steps, the primary judge was satisfied that plans were well advanced for the announcement of the outsourcing proposal, with it appearing that on that date a two-hour GMC meeting was scheduled for 21 August 2020, with the invitation extended to the industrial consultants and the Qantas Airways executive manager for industrial relations. Those steps over that period included:
(a) a process which resulted in obtaining information from potential third-party suppliers of ground handling services, which included the potential industrial benefits when compared with the existing arrangements;
(b) a 5 August 2020 meeting of the GMC which included a presentation about a risk review which his Honour was confident accurately reflected the views of Messrs David, Jones and Hughes at that time and included the topic of industrial risks; and
(c) the 6 August 2020 preparation of a draft "Australian Airports Reforecast", which referred to outsourced supplier costs and a delay in the below the wing option until December 2020, and legal and industrial risks, the content of which was heavily redacted for reflecting privilege claims, from which his Honour drew no adverse inference.
54 In the period from late August to mid-November 2020, the following occurred:
(a) on 19 August 2020, a Qantas Airways board meeting was held at which an announcement on 25 August of a strategic review of ground handling was noted;
(b) on 20 August 2020, Qantas Airways released its full year results for the 2019-2020 financial year, and a project restart steering committee meeting was held, with his Honour finding that by then it was time to put the outsourcing proposal in place; and
(c) on 24 or 25 August, Mr David executed a request for approval of a review of Australian Airports ramp, baggage and fleet presentations operations for Qantas Airways.
55 The TWU submitted to the primary judge that the request for approval process was designed to make it appear that Mr David was singularly responsible for the outsourcing decision and to disguise the role of the GMC. His Honour did not accept this, finding that it was clear that this process was a standard exercise regularly deployed to access funds and record decisions. His Honour found this was part of a formal and long process rather than a concoction, and the final step in putting in place a decision that was by that time inevitable given the evaluation of likely risks and rewards by Mr David and those reporting to him of proceeding with outsourcing. However, his Honour did not accept the suggestion that the practical decision to review the options was made at that time and not earlier. His Honour found that while the request for approval process might have been a standard procedure, this one was of importance and was prepared with extensive legal and industrial relations advice. His Honour found that what was happening was broadly consistent with Mr David's oral evidence, and that he was happy to proceed and had reached this final view sometime after 5 August and before 24 August, with his Honour noting that he had already found that Mr David's settled position for some time was that he was highly likely to proceed with the outsourcing proposal. His Honour concluded that the request for approval process was best seen as procedural step necessary to proceed with the strategic review (noted at the 19 August 2020 Board meeting).
56 On 25 August 2020, Qantas Airways notified affected employees of the decision to undertake the strategic review of ground handling, including details of the IHB process and an external request for proposal process with third party ground handlers and made a public announcement. A couple of days later there was a briefing session with the TWU. His Honour found that by the time of the instigation of the strategic review, after having received detailed expert advice about industrial and legal risks, and having weighed those risks, each of Messrs David, Jones and Hughes were of the view that a final outsourcing decision would be made, but this was subject to Qantas Airways having to go through the request for proposal and IHB processes. The rewards and benefits were by then well known to them, being annual cost savings of about $100 million when things returned to normal, ground operations would be provided only when an aircraft needed to be turned around and capital expenditure on ground equipment of $80 million over five years would not need to be expended. His Honour was satisfied that in their minds, the benefits were so significant as to outweigh the likely legal and industrial risks as explained to them, even though the experienced external industrial relations consultant was, at least initially, very concerned about the overall risks. His Honour also noted that although any savings from the counterfactual of not making that decision could not be identified until the IHB process had ended, given the significance of the savings he did not think that any of Messrs David, Jones or Hughes considered this was likely to be close, with eventual outsourcing being a "racing certainty", or close to it. His Honour made that finding despite the evidence of Mr Jones and Mr Hughes being prepared to maintain an openness to the prospect and likelihood of comparable benefits emerging from the IHB process. His Honour regarded this as a good example of the artificial nature of their evidence, and of Mr David being "somewhat" more frank and realistic.
57 The primary judge observed that a vast bulk of evidence, expert and lay, was directed to the IHB process, but his Honour considered despite that it could be dealt with briefly, with most not needing to be referred to. Even the limited reference that his Honour made does not require reproduction as it does not assist on the issues presently before the Court. His Honour recorded but did not decide upon the TWU submission that this process was no more than a box-ticking exercise that Qantas had to go through before announcing its preferred outsourcing decision.
58 By early November 2020, Qantas Airways had effectively negotiated terms with external ground services providers and was in a position to engage them to do that work. By 18 November 2020, a request for approval for the awarding of contracts for ground operations across the 10 ports had been prepared to be sent by Mr David to the Qantas Group Chief Executive Officer, Mr Alan Joyce. A power of attorney from Mr Joyce to Mr David was said to be required because the net present value of the outsourcing contracts exceeded Mr David's delegated authority. His Honour did not accept the impression sought to be conveyed by Qantas Airways that these two documents, the request for approval and the power of attorney, which he called the "David Approval Documents", had emerged as a run of the mill exercise. Rather, his Honour found that the initial evidence of the Qantas Group General Counsel, Mr Andrew Finch, was inaccurate in so far as it was to the effect that the executive manager of industrial relations had unexpectedly approached him on 18 November 2020, when in fact contact had taken place before then. The circumstances in which the documents were prepared and finalised, the deficiencies in the IHB process, and the submissions by the TWU as to both, were considered in some detail by his Honour, but that detail is not presently relevant. What matters is that his Honour was not willing to find that they were an artifice or conducted otherwise than in good faith. His Honour found that the IHB was done because it had to be done, but there was never a realistic prospect of it being successful, his Honour already having noted that the IHB response by the TWU only offered savings of $100 million over five years, with more work to be done and the possibility of additional savings.
59 The primary judge described Qantas Airways' affidavit evidence in chief on this topic as being carefully drafted to stress that the various bids failed to achieve any of the three commercial imperatives, and that this was said to be the basis upon which Mr Hughes recommended to Mr David that he decide to outsource the ground operations, and the reason why Mr Jones agreed with and endorsed that recommendation. His Honour described that as a tortured narrative, overcomplicating what actually happened, and that ever since the outsourcing proposal was first considered, each of those three men thought it was in the commercial interests of Qantas Airways and should be pursued provided the risks were not too great.
60 The primary judge considered competing submissions as to what should be made of the process and evidence in relation to the 18 November request for approval, the power of attorney, and the subsequent 26 November request for approval. His Honour accepted that they did make it appear that Mr David was the sole decision-maker and that Qantas Airways was intent on painting a picture that the outsourcing decision was a commercial decision made by one man by a commonplace and ordinary process, was conscious that the records were created to reflect this narrative, and other business records that might have been expected were not created, when specialist legal and industrial advice was being obtained. His Honour also accepted that the Qantas witnesses were careful not to depart from evidence they considered supported that case. However, his Honour did not consider that he was entitled to infer that the GMC endorsed or approved that decision, describing that as too speculative. His Honour did not accept the TWU's contention that the GMC made the outsourcing decision, describing the argument as making too much of the evidence relied upon. Rather, the role of the GMC was to set broad strategic goals and parameters for the entire Qantas Group, including the recovery plan, be a senior forum for the exchange of information and providing feedback on risks and opportunities, being a role that was fulfilled. The primary responsibility for specific significant proposals being identified, considered and implemented was for senior managers after consultation with the GMC, which made sense having regard to the size and structure of the business and the apparent ambit of the responsibilities of the senior managers.
61 The 26 November 2020 request for approval and a presentation were sent to Mr David and the next day he signed it. The primary judge was satisfied that although since at least August the outsourcing decision was very highly likely to be made, it was Mr David who was ultimately responsible for making it. On 29 November 2020, the Qantas Board was provided with a memorandum about the outsourcing decision, and on 30 November Qantas Airways announced it had rejected the in-house bid and had determined to outsource its ground services operations to external third party providers. His Honour reproduced a substantial part of the communication from Mr David to employees.
62 In late January 2021, Qantas Airways entered into ground handling agreements with third-party providers, and on or before 31 March 2021 all relevant affected Qantas employees ceased employment in that role.
63 Having made the above findings, the primary judge considered the following competing submissions and made the following findings on the outsourcing decision. Qantas Airways submitted that the TWU case was an artificial construct, seeking to "throw a blanket" over all the events and then conduct a roving search for what might have been exercising the minds of the various Qantas Airways managers, so as to assert that any and all of those things should be regarded as substantial and operative reasons for the outsourcing decision. Qantas Airways contended that while Mr David kept a close eye on implementation risks, his immediate and operative reasons were the three commercial imperatives, being the only things referred to in the comparative assessments by Mr Nicholas and Mr Hughes, the recommendation of Mr Jones and the only subject matter of the final request for approval and accompanying support pack. His Honour observed that, given the attention given to the critical documents, including by industrial relations lawyers with eyes attuned to protecting the imminent decision from attack, it would have been remarkable for there to have been reference to anything other than the three commercial imperatives.
64 The primary judge was satisfied that Mr David's evidence as to the reasons for embarking upon the outsourcing proposal being the three imperatives was substantially correct, but was not satisfied that those objectives, expressed at a level of generality, meant that Mr David was not subjectively conscious of other considerations that were not inconsistent with those objectives. His Honour had reservations about Mr David's denial that his reason for the decision to outsource was to avoid Qantas Airways being in a position where it needed to bargain with and negotiate with the TWU in the future. A part of the reason for this uncertainty was that his Honour rejected the similar but unconvincing evidence of Mr Jones that no part of his reasons for recommending the outsourcing decision be made was to prevent employees from disrupting services in 2021 by taking PIA when it was hoped that services might be getting back to normal.
65 The primary judge considered the evidence about the different view that Mr Jones and Mr Hughes had about the likely amenity of the Australian Services Union (ASU) for "above the wing" customer service staff, compared to the TWU. His Honour found that it was plain that Mr Jones and Mr Hughes believed that one could do business with the ASU, but the TWU was in a different category. However, his Honour did not accept a TWU submission that this pointed to a factor motivating the involvement in promoting the outsourcing decision.
66 The primary judge found no suggestion in the evidence that Mr David, Mr Jones or Mr Hughes had any different views about the risks and rewards of outsourcing, and the apparent consensus between them weighed in favour of a conclusion that Mr David had similar views to Mr Jones and Mr Hughes as to when and why outsourcing should occur. His Honour formed that view notwithstanding that he accepted that the three imperatives were objectively cogent commercial reasons for the outsourcing decision, this was not incompatible with another, complementary reason. The key concern of making the outsourcing decision on 30 November 2020 was because of the vanishing window of opportunity, with the operational disruptions occasioned by the pandemic meaning that the risk/reward analysis previously preventing outsourcing being considered a viable option became viable for a limited period.
67 The primary judge found that the existence of the open enterprise agreements was a further factor, at least in the mind of Mr Jones, who perceived a need for the outsourcing decision to be made prior to Qantas Airways being presented with the prospect that the industrial backlash could have included PIA. The primary judge was satisfied that this factor was part of Mr Jones' reasoning processes in making his assessment of the other two options and his endorsement of the recommendation to Mr David. However, his Honour was less certain of the subjective decision-making processes of Mr David as the decision-maker. It is clear, therefore, that in the absence of the presumption in s 361(1), the TWU's case under s 340(1)(b) would have failed because his Honour found that the positive evidence in relation to the state of mind of Mr David fell short of what was required for that purpose.
68 The primary judge considered the nature of the TWU adverse action claim, and the relevant statute and case law, including in particular the terms of and case law in relation to ss 360 and 361(1) and the conclusion that the operation of the rebuttable presumption of a proscribed reason for the outsourcing decision. There is no suggestion of error in that consideration. The case law in that regard is set out below at [143], as recently summarised in Alam v National Australia Bank Ltd [2021] FCAFC 178; 310 IR 71; 393 ALR 629 at [12]-[14] per White, O'Callaghan and Colvin JJ. His Honour then turned to the determination of whether Qantas Airways had established that, on the balance of probabilities, the action constituted by the outsourcing decision was not taken for reasons which included a prohibited reason. His Honour correctly observed that this question was to be answered by reference to his findings on all of the relevant evidence, noting that s 361(1) did not impose upon Qantas Airways any onus to call any and every piece of evidence that might arguably influence the answer, citing Construction, Forestry, Mining and Energy Union v Anglo Coal (Dawson Services) Pty Ltd [2015] FCAFC 157; 238 FCR 273 at [27] per Jessup J.
69 The primary judge then observed that s 340 and other provisions were directed to the state of mind of "a person", calling for an inquiry into the mental processes of the person responsible for the action - here the outsourcing decision - citing Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; 248 CLR 500 at [140]. His Honour observed that this inquiry can be straightforward, but in other cases can be complex even where there is a single decision-maker. In this case, this raised the issue of corporate decision-making, and the related issues of involvement in, contribution to, influence upon, or a material effect upon, such a decision. His Honour's consideration of authority on this topic is addressed in considering ground 4 in the Qantas appeal, and the TWU notice of contention in relation to that appeal. It suffices at this point to note that his Honour rejected a TWU submission to the effect that in order to discharge the onus in s 361(1), Qantas Airways was required to lead evidence of the reasons and purpose of every person who was involved in and contributed to the ultimate decision by Mr David. His Honour accepted Qantas Airways' submission that the analysis of ss 340 and 346 was a causal inquiry of the reasons of the decision-maker at the time any adverse action was taken.
70 The primary judge found that the TWU's s 346(a) adverse action case was not made out because his Honour was not satisfied that union membership per se was more than a consideration that was factored into the making of the outsourcing decision, and that this did not rise to the level of being a reason for making that decision. His Honour was satisfied that the outsourcing decision made by Mr David on 30 November 2020 became inevitable because an assessment was made that the manifest commercial benefits outweighed the risks. The financial crisis and the operational disruption caused by the pandemic meant that the industrial and reputational risks were far less significant than would otherwise have been the case. However, while his Honour accepted that pure financial interests were at the forefront, he did not accept that this was not in fact decided until the eleventh hour, as Qantas Airways urged. His Honour concluded that he was satisfied on the balance of probabilities that the fact that affected employees were members of the TWU was not of itself a substantial and operative reason for deciding to make the outsourcing decision.
71 In relation to the TWU's s 340 adverse action case, the primary judge was satisfied that the primary case based on preventing the exercise of workplace rights was made out, but that the case concerning the entitlement to the benefits of enterprise agreements was not made out. As that second decision is not challenged, it is only necessary to address the primary case, which was the only proscribed reason that his Honour found that Qantas Airways had not disproved in discharge of the onus in s 361(1).
72 In order to understand the conclusion the primary judge reached, it is illuminating first to address briefly how his Honour characterised the TWU case as argued in closing submissions, the Qantas Airways arguments to the contrary, and his Honour's consideration of those arguments. The thrust of the TWU case was that one of the reasons for the outsourcing decision was that 2020 presented a unique opportunity because of low flying levels associated with the pandemic and affected employees at that time having no ability to initiate or participate in the process of a protected action ballot (s 341(2)(d)) or the process of organising and engaging in PIA (s 341(2)(c)). The final TWU argument was that the Australian Airports business team were aware that the Qantas Airways enterprise agreement would pass its nominal expiry date on 31 December 2020 and would then be "open", which meant being exposed to the possibility of PIA in 2021, the Qantas Airways records proved awareness and sensitivity to this and that this was brought into account in assessing the positives and negatives of various options, and that this became part of the reasoning process for evaluating the options and deciding which to proceed with, which made them a substantial and operative reason for the outsourcing decision.
73 Qantas Airways submitted that certain difficulties arose from the TWU argument, aspects of which the primary judge described as inconsistent with the findings:
(a) that Mr David's reasons for making the outsourcing decision on 30 November 2020 were the same as he had for embarking upon the outsourcing proposal in August 2020, being substantially the so-called three imperatives, but that this did not mean that Mr David was not subjectively conscious of other considerations, not inconsistent with the three imperatives;
(b) that his Honour was satisfied that part of Mr Jones' reasons for recommendation to Mr David to make the outsourcing decision was to prevent affected employees disrupting services in 2021 by taking PIA when it was hoped services might be getting back to usual and the key concern within the Australian Airports business team in making the outsourcing decision when it was made because of the vanishing window of opportunity caused by the operational disruption, with his Honour further noting in relation to Mr Jones, that he was satisfied that the existence of the open enterprise agreements was a consideration; and
(c) that his Honour was not satisfied there was any difference between Mr David and Messrs Jones and Hughes in the way they thought about the proposed differences in approach between above the wing and below the wing workforces or any different views as to the risks and rewards of outsourcing.
74 The primary judge enumerated and addressed Qantas Airways' arguments in response to the TWU case summarised above as follows:
(1) Qantas Airways submitted that the evidence established that an open Qantas Airways enterprise agreement and the possibility of protected industrial action was always viewed as an implementation risk of outsourcing which was likely to be a greater risk in 2021 than in 2020, but this was distinct from the reasons for making the decision and it was wrong to elevate such a risk assessment into a reason.
His Honour's response was that the relative risk assessment for implementation in 2020 compared to any future opportunity was central to the view collectively held by the Australian Airports business team as to why there was a vanishing window of opportunity to outsource, and further that he was satisfied that Mr Jones factored as an important component of his risk assessment that the outsourcing decision should be taken at that particular time to prevent affected employees disrupting services in 2021 by taking PIA.
(2) Qantas Airways submitted that the TWU argument wrongly assumed it was not exposed to PIA until at least some time in 2021 because QGS employees could, after following the necessary protected action ballot procedure, organise and take protected industrial action at any relevant time in 2020, exposing it to PIA by about 63% of the relevant cohort of ground operations employees at all relevant times in 2020 and beyond.
His Honour accepted that this was so, but this was not to the point, reasoning that apart from the obvious fact that no industrial action would have been a particularly effective when planes were not flying, the real concern was to avoid the risk of the two enterprise agreements being open at the same time so that any PIA could involve both workforces and may occur when the planes were able to fly again normally.
(3) Qantas Airways submitted that there was no documentary consideration of any timing risk of open enterprise agreements or PIA in 2021 until Mr Jones' speaking notes for the 19 June 2020 GMC meeting, which did not indicate apprehension about the TWU realising an industrial opportunity, the Voice-over annotation from about 20 May 2020 had been contorted, and there was no evidence that Mr Jones presented on these notes to any other meeting, nor any evidence that Mr David ever saw these notes. Afterwards, exposure to PIA received very limited specific attention, referring to the Board pack and Board Notes and although the relevant Qantas Airways witnesses were aware of these matters and conscious of the increased implementation risks in 2021 and their causes, this was relevant only to operational continuity risk.
His Honour's response is that he had found that there was consideration of a timing risk of open enterprise agreements as early as May and was satisfied that Mr Jones believed, at all material times, that operational risk would increase in 2021 in circumstances of open enterprise agreements and power being concentrated back in the TWU.
(4) Qantas Airways submitted that, apart from the TWU not fairly characterising its business records, aspects of the timeline of events was against its argument, including that a target date was set for the end of any request for proposal or IHB process as the end of 2020, and there could have been a delay to that timeline into the early months of 2021 so that Qantas Airways would not be implementing any outsourcing proposal until 2021, at a time when both enterprise agreements would be open and both entities would be vulnerable to PIA.
His Honour considered that the fact that on a worst-case scenario the outsourcing decision could conceivably be delayed was of no moment, because it was manifest that if a decision was to be made, the collective view within the Australian Airports team was that it should be made swiftly, with the window perceived to be finite. This involved management of the "so-called" IHB timeline. His Honour observed that while timelines for the process of decision-making undoubtedly contemplated delay if, as the industrial relations consultant had warned, the TWU opportunistically used provision for the IHB to frustrate and attempt to delay the process, there was no doubt the aim was to make the outsourcing decision as soon as it could be made, subject to proper assessment of the risks and effective management of the IHB process.
(5) Qantas Airways submitted that the TWU's argument had a more fundamental difficulty in that the relevant factor or consideration at the time of both the outsourcing proposal and the outsourcing decision, was that operational risk was low because of limited flying and staff stand downs and because the employees did not have any entitlement to bargain or take PIA. It went beyond the scope of the word "prevent" in s 340(1)(b) and its legislative purpose to suggest that any aspect of Qantas Airways' reasoning was to prevent a possible future exercise of rights to bargain and take protected industrial action, which might only arise if the actual decision were to be made at some later point in time when there were greater flying activity. Thus Qantas Airways argued that the outsourcing decision did not prevent anything and the TWU could not point to any direct or immediate thing that was prevented by the outsourcing decision.
His Honour described this submission as misconceived, reasoning that the TWU was correct to submit that the insertion of a requirement that the prevention of the exercise of the workplace right be direct or immediate was a gloss on the words of s 340(1)(b). Rather, the provision directs attention to whether adverse action has been taken "to prevent" the exercise of a workplace right, and there was no basis for adding a requirement that the right be of a particular nature such that it can be characterised and assessed to be sufficiently immediate. His Honour further observed that in any event the outsourcing decision prevented the members of the TWU who were affected employees exercising their workplace right to do something that Qantas Airways did not want to occur and wished to prevent, that is, participation in PIA. His Honour said s 340(1)(b) contemplates acts to prevent employees exercising workplace rights by preventing circumstances arising whereby those rights could be exercised.
(6) Qantas Airways submitted as a particular illustration of a more general Browne v Dunn complaint that it was never put to Mr David, squarely, in terms or at all, that when he came to make either the outsourcing proposal decision or the outsourcing decision that particular considerations or risks attending the other options considered in June 2020, were present to his mind, or that they were amongst his substantial and operative reasons for making the decisions he did, in August and then in November 2020, nor were such matters ever put to the other relevant witnesses. Qantas Airways submitted that much of the cross-examination on this topic was entirely hypothetical and framed as questions of basic logic in the sense of cause and effect, rather than going into the actual reasoning process employed by the witnesses themselves.
His Honour said that this complaint went nowhere, because, irrespective of the criticisms of the cross-examination, the three centrally important witnesses were cross-examined, often at very considerable length, by reference to documents they had prepared or approved that outsourcing occur in 2020 because of the risk of employees being in a position to bargain and take protected industrial action in 2021. His Honour accepted the TWU's submission that the proposition that Qantas Airways, and those managers who gave evidence, wanted to prevent its ground handling employees being in a position to bargain and to take protected industrial action, was squarely put.
(7) Qantas Airways submitted that even if the Court were to conclude that there was a desire to avoid the consequences for operational continuity of enterprise bargaining and PIA, a multitude of factors are likely to come into the mind of a decision-maker when assessing various options and their risks, before going on to significant decisions at later points in time. Qantas Airways submitted that it was not unusual that oral and documentary evidence shows an extensive and detailed consideration of various risks associated with evaluating various options and later the implementation risks associated with one of those options, being the outsourcing of ground operations.
His Honour said Qantas Airways was correct to stress that it was to be expected that the evidence would show extensive and detailed consideration of various "risks" associated with the evaluation of various options and later the implementation risks associated with one of those options, and that it can be relevant that a decision-maker was aware of a risk and gave consideration to it, but this did not mean that the identification of risk means an action was taken for a particular reason. His Honour said this was why the TWU's submission that the Court can make something significant of the fact that specialist industrial relations legal advice was obtained was misconceived. His Honour said it would have been contrary to common sense if such advice was not obtained. Such advice might be relevant to understand or give weight to representations in documents settled or passed by lawyers, but to draw some adverse inference simply because advice on a certain topic was received would be contrary to principle.
(8) Qantas Airways submitted that each of Messrs David, Jones, Hughes and Nicholas only ever considered open enterprise agreements and PIA, as relevant to an assessment of operational continuity risk at a different future point in time and there was no evidentiary foundation for a finding that any part of their reasoning process was directed towards enterprise bargaining or PIA per se. His Honour described how this argument was developed by quoting from Qantas Airways' submissions to the effect that enterprise bargaining and the frequent availability of PIA were a feature of life at Qantas Airways, but PIA never arose as a consideration in relation to the outsourcing decision because it did not give rise to an operational continuity risk, as opposed to an implementation risk. Qantas Airways submitted that it was principally the risk PIA might pose to operational continuity, including in particular if a decision were to be deferred to a future date, that was considered, not the mere fact of the protected action itself.
His Honour accepted that it was unsurprising that the risk PIA might pose to operational continuity would be considered, and that the identification of such a risk does not mean that the prevention of the risk occurring in the future somehow becomes a reason for a decision which would mean the risk would not eventuate, with the focus being on the mind of the decision-maker. However, the relevance of the fact that the relevant risk was identified and discussed was rationally relevant to the assessment of whether Qantas Airways had established that the prevention of that risk eventuating via the workplace right being exercised in the future was not a reason why the outsourcing decision was made in November 2020.
75 The primary judge's conclusion on the TWU's primary s 340 case was posed as being the answer to the following question to himself:
Did Mr David decide to outsource the ground operations for one of the prohibited reasons alleged, being preventing the exercise by the affected employees of their workplace right to organise and engage in protected industrial action and participate in bargaining in 2021[?]
His Honour defined this identified proscribed reason as the "Relevant Prohibited Reason". This was later refined for the purposes of the declaration that was made. His Honour noted that s 361(1) meant that it was presumed that Mr David made the outsourcing decision for reasons that included that reason unless Qantas Airways proved otherwise, and that accordingly the focus of the inquiry was whether that was a substantial and operative reason, although it was not necessary to go so far as to establish that this reason was entirely disassociated from that workplace right. That in turn required his Honour to reach a state of actual persuasion.
76 The primary judge was not satisfied that Qantas Airways had proved on the balance of probabilities that Mr David did not decide to outsource the ground operations for reasons which included the identified proscribed reason. His Honour said that that this conclusion reflected his unease as to the state of the evidence on this fact in issue and in particular Mr David's evidence viewed in the light of all the other evidence referred to. In making that finding, the primary judge observed that if the question had instead been whether he had reached a state of actual persuasion that this was a substantial and operative reason for Mr David outsourcing the ground operations, he would have answered that in the negative; whereas if the question instead had been whether a substantial and operative reason for Mr Jones endorsing the recommendation to make the outsourcing decision, he would have answered that in the positive. Both sides seize on this in support of their respective arguments in this Court.
77 The primary judge then explained why the denial of the proscribed reason in Mr David's affidavit had not prevailed by way of three important examples in addition to examples given earlier in the reasons and summarised above, in substance demonstrating to his Honour that the affidavit account of events had been shown to be incomplete:
(a) in his oral evidence, Mr David accepted that by the time of the outsourcing proposal, a decision to outsource ground handing had been made, subject to the formal request for permission process and the in-house bid process, and that there was very little prospect that the latter would come close to delivering commercial benefits like outsourcing, but this was not to be found in the affidavit;
(b) the power of attorney was described in Mr David's affidavit as being a routine authority to negotiate, finalise, amend and execute documents with the third parties (which Mr David never in fact did), but in his oral evidence it was described as authority to make the outsourcing decision, such that the picture that emerged, despite the carefully drawn affidavit, of artificiality, with the differences between the authentic aspects of the oral evidence and the written evidence in chief being sufficient for his Honour to harbour doubts about the persuasiveness of the written evidence;
(c) the lack of an authentic voice in the affidavit was demonstrated on a point that was otherwise not decisive and of minor importance, being a denial of a proscribed reason by reference to [40] of the amended statement of claim, which his Honour described as a suboptimal way to obtain a genuine account of a lay witness as to facts in issue.
78 The primary judge said that even leaving aside any deficiencies in the affidavit evidence, an independent reason for hesitating to reach the necessary state of satisfaction in relation to Mr David's evidence was that the case for Qantas Airways was expressly run on the basis that there was no difference between Mr Jones's reasons for his involvement and Mr David's reasons. His Honour noted that the affidavit evidence was that Mr Hughes recommended to Mr David that he decide to outsource the ground operations, that Mr Jones agreed with and endorsed that recommendation for the same reasons, and that Mr David made the outsourcing decision essentially for the same reasons, identifying the affidavit paragraph numbers for those assertions of each of those three men. Evocatively, his Honour observed that Qantas Airways' submissions did not suggest a "cigarette paper of difference" between the motivations of these three men, noting no evidence of any difference as to the differences in approach between above the wing and below the wing, or the risks and rewards of outsourcing. His Honour referred to his earlier satisfaction that Mr Jones was motivated by the identified proscribed reason, and said that the closeness of the working relationship between Mr Jones and Mr David gave some pause in accepting that Mr David was differently motivated.
79 The primary judge's gave a further independent reason for his scepticism about there being any difference in the motivations of Mr Jones and Mr David related to the oral evidence. His Honour described Mr David as being aware how some concessions would be "unwary" and appeared keen at times to highlight in non-responsive ways aspects of his account that he considered supported the conclusion that he was not motivated by the identified proscribed reason. His Honour explained that he hesitated to reject Mr David's evidence, because parts of it were evidently candid, but pointed to conventional reasoning about accepting parts of a witness' evidence and rejecting other parts. His Honour said that this also applied to the position between those two stances of not being satisfied that evidence should be accepted or rejected.
80 The primary judge concluded that after considering all of the evidence the facts proved on the balance of probabilities fell short of a reasonable basis for a definite affirmative conclusion that Mr David did not decide to outsource the ground operations partly to prevent the exercise by the affected employees of their workplace right to organise and engage in PIA and participate in bargaining in 2021. His Honour expressly described that conclusion in another way as being that, while it may be that a substantial and operative reason for Mr David making the outsourcing decision was not the identified proscribed reason, by reference to all the evidence he was not satisfied on the preponderance of probabilities that this had been proven by Qantas Airways. This necessarily entailed a rejection of the TWU's contention that Mr David cannot have been the sole operative decision-maker.
81 The primary judge noted that while Qantas Airways did not contest the focus of the inquiry being upon not just Mr David, but also Mr Hughes and Mr Jones who, respectively, recommended and endorsed the recommendation to make the outsourcing decision, the evidence supported the conclusion that a substantial and operative reason for Mr Jones' endorsement was the identified proscribed reason. His Honour said that despite it being uncontroversial that Mr David relied upon Mr Hughes's recommendation which had been endorsed by Mr Jones, it was not necessary to base his ultimate conclusion on the notion that Mr Jones could be regarded as a decision-maker for the purpose of a proscribed purpose. Rather it was better in this case to have focused on a causal inquiry into the reasons of Mr David at the time the adverse action was taken, and whether Qantas Airways had proved what it needed to in relation to those reasons, taking into account all of the evidence, including the relevance of Mr Jones's motivations to Mr David's decision-making, given how closely they worked together.
82 The primary judge also observed that it seemed to him that it was more likely than not that Mr Hughes was also motivated by the proscribed reason identified by his Honour in the same way as Mr Jones, given the nature of their working relationship, the communications between them and the fact that there was no suggestion there was any difference in their views as to the risks, rewards and reasons for the proposed outsourcing. However, his Honour did not consider himself as convinced as he was for Mr Jones. These overtly obiter observations about Mr Hughes and Mr Jones are the effective conclusory foundation for the TWU notice of contention.
83 The primary judge decided the terms of the declaration flowing from the liability judgment, following a separate hearing as addressed in the resultant declaration judgment.