QR Limited v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

Counsel for the Appellant in QUD244/2010: Mr A Horneman-Wren SC and Mr D Pratt

Solicitor for the Appellant in QUD244/2010: Allens Arthur Robinson

Counsel for the Respondents: Mr R Kenzie QC and Mr W Friend SC

Solicitor for the Respondents: Hall Payne Lawyers

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY FAIR WORK DIVISION QUD 241 of 2010

AND: COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA

AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION Second Respondent AUSTRALIAN MUNICIPAL, ADMINISTRATIVE, CLERICAL AND SERVICES UNION Third Respondent AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION Fourth Respondent AUSTRALIAN FEDERATED UNION OF LOCOMOTIVE EMPLOYEES, QUEENSLAND UNION OF EMPLOYEES

JUDGES: KEANE CJ, Gray AND MARSHALL JJ DATE OF ORDER: 15 december 2010 WHERE MADE: BRISBANE

1. The appeal be allowed in part. 2. Paragraph 2 of the order made on 22 June 2010 be varied by substituting for the figure "$396,000" the figure "$192,000". 3. Paragraph 4 of the order made on 22 June 2010 be varied by substituting for the figure "$33,000" the figure "$16,000". 4. Paragraph 5(a) of the order made on 22 June 2010 be varied by substituting for the figure "$79,200" the figure "$38,400". 5. Paragraph 5(c) of the order made on 22 June 2010 be varied by substituting for the figure "$6,600" the figure "$3,200". 6. Otherwise, the appeal be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY FAIR WORK DIVISION QUD 244 of 2010

BETWEEN: QUEENSLAND RAIL LIMITED (FORMERLY QR PASSENGER PTY LTD)

AND: COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA

AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION Second Respondent AUSTRALIAN MUNICIPAL, ADMINISTRATIVE, CLERICAL AND SERVICES UNION Third Respondent AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION Fourth Respondent AUSTRALIAN FEDERATED UNION OF LOCOMOTIVE EMPLOYEES, QUEENSLAND UNION OF EMPLOYEES

JUDGES: KEANE CJ, GRAY AND MARSHALL JJ DATE OF ORDER: 15 december 2010 WHERE MADE: BRISBANE

1. The appeal be allowed in part. 2. Paragraph 3 of the order made on 22 June 2010 be varied by substituting for the figure "$231,000" the figure "$112,000". 3. Paragraph 5(b) of the order made on 22 June 2010 be varied by substituting for the figure "$46,200" the figure "$22,400". 4. Otherwise, the appeal be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY FAIR WORK DIVISION QUD 241 of 2010

AND: COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA

AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION Second Respondent AUSTRALIAN MUNICIPAL, ADMINISTRATIVE, CLERICAL AND SERVICES UNION Third Respondent AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION Fourth Respondent AUSTRALIAN FEDERATED UNION OF LOCOMOTIVE EMPLOYEES, QUEENSLAND UNION OF EMPLOYEES

JUDGES: KEANE CJ, GRAY AND MARSHALL JJ DATE: 15 december 2010 PLACE: BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY FAIR WORK DIVISION QUD 244 of 2010

BETWEEN: QUEENSLAND RAIL LIMITED (FORMERLY QR PASSENGER PTY LTD)

AND: COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA

AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION Second Respondent AUSTRALIAN MUNICIPAL, ADMINISTRATIVE, CLERICAL AND SERVICES UNION Third Respondent AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION Fourth Respondent AUSTRALIAN FEDERATED UNION OF LOCOMOTIVE EMPLOYEES, QUEENSLAND UNION OF EMPLOYEES

JUDGES: KEANE CJ, GRAY AND MARSHALL JJ DATE: 15 december 2010 PLACE: BRISBANE

KEANE CJ AND MARSHALL j: 1 The appellants are QR Limited and its wholly owned subsidiaries, Queensland Rail Limited and QR Network Pty Ltd. Each of the appellants had the status of a government-owned corporation under the Government Owned Corporations Act 1993 (Qld). Together, they operate passenger and freight rail services in Queensland. At the time of the events in question, Queensland Rail Limited was known as QR Passenger Pty Ltd; for the sake of ease of identification, we will continue to refer to it as QR Passenger. 2 The respondents are trade unions whose members include employees of one or other of the appellants. There were at the relevant time approximately 10,300 such employees. For convenience, we shall refer to the respondents collectively as "the Unions". 3 On 8 December 2009, the Premier of Queensland, the Honourable Anna Bligh MP announced a proposal for the partial privatisation of rail services in Queensland. The Queensland Government intended to effect the transfer of the freight and coal transport businesses then operated by QR Limited and QR Network to a privately owned company yet to be formed. QR Passenger would remain in government ownership. 4 On 22 January 2010, 3,460 members of the Unions who were employed by QR Limited and QR Network, received a letter from QR Passenger inviting the recipient to terminate his or her current employment and to take up alternative employment with QR Passenger. Employees were invited to seek further information if they wished to do so before acting upon the invitation. Some employees took up that invitation before making a decision. The vast majority (about 99%) of the employees accepted the invitation. The effect of these acceptances was substantially to increase the workforce of QR Passenger. 5 The Unions brought proceedings in the Federal Court of Australia seeking the imposition of pecuniary penalties under s 546 of the Fair Work Act 2009 (Cth) (the Fair Work Act) on each of the appellants for the contravention of its obligation to consult with employees in relation to these matters. That obligation was contained in each of 20 collective agreements (the agreements) between one or other of the appellants and its employees. These agreements were registered under the then Workplace Relations Act 1996 (Cth) and continued in effect by the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (the Transitional Provisions Act). 6 The learned primary judge upheld the Unions' claim declaring, in effect, that each of the appellants had contravened a provision of each of the agreements. Subsequently, after argument on the issue of penalty, his Honour ordered that: QR Limited pay a pecuniary penalty in the sum of $396,000.00; QR Passenger pay a pecuniary penalty in the sum of $231,000.00; QR Network pay a pecuniary penalty in the sum of $33,000.00. 7 These penalties reflected the imposition of the maximum penalty in respect of the contravention of each of the 20 agreements in issue. The maximum penalty for each contravention was $33,000. 8 His Honour made ancillary orders apportioning the payment of these penalties among the Unions. No question arises in these proceedings in relation to these ancillary orders. 9 The appellants challenge the primary judge's principal order on the basis that they were under no obligation under the agreements to consult with their employees about the matters of which the employees were informed by the letter of 22 January 2010. The appellants argue that it was not open to the primary judge fairly to conclude that they were under any obligation to consult in relation to the entitlement of employees to work in a publicly owned enterprise, that being a basis on which his Honour held that the required consultation had not taken place. In the alternative, the appellants argue that the primary judge erred in failing to find that any consultation required by the agreements did, in fact, occur. 10 The appellants also challenge the penalties imposed on them as excessive. We will discuss the bases of challenge to the quantum of the penalties after dealing with the challenge to the finding of contraventions. In that regard, we will set out the relevant terms of the agreement, the letter of 22 January 2010, the case put by the Unions, the reasons of the primary judge and the arguments of the appellants, before turning to a consideration of those arguments.

THE OBLIGATION TO CONSULT 11 Each of the agreements provided in identical terms for consultation. For the sake of convenience, the parties and the primary judge focused their attention upon the QR Limited Traincrew Union Collective Workplace Agreement 2009 (the Agreement). We will do likewise. 12 Clause 36 of the Agreement provides as follows: 36 Consultation 36.1 For the purposes of this Agreement, consultation is a process: Aimed at getting individuals or groups to suggest or respond to proposals to be implemented without at the same time giving up management's rights to make the final decision in these matters. It provides an opportunity to present a point of view or state an objection; and Involves the timely exchange of relevant information so that the parties have the actual and genuine opportunity to influence the outcome. The Company will not be obliged to disclose confidential information if that disclosure is contrary to the Company's interests. 36.2 The Company will consult with affected employees and, at the employees' election, their nominated representatives, over any proposed changes that will have an impact on employees' terms and conditions of employment. The matters over which the Company will consult include, but are not limited to: termination of employment changes in the composition, operation or size of the Company's workforce, or in the skills required the elimination or reduction of promotion opportunities, job opportunity or job tenure the alteration of hours of work the need for retraining or transfer of employees to other work or locations the restructuring of jobs. 36.3 However, the Company is not required to consult over individual workplace/performance issues (see Clause 38). 36.4 The Company will consult: At the local level, if the proposed change is not expected to affect any other part of the Company At the business group or Company level where the change is expected to impact on employees more broadly. 36.5 The process of consultation will include: The timely provision in writing of all relevant information, including details of the change, the likely effects on employees, the reasons for the proposed change and, where relevant, a proposed implementation date Discussion on measures to avert or mitigate any adverse effects on employees Provision of reasonable resources, including work time, for employees to fully participate in the consultation process Genuine consideration of employees', and at the employee's election, their representatives' suggestions, ideas and contributions Genuine opportunity for employees and, at the employee's election, their representatives to affect the outcome. 36.6 Where the Company makes a final decision in relation to the matter subject to consultation, the Company will notify the affected employees and, at the employee's election, their representatives in writing. This notification will include final details of the proposed change and an implementation date. The implementation date will not be earlier than 5 working days from the date of the notification, unless safety concerns demand otherwise. In such cases, the notification will be signed by senior Company management. 36.7 If, however, at the conclusion of this consultative process, concerns continue to exist regarding the matter subject to consultation, the employees, and at the employee's election, their representatives will have 5 working days in which to issue a notice of dispute. This notice of dispute will be issued in accordance with Step 3 of the Dispute Resolution Procedure. 36.8 Traincrew Agreement Consultative Committee A Freight Traincrew Agreement Consultative Committee will be established to review the implementation of the Agreement at regular intervals. 13 The context in which cl 36 falls to be construed includes cll 41 and 42 which are in the following terms: 41 Managing Surplus Employees 41.1 The Company is committed to maximising permanent employees' security of employment, but it operates in a rapidly changing, competitive environment where security of employment is increasingly linked to winning and retaining work. 41.2 This requires a continuous review and re-alignment of how we deliver products and services to our customers. The objective is to maximise the application of available resources including staffing and infrastructure, while considering changing customer needs or organisational priorities. 41.3 This may mean changes to employment arrangements. Where this occurs it is the parties' intent to pursue security of employment for permanent employees through re-skilling and/or retraining and/or redeployment opportunities. The intent is to provide long-term sustainable employment for employees whilst acknowledging that the flexibility the Company requires may often require changes to people's jobs. 41.4 To support these commitments the parties agree that where there is a reduction in staffing requirements not associated with natural attrition, then there will be no forced redundancies and no forced relocation. 41.5 An employee will not unreasonably reject retraining, transfer and/or redeployment. Transfer will apply as defined in the relevant Company policies as amended from time to time. 41.6 Where a fixed-term engagement extends for more than 2 years or involves more than 5 consecutive fixed-term engagements at the same location, the employee is to be engaged/converted to permanent employment with the condition that the employee will be subject to involuntary redundancy and termination payments as provided in the relevant Company policies as amended from time to time. 41.7 Where an engagement as set out above extends more than 4 years the employee is to be engaged/converted to permanent employment without involuntary redundancy. 42 Transmission Of Business 42.1 The parties acknowledge that Part 11 - Transmission of Business Rules, of the WRA sets out the legislative framework with respect to how this Agreement will bind a successor, assignee or transmittee of the Company's business. 42.2 Where a business is transmitted from the Company to another employer, as contemplated by the WRA (in this clause called the "transmittee") and an employee who: (a) At the time of such transmission was an employee of the Company in the business transmitted; and (b) Was covered by the provisions of this Agreement; and (c) Who immediately becomes an employee of the transmittee; Then where: (d) The employee's service and accrued and unused leave entitlements with the Company are assumed by the transmittee; and (e) The employee is offered employment on terms and conditions no less favourable than the employee currently enjoys; the employee will not be entitled to payment on account of any leave, severance, redundancy, period of notice or any other entitlement on termination of their employment with the Company. 14 It may be said immediately that the process of consultation with which cl 36 is concerned is not to be confused with the ordinary and familiar processes of negotiation over industrial claims and counterclaims about "pay and conditions". Clause 36 of the agreement constitutes an intrusion upon the managerial prerogative of employers; but the legitimacy of such intrusion and the importance attached to such provisions has long been recognised. More than a quarter of a century has elapsed since Murphy J said in Federated Clerks' Union (Aust) v Victorian Employers' Federation (1984) 154 CLR 472 at 493-494: In the history of industrial law, many matters which were within the exclusive managerial prerogative of employers have been brought within the scope of industrial regulation, by the legislature or industrial tribunals. Sometimes the former prerogative has been eliminated, for example by health and safety laws which prohibit certain practices. Sometimes it has been restricted, for example by minimum wage provisions. Various privileges which were once exclusive to the employer are now shared with employees (or their organizations). During this generation, there has been an accelerating trend towards concentration of economic power in fewer and fewer persons. The growth of the great national corporations, their mergers and expansion into transnationals have transformed the methods of production, distribution and exchange. The power of the greatest corporations transcends that of most governments. A reaction to the submergence of the individual worker is the demand by organized workers for some share in deciding what work is to be done, by whom and when, where, and how it is to be done. The thrust of the demand is not merely the improvement in existing pay and conditions. It extends to the protection of jobs, for themselves treated as more than wage-hands - to be treated as men and women who should be informed about decisions which might materially affect their future, and to be consulted on them. It is a demand to be emancipated from the industrial serfdom which will otherwise be produced by the domination of the corporations; a demand to be treated with respect and dignity.

THE LETTER OF 22 JANUARY 2010 15 It is convenient, at this point, to set out in full the terms of the letter of 22 January 2010 sent to employees of QR Network : 22 January 2010 Dear ….. IMPORTANT INFORMATION - PLEASE ENSURE THAT YOU CAREFULLY READ THIS LETTER THE SALE AND ITS EFFECT ON YOU Background As you know, the Queensland government has announced its intention to sell parts of QR Limited and to retain ownership of the passenger services together with a number of associated network and service businesses. The Government has also decided that QR Passenger is to be separated from the QR Group of companies and will become known as Queensland Rail. This separation is expected to occur on 1 July this year. Later in the year, QR Limited will become known as QR National and will be listed on the Australian Stock Exchange in what is known as an "Initial Public Offering" (IPO). Along with many of my colleagues I participated in an extensive communication process explaining the Government's decision to employees. This occurred late last year through face-to-face briefings and the provision of other information. At that time we made a commitment that we would, by the end of January, provide you with specific information about your placement in either Queensland Rail or QR National. The contribution of our people is valued and is critical to the future success of both companies. It is important to ensure that both QR National and Queensland Rail have the workforce capacity required to operate effectively and efficiently after the separation. Accordingly it is necessary to transition some of the functions and employees of QR Limited and QR Network Pty Ltd to QR Passenger Pty Ltd (Queensland Rail). The effect on you As discussed above, to ensure the ongoing effective operation of QR National and Queensland Rail it is necessary to transfer some employees from the current employer (QR Limited or QR Network Pty Ltd) to employment with QR Passenger Pty Ltd (Queensland Rail). A People Resourcing Team, together with your current executive, has considered this issue and concluded that your position and accordingly your employment should be transferred. This means that it is intended that you will transfer your employment to a business that will be retained in Government ownership. This letter is an offer to transfer your employment to QR Passenger Pty Ltd. The decision on whether or not to accept this offer to transfer is yours to make. You have until 19 February 2010 to make your decision. It is appropriate to outline to you the legal aspects of this transfer of employment and its effect on you and your terms and conditions of employment if you accept this offer. Should you agree to transfer, you will commence employment on the date of the creation of Queensland rail as a Government Owned Corporation. As you know, the Queensland Government has indicated its intention for this to occur on 1 July 2010. This remains the target and if this date changes you will be advised. By accepting this offer you will by notice, terminate your employment with QR Network Pty Ltd upon the commencement of your employment with QR Passenger Pty Ltd (Queensland Rail). By agreement between yourself, QR Limited and QR Passenger Pty Ltd you may transfer your employment on an earlier date. You will be employed by QR Passenger Pty Ltd in the position, classification and wage level at which you are permanently appointed immediately prior to your transfer. Unless you are currently doing so you will not be required to serve a period of probation on commencement with QR Passenger Pty Ltd. Upon the commencement of your employment with QR Passenger Pty Ltd all of your current leave accruals and your length of service will transfer with you. All of your current terms and conditions of employment will transfer with you. As you are employed under a Workplace Agreement your Workplace Agreement will transfer with you and QR Passenger Pty Ltd (and subsequently Queensland Rail) will be obligated to apply the terms of that Workplace Agreement to you. The transfer of your Workplace Agreement is required by the Fair Work Act 2009. Your superannuation arrangements will continue and will not be affected by the transfer. Should you refuse this offer of transfer and it still remains necessary to transfer your position, consideration will be given to other options for you. These options may include making suitable employment arrangements within QR Limited and subsequently QR National. You will recall that the Government announced that the administrative headquarters for Queensland Rail will be relocating to Ipswich. The Minister for Transport has subsequently announced that, without agreement, no positions will be relocated for at least two years from the date of separation (expected to be July 2010). In that two-year period, the Government has also committed to closely consulting with staff and their unions as well as Queensland Rail management to identify the specific functions that will be relocated. You can be assured that if you accept a transfer and your new position is subsequently identified as one that will be relocating to Ipswich, your individual needs and circumstances will be considered and we will work closely with you to find an alternative arrangement should this be necessary. A voluntary relocation program will be available during this two-year period for staff who would like to make the move sooner and where it makes sense to do so from a business perspective. Likewise, some of Queensland Rail's key executive team will establish a presence in Ipswich during this time. Irrespective of the Ipswich relocation your work location may change in the future as a result of the business needs of Queensland Rail. Should that occur any rights you hold in that regard are unaffected by your transfer to QR Passenger Pty Ltd and subsequently Queensland Rail. Actions Required You are required to advise of your decision to accept or reject this offer to transfer your employment to QR Passenger Pty Ltd by no later than 5.00pm 19 February 2010. To do this you must complete one of the forms attached to this letter and post it using the enclosed envelope. Failure to post a form by the above time will mean that you have rejected this offer to transfer your employment to QR Passenger Pty Ltd. Should this offer be rejected the position required in QR Passenger Pty Ltd may be offered to other employees of QR Network Pty Ltd. If you accept this offer to transfer your employment you are required to authorise the transfer to QR Passenger Pty Ltd of your personal details currently held by QR Limited/QR Network Pty Ltd. This authorisation is included in the relevant form attached to this letter. Should you require further information as part of our broader consultation with employees, please do one or more of the following: - talk to your manager - contact your HR team in your business area - send an email with your questions to employeehotline@qr.com.au - phone the Employee Enquiry Hotline on 1800 755 175 Looking ahead This is an exciting time of the history of our Company. While no doubt there will be a range of challenges, the changes to the QR Group provide enormous opportunities for our Company into the future. Queensland Rail will be a large multifaceted business with the scope to expand to meet Queensland's growing population with strong revenue streams from the regional freight and passenger networks. It will have the people talent, capability and resources to deliver services of the highest calibre - in commuter and long distance markets: network access services and rolling stock and infrastructure maintenance and construction. Looking forward the skills, experience and commitment of the 6900 Queensland Rail employees will ensure that it will be a modern, customer-focused company and an Australian leader in its field. Thank you for your valuable service and contribution to the success of QR Network Pty Ltd and whatever your decision, we wish you every success in your future career with Queensland Rail or QR National. You will be kept informed of further developments surrounding the separation of QR Passenger Pty Ltd from the QR group of companies. Lance Hockridge Paul Scurrah Chief Executive Officer Executive General Manager QR Limited QR Passenger Pty Ltd

[ATTACHED PRO FORMA ACCEPTANCE OR REJECTION OF OFFER] ACCEPTANCE OF TRANSFER OF EMPLOYMENT Date ………. To Chief Executive Officer QR Limited Executive General Manager QR Network Pty Ltd Executive General Manager QR Passenger Pty Ltd I, (Please print full name) First Name/s Surname Service Number

hereby accept the offer for my employment to be transferred to QR Passenger Pty Ltd commencing on the date of the creation of Queensland Rail as a Government Owned Corporation. It is understood that by written agreement I may transfer my employment before the creation of Queensland Rail as a Government Owned Corporation. I accept the offer on the terms contained in the letter to me dated 22 January 2010. In accepting this offer I hereby give notice to QR Network Pty Ltd that my employment will terminate effective upon the commencement of my employment with QR Passenger Pty Ltd (Queensland Rail). I authorise QR Limited/QR Network Pty Ltd to provide to QR Passenger Pty Ltd my personal file and/or any other relevant written person information. ________________ SIGNATURE PLEASE POST THIS ACCEPTANCE USING THE ENCLOSED ENVELOPE BY NO LATER THAN 5.00PM 19 FEBRUARY 2010 REJECTION OF OFFER TO TRANSFER Date …….. To Chief Executive Officer QR Limited Executive General Manager QR Network Pty Ltd Executive General Manager QR Passenger Pty Ltd I, (Please print full name) First Name/s Surname Service Number

hereby reject the offer to transfer my employment to QR Passenger Pty Ltd. ______________________ SIGNATURE PLEASE POST THIS REJECTION USING THE ENCLOSED ENVELOPE BY NO LATER THAN 5.00PM 19 FEBRUARY 2010.

THE CASE PUT BY THE UNIONS 16 The primary judge summarised the case put by the Unions at [139]-[140] (of [2010] FCA 591): The applicant trade unions' submission was…that the immediate reaction of the QR employers to the Queensland Government's announcement of 8 December 2009 itself evidenced proposed changes to be implemented which had the following features: Their businesses were to be reorganised, restructured and split as necessary to accommodate the government's announcement of 8 December 2009. The [QR employers] would adopt a process whereby they would identify positions in QR Network and QR Limited for transfer to QR Passenger - meaning that those positions would no longer be required within QR Ltd and QR Network. The identification of those positions would be undertaken as a management decision without any involvement from employees or their representatives. There would be no voluntary redundancies offered and employees would not be asked to volunteer for transfer from one company to another. After positions were identified by management employees would be offered the option of terminating their existing employment and transferring to new employment with QR Passenger in the transferred position. The transfer of position and the offer referred to would be identified to employees by late January 2010. The employees would be given about four weeks to decide whether or not to accept the transfer. The process of selection of positions would be informed by principles identified by management. The selection of positions and transfer of employees' employment would be undertaken by the organisational structure of QR Passenger was determined [sic]. Employees would be given the chance to provide feedback on the PRT decisions after notification thereof at the end of January when they were provided with contractual documents. The applicant trade unions' further submission was that this proposal did have an impact upon employees' terms and conditions of employment: (a) Positions were to be identified which were no longer to be required by an existing employer and new positions with a different employer were to be offered. (b) The career prospects of all employees were affected because of the substantial change in the size and nature of the employer for which they then worked. These, it was submitted, were the very types of proposals expressly identified in cl 36.2 of the Traincrew Agreement. That clause, it was submitted, extended just as much to proposals for change to be brought about with the agreement of an employee as it did to changes brought about by the direction of an employer. The duty to consult, it was submitted, arose in respect all employees, such was the nature and extent of the organizational change proposed. It arose, so it was submitted, as soon as the QR employers determined on or shortly after 8 December 2009 to embark upon the proposal identified by the applicant trade unions. Breaches of the consultation clauses by the respective employees occurred, so it was submitted, on or about but not later than 22 January 2010 when the QR employers implemented that proposal by the dispatch of the letters of 22 January 2010.

THE REASONS OF THE PRIMARY JUDGE 17 The primary judge concluded that a consultation obligation was triggered as soon as the appellants decided on 8 December 2009 to give effect to the Premier's announcement. In this regard, his Honour said at [141]: My conclusion is that the QR employers became subject to an obligation to consult under the QR Agreements as soon as they decided on 8 December 2009 to give effect to the State Government's announcement. In so doing they initiated a proposal for change that would affect the terms and conditions of each and every one of their employees. A final decision to implement that proposal is evidenced by the sending of the template letters on 22 January 2010 to their employees. In respect of what was, in terms of Queensland experience, evident from the legislative history discussed above, a radical proposal for change, the QR employers failed, utterly, to honour the consultation clauses in the QR Agreements by which they were respectively bound. 18 The primary judge went on to offer an alternative view of the basis on which an obligation to consult had arisen under cl 36.2 before the decision to send the letter of 22 January 2010. His Honour said at [149]: Even if, contrary to my conclusion that the decision to adopt and act on and from 8 December 2009 constituted the adoption of a "proposal to be implemented" which impacted on employees' terms and conditions, one were to regard the PRT decision as approved by the steering committee in January 2010 as the adoption of a proposal to implement change as evidenced by the proposed template letters to employees there was never any consultation in advance of the dispatch of these letters. Nor was there anything provisional about this decision as so approved. It was not subject to consultation. The letters did not communicate a provisional decision. The responses made to these letters were the acceptance or rejection of offers, not evidence of consultation. The time for consultation as required by the agreements had passed. That thereafter some changes were made by the QR employers to their earlier decided position is relevant and remarkable only in that it highlights at the very minimum what might have been the benefits of prior consultation. That there may have been other such benefits was, I also thought, evident in some of the comments made by trade union representatives at the meetings conducted between 19 January 2010 and 22 January 2010. 19 The primary judge held that there had not been consultation as required by cl 36.2 of the agreement before the decision was made to send the letter of 22 January 2010. His Honour examined at length the communications between officers of the appellants and their employees in which the appellants' plans for the implementation of the privatisation process were explained to the employees. These communications did not include an invitation to employees to provide their views, either on the selection of those employees who would go to QR Passenger, or the new privatised entity, or upon the issue of redundancy. In this regard, his Honour concluded at [146]: What occurred in the period between 8 December 2009 and 22 January 2010 was managerially dictated furtherance of the proposal adopted on 8 December 2009. On 8 December 2009 that proposal had, or between then and 22 January 2009 came to have, each of the features described in the applicant trade unions' submission and set out in paragraph 139 above. In respect of none of these was there consultation with employees. Benign dictatorship is not to be equated with consultation. On the subject of which positions were to be abolished, which retained and which created, as well as who was to fill the same or how to go about the process of deciding such matters the QR employers did not just have the "first crack", they had the only crack prior to the making of a final decision. When on 18 January 2010 the steering committee approved the PRT decision it made a final decision, as evidenced by the form of the template letters which were dispatched on 22 January 2010. That is so in respect of letters which communicate a decision not to offer alternative employment just as much as it is in respect of letters which invite agreement to termination of existing employment and offer alternative employment. As I have already held, they were neither tentative nor provisional. 20 While the paragraphs we have set out from his Honour's reasons afford a sufficient basis to support his decision, it is fair to say that the primary judge regarded the failure of the appellants to consult with their employees in relation to the broad issue of privatisation as an aspect of their failure to consult as required by cl 36.2 of the agreement. In this regard, his Honour said at [104]: For all that, neither the decision to form the PRT, nor maintain it in existence after 8 December 2009, nor to settle the PRT principles, nor how such principles should be applied in practice in terms of allocation of positions as between the new Queensland Rail and the new QR National and in terms of the identification of particular persons to fill these positions were put to the wider workforce of the QR employers or any representatives thereof, be they unions or otherwise, for participation or submission of views before managerial decisions were made. More fundamentally, whether to embark upon the partial privatisation process as announced on 8 December 2009 at all was never after that date put to the wider workforce of the QR employers by or on behalf of their boards of management. 21 His Honour went on to say further in this regard at [142]: The reaction of the QR employers to the State Government's announcement of 8 December 2009 was Pavlovian. In adopting that announcement, they were thereby proposing to implement changes that would, in terms of the QR Agreements by which they were bound, "have an impact on employees' terms and conditions of employment". This did not feature in their decision with respect to the announcement. "Employees' terms and conditions of employment" is not…to be narrowly construed. In adopting the State Government's announcement the QR employers were adopting as a proposal to be implemented a proposal for radical change of the most fundamental kind in the terms and conditions of all of their employees. In effect, a group in public ownership and control for almost a century and a half was proposed to be broken up with major business parts passing into private ownership and control. Working within a group of companies under that public ownership and control formed part of the terms and conditions of each and every employee with the group constituted by the QR employers. Also as part of the breaking up of the group, thousands of existing positions with an existing employer were no longer required and thousands of new positions with a new employer were required.

THE APPELLANTS' ARGUMENTS 22 The appellants' challenge to the primary judge's conclusion that the appellants had contravened the agreements is focused largely upon the emphasis placed by the primary judge on the concern of employees to work in a publicly owned enterprise as opposed to a privatised enterprise and the failure of the appellants to consult them upon this matter. The appellants argue that this is not a matter in respect of which cl 36.2 obliges the appellants to consult with their employees. The appellants say that there was no occasion for them to consult with their employees about the decision of the owner, the State Government, to privatise part of the operation of the railways. They were bound to comply with their owner's decision, and that decision did not impact on "employees' terms and conditions of employment". 23 The appellants argue that the identity of the shareholders of the appellants and any change in that regard was a matter external to the relationship regulated by the agreements. Accordingly, it is not a matter for consultation between employer and employee. The decision partially to privatise the enterprise conducted by the appellants was not a decision made by them but by their shareholder, ie. the executive government of the State of Queensland. They argue that it strains the language of the agreements unduly to suggest that the appellants were duty-bound to consult with their employees as to matters in which the appellants had no relevant decision-making power or function. The appellants fix upon the circumstance that cl 36.2 of the agreement does not refer to changes in the shareholding or ownership of the employer as a matter in respect of which consultation is required. This is a persuasive submission. It was not contested by the Unions; it should be accepted. 24 The appellants also point out that the only invitation to employees to transfer their employment was extended by QR Passenger. That company would continue to run its business as a government owned corporation. The appellants make the point that there was no evidence of any employee being invited to take up employment with a privately owned entity. 25 The appellants also argue that the agreements required consultation with affected employees only where there was a "proposed change that will have an impact on employees terms and conditions of employment". They submit that the obligation to consult arises only in respect of a proposal for change which, subject to the outcome of the consultation process, will necessarily have an impact on terms and conditions of employment. The appellants refer to the introductory language of cl 36.2, which obliges the employer to "consult with affected employees…over any proposed changes that will have an impact on employee's terms and conditions of employment". The appellants argue that the decision on the part of the employers to give effect to the privatisation decision of the Queensland Government was not one in respect of which it could be said that it amounted to a "proposed change that will have an impact on employees' terms and conditions of employment". They say that whether or not a change in the identity of the owners of the shareholding in any of the appellants will have an effect on terms and conditions of employment is something which could not be known prior to 22 January 2010. 26 The appellants also submit that any consultation which was required actually occurred. In this regard, they refer to the work of a group described as the People Resourcing Team (PRT) formed by the appellants to consider employee issues. This group made its recommendations to the appellants shortly before the 22 January 2010 letters were sent. Until that work had been done, the employees who might be affected by receiving or not receiving an invitation to transfer employment could not be ascertained. It is said that, until that time, no proposal had emerged which could have any "impact" on any particular employee. Further, the PRT's proposal was not a proposal which would have an impact on any employee's terms and conditions because the letters merely offered an opportunity to transfer employment on a voluntary basis, and employees were invited to provide "feedback" in relation to these invitations. 27 The appellants also contend that they were denied procedural fairness, in that the Unions had not sought to contend below that the privatisation proposal of the Queensland Government triggered an obligation in the appellants to consult with their employees. The specific complaint of the appellants under this heading is that the Unions did not contend at trial that the government's privatisation proposal itself triggered the obligation to consult under the agreements: rather, their case was limited to the proposition that the proposal by the appellants "to transfer employees' employment [sic] from one QR employer to another QR employer" triggered the obligation to consult. It will be apparent from the reasons that follow that it is not necessary to address this argument because the conclusion that the appellants contravened cl 36.2 can be sustained without reliance on the failure to consult in relation to privatisation.

CONSIDERATION OF THE ARGUMENTS 28 We turn now to a consideration of the appellants' arguments. We will discuss first the nature of the obligation to consult created by cl 36.2 of the agreement.

The obligation to consult? 29 In our respectful opinion, the appellants' arguments directed to the issue of public sector employment are misplaced, so far as the appeal against the finding of contravention is concerned. While it is true that concern as to the radical change wrought by the decision to privatise loomed large in his Honour's reasons, the kernel of the primary judge's reasoning lies in his acceptance of the Union's argument that the appellants' decision to implement its instructions from their shareholders by making offers of transfers of employment to QR Passenger without consulting as required by cl 36.2 was a contravention of a civil remedy provision of the legislation. On behalf of the Unions, no attempt was made to support that part of his Honour's reasoning which related to the absence of consultation about privatisation. 30 The arguments put on behalf of the appellants do not meet the point that, although the privatisation decision was made by the appellants' shareholder, the exigencies of implementing that decision necessarily gave rise to matters for decision by the appellants which fell within the scope of the consultation obligation. In this regard, the decision to send the letter of 22 January 2010 pre-empted the process prescribed by cl 36. 31 The 3,460 recipients of the letter were not consulted as to their view as to whether they, rather than other employees, should be invited to terminate their existing employment in order to transfer employment to QR Passenger. Those employees who did not receive letters were not consulted as to whether their positions might be made redundant so that they might transfer to QR Passenger. The existing employees of QR Passenger were not consulted as to whether the workforce of QR Passenger should be expanded. No employees were consulted as to whether the positions of the recipients with their current employer should have been abolished. None of the employees were consulted about whether voluntary redundancies might be offered. 32 Under cl 36.2, the employees were entitled to an opportunity to urge a different approach to the implementation of the privatisation decision. There may have been little likelihood that the QR employers would be persuaded to take a different position, given the attitude of their shareholders, but cl 36.2 is not concerned with the likelihood of success of the consultative process. It is concerned simply to ensure that consultation occurs, before a decision is made to implement a proposal. 33 The letter of 22 January 2010 expressly proposed the termination of the recipient employee's employment with whichever of the appellants the recipient was then in employment. That decision was not merely a matter of change in the identity of the shareholders of the employer: it included a proposal for the termination of employment with a particular employer. That any termination in conformity with the proposal would be voluntary does not mean that the proposal did not concern termination. 34 This is not a case where the decision to send the letter of 22 January 2010 can accurately be described as provisional or as a mere speculation about a possibility of a change in the ownership of the shares in the employer which might impact upon employees' terms and conditions of employment. It is manifest from the letter itself that decisions had been made by the appellants to pursue a change to the terms and conditions of employees' employment. The impact of the acceptance of the proposals upon the terms and conditions of employment was not merely a matter of speculation. The letter explicitly invited the termination of employment of individual employees then in the employ of QR Limited and QR Network. It thereby invited a change involving the termination of employment, a matter specifically referred to in matters listed in cl 36.2. It also incidentally reflected decisions as to "the elimination or reduction of …job opportunity or job tenure" and to the "restructuring of jobs" as well. 35 It is argued that these decisions cannot be said to be decisions about "proposed changes which will have an impact on employees' terms and conditions of employment". It is said that, because the letter of 22 January invites the making of a voluntary choice in that regard, it cannot be said that the proposals in the letter of 22 January "will" have an impact on terms and conditions. This argument should be rejected. No "proposed changes" can impact at all on terms and conditions unless they are adopted by the parties. As a matter of trite law, proposed changes can have no impact at all on the terms and conditions of employment unless those changes are either accepted by employees or imposed by compulsory process. Equally, once a proposal by one party to vary the terms and conditions of employment has been accepted by the other party, there is no longer any scope for consultation about the matter the subject of the proposal. Further, the process spoken of in cl 36.2 is consultation, not bargaining or negotiation. The evident intention of cl 36.2 is to enable employees to make suggestions in relation to proposals for change to terms and conditions of employment at a point anterior to the processes of negotiation by way of offer and acceptance. Clause 36.2 must necessarily be read exegetically as encompassing "proposed changes which will, if adopted, have an impact …". 36 It follows that the requirement to consult arose prior to the appellants' decision to invite the acceptance by employees of changes to terms and conditions of employment, particularly in relation to the range of matters specifically identified in cl 36.2 of the agreement. 37 The purpose of cl 36.2, evident from its text read in context with cll 36.3 and 36.4, is to ensure that, before the employer seeks to negotiate to alter the terms and conditions of employment, whether by inviting voluntary acceptance of an offer or engaging in compulsory processes of dispute resolution, employees will have a real opportunity to make suggestions on the subject matter raised for their consideration so that the suggestions might be considered by the employer before the processes of bargaining and offer and acceptance begin. 38 As to the argument that the appellants were denied a fair hearing, there can be no doubt that the appellants understood that the case they had to meet was that, subsequent to the decision by the Queensland Government to privatise parts of the enterprise conducted by the appellants, the appellants decided to implement the proposals in the letter of 22 January 2010 and this decision was made without consultation with their employees. Whether or not recipients of the letter were entitled to regard employment in the public sector as a condition of their employment is immaterial to the question whether there was a failure of consultation. The Unions do not now, and did not before the primary judge, seek to support the charges of contravention by reference to the appellants' failure to consult in relation to the privatisation. The findings of contravention should be sustained on the narrower basis for which the Unions contended. That having been said, to the extent that the appellants' failure to consult in relation to the privatisation issue affected his Honour's view of the gravity of the contravention, that is a matter which bears upon the propriety of the pecuniary penalties which his Honour imposed.

Did consultation occur? 39 As to whether the appellants' employees were given the opportunity required by cl 36.2 of the agreement to urge on their employers a course different from the invitations made by the letter of 22 January, the appellants point to a number of communications between representatives of the employers and employees prior to the sending of the letter. The primary judge analysed at length the evidence in this regard. Little purpose would be served by reciting that evidence. The short answer to the argument of the appellants on this point is that in none of these communications were employees asked for their "suggestions, ideas and contributions" in relation to the selection of employees who might, or might not, be offered a position in QR Passenger. 40 This point may be made by referring to a communication on which the appellants placed particular store. The appellants referred to an information pack provided by the appellants to employees prior to 22 January 2010. It was referred to by his Honour at [113]: Included in this information pack was a series of anticipated employee questions of management together with responses to such questions. These responses are the approved responses of the QR employers to these anticipated questions. They accurately described either process or, as the case may be, corporate policy. What those answers reveal is significant. I therefore set out the anticipated questions and approved responses in full: Q. How was this decision [a placement decision] made? Since the Government announcement outlining the operations and responsibilities of QR National and Queensland Rail, significant work has been undertaken to determine the functions and resources required in each business. This includes the people requirements. The People Resourcing Team, comprised of Policy Committee members, HR representatives, together with the Senior Executives from business units, made the position placement decisions to ensure that both businesses have the people capability for success. Q. Why haven't I been asked to accept a position like people going to Queensland Rail? The only people who were offered positions were those required to change from one employer to another. For the most part this applies to those who currently work for QR Limited or QR Network Pty Ltd whose position is required in Queensland Rail. If you were not offered a position within Queensland Rail it is because your position is required in QR National or because your position already resides in QR Passenger Pty Ltd. Q. What happens if I don't want to go to the company I have been allocated to? If you are a current employee of QR Passenger Pty Ltd you are already part of the organisation that will become part of Queensland Rail. Your employer is not changing and there is no ability to transfer to QR National. If you are an employee of QR Limited or one of its subsidiary companies (apart from QR Passenger Pty Ltd) you are already part of the group of companies that will become QR National. If your position is required in QR National this is simply a continuation of your current employment. There is no option to transfer to Queensland Rail. If you currently work for QR Limited or QR Network Pty Ltd and your position is required in Queensland Rail but you do not accept the offer, you will remain with your current employer. However, your position will be transferred to Queensland Rail. Consideration will be given to other options for you. These options may include making suitable employment arrangements within QR Limited and subsequently QR National. Q. Why has my position been placed in Queensland Rail and not my team mate's position? Queensland Rail and QR National require two workforces that include the skills and experience to make both a success. In some cases it made business sense for whole teams to stay together, and in other cases both businesses required these skills and experience. In these cases, the members of those teams have been allocated between the businesses. The People Resourcing Team together with the Senior Executives from business units determined the individuals and teams placed in each company to ensure that both businesses have the people capability for success. Q. Who am I working for until the separation of Queensland Rail from QR Limited on 1 July 2010? You will continue to work for your current employer. It is possible some transitional arrangements may be put in place prior to enable you to start performing duties reflective of your allocated company. Some employees who have accepted an offer to go to Queensland Rail may formally transfer earlier than the date of separation if all parties, QR Limited, QR Passenger Pty Ltd and the employee, agree. Q. When will I know who I'll be reporting to after the changes? The organisational structures are still in the process of being determined. We understand that this is important to you and we will advise you as soon as possible. Q. What happens with the Workplace Agreements and any pay increases? You will continue to be covered by your existing workplace agreement whether you remain with your current employer or you accept a transfer. You will receive pay increases in line with your workplace agreement. Q. I am a contract manager and have been offered a position in Queensland Rail. What happens to my contract? The terms and conditions of your contract will continue to apply. Q. I'm on a secondment in one company, but my position has been placed in another. Do I stay in my secondment or do I have to go back? Unless otherwise directed, your secondment will continue in its current terms. Your position placement however was based on your substantive position. Q. When will the new CEOs and Boards be announced? These are decisions for the Queensland Government and must be finalised prior to separation. Q. Will there be any Voluntary Redundancies? There will be no voluntary redundancies as a result of the position placement process. Q. If I am on higher grade, what happens to my higher grade payment? If you continue to act in the higher grade you will commence to receive the higher grade payment. Q. Can I still move between the new companies if jobs are advertised? Will my benefits move with me as they do today? Following the separation of Queensland Rail, employees of one business who wish to apply for jobs in the other will be treated as external applicants. In such circumstances benefits do not transfer. Q. Who will be located in Queensland Rail and QR National? The State Government has announced that Queensland Rail will include the passenger service business and assets, including ownership of the metropolitan rail networks. It will also retain regional freight networks. They have indicated that the coal, freight and infrastructure businesses will be separated into QR National. For many people this will mean they simply remain doing their job within the business in which they currently work. However for some people it is not clear, especially for those that currently service more than one business in areas such as corporate and shared services. Q. What does the sale mean to the traincrew transfers that currently occur between QR Limited and QR Passenger? Your current Workplace Agreement provide for transfers to occur within and between QR Limited and QR Passenger in accordance with the Traincrew Transfer Guidelines. This means that the transfer arrangements will continue to apply for QR National and QR Passenger for the life of your current Workplace Agreement. Q. Which employees are covered by the Queensland Government two year employment guarantee? Permanent employees based in Queensland covered by workplace agreements. Beyond this period we expect both organisations to continue to grow and diversify with strong jobs growth to service increasing demand in our passenger, coal and our freight markets. Q. When will the two year employment guarantee start? The State Government has confirmed that for those employees who will be part of Queensland Rail as a Government Owned Corporation the two year guarantee will begin when the separation of the business occurs. The target date for separation of the Queensland Rail business is 1 July 2010. For those employees who will be part of QR National - the two year period will begin at the time of the public float. This is expected to occur by December 2010. Q. What will happen to my entitlements? Entitlements such as sick leave, annual leave and long service leave will be transferred to Queensland Rail or QR National. Q. What will happen with my superannuation with the changes? Employees will maintain their existing superannuation arrangements. This includes those employees who currently hold a "defined benefits" account. For those employees who will be part of QR National - a process will be put in place that will enable employees to continue their existing superannuation arrangements with QSuper after the public float. Q. What happens with rail passes for those employees in the new QR National? There will be no change for QR National employees to the QR rail pass benefits currently provided to employees for a period of two years from the time of float. Q. Will there be a round of voluntary redundancies offered? There are currently no plans to offer voluntary redundancies. Q. Do QR Passenger employees have to move to Ipswich? The State Government has announced that the administrative headquarters for Queensland Rail will over time relocate to Ipswich. The Government has assured all current QR Passenger staff that this process will be staged and carried out in close consultation with employees. The final mix of jobs and people numbers has not been determined at this time. Executive staff and employees living in the Ipswich [sic] will be the first consideration, though no timeframe has been established. Queensland Rail will maintain a Brisbane CBD presence and will continue to be a major employer in the Brisbane region. Q. Privatisation has failed in other states. Why will it work here? This method for privatisation is different. The State Government has chosen a simple, integrated model which will not see our organisation broken into lots of different pieces. The method they have chosen has worked around the world. Canadian National, for example was privatised in 1995, and has since become one of the leading railroads in North America. Q. Where can I get further information? A toll-free Employee Enquiry Hotline has been established and operates between 7am and 6pm. The number is 1800 755 175. Employees can also email questions to: employeehotline@qr.com.au. Q. What does a sharemarket float involve? A sharemarket float or initial public offering (IPO) will involve the sale of shares in QR National on the Australian Stock Exchange. The float is not expected to take place until the last quarter of 2010 so nothing will change overnight. However there is a lot of work to be done to prepare the company for its listing on the stock exchange including due diligence and development of a prospectus and financial information. Q. Who will invest in QR National? Many investors including superannuation funds will be eager to buy shares in a publicly listed QR National. It will be an attractive investment because of its national scale, its strong market position and the growth opportunities available. Quality, integrated rail companies are historically very attractive to transport market investors. In North America the Canadian National and Conrail floats were both very successful in the last couple of decades. More than 11,000 employees of Canadian National became shareholders in the initial float providing them with a direct investment in the company's future success. Q. Who will be eligible for the employee share offer? The State Government has indicated that all eligible, permanent employees transitioning to QR National will be offered a $1000 parcel of free shares in QR National. In addition to the share allocation transferring employees will be given the opportunity to purchase additional shares on a discounted basis up to the value of $4000. Q. Will I lose any of my leave accruals at the end of the 2 year guarantee period? No - what you have accrued in your sick leave, annual leave and long service will go with you no matter which company you are in and they will not be taken off you at the end of the 2 year period. You will continue to be able to access your accruals. Q. What happens to current Employees in Transition? There is no change to the management of current employees in transition. The current applicable HR policy and case management approach applies. Each employee in transition will also be allocated into a company as is the case for every employee. Q. What happens when staff are on secondment? Employees on secondment will be allocated to one of the companies on the basis of their substantive position. Any temporary arrangements such as secondments and higher grade will need to be considered at the time. The continuation of any of these arrangements will require the arrangement of the employee, the employer of their substantive position and the employer of their temporary position. Q. Will my workplace agreement continue to apply to me or will it be renegotiated? Your workplace agreement will continue to operate and is not affected by the government decision. Q. What does the 2 year guarantee mean for EBA negotiations? Permanent employees working in Queensland covered by workplace agreements have the Government's two year employment guarantee. For employees in Queensland Rail the guarantee begins with the separation of Queensland Rail from the QR group of companies - target date June 2010. For those employees who will be part of QR National - the guarantee will begin two years from the time of the public float - by December 2010. Q. What happens to apprentices? The restructure of the QR Group will not have any negative affects [sic] on the terms of your apprenticeship. As a part of the restructure all employees (including Apprentices) will be allocated to either the new Queensland Rail Government Owned Corporation or QR National. Regardless of the Company into which you are allocated, all of the terms and conditions that currently apply to you as an Apprentice will continue to apply to you after the restructure and separation. (emphasis added). 41 The appellants criticised as "Delphic" his Honour's reference to the "significance" of some of the statements in the information pack. With respect, it is not difficult to see the significance of the statements which we have highlighted. It is apparent from these questions and answers that decisions as to the allocation of members of the workforce to QR Passenger and, consequently, the redundancy of existing jobs with the other appellants, and an increase in the size of QR Passenger's workforce, had already been made. The effects of these decisions were not merely speculative: once recipients of these letters accepted the offer of re-employment to QR Passenger, the possibility of acceding to an application for similar redeployment by non-recipients of the letter was reduced, if not practically foreclosed. It is also apparent that the decision that there would be no voluntary redundancies by way of termination of employment had already been made without any opportunity for input from employees upon this aspect of the issue of termination of employment. 42 This aspect of the appellants' challenge to the decision of the primary judge must fail.

PENALTY 43 The appellants argue that the primary judge erred in failing to appreciate that he was obliged by s 557 of the Fair Work Act 2009 (Cth) to treat the breaches of twenty agreements as a single contravention for the purpose of imposing a pecuniary penalty pursuant to s 546 of the Fair Work Act. Further, they argue that his Honour failed to take into account considerations relevant to the exercise of his sentencing discretion which, when taken into account, demonstrate that the penalty imposed against each of the appellants was excessive. We shall consider these arguments in turn.

One course of conduct? 44 Section 546 of the Fair Work Act provides for the imposition by the court of a pecuniary penalty in respect of the contravention of a "civil remedy provision". Item 2 of Schedule 16 to the Transitional Provisions Act provides that a person must not contravene a term of a transitional instrument. By Item 16 of Sch 16 to the Transitional Provisions Act, Item 2 of that Schedule is a civil remedy provision for the purposes of the Fair Work Act. 45 Section 557 of the Fair Work Act is relevantly in the following terms: 557 Course of conduct (1) For the purposes of this Part, 2 or more contraventions of a civil remedy provision referred to in subsection (2) are, subject to subsection (3), taken to constitute a single contravention if: (a) the contraventions are committed by the same person; and (b) the contraventions arose out of a course of conduct by the person. (2) The civil remedy provisions are the following: … (s) any other civil remedy provisions prescribed by the regulations. (3) Subsection (1) does not apply to a contravention of a civil remedy provision that is committed by a person after a court has imposed a pecuniary penalty on the person for an earlier contravention of the provision. 46 The appellants argue that while there were breaches of twenty (20) different agreements, there was a breach of only one civil remedy provision. In this case, so it is argued, all the breaches relied upon by the unions contravened the same civil remedy provision, viz, Item 2 of Schedule 16 of the Transitional Provisions Act. 47 It seems to us, as it seemed to the primary judge, that the difficulty with the appellants' argument is that Item 2(2) provides: "A person must not contravene a term of an agreement based transitional instrument that applies to the person". The note to Item 2(2) states that it is a civil remedy provision. 48 There may be one course of conduct in respect of each agreement associated with the relevant term of each of many agreements. There are, for the purposes of s 557(1), contraventions of multiple terms of multiple agreements. Accordingly, s 557(1) does not avail the appellants. 49 Even if s 557(2) does not apply to a case to oblige to treat as one contravention all the consequences of a particular piece of conduct, it is open to the Court, in an appropriate case, to take into account, as a matter of discretion, the circumstance that the same acts or omissions have resulted in multiple contraventions by multiple breaches of a term cast in similar language in each of multiple agreements, by imposing a lesser penalty or even no penalty in respect of breaches of some terms, while imposing a substantial penalty in respect of breaches of other terms (Gibbs v Mayor, Councillors and Citizens of Altona (1992) 37 FCR 216 at 233; Kelly v Fitzpatrick (2007) 166 IR 14 at 17). 50 His Honour was not disposed to approach the exercise of his discretion on this footing. It is not necessary to consider whether his Honour's approach in this regard miscarried because there are other reasons which compel the conclusion that the exercise of his Honour's discretion miscarried.

Were the penalties manifestly excessive? 51 The appellants also argue that the penalties imposed were manifestly excessive. In support of this argument, the appellants argue that the maximum penalty provided by law should not have been imposed in a case where the contravention was not deliberate, was a first offence, and where it was not apparent that workers had suffered actual pecuniary loss. They also argue that the primary judge took into account an irrelevant consideration insofar as he regarded the appellants' failure to consult in relation to the issue of privatisation as an aspect of the contravention. 52 In relation to the appellants' latter argument, the Unions respond that his Honour's reasoning in respect of penalty was not affected by the judge's perception that the failure to consult in relation to privatisation was a material aspect of the contravention. But reference to his Honour's reasons in relation to penalty shows that the appellants' argument in this regard must be accepted. The primary judge said in [2010] FCA 652 at [55]: The only consultation that occurred before a final decision was made was inhouse managerial consultation, not consultation with workers. There was no consultation with workers about where they might end up, where they wanted to end up, let alone about the process by which such a decision would be made, and let alone, strictly, about the proposal to privatise itself. 53 In our respectful opinion, it is apparent from this passage and from [104] of his Honour's reasons in respect of the contravention (set out at [20] of these reasons), that the learned primary judge did proceed upon this consideration in gauging the culpability of the appellants by reference to their failure to consult in relation to "the proposal to privatise itself". 54 This consideration did, however, affect his Honour's exercise of his discretion, both in relation to the imposition of the maximum penalty in each case, and to decline to ameliorate the overall result by reference to what has been called the totality principle. In this regard, his Honour said at [2010] FCA 652 at [59]-[63] and [76]: It is very important, as was, with respect, rightly emphasised by counsel on behalf of the QR respondents, not to reach such a conclusion with the wisdom of hindsight. I have endeavoured, as best I can, not to do that in making that observation as to blindness, closing eyes to the obvious. Rather, what I have tried to do, is to look at the matter in prospect. Looked at in prospect, what I see is this: the phenomenon of privatisation, partial or otherwise, is not unknown in railways. I gave examples by reference to statutes here and abroad of that. More generally, privatisation itself is hardly novel in contemporary Australian experience. All of us can remember Qantas as a publicly owned organisation, and the same with the Commonwealth Bank and Telstra, to give examples. In each of those, be they in railways or otherwise, though, privatisation involves radical change, a radical break with the past. Having regard to the history of QR Limited, which I set out at some length in the principal judgment, and it necessarily embraces each subsidiary, the partial privatisation of railways was a radical break with the past in this State. Even having regard to the announcement made by the Premier on 8 December 2009, and certainly by the time the people resources team recommendations were adopted, what was occurring was an effective doubling of QR Passenger and the wholesale abolition or creation of thousands and thousands of positions. All of that was very evident in prospect. It is not hindsight to regard what occurred here as a closing of eyes to the obvious. The annual report of QR Limited offers a reminder about how radical the change proposed was, in the description of "Employment" on page 47: As a major Australian corporation, QR employs over 15,000 people at more than 500 locations across the country, from Cairns to Perth. Then the following is stated: With a growing national footprint and more than 1,500 positions located outside our home state of Queensland, QR offers excellent employment and development opportunities for its people. More than 75 % of QR's people are employed in operations, trades, and construction, and in businesses where there are strong growth opportunities. These include resources sector, general freight, and the passenger market. Ultimately, QR aspires to be the employer of choice in the transport industry and the broader job market. It offers an outstanding range of professional opportunities across 300 job categories. You can drive a twokilometre long coal train, be at the cutting-edge of engineering design, or in a frontline customer service role on QR's suite of Traveltrains. During 2008/09, QR's recruitment centre processed more than 34,000 applications for over 2,000 positions and reduced our fill-time rate to 31 days. The centre reduced reliance on recruitment agencies and resulted in savings for the organisation. QR is witnessing rejuvenation across its ranks while ensuring retention of its renowned operational and technical excellence. This is illustrated by the fact that one third of QRs employees - some 5,000 people - have been with the company for one to four years. At the other end of the spectrum, and where company loyalty is strongly evident, about half have been with QR for 20 years or more. It is that employment, that organisation that has been broken up by the privatisation. It is truly radical change, and it is obvious change, change that, in my respectful opinion, was obviously intended to be the subject of the type of consultation for which the QR agreements provide. Not to appreciate that is to close one's eyes to the obvious. The changes are radical across the whole group. They are radical for QR Limited as well as for each subsidiary. … Having regard to all that I have mentioned, my opinion is that each individual contravention calls for the maximum penalty. It is hard to imagine a worse case in terms of fundamental change in this organisation. 55 In our respectful opinion, the primary judge erred in treating the "fundamental change" involved in privatisation as a basis for putting this case in the category of "worst imaginable cases". This is especially so given that his Honour rejected the Unions' submission that the appellants had acted in bad faith in failing to consult as required. 56 In relation to the application of the totality principle, his Honour said at [2010] FCA 562 at [79]-[80]: Having so derived the maximum penalty, I then turn to the totality principle. As to that, I prefer an approach evident in the judgment of Goldberg J in a case ACCC v Australian Safeway Stores Pty Ltd (No 4) [2006] ATPR 42-101 where his Honour said at [82] and [83]: The "totality" principle requires the court, after determining an appropriate … penalty for specific … contraventions in accordance with proper principles, to review the total of the … penalties and consider "whether the aggregate is just and appropriate". … The totality principle finds its genesis in the criminal law but it has been applied in the context of fixing penalties for contraventions of the [Trade Practices] Act … I have … borne in mind the totality principle. That is, I have ensured that having determined an appropriate penalty for each contravention, I have as a check considered whether the aggregate is appropriate for the various acts of contravening conduct involved. I turn to the question as to whether, having regard to the totality principle, what I should do in respect of the aggregate penalties, in respect of each of the corporations concerned. In my opinion, this change is so radical, the breach so comprehensive, and the occasion for consultation so obvious that anything less, even considered in aggregate, than an aggregate of the maximum penalties would not do justice to the circumstances of the case and the need to ensure public confidence in adherence to industrial bargains. For that reason, the penalties that I propose to impose by order on these respondents will be the aggregate maximums that I have mentioned earlier in the reasons. 57 Having concluded that the primary judge's discretion miscarried in relation to the imposition of an appropriate pecuniary penalty, the question arises as to whether the matter should be remitted to the primary judge for the reassessment of penalty. The Unions urged this course on the basis that his Honour had the benefit of seeing the appellants' officers give evidence and so is better situated to gauge their culpability. That seems to us to be a slim basis on which to prolong the matter and put the parties to further expense. Accordingly, it falls to this Court to exercise the discretion anew. 58 The contravention was serious; but, for the reasons given above, we consider that the primary judge erred in placing this case in the category of the worst kind of contravention. 59 The principal mitigating factors are: the absence of dishonesty or deliberate breach on the part of the appellants; the circumstance that this was the first offence for each of the appellants; 60 The principal aggravating factors are that: the breach was heedless of the rights of employees; the breach involved the contravention of twenty (20) agreements affecting the industrial rights of 10,300 employees. 61 In relation to the penalty appropriate to each contravention, we consider that a figure of $20,000 appropriately reflects a balance of the principal mitigating and aggravating factors. 62 Once the appropriate level for each of the contraventions has been assessed, it is necessary to consider the aggregate of those to form a view as to whether that aggregate is so out of proportion to the overall misconduct of the appellants as to constitute an unjust result: see Australian Opthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 at [23]; McIver v Healey [2008] FCA 425 at [30]-[31]. 63 By reference to these considerations of totality, we would reduce the overall penalty for each appellant by one quarter to give effect to the totality principle recognising that the multiple contraventions were the consequence of a single course of conduct.

orders 64 We would dismiss the appeals against conviction. 65 We would allow the appeals against sentence, but only to the extent of setting aside the penalties of $396,000, $231,000, and $33,000 in relation to the appellants respectively, and inserting, in lieu, the sums of $192,200, $112,000 and $16,000. Otherwise, we would dismiss the appeal. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Keane CJ and Marshall J.

Associate: Dated: 14 December 2010 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY FAIR WORK DIVISION QUD 241 of 2010

AND: COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA

AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION Second Respondent AUSTRALIAN MUNICIPAL, ADMINISTRATIVE, CLERICAL AND SERVICES UNION Third Respondent AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION Fourth Respondent AUSTRALIAN FEDERATED UNION OF LOCOMOTIVE EMPLOYEES, QUEENSLAND UNION OF EMPLOYEES

JUDGES: KEANE CJ, GRAY AND MARSHALL JJ DATE: 15 december 2010 PLACE: BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY FAIR WORK DIVISION QUD 244 of 2010

BETWEEN: QUEENSLAND RAIL LIMITED (FORMERLY QR PASSENGER PTY LTD)

AND: COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA

AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION Second Respondent AUSTRALIAN MUNICIPAL, ADMINISTRATIVE, CLERICAL AND SERVICES UNION Third Respondent AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION Fourth Respondent AUSTRALIAN FEDERATED UNION OF LOCOMOTIVE EMPLOYEES, QUEENSLAND UNION OF EMPLOYEES

JUDGES: KEANE CJ, GRAY AND MARSHALL JJ DATE: 15 december 2010 PLACE: BRISBANE

Gray j: 66 I have read the joint reasons for judgment of the learned Chief Justice and Marshall J in draft form. I agree that each appeal should be allowed in part. The orders numbered 2, 3 and 4, pronounced by the learned primary judge on 22 June 2010 should be varied by substituting for the figures $396,000, $231,000 and $33,000 respectively the figures $192,000, $112,000 and $16,000. The primary judge's order numbered 5 should also be varied by substituting for the figures $79,200, $46,200 and $6,600 respectively the figures $38,400, $22,400 and $3,200. Otherwise, the appeal should be dismissed. 67 It is unnecessary for me to set out again the facts, which are summarised conveniently in the joint reasons. I agree generally with their Honours' reasons, but desire to add some additional comments of my own.

The obligation to consult 68 The crucial question is whether there were "proposed changes that will have an impact on employees' terms and conditions of employment", within the meaning of the consultation clauses, by which the appellants were bound in relation to all of their employees, exemplified by cl 36.2 of the QR Limited Traincrew Union Collective Workplace Agreement 2009. From the time when the management of the appellants decided to implement the announcement of the Queensland Government that it intended to privatise part of its railway operations, such proposed changes existed in one form or another. 69 There were several important features of the government's announcement, which was made on 8 December 2009, as it was conveyed to employees on the same day by Lance Hockridge, the Chief Executive Officer of QR Limited. Ownership of the metropolitan rail networks and regional freight networks was to be transferred to a new government-owned corporation. The administrative headquarters for this new corporation would be moved to Ipswich. All aspects of the commercial operations, including coal, freight, services and parts of the network were to be "sold as a vertically integrated, multi-freight transport logistics enterprise". All "eligible, permanent QR employees transitioning to the new privatised QR National" were to be offered an allotment of shares in the company to the value of $1,000 and "transferring employees" were to be given an "opportunity to purchase additional shares on a discounted basis." All permanent employees were to be guaranteed "a position for the next two years, with conditions and entitlements unaffected." 70 The implementation of the government's announcement therefore required that decisions be made to allocate existing employees between the proposed new government-owned corporation and the proposed privatised enterprise. How many employees would be allocated to each, and who those employees would be, had to be determined. A process by which those determinations would be made had to be established. The results of those determinations would have an impact on the terms and conditions of employment of all employees, whatever those results were. At least some, and possibly all, employees would be invited to enter into new contracts of employment with a new employer, or new employers. Some would become employed in a private enterprise. Others would remain in government service. Some would become entitled to the share ownership package. Others would not. In the future, some employees would have to move their place of employment to Ipswich if they wished to retain their jobs. Others who might wish to work in Ipswich would be denied the opportunity to do so if they also wished to retain their existing jobs. When the two-year guarantee expired, if there were to be reductions in the workforce, some employees might be more likely to be subject to those reductions, and to be dismissed as redundant, than others. 71 After 8 December 2009, the process required for making these decisions was conceived, refined progressively, and then implemented before the sending out of the standard-form letter dated 22 January 2010 to some 3,460 employees. At all times between these dates, there were current proposals, of a more or less specific nature, that answered the description in cl 36.2, of being proposed changes that "will have an impact on employees' terms and conditions of employment". 72 The impact of the proposed changes on the terms and conditions of all employees is illustrated by the actual results of the process that was adopted. The employees were divided into three categories. Employees in the first category were chosen to constitute the workforce of the privatised enterprise. They became entitled to the share ownership package. None of them was offered the opportunity to continue their employment in government service, whether in Ipswich or elsewhere. Employees in the second category received the standard-form letter dated 22 January 2010. They were invited to relinquish their existing employment contracts and to enter into new ones with another employer. Although this offer was necessarily put to them on the basis that they would choose to accept or reject it, the letter did not encourage rejection, when it informed them that "consideration will be given to other options" for those who wished to go to the private enterprise, but whose positions it "still remains necessary to transfer". The unattractiveness of rejection is borne out by the overwhelming numbers accepting the offer. Those who accepted were to be denied access to the share ownership package. As the standard letter itself recognised, some of them would discover in the future that their positions would be identified as positions that would be "relocating to Ipswich". The third category of employees was to remain with the government-owned corporation. They were given no choice to transfer to the private enterprise. They could not become eligible for the share ownership package. Some of them would be likely to find that their positions were to be transferred to Ipswich. 73 Whether being placed in any of the three categories rendered employees more or less vulnerable to redundancies cannot be determined. The fact that the process appears to have involved choosing the first category first, by estimating the optimum number of positions for the private enterprise and choosing the employees who were to fill those positions, suggests that redundancies among the employees in that category are not very likely. The amalgamation of the second and third categories under one employer, even taking into account the additional workload resulting from the assumption by that employer of responsibility for regional freight networks, might have the result of casting onto the government-owned enterprise responsibility for redundancies when the two-year guarantee expires. The question is whether the additional workload is proportional to the increase in the size of the workforce. 74 It is easy to see that the proposal to implement the privatisation could have been carried out differently. Some or all of the employees might have been afforded a greater measure of choice as to whether they wished to be employed in the private enterprise or the government-owned enterprise. Employees might have been given the opportunity to challenge the estimate of the optimal workforce for the private enterprise or for the government-owned enterprise. The question of future redundancies might have been brought into the open. Employees might have been given the chance to opt out of the whole dilemma by requesting that voluntary redundancy be part of the offer. 75 Clause 36.2 makes provision for consultation about certain specified matters, including termination of employment; changes in the composition, operation or size of the workforce; the elimination or reduction of promotion opportunities, job opportunity or job tenure; the need for retraining or transfer of employees to other work or locations; and the restructuring of jobs. The specification of these matters is designed to assist in the interpretation of what are to be regarded as "changes that will have an impact on employees' terms and conditions of employment." It is not the case, as the appellants argued, that the specific matters are only to be discussed if otherwise there are such proposed changes. The specific matters are very much part of the content of the proposed changes contemplated by the clause. Each of these matters was in question in relation to all employees up to 22 January 2010, when the proposed changes were implemented by sending the standard-form letter to 3,460 of them, and not to the remainder. 76 It was not necessary for management to consult about the government's decision to privatise. So far as both management and employees were concerned, that was not a decision that management could unmake. The manner in which it was to be implemented is a different matter. Nor do the consultation clauses require consultation about the manner in which workplace or performance issues of individual employees were to be dealt with. Clause 36.3 so provides. If, as a result of the consultation process, management decided to base the allocation of employees to one or other enterprise on a judgement as to the competence and diligence of each individual employee, cl 36 did not require consultation in the making of that judgement. One thing it did require was consultation about whether such decisions should be made on the basis of individual judgements as to competence and diligence, or on some other basis. 77 It is not the case, as the appellants argued, that clause 36 only came into operation once the process of choosing the employees who would receive the offer to relinquish their employment and take up employment with a new employer were identified. From 8 December 2009, all the proposed changes impacted on the terms and conditions of employment of all employees. Consequently, there was an obligation to consult.

The content of the obligation 78 The appellants argued that they had complied with the obligation to consult. They pointed to the substantial amounts of information about the proposed changes they supplied to their employees during the period from 8 December 2009 until 22 January 2010. They pointed to facilities established for employees to ask questions, and to standard answers to frequently asked questions prepared to assist those whose task it was to deal with the questions. All of this does not establish that there was consultation in accordance with the consultation clauses. 79 It is not difficult to ascertain what the consultation clauses mean by way of consultation. As cl 36.1 makes clear, consultation is to be "Aimed at getting individuals or groups to suggest or respond to proposals". It is to provide "an opportunity to present a point of view or state an objection". The exchange of information required is to ensure that there is "the actual and genuine opportunity to influence the outcome." The mere provision of information does nothing to promote these outcomes. Nor does the giving of opportunities to ask questions, in response to which the management line is disseminated. 80 To comply with its obligations to consult, management needed to make it clear that there would be real opportunities for employees, individually or collectively, to suggest proposals for the implementation of the government's intention to privatise part of its railway operations, and to respond to the proposals of management about such implementation. Opportunities for employees to present their points of view or state their objections were necessary. So was a genuine opportunity to influence the outcome, so that even though management was not giving up its right to make a final decision, it was prepared to do so only after hearing and considering the suggestions of employees, their responses to management proposals, their points of view and their objections. 81 Even though management retained the right to make the final decision, it is not to be assumed that the required consultation was to be a formality. Management has no monopoly of knowledge and understanding of how a business operates, or of the wisdom to make the right decisions about it. The process of consultation is designed to assist management, by giving it access to ideas from employees, as well as to assist employees to point out aspects of a proposal that will produce negative consequences and suggest ways to eliminate or alleviate those consequences. In his reasons for judgment, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited [2010] FCA 591 at [117]-[129], the primary judge set out several examples of suggestions by employees, in response to the letters of 22 January 2010, which management implemented by making changes to its original proposals. Proper consultation prior to the sending of those letters would have been likely to reveal those suggestions, and perhaps many others that would have been of value to management in deciding how to implement the privatisation decision.

The seriousness of the non-compliance 82 In his reasons for judgment dealing with penalty, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited (No 2) [2010] FCA 652 at [57]-[58], the primary judge expressed two findings that appear inconsistent at first sight. His Honour "did not regard the QR managerial officers who gave evidence as giving dishonest evidence." Nevertheless, his Honour characterised the inaction of management in relation to consultation as "a closing of eyes to the obvious, what some might term a blindness, a wilful blindness, in relation to what was occurring." Ordinarily, a finding of wilful blindness connotes dishonesty, a deliberate refusal to make an inquiry, because the person is aware that that the answer to the inquiry will be unfavourable to the course the person wishes to take. 83 In the present case, the managerial witnesses gave evidence that they had turned their minds to the consultation clauses, but had either formed their own view, or accepted the view given to them by another manager, that consultation was not required prior to the making of firm proposals to some employees, and then only to those employees. They also said that they took the view that, notwithstanding the inapplicability of the consultation clauses, they would choose to consult. Such unanimity of opinion about matters so obviously susceptible of more than one answer, in favour of the answer less likely to be right, is inherently unlikely. Such certainty about what the primary judge and this Court have found to be an incorrect interpretation of the consultation clauses is also unlikely. Such consistent failure to consult in any way other than by providing information does not suggest that the statements of intention to consult in any event were any more than pious utterances. The Court was not invited to overturn the finding about the absence of dishonesty, however, so it is necessary to try and reconcile the two findings of the primary judge, if this is possible. 84 Manifestly, the view that was taken about the non-operation of the consultation clauses was the view that would support what management wanted to do. Management wanted to be left alone to develop its own strategy for implementing the privatisation decision. To be troubled at every turn by the need to consult with employees, as the proposals for implementation were increasingly refined, would have been regarded as too onerous. The incentive to adopt, or to go along with the adoption of, the view that favoured what management wanted to do would have been powerful. The emergence of a corporate attitude to the consultation clauses would have provided comfort to any with lingering doubts, enabling them to accept the orthodoxy of that attitude. In this way, a belief that the consultation clauses did not yet require any action by management would have gathered momentum and would have become a genuine belief. Once such a belief had been adopted or accepted by each of the participants in the decision-making process, the consultation clauses would have been put aside as having no bearing on the situation. 85 This kind of process is capable of justifying the finding that there was no dishonesty. It does not justify the finding of wilful blindness, however. Someone who is genuinely mistaken, even someone who has allowed himself or herself to become so because the adoption of a mistaken view is seen to be the thing to do, is not described accurately as wilfully blind. There was a serious failure to take steps to ensure that the appellants discharged their responsibilities under the industrial agreements that bound them. No legal advice was sought. There was no adequate consideration of the terms of the consultation clauses. Management took the easy way out. The assessment of appropriate levels of penalties must reflect these factors, but to fix penalties on the basis that there was wilful blindness amounts to an error. The error caused the primary judge's exercise of discretion to miscarry. This Court should rectify the error by fixing appropriate penalties itself. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray.