Shop Distributive & Allied Employees' Association v Karellas Investments Pty Ltd

Federal Court of Australia (Full Court)|2008-04-04|Before: Tracey JJ

REASONS FOR JUDGMENT 1 This appeal arises from an attempt by the Shop Distributive & Allied Employees' Association ("the SDA") to have an agreement, entered into between the respondent company and its employees, declared void. The case raises a number of issues relating to the proper construction and application of certain provisions appearing in Part 8 of the Workplace Relations Act 1996 (Cth) ("the Act"). Those provisions concern the making and avoidance of agreements and the standing of organisations, such as the SDA, to prosecute proceedings on behalf of their members.

BACKGROUND 2 The respondent, Karellas Investments Pty Ltd ("Karellas"), is the proprietor of two retail stores. One is located at Cremorne and the other at Blaxland, both in the State of New South Wales. In April 2007, Karellas had 85 employees at its Cremorne store who were eligible for membership of the SDA. There were 151 employees at the Blaxland store who were similarly eligible. One such employee was Ms Sandra Stringer. Ms Stringer was a member of the SDA. The terms and conditions of employment of these employees were then regulated by the Karellas Investments Pty Ltd Enterprise Agreement 2003 ("the 2003 Agreement"). The parties to this agreement were Karellas and the SDA. The 2003 Agreement had been certified on 23 July 2003 by the Australian Industrial Relations Commission and was expressed to be operative for a period of three years. 3 During April 2007, Karellas sought to persuade its employees to enter into a new agreement which would supersede the 2003 Agreement. It proposed the making of an employee collective agreement with its employees. In an effort to persuade the employees to enter the agreement, the company made available two publications, which it placed in the Blaxland store in places where employees would have access to them. It also handed out one of these publications to employees at the Cremorne Store. In some cases the documents were handed to employees by managers. The two documents were circulated in the latter part of April 2007. The SDA alleged that those documents contained certain false representations relating to the terms and effect of the proposed employee collective agreement. The trial judge found, and it was not disputed on appeal, that a number of the statements in the documents circulated by Karellas were indeed false and misleading. They included a representation that the proposed agreement provided for a 5% pay rise for employees. It did not. Such a pay rise was to be provided independently of the agreement. It was also asserted by Karellas that employees would remain entitled, under the proposed agreement, to the same penalty rates for which the 2003 Agreement had provided. This was false. 4 During the period 27 to 30 April 2007, employees at the two stores voted by secret ballot to determine whether or not the proposed agreement should be approved. A majority of employees at both stores voted to approve the agreement. Ms Stringer voted at the Blaxland store on 30 April 2007. The evidence does not disclose whether she voted for, or against, approval of the agreement. The proposed agreement was entitled Karellas Investments Pty Ltd Employee Collective Agreement 2007 ("the 2007 Agreement"). It was lodged with the Employment Advocate on 1 May 2007. 5 By an amended application, dated 23 May 2007, the SDA applied to the Court for declarations that:

THE LEGISLATION 10 Part 8 of the Act provides for various types of workplace agreements, including agreements between employers and individual employees and different forms of collective agreements. Some provisions of Part 8 have been amended since events, relevant to this appeal, occurred. Those changes will be noted where necessary. Employee collective agreements are provided for in s 327 of the Act, which provides that: "An employer may make an agreement (an employee collective agreement) in writing with persons employed at the time in a single business (or part of a single business) of the employer whose employment will be subject to the agreement." 11 Section 333(b) of the Act provides that: "For the purposes of this Act, a workplace agreement is made at whichever of the following times is applicable: (a) … (b) for an employee collective agreement - the time when the agreement is approved in accordance with section 340; (c) ……………………….." 12 Section 337 of the Act imposes obligations on an employer that wishes to enter into an employee collective agreement. These obligations include requirements that the employer provide access to the proposed agreement and also provide an information statement about it to the employees who would be affected by it should it be approved. 13 Section 340(2) of the Act provides that: "(2) An employee collective agreement … is approved if: (a) the employer has given all of the persons employed at the time whose employment will be subject to the agreement a reasonable opportunity to decide whether they want to approve the agreement; and (b) either: (i) if the decision is made by a vote - a majority of those persons who cast a valid vote decide that they want to approve the agreement, or (ii) …" 14 Section 341 provides that: "(1) An employer contravenes this subsection if: (a) the employer lodges a workplace agreement …; and (b) the agreement has not been approved in accordance with section 340. (2) Subsection (1) is a civil remedy provision." 15 At the relevant time, s 342 (1) (when read with s 344) required an employer to lodge an employee collective agreement with the Employment Advocate within 14 days of it being approved in accordance with s 340. By s 347(1), the agreement comes into operation on the day on which it is lodged with the Employment Advocate. (Since 1 July 2007 employers have been required to lodge agreements with the Workplace Authority Director: see Clause 12 of Part 2 of Schedule 2 of Act No 107 of 2007). By s 347(2) a workplace agreement comes into operation even if the requirements of ss 337, 340(2) and 342 have not been complied with. Once it comes into operation, an employee collective agreement binds the employer and all classifications of employees who are subject to it during its currency, whether or not those employees were employed by the employer at the time at which the agreement was made: see s 351. 16 As already noted, s 341 renders an employer liable to a civil penalty if the employer lodged an agreement with the Employment Advocate that had not been approved in accordance with s 340. Other potential consequences are also contemplated. If the employer contravenes s 341(1), s 409 empowered the Court to make an order: (a) declaring that the workplace agreement is void; or (b) declaring that specified terms of the workplace agreement are void. 17 Section 412(1) provides that, if an order is made under s 409, the order "takes effect from the date of the order or a later date specified in the order". The power to make an order under s 409 is qualified by s 412(2) as follows: "(2) The Court may make an order under section 409 … only to the extent that the Court considers appropriate to remedy the following: (a) all or part of any loss or damage resulting from the contravention …; (b) prevention or reduction of all or part of that loss or damage." 18 By s 413, the Court may order an employer to pay compensation for any loss or damage suffered by an employee that results from a contravention of s 341 of the Act. Section 414 empowers the court to grant an injunction requiring an employer to cease contravening the Act. 19 Section 405 of the Act deals with standing to make an application for an order under the Division in which s 409 appears. Relevantly it provides: "(1) Any of the following persons may apply to the Court for an order under this Division in relation to a workplace agreement: (a) an employee who is or will be bound by the agreement; (b) ... (c) an organisation of employees that is or will be bound by the agreement; (d) an organisation of employees that represents an employee who is or will be bound by the agreement (subject to subsection (3)); (e) … (f) a workplace inspector; (g) … (2) …. (3) An organisation of employees that represents an employee (as mentioned in paragraph (1)(d)) must not apply on behalf of an employee for a penalty or other remedy under this Division in relation to a contravention of the civil remedy provision unless: (a) the employee has requested the organisation to apply on the employee's behalf; and (b) a member of the organisation is employed by the employee's employer; and (c) the organisation is entitled, under its eligibility rules, to represent the industrial interests of the employee." 20 The 2003 Agreement is a "pre-reform certified agreement" within the meaning of Clause 1 of Schedule 7 to the Act. Clause 3 of Part 2 of Schedule 7 prescribes the time at which such pre-reform agreements cease to operate. Relevantly, clause 3 provides: "(1) A pre-reform certified agreement ceases to be in operation in relation to an employee if a collective agreement … comes into operation in relation to that employee. … (5) If a pre-reform certified agreement has ceased operating in relation to an employee because of subclause (1), the agreement can never operate again in relation to that employee."

WAS AN AGREEMENT MADE? 21 It will be convenient to deal first with this point, which arose in argument. It has been explained, in summary form, above at [9]. The issue is whether, in the circumstances of the present case, an employee collective agreement exists that might be rendered void by an order made under s 409 of the Act. The point is one that will only assume significance on the appeal if it is determined that an order under s 409 of the Act could and should have been granted by the Court. 22 Section 327 of the Act contemplates that an employer may "make" an employee collective agreement with its employees. It seems to be assumed that the employer will be the moving party that will propose the terms of the agreement and publish those terms to the employees. Section 337 of the Act requires that, in the normal case, the employer must make copies of the proposed agreement available to employees, together with an information statement, at least seven days before the agreement is approved. Section 340(2)(b) of the Act imposes a requirement that an employee collective agreement will not be taken to be approved unless a majority of the employees to whom it is to apply signify that they agree to be bound by its terms. Their approval may be signified by a vote of some kind or by some other process. The vote may, or may not, be by secret ballot. It could, for example, take place by show of hands. Approval might also be signified by a majority of employees verbally advising an appointed representative that they approved of the agreement. Once a majority has signified approval, a representative of the employees may then sign the agreement: see reg 8.13 of the Workplace Relations Regulations 2006 (Cth) ("the Regulations"). 23 By s 340(2)(a) of the Act, it is also necessary that, in order for an employee collective agreement to be approved, the employer has given all relevant employees "a reasonable opportunity to decide whether they want to approve the agreement." On the trial judge's findings this has not occurred in the present case because of the making, by the employer, of false and misleading statements in the lead up to the secret ballot in which a majority of employees approved the agreement. The question that arises, therefore, is whether the failure of the employer to satisfy the requirements of s 340(2)(a) has any consequences under the Act, and, if so, what those consequences are. 24 One possible consequence may be that the employer becomes liable to a penalty for contravention of s 341. This will occur if the employer lodges the agreement with the prescribed statutory authority. In the present proceeding the SDA has not sought the imposition of a penalty on Karellas under s 341. 25 Of greater current importance is the question of whether Karellas' failure to satisfy the requirements of s 340(2)(a) (if it did so fail) meant that the employee collective agreement that it lodged with the Employment Advocate on 1 May 2007 had not been "made". Plainly, one of the requirements that would enable it to be said that the agreement had been approved, for the purposes of the Act, would not have been met. Nonetheless, the agreement came into operation, in accordance with its terms, on and from the date of its lodgement. Section 347(2) so provided. By s 351, it was and remains binding on the employer and its relevant employees. If it is alleged that such an agreement has not been approved, a person who has standing under s 405 may seek certain forms of redress. One of them, as already noted, is the imposition, on the employer, of a civil penalty under s 341. Another is an order, under s 409(a) of the Act, declaring that the workplace agreement is void). Any such order operates prospectively: see s 412(1). 26 This review of the legislative provisions leads strongly to the conclusion that Parliament intended that an employee collective agreement will be treated as having been made and having come into operation notwithstanding a failure, on the part of the employer, to meet its obligations under s 340(2) of the Act. In this respect employee collective agreements may be contrasted with multiple business agreements, which according to s 347(3) of the Act, only come into operation if a necessary precondition has been satisfied. 27 The reason for the distinction is explained in the explanatory memorandum to the Workplace Relations Amendment (WorkChoices) Bill 2005. In dealing with the then proposed s 100 (which became s 347), the explanatory memorandum stated that: "947. Proposed section 100 would set out when a workplace agreement comes into operation and ceases to be in operation. 948. Sub-section 100(1) would provide that a workplace agreement comes into operation on the day the agreement is lodged. 949. Sub-section 100(2) would provide that a workplace agreement comes into operation even if the requirements relating to Divisions 3 and 4 of Part [8] have not been complied with. This would be a necessary consequence of a lodgement only system that does not involve workplace agreements being scrutinised prior to coming into operation. 950. It is intended that once lodged, a workplace agreement will remain in operation even if Divisions 3 and 4 have not been complied with, unless the Court decides otherwise. For example, an employer might lodge a collective agreement without giving employees ready access to the agreement under proposed [s 337] or seeking their approval for that agreement under proposed [s 340]. In those circumstances, the agreement would come into operation. However, the employer could have committed a criminal offence by making a false declaration when lodging the agreement … and be liable for remedies including pecuniary penalties and compensating employees that have suffered loss or damage as result of the employer's actions."

28 Having regard to this legislative scheme, it cannot be said that for the purposes of the Act, an employee collective agreement has not been made on the basis that one of the preconditions for treating it as having been approved by the relevant employees has not been met. Section 333(b) is concerned with fixing the time at which an agreement is, for the purposes of the Act, to be taken as having been made. It provides that that time is the time at which the agreement is approved in accordance with s 340. Section 333 does not deem an agreement that has not been approved under s 340 not to have been made. The legislation treats collective agreements that have been lodged as having been made and approved unless and until they are set aside by order of the Court. 29 Section 333 was intended to serve a different purpose. That purpose is explained in the explanatory memorandum as follows (at [844]): "The concept of when an agreement is made is included in Part [8] because of the effect that making an agreement has on parties' rights. Once a collective agreement is made any bargaining period on foot between the parties ends, with the effect that any industrial action taken after that time would not be protected action (see paragraph [428(a)]). Also, there is a prohibition on an employer withdrawing from a union collective agreement or union greenfields agreement after it has been made (see proposed section [339])." Parliament does not appear to have turned its attention to the interrelationship of s 333(b) and s 340(2) on the one hand, and the remedial provisions in Division 11 of Part 8 on the other. It is, however, tolerably clear that s 333 is to be understood as deeming agreements to have been made at particular times in order to fix with precision when certain other provisions of the Act take effect. Section 333 is not intended to operate so as to render non-existent, for all purposes, collective agreements that have been lodged in circumstances in which statutory conditions, such as those prescribed by s 340(2), have not been satisfied.

THE SECTION 401 POINT 30 The learned trial judge found that Karellas had not contravened s 401(1) of the Act. His Honour accepted that Karellas had made false or misleading statements to its employees. His Honour did not, however, consider that the elements of the offence prescribed by s 401(1)(b) and s 401(c)(i) had been made out. 31 Section 401(1)(b) of the Act requires that the person who makes a false or misleading statement must be "reckless as to whether the statement is false or misleading." His Honour accepted that, by force of regulation 8.15 of the Regulations, the Court was required, in determining whether or not Karellas was "reckless" for the purposes of s 401(1)(b) of the Act, to have regard to the provisions of s 5.4 of the Criminal Code Act 1995 (Cth) ("the Criminal Code"). Section 5.4 provides as follows: "(1) A person is reckless with respect to a circumstance if: (a) he or she is aware of a substantial risk that the circumstance exists or will exist; and (b) having regard to the circumstances known to him or her, it is unjustifiable to take the risk. (2) A person is reckless with result to a result if: (a) he or she is aware of a substantial risk that the result will occur; and (b) having regard to the circumstances known to him or her, it is unjustifiable to take the risk. (3) The question whether taking a risk is unjustifiable is one of fact. (4) If recklessness if a fault element for a physical element of an offence, proof of intention, knowledge or recklessness will satisfy that fault element." The trial judge found (at [92]) that the SDA's case under s 401(1)(b) had not been made out because: "There was no evidence as to Karellas' awareness of any risks associated with the making by it of statements in the [contentious documents] that may be found to have been false or misleading. Furthermore, there was no evidence as to the circumstances known to Karellas which may have made any risk unjustifiable." 32 It is not entirely clear whether the trial judge concluded that the SDA had failed to prove that the statements that his Honour had found were false and misleading were made recklessly in the way contemplated by s 401(1). His Honour did say, by reference to s 5.4 of the Criminal Code, that there was no evidence as to Karellas' awareness of any risks associated with the making of the statements in the documents and no evidence as to the circumstances known to the respondent that may have made any risk unjustifiable. With respect, we would approach the matter differently. The contentious documents were each signed by Mr Peter Smith, the Operations Manager of Karellas. In the circumstances, Mr Smith's knowledge can be imputed to Karellas. It can be inferred from the terms of the documents that he was aware of the contents of the 2003 Agreement and of the then proposed 2007 Agreement. It is also plain that the documents were being published in an effort to induce the employees to vote in favour of the 2007 Agreement. Karellas' state of mind was a matter peculiarly within its knowledge. The evidence required by the SDA to prove that Karellas had a particular state of mind at relevant times can, in those circumstances, be slight. We do not accept, as counsel for Karellas submitted, that it was incumbent upon the SDA to call Mr Smith or someone else representing Karellas to demonstrate Karellas' state of mind. It can be inferred that Mr Smith knew of the differences and similarities between the 2003 Agreement and the proposed 2007 Agreement. From that it can be inferred that he was aware that the documents that he signed represented differences and similarities that did not truly reflect the differences and similarities between the two agreements. In the circumstances, it could be inferred that he was aware there was a substantial risk that the misstatement of the differences might induce employees to vote in favour of the 2007 Agreement. It is but a very small step from that point to conclude that the risk was unjustifiable, given the need to ensure that the employees voting on whether or not to accept the 2007 Agreement should do so in a fully informed, and not misinformed, way. The various inferences can far more readily be drawn in circumstances where Karellas failed to call Mr Smith. If it be the fact that he was not aware that the letters were misleading or deceptive, or that he believed that any misleading or deceptive aspect of them was not likely to influence the employees' decision as to whether or not to approve the 2007 Agreement, he could have said so in sworn testimony. He did not do so. 33 We are, therefore, for the purposes of determining this appeal, prepared to accept, in the SDA's favour, that Karellas was reckless as to whether or not the statements that the trial judge found to be false and misleading were, in fact, false and misleading. 34 In order to establish that Karellas had contravened s 401(1), the SDA was also required to establish that the making of the false and misleading statements caused the employees "to make [or] approve" the collective agreement. 35 At trial, the SDA submitted that it could be inferred, from the making of the false and misleading statements, that these statements caused the employees to approve the 2007 Agreement. The trial judge rejected this submission. His Honour explained his reasons as follows (at [97]): "In my opinion, absent any evidence that the making of any false or misleading statement to another person or persons caused that other person or persons to vote to approve the 2007 Agreement, a 'fair inference of fact' that the making of the false or misleading statement or statements relied upon caused the person or persons to approve the 2007 Agreement would not be available. It is quite possible that, the causal link between the making of a false or misleading statement to another person or persons and the approval of, in this case, the 2007 Agreement by a majority of those persons who cast a valid vote deciding that they wanted to approve same, is missing because the employees of Karellas who cast valid votes indicating that they wanted to approve the agreement, did not even read the documents containing the false or misleading statements upon which the applicant has relied, let alone pay any regard to them." 36 Both at trial and on appeal, counsel for the SDA relied on certain statements of principle expounded by Wilson J in Gould v Vaggelas (1985) 157 CLR 215 at 236. His Honour there said: "1. Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case. 2. If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation. 3. The inference my be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation. 4. The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract." His Honour continued (at 238-9): "…Where a plaintiff shows that a defendant has made false statements to him intending thereby to induce him to enter into a contract and those statements are of such a nature that would be likely to provide such inducement and the plaintiff did in fact enter into that contract and thereby suffered damage and nothing more appears, common sense would demand the conclusion that the false representation played at least some part in inducing the plaintiff to enter into the contract. … When all the facts are in, the fact-finding tribunal must determine whether or not it is satisfied on the balance of probabilities that the misrepresentations in question contributed to the plaintiff's entry into the contract. The onus to show that they did is a condition precedent to relief and rests at all times on the plaintiff."

37 Counsel for the SDA submitted that Karellas was seeking to induce its employees to vote to approve what became the 2007 Agreement. In an effort to achieve that objective, false and misleading statements were made in the documents that were made available to employees. This was sufficient, it was submitted, to give rise to the inference that the employees who had voted to approve the agreement, were induced to do so (at least in part) by the impugned representations. 38 The evidence called by the SDA at trial going to this point went no further than establishing that the documents containing the false and misleading statements had been signed by a senior employee of Karellas and made available to employees. In a few cases the documents were handed to employees. The rest were left where employees might see them and be able to pick up copies. There was no evidence that any employee other than Ms Stringer had read either of the documents. The only employee who gave evidence, Ms Stringer, said that she had read the documents and queried certain of the statements made in them with her manager and Mr Smith. She did not depose that anything in either of the documents had induced her to vote in favour of approving the 2007 Agreement. Indeed, she did not give evidence as to whether she voted for, or against, approving the agreement. 39 What is necessary to prove that a false or misleading statement caused another person to act in a particular way will depend on all the circumstances established by the evidence in the proceedings in which the allegation is made. It will not always be necessary for direct evidence to be given that a person to whom the misleading statement was made acted in a particular way because of the statement. There are many authorities to this effect concerning proof in proceedings involving allegations of misleading and deceptive conduct and claims for damages under the Trade Practices Act 1974 (Cth). One such authority is Como Investments Pty Ltd (in liquidation) v Yenald Nominees Pty Ltd (1997) ATPR 41,550, in which the Full Court of the Federal Court said (at 43,619-43,620): "The law does not consider cause and effect in mathematical or in philosophical terms. The law looks at what influences the actions of the parties. Acknowledging that people are often swayed by several considerations, influencing them to varying extents, the law attributes causality to a single one of those considerations, provided it had some substantial rather than negligible effect. As Brennan J said in San Sebastian Pty Ltd v Minister administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340 at 366: "The representation must be a real inducement or one of the real inducements to engage in the conduct which occasions the loss." Where a representation is relevant to the decision in question, and in its nature persuasive to induce the making of that decision, it accords with legal notions of causation to hold that it has a causative effect. And where a respondent, who may be taken to know his own business, has thought it was in his interests to misrepresent the situation in a particular respect, the Court may infer that the misrepresentation was persuasive. These inferences arise from the making of the respondent doing the thing it was calculated to induce him to do. All this is a matter of common sense. It has also been stated in the authorities. In Gould v Vaggelas (1985) 157 CLR 215 at 236 Wilson J said: "If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation." His Honour went on to say that the "inference may be rebutted", but this is to imply that in the absence of rebuttal the conclusion should stand. That it is appropriate to infer the effectiveness of a representation from its materiality is also supported by the joint majority judgment in Krakowski v Eurolynx Pty Ltd (1995) 183 CLR 563 at 578, where Wilson J's statement in Gould v Vaggelas is cited in footnote 28. The same reasoning was adopted by the Full Court of this Court in Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd (1992) 110 ALR 535 at 546-547. The point was strongly made by Stuart-Smith LJ (with whom Farquharson and Evans LJJ agreed) in Commission for the New Towns v Cooper (Great Britain) Ltd [1995] Ch 259 at 282, where his Lordship said: [W]here a false representation is made for the purpose of inducing the other party to adopt a certain course of conduct and the representation is such as to influence a person behaving reasonably to adopt that course of conduct, the court should infer, in the absence of evidence to the contrary, that the representation did have that effect." 40 Plainly, in an application for a civil penalty, the character of the proceedings will influence the nature and quality of the evidence necessary to prove all the elements that will expose the respondent to the penalty. However, even so, the principle just discussed will be relevant in many cases in which contravention of s 401 is alleged. In the present case, where there was a dearth of evidence proving directly or by inference that the misleading material found its way into the hands of employees who ultimately voted and the only employee who gave evidence (including evidence that she saw the material) said nothing about the impact of the material on her, it is difficult to conclude that the SDA has established that the making of the misleading statements caused any employee to vote to approve the agreement. Indeed, the evidence of Ms Stringer to the effect that she questioned the material rather suggests that she understood, or at least apprehended, that the material contained inaccurate statements, which in turn, would have made it difficult to infer that it influenced her vote, whatever her vote may have been. While the trial judge may have erred in assuming that these matters had to be proved by direct evidence (although it is not entirely clear from his Honour's reasons that the matter was approached this way), his Honour's ultimate conclusion was correct. 41 The language of s 401(1)(c) raises a serious doubt as to whether subsection 1(c) has any application to the making of collective agreements. Whilst it makes grammatical sense to speak of an individual making or approving an agreement with his or her employer, it is not linguistically apt to speak of one of a number of individuals voting on whether or not to approve what may become a collective agreement as making or approving that agreement. At most they are expressing an opinion which, depending on the majority view, might or might not lead to the agreement being made or approved. The individual will not make or approve it. 42 In Gould v Vaggelas, the High Court was concerned with fraudulent representations made in the course of business negotiations. The persons to whom the representations were made gave evidence that they relied on the representations when determining to enter into a contract on behalf of a company they controlled. For reasons already given, the employees who voted to approve or not approve the 2007 Agreement did not enter into a contract with Karellas. At the time at which they voted, all that they knew or could have known was that if a majority voted to approve the agreement and the agreement was lodged with the Employment Advocate in the proscribed manner, they would, by force of statute obtain the benefits and undertake the responsibilities provided for in the 2007 Agreement. 43 It is also significant that there was no evidence that any employee other than Ms Stringer had read, much less considered, the two documents that contained the false and misleading statements. In these circumstances it is far more difficult to draw the inference that any of the relevant employees, much less a majority of them, voted to approve the agreement because of the false and misleading representations made in the documents. The necessary factual foundation for the drawing of the inference of fact referred to by Wilson J in Gould v Vaggelas did not and does not exist. 44 Accordingly, we consider that his Honour was correct in holding that the SDA had not established that Karellas was guilty of a contravention of s 401(1) of the Act.

RELIEF UNDER SECTION 409 45 The trial judge refused to make a declaration under s 409(a) of the Act. His Honour declined to do so because neither of the preconditions for the making of such an order, as prescribed in s 412(2) of the Act, had been satisfied. His Honour summarised his reasons as follows (at [115]): "The problem for the applicant and Ms Stringer in particular, in the present case, is that there is simply no evidence of any loss or damage for which monetary damages could be awarded, if otherwise appropriate and available, in her favour or in favour of any of Karellas' other employees. Nor is there any evidence that the approval, making and/or coming into operation of the 2007 Agreement resulted from the contravention by Karellas of s 341(1) of the Act." 46 The SDA contends that his Honour erred by confining "loss or damage", as comprehended by s 412(2)(a) of the Act, to loss or damage of the kind for which monetary damages might be awarded. The SDA submitted that loss of entitlements provided for in the 2003 Agreement was a relevant "loss", notwithstanding the fact that existing employees suffered no financial loss because their pre-existing entitlements, which were not incorporated in the 2007 Agreement, were preserved by a collateral arrangement. Future employees, whose employment would be governed by the 2007 Agreement, were not similarly protected. The SDA also challenged the trial judge's finding that the loss and damage for which it contended had not resulted from the contravention of s 341(1) of the Act. 47 The Court asked counsel for the SDA whether the relevant "loss and damage" about which complaint was made had been particularised either prior to trial or at trial. He advised that this had not been done. The Court granted leave to the SDA to file and serve particulars of such loss and damage. It filed a list of seven particulars. Each was either a reduction in entitlements provided for in the 2003 Agreement or the restriction or removal of rights conferred on employees by the 2003 Agreement. 48 The SDA was concerned to argue that the making of a declaration under s 409(a) would have the legal effect of "reinvigorating" the 2003 Agreement. We understand this to mean that, upon the making of an order under s 409(a) or at a later time fixed by the order (see s 412(1)), the 2003 Agreement will operate to regulate the terms and conditions of employment of those of Karellas' employees to which it has application. The trial judge had held that the 2003 Agreement would not be revived if the 2007 Agreement were declared to be void. The SDA submitted that, if the Full Court were to agree with the trial judge on this point, the SDA would not invite the Court to make a declaration, even if it were persuaded that the trial judge was in error in holding that a declaration should not be made because of the limitations provided for in s 412(2). 49 We are by no means persuaded that the trial judge confined the meaning of "loss and damage" in s 412(2)(a) to loss or damage for which monetary damages could be awarded. His Honour said (at [111]) that it "may well be correct" that "loss or damage" was not so limited, noting (at [112]) that each of the members of the Full Court in Demogogue Pty Ltd v Ramesnsky Pty Ltd (1992) 39 FCR 31 ("Demogogue") had "found that the expression 'loss or damage' where used in s 87 of the Trade Practices Act, and which corresponded in many respects with s 412(2) of the Act in the present case, could include being saddled with an agreement which had been induced by misleading or deceptive conduct." Whether this is correct or not, his Honour's refusal to make an order under s 409(a) was founded, at least in part, upon the view that there was no evidence that any loss or damage that was suffered by any employee resulted from Karellas' contravention of s 341(1) of the Act. This finding, in turn, rested upon the finding that there was no evidence that the false and misleading statements had influenced any employee (much less a majority of employees) to vote to approve the 2007 Agreement. In this regard, it is to be noted that his Honour distinguished Demogogue on the ground that in Demogogue itself, the trial judge had found a causal link between the vendor's misleading and deceptive conduct and the purchasers' entry into a contact. 50 For reasons already given, we consider that his Honour was correct in holding that there was no evidence that would have enabled his Honour to determine that the purported approval and coming into operation of the 2007 Agreement resulted from Karellas' failure to comply with the requirements of s 340(2) of the Act. 51 These matters need not be pursued further because, in our opinion, the trial judge was correct in holding that the making of a declaration under s 409(a) would not result in the 2003 Agreement being revived. As already noted, the SDA does not seek the making of a declaration under s 409(a) if this Court is of the view that the 2003 Agreement will not again become operative. 52 In our view, the provisions of sub-clauses 3(1) and 3(5) of Schedule 7 of the Act make it abundantly clear that, upon the coming into operation of the 2007 Agreement on 1 May 2007, the 2003 Agreement ceased to operate in respect of the employees to whom the 2007 Agreement applied and could never thereafter operate in relation to those employees. Those employees included Ms Stringer, on whose behalf the SDA brought the present proceeding. 53 The SDA suggests that, even if the 2003 Agreement can no longer operate in respect of employees who became subject to the 2007 Agreement on 1 May 2007, it may, nevertheless, operate in relation to employees engaged since 1 May 2007 once the 2007 Agreement is avoided. We do not consider that clause 3 leaves open this theoretical possibility. Clause 3 does not render pre-reform agreements inoperable simply because a new collective agreement comes into force. This is because the new agreement may not apply to all categories of employees covered by the pre-reform agreement. It does, however, render pre-reform agreements inoperative in respect of all existing employees to whom the new agreement applies. Where, as here, both the pre-reform and the new collective agreements cover the same classifications, the pre-reform agreement ceases to have any work to do once the superseding agreement becomes operative. It would be surprising, in these circumstances, if the making of a declaration under s 409(a) had the effect of reviving the pre-reform agreement. Were this to be the effect, the 2003 Agreement would be applicable to employees, in the relevant classifications, who may be engaged after the declaration was made, but will not apply to the employees who had earlier been subject to it. The 2003 Agreement would thereby be rendered applicable to employees (if there are any) who were never previously subject to its terms. In our view, clause 3(5) should be construed as applying to employees who were subject to a superseded pre-reform agreement and to later engaged employees whose work falls within the same classifications as those covered by the new collective agreement.

THE CROSS-APPEAL 54 By its cross-appeal, Karellas contends that the trial judge erred in finding that it breached s 341 of the Act. Karellas submits that such a finding was not open to his Honour in the absence of evidence concerning the effect of the information on the employees. His Honour had regard to the likely effect of the information on employees. We consider that his Honour was correct to do so. An employee who is given false and misleading information that may affect his or her decision on whether to approve an agreement is, by the very provision of that information, denied a reasonable opportunity to decide whether to approve the agreement. That is, because there is information available to the employee which has the capacity to distract him or her on voting on the agreement and from considering its actual effect. A decision that is capable of being affected by false and misleading information is not a decision about approving the agreement, but a decision about extraneous matters not given effect to by the agreement. 55 Karellas also contends that the trial judge should not have found that a breach of s 341 of the Act occurred in the absence of a finding that a breach of s 401 of the Act occurred. This submission is rejected. Section 401 of the Act contains additional elements not dealt with in s 341, including the issue of causation in s 401(1)(c). 56 The cross-appeal further takes issue with his Honour's finding of fact that the relevant employees were deprived of a reasonable opportunity to decide whether to approve the agreement. We reject this submission for the reasons referred to in [54] above. 57 Karellas sought the quashing of the declaration made by the trial judge that the 2007 Agreement was not approved in accordance with s 340(2) of the Act. We agree with his Honour that the agreement was not so approved for the reasons set out above. We consider that it was open to his Honour to make the declaration, and notwithstanding that the SDA's appeal has been dismissed, the trial judge's declaration is significant. As Finkelstein J said in Warramunda Village Inc v Pryde (2002) 116 FCR 58 at [65]: "…While such a judgment does not require a party to do or refrain from doing any act or thing, it is nevertheless an order of the court. And, being an order of the court, a declaratory judgment, whether it be a positive declaration or a negative declaration, will create an estoppel per rem judicatam, that is, it will prevent the parties in any subsequent litigation from disputing or questioning the declaration on the merits. A declaration will also give rise to an issue estoppel and so be conclusive proof of the facts and the law directly or necessarily in issue in the case and actually decided by the court as appears from the judgment as delivered: Marra Developments Ltd v B W Rofe Pty Ltd [1977] 2 NSWLR 616 at 626; Coles v Wood [1981] 1 NSWLR 723 at 727."

DISPOSITION 58 Both the appeal and the cross-appeal should be dismissed. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Moore, Marshall, Tracey

Counsel for the Respondent: P Newall with M Easton

Solicitor for the Respondent: Greenstein Shakenovsky

Workplace Relations Act 1996(Cth)ss 327, 333(b)

Trade Practices Act 1974(Cth)

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