The Australian Workers Union, New South Wales v Construction, Forestry, Mining, and Energy Union, New South Wales

AUSTRALIAN WORKERS' UNION Mr A Hatcher of counsel Instructed by Maurice May & Co

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION LEGAL REPRESENTATIVES: Mr I Latham of counsel Instructed by Ms R Mallia, solicitor

MANILDRA ENERGY PTY LTD (intervenor) Mr J Murphy of counsel Instructed by Australian Business Lawyers

JUDGMENT: - 7 - INDUSTRIAL REALTIONS COMMISSION OF NEW SOUTH WALES Coram: Grayson DP 18 December 2003

The Australian Workers' Union, New South Wales v Construction, Forestry, Mining and Energy Union, New South Wales

Application for orders of demarcation pursuant to s 294 of the Industrial Relations Act 1996

1 This matter proceeded by way of an application for demarcation orders pursuant to s 295 of the Industrial Relations Act 1996 ("the Act").

2 The application is made by the Australian Workers Union, New South Wales ("the AWU") for whom Mr A Hatcher of counsel appeared. It is supported by Manildra Energy Australia Pty Ltd ("the employer") for whom Mr J Murphy of counsel appeared and it is opposed by the Construction, Forestry, Mining and Energy Union ("the CFMEU") for whom Mr I Latham of counsel appeared.

3 The Act relevantly provides as follows: 295(1) [Possible demarcation orders] The demarcation orders that the Commission may make include (but are not limited to) any one or more of the following orders: (a) an order that an industrial organisation of employees is to have the right, to the exclusion of another such organisation or other such organisations, to represent under this Act the industrial interests of a particular class or group of employees who are eligible for member ship of the organisation, (b) an order that an industrial organisation of employees that does not have the right to represent under this Act the industrial interests of a particular class or group of employees is to have that right, (c) an order that an industrial organisation of employees is not to have the right to represent under this Act the industrial interests of a particular class or group of employees who are eligible for membership of the organisation. 295(2) [Alteration of rules in accordance with order] When the Commission makes a demarcation order, the Commission may, after giving each industrial organisation and each State peak council concerned an opportunity to be heard, require the rules of the organisation to be altered in accordance with the demarcation order or a subsequent order of the Commission so as to give effect to the demarcation order.

1. The AWU, New South Wales is to have the right to the exclusion of the Construction, Forestry, Mining and Energy Union (Construction and General Division) NSW Divisional Branch to represent under this Act the industrial interests of Shoalhaven Starches Pty Ltd (SS) employees at its Bomaderry site subject to the Manildra Group of Companies Bomaderry Site Agreement 2000 (the Manildra Agreement) who are eligible for membership of the Australian Workers Union, New South Wales. 2. The CFMEU (Construction and General Division) NSW Divisional Branch is not to have the right to represent under the Act, the industrial interests of SS employees at its Bomaderry site subject to The Manildra Agreement. 3. The rules of the CFMEU (Construction and General Division) NSW Divisional Branch be varied to reflect the exclusion consequent upon order 2 above. 4. The CFMEU (Construction and General Division) NSW Divisional Branch be restrained until further Order from representing under the Act, the industrial interests of SS employees at it's Bomaderry site subject to the Manildra Agreement. 5. Such other order that the Industrial Relations Commission deems appropriate.

5 The grounds on which such orders are sought are as follows:

1. The making of the orders sought by the AWU in this application would maintain rationalised coverage by industrial organisations of employees at the SS Bomaderry site;

2. The making of the orders sought will end the reasonable apprehension of industrial disputation at the SS Bomaderry site over union coverage instigated by the CFMEU (Construction and General Division) NSW Divisional Branch and prevent such actions spreading to other areas of New South Wales;

3. If the orders sought by the applicant are not made, then the likely consequence will be demarcation disputes between the applicant at the SS Bomaderry site where the CFMEU has no maintainable interest;

4. For such other reasons as the Industrial Relations Commission deems appropriate.

6 The above grounds are particularised in this way:

· There are three industrial organisations that presently represent SS employees subject to The Manildra Agreement. Coverage is as follows, the applicant 104 members, the Australian Manufacturing Workers' Union ("the AMWU") 20 members and the Electrical Trades Union (NSW) ("the ETU") 10 members · The respondent has 2 members at the SS Bomaderry site who are not subject to the Manildra Agreement but received benefits under the Manildra Agreement · The applicant has a long and traditional history of Award and Enterprise Agreement coverage, membership and representation at the SS Bomaderry site since it was built over 30 years ago · During the last month, the CFMEU has recruited 12 members of the applicant in the Ethanol Plant at the SS Bomaderry site · The applicant maintains that the CFMEU has no maintainable interest in having these persons or any other of its members subject to their coverage under the Manildra Agreement. · The applicant retains significant support amongst the workers who are the subject of this application · The applicant is of the reasonable view that recruitment of members by the CFMEU from the applicant is an attempt to unreasonably expand and extend its membership to the SS Bomaderry site which will lead to industrial disputation in the form of a demarcation dispute.

7 The matter proceeded to hearing during which, in addition to documentary evidence adduced by the respective parties, the following witnesses were called and cross-examined on affidavits to which they deposed:

· Andrew McConnell Gillespie, Secretary Port Kembla, South Coast and Southern Highlands Branch of the AWU · Juliana Dickinson, ex - Organiser Port Kembla, South Coast and Southern Highlands Branch of the AWU · Brendon Jones, operator employed by the employer at Manildra Bomaderry Plant and AWU delegate at that site · Brian Anthony Hanley, General Manager of Manildra's Bomaderry Plant · Chris Salter Boiler Attendant at Manildra's Bomaderry Plant and CFMEU member having previously belonged to its predecessor industrial organisation, the Federated Engine Drivers and Fireman's Association (FEDFA) · Peter Primmer, South Coast Organiser, CFMEU · Ronald Lynch, Ethanol Operator at Manildra's Bomaderry Plant and one of the newly recruited CFMEU members to which the particulars above refer · Peter Zaboyak, Assistant Secretary CFMEU Construction and General Division (NSW Branch)

8 As is apparent from the foregoing, the AWU application seeks four substantive orders to be made by the Commission. In reality, and as the AWU submitted, only orders (1) and (2) above need to be considered for the purpose of these deliberations. This is because order (3) arises only if demarcation orders are made and only after each industrial organisation and each State peak council concerned have been given the opportunity to be heard (s 295(2) of the Act) and because order (4) which is interim in nature, is no longer pressed.

9 The AWU advances its case on the basis that the CFMEU lacks the constitutional capacity to enrol Manildra employees employed at the ethanol plant at Bomaderry on the NSW South Coast and secondly, that the emerging and continuing presence of the CFMEU at the Bomaderry Plant and the circumstances in which it came to enrol ethanol plant operators would lead the Commission to find that a real risk is posed to the ongoing productivity and efficiency of the operation of the site and to the ongoing historically stable industrial relations environment at the site.

10 By way of background, the Bomaderry Plant was first established as a starch plant in 1970. A glucose plant was opened as an adjunct to the starch plant in 1973 and an industrial alcohol (ethanol) plant commenced operation there in 1992.

11 The Bomaderry Plant receives flour from the flourmills at Gunnedah and Manildra in NSW. Flour arrives by train on a daily basis in Company owned flour wagons. Grain is also brought onto the site by train as a feedstock for ethanol production in addition to the starch which is derived from the flour.

12 The flour is mixed with water in the starch plant and made into a dough and the protein component of the flour, namely gluten, forms a rubbery type compound while the starch stays in liquid form and is separated from the gluten by screening. The gluten is dried and then packaged and sold mainly on the export market to America and other overseas countries. It is used for protein enrichment in bread, made up meats, animal feed or in food products which require additional protein content. Some of the gluten is modified to a higher value added product called protein isolate and is dried and sold for use in made up meat products.

13 The starch, which is produced in the starch plant is sold in liquid form to paper mills in Bomaderry, Sydney and Victoria. The majority of the starch is dried and either sold in bulk to paper mills in Australia or packaged for export overseas. The starch is also used in box manufacturing as well as the production of paper and cardboard.

14 The 'A' grade starch is used on site as a feed stock for the syrups plant, which produces brewer's syrup/glucose, and spray dried glucose for sale to various customers. The brewer's syrup is used as an ingredient for the manufacture of beer and the glucose is used in the manufacture of lollies and chocolates and dried food products.

15 The 'B' grade starch (waste starch) is used as the feedstock for the manufacture of ethanol. The starch is supplemented by grain, which is ground into fine particles to expose the starch component of the grain to enable the efficient fermentation of the starch to take place in the ethanol fermentation plant.

16 Once the mixture of 'B' grade starch from the starch plant and the starch contained in the grain is fermented the liquor is then transferred to the distillery where the ethanol is evaporated, condensed and pumped into liquid storage tanks prior to being pumped into road tankers for distribution to customers. The ethanol is used in a range of products such as fuel, aerosols, methylated spirits and printing inks.

17 The liquid waste from the ethanol plant is sent to a stillage recovery plant which removes some of the non-fermentable solids and dries those solids which are sold as high protein cattle feed, and the remaining liquid is irrigated onto a 1,000 hectare environmental farm where rye grass silage is produced for the local farmers and beef cattle are grazed on the natural pastures.

18 The whole of the operation at the Bomaderry Plant operates 24 hours per day 365 days of the year. In addition to the production units, there is a boiler plant which provides the steam requirement for the site.

19 The Bomaderry Plant produces approximately 90 percent of the glucose used by confectionary manufacturers in Australia, approximately 100 per cent of the brewer's syrup for the brewing industry in New South Wales; approximately 70 per cent of the starch used in the manufacture of paper in Australia and approximately 60 per cent of the starch used in the manufacture of cardboard boxes in Australia.

20 There are 3 corporate entities which make up the Manildra Group of Companies:

· Manildra Energy Australia Pty Ltd which was incorporated on 29 November 1933 · Shoalhaven Starches which was incorporated on 29 November 1939 · Sundyne Pty Ltd which was incorporated on 2 May 1991

21 Since commencing production at the Bomaderry Plant in 1970, Manildra Energy Australia Pty Ltd and its predecessors have employed permanent employees at the plant and on the environmental farm and since 1998/99 Sundyne Pty Ltd have employed casual employees.

22 The terms and conditions of employment of these employees are governed by the Manildra Group of Companies Bomaderry Site Agreement 2000 ("the 2000 Agreement"), which was approved by the Commission on 7 September 2000.

23 The AWU, NSW branch, the AMWU, NSW branch the ETU, NSW branch are the union parties to the 2000 Agreement.

24 The evidence of Mr Hanley, general manager, indicates that there is only one management structure and one overall site manager at the Bomaderry Plant although there are a number of corporate entities and further, that there is an interrelationship and interdependence between the various manufacturing and production facilities. For example, there is one boiler supplying steam to each of the glucose, starch and ethanol production plants. The main raw materials are flour and town water the former of which provides feedstock for the starch and gluten plant which in turn provides starch to the glucose plant and the ethanol plant in the manufacture of products for external sale.

25 As at March 2003, there were 153 full time employees and 19 casuals covered by the 2000 Agreement. The full time employees are broadly categorised as operators, electricians, fitters, general duties and transport workers. There are 98 operators, 37 maintenance staff, 8 irrigation/farm hands, 4 boiler attendants, and 6 general duties and transport workers.

26 The duties of the production operators in all sections include the maintaining of the plant functions and parameters using automated computer control systems. The operators are also required to inspect the plant on a regular basis to ensure that there are no malfunctions occurring with individual items of the plant.

27 They are also required to maintain a high level of housekeeping because products produced on the site are used for both industrial and food grade purposes and therefore food grade standards must be maintained.

28 The computerised control system used by the operators is common to all sections of the plant so that any operator can observe the activities of any section of the plant. However, adjustments to the control parameters can only be made in the section of the plant where the operator is located.

29 The ethanol plant operators are required to run the fermentation, distillation, storage and loadout functions using the computerised control equipment. They are required to maintain a high level of housekeeping and also to clean operating equipment such as heat exchangers as a normal part of their operating function.

30 Some of the ethanol plant operators have transferred from the starch operation and one of them has transferred from maintenance into the ethanol plant as vacancies have occurred. The last such transfer occurred on 19 January 1998. The Bomaderry Plant has a very stable workforce. There is very little turnover of production and maintenance staff, and by all accounts prior to the events giving rise to these proceedings, there has been a very stable industrial relations environment.

31 Of the total number of full time production operating employees at the Bomaderry site and until 12 ethanol plant employees were recruited by the CFMEU in late 2002, all but two of those employees belonged to the AWU. Mr Salter, a boiler attendant at the Bomaderry Plant, deposed to membership of the CFMEU for the total period of his employment with Manildra since 1989. Mr Salter had been a member of the Federated Engine Drivers and Fireman's Association ("the FEDFA") prior to the amalgamation of that organisation with the CFMEU. He said another boiler attendant at Bomaderry was also a CFMEU member and that the CFMEU had satisfactorily represented the industrial interests of both of them over the years. Although Mr Salter said he had not at any time sought the assistance of the AWU it seems clear enough from the evidence of Mr Hanley, for example, that as a matter of practicality the AWU had represented boiler attendants in enterprise negotiations and meetings with management from time to time. Indeed the other two boiler attendants at Bomaderry are AWU members.

32 The events leading to the resignation from the AWU of the ethanol plant operators and to those persons becoming members of the CFMEU may be broadly described as stemming from a disagreement between ethanol plant operators and other operators as to the relative value of each group within a reviewed and expanded operator classification structure which had been negotiated throughout 2001/2002. The employer, it seems had adopted a bargaining position whereby it limited the extent of pay increases for operators generally to 2% of the total annual payroll for operators, such increases being referrable to the expanded operator classification structure.

33 This was in addition to a 12% general pay increase which had been negotiated in the context of the 2000 Agreement. Various meetings of AWU operator members were held in the course of which various proposals as to how the rates of pay within the new operator classification structure might be struck having regard to the need to keep the overall cost of consequent pay increases within 2% of total operator payroll agreed to by management. In June 2001 a mass meeting of operators voted to accept a proposal whereby broadly stated, ethanol plant operators would receive an hourly rate of $16.26 and starch plant operators would receive an hourly rate of $15.10. A subsequent mass meeting of operators was convened in September 2001 which voted to rescind the earlier decision and to accept a revised proposal whereby ethanol plant operators would receive $15.95 per hour and Starch Plant operators $15.14 per hour.

34 The ethanol operators considered themselves hard done by and in November 2002, more than a year later, resigned from the AWU and joined the CFMEU in the interests of promoting their cause independently of or separately from other operators at the Bomaderry site. For its part, the AWU by its elected delegate and various officials who were called, asserts that the decision in relation to the new classification rates for operators was made by properly convened meetings of operators across the plant and had regard to the interests of operators generally rather than the sectional interests of one group of operators. Regard was also had to the fact that variations in the complexity of work carried out by operators in the various plants (including the ethanol plants) were reflected in and compensated by the levels to which those operators were appointed within the new classification structure.

35 Ethanol plant operators, for example, were all appointed at Level 5 whereas starch plant operators were appointed at Level 3 and 4. The proposal put by the employer and initially supported by AWU members would have resulted in the higher levels receiving more substantial increases than the lower levels within the new classification structure. The decision ultimately taken by AWU members was directed towards providing a more equitable distribution of the available funds across all levels within the new classification structure.

36 There was some contest in the evidence as to whether the AWU delegate, a starch plant operator, was representing his own sectional interests to the exclusion of others in the processes described above but I do not consider, particularly in the light of his denials in that regard, that there is any objective basis to so conclude.

37 In that regard, it is noted that the evidence revealed firstly, that the meeting of operators which approved the initial proposal was poorly attended and arguably unrepresentative of the general membership view and secondly, even with the revised proposal ethanol plant operators at Level 5 in the classification structure still received percentage increases considerably higher than Level 3 operators. It seems to me on an objective view of things to be an unsurprising approach by operators or perhaps the majority of them, to strive for an outcome which most equitably distributed the available quantum of increase or, to put it another way, which "divided the cake" in a manner most acceptable to the greatest number.

38 Such dynamics inevitably carry with them the risk that there will be varying degrees of satisfaction and dissatisfaction among those involved in the collective decision making process but they are nonetheless as they should be, a normal and generally acceptable feature of that process.

39 It seems, however, that ethanol plant operators formed a view that their industrial interests could be best advanced by separate representation and although they did not join the CFMEU until about November 2002, the CFMEU served notice on the employer on 14 October 2002 under s 170 MI(2) of the Workplace Relations Act 1996 (Cth) ("the Federal Act") purporting to initiate a bargaining period for the purpose of securing an agreement with the employer. The notice indicated an intention on the part of the CFMEU to have any such agreement certified under the Federal Act. A document outlining the terms of the proposed agreement was attached to the notice.

40 The notice was followed up a week later by written advice from the CFMEU that industrial action in the form of an indefinite strike of all employees would commence on 29 October 2003 in support of the CFMEU claim. No adequate explanation for such conduct was offered when the matter was canvassed with CFMEU witnesses in cross examination and Mr Primmer, the local CFMEU official, was adamant that he did not personally request such written advice to be sent to the employer. Further, there were only the 2 boiler attendants to which earlier reference was made who were then members of the CFMEU and there had been no consultation with or requests by Manildra employees prior to the notices being sent. Clearly though, the written threat of indefinite strike action by all its employees was a matter which Manildra was entitled as an employer to view most seriously indeed, and absent sufficient or satisfactory explanation on the part of the CFMEU, it is a matter in respect of which the Commission is asked to draw certain inferences adverse to the CFMEU interests in these proceedings.

41 The evidence as to the circumstances in which the ethanol plant operators were enrolled as members demonstrates, as I am disposed, a degree of uncertainly or obscurity in the minds of the CFMEU officials directly involved in the process, as to whether operators could or should be recruited and if so, on what basis within the CFMEU constitution rule. Mr Primmer, for example, was of the view that freedom of association laws enable the CFMEU to enrol virtually any employee regardless of trade or calling or industry in which they are employed. He did not examine the CFMEU constitution rule although he did check with CFMEU Assistant Secretary Mr Zaboyak as to whether membership applications should be accepted from the Manildra operators. Mr Zaboyak said he initially refused Mr Primmer's request to recruit the operators, then about a fortnight later he told Mr Primmer there was constitutional coverage but the operators should not be recruited, and then later still, that the operators could be recruited. Mr Zaboyak admitted that he had not given Mr Primmer approval to recruit the operators by reference to the CFMEU constitution rule (with which he had no particular familiarity) or on the advice of other CFMEU officials who may have such familiarity.

42 An application for approval of the Manildra Group of Companies Bomaderry Site Agreement 2003 ("the 2003 Agreement") has been filed in the Commission (Matter no IRC 03/2302) and adjourned pending the outcome of these proceedings. Commendably, the significant benefits of the 2003 Agreement have in the interim been extended to Manildra employees from the date of expiry of the 2000 Agreement (viz, 31 December 2002) and it is the stated wish of the CFMEU to become a signatory to the 2003 Agreement. This is opposed by the AWU, AMWU, ETU and Manildra as the present signatories.

43 Be that as it may, the CFMEU unsuccessfully attempted to bargain with Manildra initially in support of the claim it filed in October 2002 and then later, as part of the single bargaining unit comprising the AWU, the AMWU and the ETU. Notably, the claim filed by the CFMEU made no reference to ethanol plant operators whereas the 2003 Agreement negotiated by the unions comprising the single bargaining unit not only expressly provides for ethanol plant operator classifications but also commits the parties to a review of the new operator classification structure which, as earlier observed, was implemented in September 2001.

44 Mr Hatcher for the AWU argued that if the CFMEU is permitted to retain rights of representation at Manildra into the future, it is likely to have implications which are detrimental to the stable and progressive industrial relations thus far applying at the Bomaderry site.

45 This is so Mr Hatcher submitted because among other things:

· The ethanol plant operators want separate negotiations (through the CFMEU) for their wages, thus endangering the continued existence of the single bargaining unit;

· The ethanol plant operators want to achieve a separate classification structure and pay rates, thus endangering the integrated classification structure and progress towards multi-skilling and flexibility as between different parts of the Manildra operation; · The ethanol plant operators see themselves as having more in common with plant operators in the oil industry rather than those in the starch plant at Manildra, and believe that wages and conditions applying in the oil industry ought to be used as a guide for the setting of their wages and conditions. This endangers proper enterprise bargaining at the site, and raises the prosects of flow-ons from the oil industry being sought;

· In the context of the above, Mr Hanley, Manildra General Manager, quite properly expressed a concern about negotiating enterprise agreements where there are conflicting or competing interests or divisions amongst the employees; · If there were any AWU members amongst the ethanol plant operators in the future that would cause difficulties, which could be manifested in industrial actions being taken, including industrial action to force all ethanol plant operators into the CFMEU; · It was accepted that the mere fact of having two unions covering plant operators had the potential to cause industrial disruption and the loss of production; · The CFMEU will not rule out recruiting in other areas of the Manildra plant, and will sign up any other employees that approach it. This raises the prospect of further spread of the demarcation dispute and ongoing difficulties between the AWU and the CFMEU; · There are clear possibilities for disruption if CFMEU members move into AWU parts of the plant, or vice versa.

46 Moreover and as to coverage, it is submitted by Mr Hatcher that there is no constitutional capacity which would permit enrolment by the CFMEU of the Manildra employees concerned and that the part of the CFMEU rules said to demonstrate such capacity falls well short of the mark in that regard.

47 The CFMEU, by their national industrial officer Mr Maxwell, relies on clause (F) of the rules of the NSW Branch of the CFMEU which provides as follows: (F) Without limiting the generality of the following and without being limited thereby the Union shall also consist of: (a) an unlimited number of classes of engine drivers (including operators of rear side and/or bottom dumpers on construction work), firemen, crane drivers, dynamo attendants, mobile crane drivers, forklift drivers, tow motor drivers or attendants, greasers, cleaners, trimmers and any other workers assisting in and about the work incidental to engine, boiler or machinery and all operators and trainees howsoever called employed by Shell Refining (Australia) Pty Limited at its Clyde Refinery and Gore Bay terminal or any other site where these installations maybe relocated in the future.

48 Mr Maxwell, who was not required for cross-examination said: This clause originated from the old Federated and Engine Drivers and Fireman's Association ("FEDFA") coverage. Traditionally engine drivers and operators controlled machinery manually through levers and the like. As technology developed much of this is now done by the operation of a computerised system. Such operators remained covered by the FEDFA and then the CFMEU. The FEDFA amalgamated with the CFMEU (NSW Branch) in 1995. The FEDFA coverage has been recognised to cover a broad range of classifications including the work of control room operators and shipload operators. The FEDFA coverage extended to a myriad of industries, including all kinds of manufacturing, power generation and construction.

49 Mr Hatcher contended that the part of the CFMEU (NSW Branch) rules identified by Mr Maxwell does not sustain CFMEU coverage and that in particular the words "engine driver" are not apt to describe the work of the ethanol plant operators: the ethanol plant is not an "engine", as that term is industrially understood, nor do the operators "drive" the ethanol plant. The wide interpretation that the CFMEU attempts to place on the phrase "engine driver" would, if taken to its logical extreme, mean that the CFMEU could cover operators of any mechanical contrivance at all, including workers in almost any manufacturing process (eg. food, textiles, clothing and footwear), drivers of any buses, trucks, trains, ships captains and aircraft pilots and computer operators (thus encompassing most clerical occupations). This is simply ludicrous, and it demonstrates that the CFMEU's interpretation of its rule cannot be correct.

50 As Mr Murphy for the employer correctly submitted, however, the part of the CFMEU (NSW Branch) rules relied upon to establish coverage of the ethanol plant operators at Manildra also makes the following express provision which was not cited by Mr Maxwell and which would appear relevant to the issue of coverage presently before the Commission: Provided that, nothing in this sub-rule shall render eligible to join the Union any person employed:

1. on a building or structure which building or structure is for the purpose of housing mechanical or electrical plant on a civil or mechanical engineering site.

2. In the mining or exploration or hydrocarbons industries

51 Mr Murphy points to the fact that ethanol is a hydrocarbon and further, that the decisions cited by Mr Maxwell: Re Coal Loaders Case (1992) 5 CAR 278; Re SCR v CFMEU Print Q6689; Sydney Coal Lumpers v FEDFA (1991) 38 IR 265; CFMEU v A Tech, Print N6421; Re FEDFA [1958] AR 689; FEDFA v MBA, Print F4093; Re Screte, Print P3042; Coldham and Others, Ex parte AWU (1984) 56 ALR 149, by and large involve consideration of the CFMEU's federal constitution rule which may have some relevance to the federal awards cited by Mr Maxwell to the extent that those awards cover panel operators but, which can have no effect on the constitutional capacity of the state registered CFMEU, which is the subject of these proceedings.

52 Mr Murphy further argues after analysing the industrial instruments cited by Mr Maxwell that the existence of particular classifications in various consent awards and industrial agreements to which the CFMEU is a party, or one of the union parties, especially in circumstances such as this case where no attempt has been made to compare the work of those classifications with the work of Manildra's employees, does not and cannot clothe the CFMEU with constitutional capacity to cover operators at Manildra. This is especially so when it is clear that, in the examples cited in the Maxwell affidavit, the CFMEU's constitutional coverage (where it does have such coverage) is derived from parts of its constitution rule other than that part upon which it relies in this case.

53 Nor, it is submitted by Mr Hatcher, does the CFMEU's party status to various consent awards to which Mr Maxwell points, amount to any determination the CFMEU necessarily has constitutional capacity to enrol any or all persons covered by those awards.

54 Mr Hatcher submitted, and I accept in respect of the principles governing demarcation issues, that whilst s 295 of the Act invests the Commission with a broad and general discretion, it is a discretion which is to be exercised in accordance with established and known industrial principles as laid down by the authorities (NUW v TWU (1998) 84 IR 360 at 365). Those principles have been recently summarised by Walton J, Vice-President in Re AWU (2002) 118 IR 1 at [349]-[389]. In that case Walton J quoted with approval a decision of Boland J in Re Public Hospital Employees Skilled Trades (State) Award [2001] NSWIRComm 4 who identified a number of factors which may be relevant in the determination of a demarcation question under the Act. Those factors are as follows:

· the constitutions of the competing unions; · the history of the industrial coverage and representation; · the history of the award coverage and representation; · the wishes of employees affected; · the attitude of the employer; · the state of industrial relations; · the issue of multiple union coverage; · the impact of the demarcation question on the productivity and efficiency of an employer or industry; and · the industrial behaviour of affected industrial organisations

55 In terms of the wishes of employees affected, Mr Hatcher submitted, and I accept to the exclusion of propositions to the contrary, that two key principles emerge from a consideration of the way in which this issue has been dealt with in the decisions of the Commission and its predecessors. Firstly, the issue of employee preference can never be decisive and secondly, the Commission is entitled to look behind any expressed views as to preference to see the reasons for those views and to examine whether there is any objective basis for them (Re Health and Research Employees' Association of Australia, NSW Branch v University of New England [1984] AR 623 at 626; Public Service Association (NSW) v Australia Workers Union (NSW) (1990) 36 IR 221 at 223/4; FIA v TWU (1994) 78 IR 123 at 127/8; NUW v TWU at 408).

56 The following passage from Sweeney J's judgment in the HREA case is said to be particularly apposite to the consideration of employee preference: It seems to me that from time to time every trade union will have members or groups of members who disagree with some decision or policy of the union. Normally such matters can be and are satisfactorily resolved within the union in accordance with the majority vote of the members concerned. Occasionally, however, a group of disaffected members may seek to resign from the union that has traditionally covered and represented their field of employment and seek to join and be represented by some different trade union. It is often submitted in such circumstances, and is submitted in this case, that such members have exercised "a free choice" and have "voted with their feet". In my opinion however it remains in the long term interests of good industrial relations to avoid competition for membership where practicable and to have these disagreements and disaffections resolved according to democratic processes within the union that has traditionally covered and represented the field of employment.

57 Mr Murphy for the employer supported the AWU submissions and in so doing, emphasised the consistent approach of the Commission to the effect that dissatisfaction on the part of a group of employees with previous industrial representation is not decisive of demarcation disputes. Mr Murphy referred to the decision of the former Commission in Re Australian Workers Union (1983) 4 IR 404 at 413 as follows: Normally we would be prepared to accord substantial weight to any freely held views of the body of employees affected. There are substantial pragmatic reasons why this should be so. We take this aspect into account but with the very clear reservations, earlier expressed, in mind. One or two aspects were suggested in the evidence as influencing the choice of employees. They are neither explanatory nor compelling. We think that both unions are to be regarded as capable and likely to cater adequately for the interests of the employees, with no elements of substance to choose one against the other, if such a choice were the only criterion. This is something we are satisfied the employees will, in a reasonable and common sense way, accept whatever the final outcome of these applications.

58 Mr Murphy referred to other decisions of the Commission and its predecessors where such an approach was followed (see for example, Federated Ironworkers Association of Australia, NSW Division v Transport Workers Union of Australia, NSW Branch (1994) 78 IR 123 at 128. He further cited a passage from Public Service Association (NSW) v Australian Workers Union (NSW) (the Toll Collectors Case) (1990) 36 IR 221 in which the PSA members concerned had expressed a desire to be represented by the AWU after many years of traditional coverage by the former union. In finding in favour of the PSA in that case, Bauer J said at 225: Further, the principles of the Industrial Commission in a number of judgments has set out that a strong case is needed before any entry of a union into a field already covered would be allowed. Reference was made by Mr Wright to Health and Research Employees Association of Australia, NSW Branch v University of New England (1984) 8 IR 356 at 359; Public Service Association of NSW v Federated Clerks Union of Australia, NSW Branch [1954] AR NSW 224 at 252-3; Australian Workers Union v Federated Miscellaneous Workers Union (1968) AR (NSW) 56 at 72 and Re Federated Miscellaneous Workers Union [1968] AR (NSW) 73, as supporting those industrial principles.

59 In my opinion, the argument in favour of such an approach has even more force in a case such as this where it is clear that the apparent dissatisfaction with the AWU amongst the ethanol plant operators is entirely motivated by sectional interest against a background where the evidence makes it clear that, as a result of the salary scale restructure in 2001, the ethanol plant operators, despite their dissatisfaction, received the lion's share of the "cake".

· That there is no entity called the CFMEU (Construction and General Division) NSW Divisional Branch as named in the AWU application and thus the Commission has no power to make the order/s sought. · That the Manildra Agreement purports to bind an employer entity known as Shoalhaven Starches Pty Ltd when in fact, the employing entity in respect of the Manildra Group's Bomaderry Site is a company called Manildra Energy Australia Pty Ltd and thus the Commission has no power to make the order/s sought. · That in the alternative, the Commission should not exercise its powers to make the order/s sought. · That the Commission should recommend the maintenance of the status quo; the formalisation of the site agreement and the processes for negotiating it and the right to return to the Commission if conflict breaks out.

61 Mr Latham submitted that the existence of a CFMEU (Construction and General Division) Branch within the federal CFMEU does not render the state organisation liable to orders of this Commission as it is clear since the High Court's pronouncements in McJannet v White (1995) 184 CLR 620 at 641 that the federal organisation is a different legal entity to the state organisation.

62 Mr Latham submitted that the AWU should not be permitted by way of amendment, to correct the error, which is a substantial error and not merely a drafting error.

63 In the alternative, Mr Latham submitted that there is no necessity for a finding as to constitutional capacity on the part of the CFMEU (see Public Service Association Professional Officers' Amalgamated Union of New South Wales v the Federated Municipal and Shire Council Employees Union of Australia, New South Wales Division [1999] NSWIRComm 394 (2 September 1999) unreported decision of Sams DP and Re AWU (2002) 118 IR 102.

64 Mr Latham cited a passage in Re AWU where, after a comprehensive review of the authorities and the legislation his Honour Walton J, Vice-President observed at [397]: It follows from an examination of the provisions of s 295(1) and the aforementioned authorities that the constitutional coverage of an industrial organisation of employees is not an essential pre requisite to, or a factor which may be determinative of a demarcation question or the making of demarcation orders pursuant to ss 294 and 295 of the 1996 Act. The matter may be more of less significant in proceedings depending on the facts and circumstances of a particular case. This is a matter for the discretion of the Commission. 65 I note in that case that Walton J, Vice-President found it unnecessary to determine the scope of the AMWU rules and approached the determination of the matters before him as if the AMWU had constitutional coverage for the entirety of the disputed areas in question. I consider this matter to be amenable to such an approach given, as was also observed in Re AWU at [400], the issue of constitutional coverage would not in any event, be determinative of the application. In saying that and without expressing a concluded view, it seems to me on the evidence presented that the proposition for which the AWU and Manildra contend as to constitutional coverage of the CFMEU may not be completely devoid of merit. A further factor against determining the question, however, lies in the relatively narrow evidentiary scope, or as Mr Latham puts it, the skeletal nature of the AWU argument, which when coupled with the non-determinative character of such a finding, suggests not only an absence of necessity but also a certain desirability about the question remaining at large. The AWU accepts and properly so, that it may not ultimately be necessary to determine the coverage issue.

66 As to the proposition that there is no entity called the CFMEU (Construction and General Division) NSW Divisional Branch against which the orders filed are sought, the AWU argued with considerable persuasive force that the proceedings have gone forward on the basis that there is no practical distinction between the CFMEU as named in the application and the CFMEU as registered under the Act. The conduct of the CFMEU throughout the proceedings clearly demonstrated this and when one looks at the multiplicity of titles given to the CFMEU by those representing it, and giving evidence on its behalf, it is apparent that no point in that regard was contemplated and nor should it be taken now as I am disposed. I agree with, although do not recite, Mr Hatcher's submissions in reply in that regard in concluding that this is a simple case of misdescription of the respondent CFMEU which has no substantive effect. This is particularly so when the CFMEU, as registered under the Act, has appeared in the proceedings and been fully heard.

67 As to the second matter raised by Mr Latham going to the proper identity of the employer, I again agree with Mr Hatcher's submission in reply in that it is clear that the 2000 Agreement is the Agreement under which the relevant employees at Manildra are, as a matter of fact, remunerated. Whether as a matter of law the 2000 Agreement applies to them by reason of the misdescription of the employer is another matter. Given the purposive construction usually given to industrial instruments (see eg, Perisher Blue v Australian Workers' Union (1999) 91 IR 274 at 283-4), it should not be assumed that this misdescription robs the 2000 Agreement of its intended effect.

68 It may be observed, incidentally, that the 2003 Agreement contains the same misdescription of the employer as the 2000 Agreement. On the CFMEU's submission it can apply to no-one. Yet the CFMEU has persistently sought to become a party to it on the basis that they have members covered by it, including before the Commission. Mr Hatcher submitted that the CFMEU should not be allowed to approbate and reprobate in this fashion.

69 In each of these areas of misdescription, the Commission is asked by the AWU to allow appropriate modification to the form of orders sought and to do so, having regard among other things, to its overriding obligation to act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms (s 163(1)(c) of the Act).

70 I am of the view having carefully considered the facts and matters submitted that there is a compelling case in favour of the AWU application. There can be no doubt on the evidence that industrial relations at Manildra's Bomaderry site were harmonious and positive prior to the CFMEU intervention in later 2002 and that demonstrable productivity and efficiency benefits to the employer flowed therefrom. Similarly, there were steadily improving remuneration and other conditions of employment which were achieved by employees including, as the evidence indicated, the disappearance of previously existing demarcation issues between the various sections on the site and the absence of any industrial action in at least the last 11 years.

71 The AWU, together with the AMWU and the ETU have formed a highly effective single bargaining unit which has negotiated a series of enterprise-specific agreements in 1989, 1994, 1997, 2000 and 2003 which have, as Mr Hatcher submitted, comprehensively regulated conditions of employment at the site and generally speaking, delivered regular and progressive improvements in pay and conditions for all employees as well as measures directed at improving productivity, efficiency, flexibility, co-operation and workplace safety. The major industrial initiative of multi-skilling and flexibility is presently in the early stages of development between the bargaining parties and the parties are expressly committed in the 2003 Agreement to the review of operators classification structures (including ethanol plant operators) with a view to implementing new classification structures which recognise the skills of the employees concerned and which meet the needs of the company.

72 I have little hesitation in saying to those ethanol plant operators who have embarked upon a course of separate industrial representation, that their overall industrial interests would be well served by rejoining the AWU and actively participating in the bargaining process in conjunction with fellow employees and unionists at the Bomaderry site. I note the AWU warrants, in any event, that it will continue along with the trade based unions in the single bargaining unit, to represent the interests of all employees at the site.

73 I am well satisfied, as the AWU and Manildra submitted, that separate representation of ethanol plant operators has implications for potential detriment to the progressive industrial relations arrangements achieved to date at the Bomaderry site and in that regard, I find the submissions of Mr Hatcher as to future implications of CFMEU representation to be persuasive.

74 The AWU in my opinion, has made a compelling case for the Commission to exercise its discretion in this matter and I grant the application accordingly. In so doing, I make the amended orders proposed by the AWU which differ from those set in the application and which attend to the technical misdescription of the CFMEU and the employing entity at the Bomaderry site.

75 The orders of the Commission under s 295(1) of the Act are as follows:

1. The Australian Workers Union (New South Wales Branch), is to have the right to the exclusion of the Construction, Forestry, Mining and Energy Union, (New South Wales Branch) to represent under this Act the industrial interests of Manildra Energy Australia Pty Limited ("ME") employees at its Bomaderry site, who, at the date of the making of this order, are remunerated under the Manildra Group of Companies Bomaderry Site Agreement 2000 ("The Manildra Agreement") and who are eligible for membership of the Australian Workers Union, New South Wales.

2. The Construction, Forestry, Mining and Energy Union (New South Wales Branch) is not to have the right to represent under the Act the industrial interests of ME employees at Bomaderry who, at the date of the making of this order, are remunerated under The Manildra Agreement.

3. The above orders shall take effect from the date of filing of the application in these proceedings.

76 The matter will be listed at 9.45am on 17 February 2004 for directions as to further hearing in respect of alteration to the CFMEU rules under s 295(2) of the Act.

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