(2021) 308 IR 244 and Transport Workers' Union of Australia v Qantas Airways Ltd (No 4) [2021] FCA 1602
Source
Original judgment source is linked above.
Catchwords
(2021) 308 IR 244 and Transport Workers' Union of Australia v Qantas Airways Ltd (No 4) [2021] FCA 1602
Judgment (63 paragraphs)
[1]
Acts Interpretation Act 1901 (Cth) s 33(2A)
Legislation: Fair Work Act 2009 (Cth) ss 340(1)(b), 341, 346, 361(1), 415, 417, 437, 438, 443, 449, 459, 545, 545(1), 545(2), 545(2)(b), 546
Federal Court of Australia Act 1976 (Cth) Pts IVA, VB, ss 33ZB, 37M(1), 37N(1), 37N(2), s 37P(2)
Trade Practices Act 1974 (Cth) s 82
[2]
Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 221 CLR 568
Ashby v Slipper [2014] FCAFC 15; (2014) 219 FCR 322
Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) 262 CLR 157
Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333; (2011) 193 FCR 526
Australian Workers' Union v CBI Constructors Pty Ltd [2016] FCA 745; (2016) 261 IR 215
Barnes v Hay (1988) 12 NSWLR 337
Bartlett v Australia & New Zealand Banking Group Ltd [2016] NSWCA 30; (2016) 92 NSWLR 639
Berry v CCL Secure Pty Ltd 2020 HCA 17; (2020) 271 CLR 151
Browne v Dunn (1893) 6 R 67
Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17; (2024) 98 ALJR 719
Construction, Forestry, Maritime, Mining and Energy Union v Fremantle Port Authority [2024] FCA 848
Construction, Forestry, Mining and Energy Union v Clermont Coal Pty Ltd [2015] FCA 1014; (2015) 253 IR 166
Dafallah v Fair Work Commission [2014] FCA 328; (2014) 225 FCR 559
Elliott v Kodak Australasia Pty Ltd [2001] FCA 1804; (2001) 129 IR 251
Elliott-Carde v McDonald's Australia Limited (Stay Application) [2023] FCA 1210; (2023) 301 FCR 84
Elliott-Carde v McDonald's Australia Limited [2023] FCAFC 162; (2023) 301 FCR 1
Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union (the Hutchison Ports Appeal) [2019] FCAFC 69
Fair Work Ombudsman v Maritime Union of Australia (No 2) [2015] FCA 814; (2015) 252 IR 101
Henville v Walker [2001] HCA 52; (2001) 206 CLR 459
Hotson v East Berkshire Area Health Authority [1987] AC 750
Hughes v Hill [2020] FCAFC 126; (2020) 277 FCR 511
I & L Securities Pty Limited v HTW Valuers [2002] HCA 41; (2002) 210 CLR 109
Kumova v Davison (No 2) [2023] FCA 1
Lehrmann v Network Ten Pty Limited (Trial Judgment) [2024] FCA 369
Lewis v Australian Capital Territory [2020] HCA 26; (2020) 271 CLR 192
Cases cited: Lloyd v Belconnen Lakeview Pty Ltd [2019] FCA 2177; (2019) 377 ALR 234
Malec v JC Hutton Pty Ltd (1990) 169 CLR 638
Maritime Union of Australia v Fair Work Ombudsman [2015] FCAFC 120
Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494
Martinez v Griffiths [2019] NSWCA 310
Medlin v State Government Insurance Commission (1995) 182 CLR 1
Murphy v Overton Investments Pty Limited [2004] HCA 3; (2004) 216 CLR 388
O'Brien v Dunsdon (1965) 39 ALJR 78
Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union (No 3) [2021] FCA 348
Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union (No 4) [2021] FCA 1481
Precision Plastics Pty Limited v Demir (1975) 132 CLR 362
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355
Qantas Airways Limited v Transport Workers' Union of Australia [2022] FCAFC 71; (2022) 292 FCR 34
Qantas Airways Limited v Transport Workers' Union of Australia [2023] HCA 27; (2023) 412 ALR 134
Retail and Fast Food Workers Union Incorporated v Tantex Holdings Pty Ltd [2020] FCA 1258
Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82; (2014) 223 FCR 334
Saw v Seven Network (Operations) Ltd [2024] FCA 1210
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
Shizas v Commissioner of Police [2017] FCA 61
Todorovic v Waller (1981) 150 CLR 402
Transport Workers' Union of Australia v Qantas Airways Limited [2021] FCA 873; (2021) 308 IR 244
Transport Workers' Union of Australia v Qantas Airways Limited (No 2) [2024] FCA 1012; (2021) 308 IR 333
Transport Workers' Union of Australia v Qantas Airways Limited (Order to Recall Witnesses) [2024] FCA 572
Transport Workers' Union of Australia v Qantas Airways Ltd (No 4) [2021] FCA 1602; (2021) 312 IR 133
Travel Compensation Fund v Tambree [2005] HCA 69; (2005) 224 CLR 627
Westpac Banking Corp v Forum Finance Pty Ltd [2021] FCA 807
Wong v National Australia Bank Limited [2021] FCA 671
[3]
Hamer, D "'Chance would be a fine thing': Proof of causation and quantum in an unpredictable world" (1999) 23(3) Melbourne University Law Review 557
Moore, M "Causation in the Law" in Edward N Zalta (ed), Stanford Encyclopedia of Philosophy (Stanford University, Winter 2019)
[4]
National Practice Area: Employment and Industrial Relations
[5]
Date of hearing: 18-22 March, 20 May, 29-30 May 2024
[6]
Counsel for the applicant: Mr M Gibian SC with Mr P Boncardo
[7]
Counsel for the respondent: Mr R Dalton KC with Mr M Follett SC and Mr N Burmeister
[8]
Solicitor for the respondent: Herbert Smith Freehills
[9]
BETWEEN: TRANSPORT WORKERS' UNION OF AUSTRALIA
Applicant
QANTAS AIRWAYS LIMITED ACN 009 661 901
AND: First Respondent
QANTAS GROUND SERVICES PTY LTD
Second Respondent
[10]
order made by: LEE J
DATE OF ORDER: 21 October 2024
[11]
THE COURT ORDERS THAT:
Pursuant to s 37P(2) of the Federal Court of Australia Act 1976 (Cth), counsel for the parties confer in person at a convenient place and time in an attempt to calculate the amount of statutory compensation payable to each of the test case individuals in conformity with these reasons.
The conferral required by Order 1 take place on or by 4 November 2024 and, on or by 8 November 2024, the parties are to provide agreed minutes of order or, alternatively, competing minutes of order together with any submissions in support of those contended orders to the Associate to Justice Lee.
The proceeding be listed for further hearing and entry of orders at 9:30am on 15 November 2024.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
LEE J:
[12]
A INTRODUCTION
1 In Transport Workers' Union of Australia v Qantas Airways Limited [2021] FCA 873; (2021) 308 IR 244 (LJ), I found that on 30 November 2020, the Chief Executive Officer (CEO) of Qantas Domestic and International, Mr Andrew David, decided, during the COVID-19 pandemic, to "outsource" Qantas Airways Ltd (Qantas Airways) ground handling operations work at ten Australian airports to several third-party ground handling companies (outsourcing decision).
2 Before the outsourcing decision, the ground handling operations had been undertaken by employees of Qantas Airways and its subsidiary Qantas Ground Services Pty Ltd (QGS and together Qantas), many of whom were members of the Transport Workers' Union of Australia (Union). The implementation of the outsourcing decision meant that the vast majority of the Qantas-employed ground handlers were sacked.
3 The Union challenged the outsourcing decision alleging Qantas had taken adverse action preventing Qantas employees who worked in its ground handling business from exercising their workplace rights to participate in a protected action ballot, organise and engage in protected industrial action and participate in enterprise bargaining in 2021. To this end, at the time the outsourcing decision was made, the affected employees were prohibited by s 417 of the Fair Work Act 2009 (Cth) (FWA) from organising or engaging in protected industrial action under s 415 of the FWA because one of two enterprise agreements had not passed its nominal expiry date. The agreement covering the affected Qantas employees commenced operation on 27 December 2018 and had a nominal expiry date of 31 December 2020, and the agreement covering the affected QGS employees commenced operation on 17 February 2017 and had a nominal expiry date of 1 September 2019. While the nominal expiry date of the QGS employees' agreement had passed, protected industrial action was not possible because the necessary procedural steps to enable protected industrial action to occur had not been completed at the time of the outsourcing decision: see ss 437, 438, 443, 449 and 459 of the FWA.
4 On 30 July 2021, I delivered the LJ, determining that the outsourcing decision made by Qantas Airways was "adverse action" against Qantas employees in contravention of s 340(1)(b) of the FWA, which provides that a person must not take adverse action against another person to prevent the exercise of a workplace right by the other person. Here, the relevant "workplace right" (as that term is defined under s 341 of the FWA) was the ability for the employees to organise and engage in protected industrial action and participate in bargaining in 2021 (Relevant Prohibited Reason).
5 I granted declaratory relief on 25 August 2021 in Transport Workers' Union of Australia v Qantas Airways Limited (No 2) [2024] FCA 1012; (2021) 308 IR 333 (DJ).
6 The Union then filed Points of Claim identifying the consequential relief sought. By prayers [1]-[5], the Union sought general reinstatement under s 545 of the FWA, and in October 2021, I ordered that the relief claimed in relation to general reinstatement be determined separately. Just before Christmas 2021, I dismissed the Union's claim seeking this relief: Transport Workers' Union of Australia v Qantas Airways Ltd (No 4) [2021] FCA 1602; (2021) 312 IR 133 (RJ).
7 The declaration and orders reflecting my findings in relation to liability, and the dismissal of the reinstatement application were appealed to the Full Court, and I adjourned the balance of the proceedings for a case management hearing on a date to be fixed.
8 Appeals were pursued by Qantas and the Union on the following grounds, as helpfully summarised by the Full Court (Qantas Airways Limited v Transport Workers' Union of Australia [2022] FCAFC 71; (2022) 292 FCR 34 (at 43-44 [23] per Bromberg, Rangiah and Bromwich JJ)):
Qantas appealed from the declaration of adverse action, relying upon five grounds of the appeal;
The Union relied upon a notice of contention in the Qantas appeal to assert that the declaration of adverse action could be supported upon two grounds other than those I relied upon;
The Union cross-appealed in the Qantas appeal against my finding that the s 346(a) adverse action had not been proven, relying upon three grounds;
The Union appealed by leave from the dismissal of the reinstatement application, relying upon six grounds; and
Qantas relied upon a notice of contention in the Union appeal to assert that the dismissal of the reinstatement application could be supported on another ground.
9 The appeals presented to the Full Court were dismissed.
10 After the proceeding had returned to deal with remaining questions concerning compensatory relief, by Order 1 of Orders dated 18 November 2022, the outstanding orders and directions of the Court in the proceeding were temporarily stayed, and the balance of the proceeding adjourned, pending determination by the High Court of the appeal lodged by Qantas (after it had been granted special leave).
11 The issue before the High Court was whether it was correct to conclude that, in making the outsourcing decision for reasons that included a proscribed reason, Qantas contravened s 340(1)(b) of the FWA: Qantas Airways Limited v Transport Workers' Union of Australia [2023] HCA 27; (2023) 412 ALR 134 (at 136 [4] per Kiefel CJ, Gageler, Gleeson and Jagot JJ). The High Court appeal was dismissed on 13 September 2023.
12 The remainder of the pleaded claims were then referred to mediation on 20 September 2023. Absent non-curial resolution, the proceeding was relisted for the resolution of the test compensation cases from 18 March 2024.
13 By prayers [6]-[8], the Union seeks statutory compensation pursuant to ss 545(1) and 525(2)(b) of the FWA for economic and non-economic loss alleged to have been suffered by the 1,820 affected employees (affected employees) "because of" Qantas' contravention of s 340(1)(b) of the FWA when it decided to outsource its ground handling operations. Following redeployments and job swaps after the announcement of the outsourcing decision, there were approximately 1,683 employees performing ground handling operations.
14 Despite my entreating the Union to consider adopting the course of reconstituting the remaining aspects of the dispute as a Pt IVA (of the Federal Court of Australia Act 1976 (Cth) (FCA Act)) class action with the Union as lead applicant (with the attendant procedural flexibility and statutory estoppels that such an action would bring for the benefit of both parties and the Court), for reasons never explained, the Union decided to plough on with the more cumbrous and unwieldy so-called "representative type" of procedure provided for in the FWA. For a comparison of these types of procedures and an explanation of the manifold benefits of the modern class action regime see: Elliott-Carde v McDonald's Australia Limited [2023] FCAFC 162; (2023) 301 FCR 1 (Beach, Lee and Colvin JJ); and Elliott-Carde v McDonald's Australia Limited (Stay Application) [2023] FCA 1210; (2023) 301 FCR 84 (Lee J). With respect, I find it somewhat difficult to reconcile the forensic course taken by the Union with the statutory requirement to facilitate the case management imperatives in Pt VB of the FCA Act, which requires each party to assist in the just determination of disputes as quickly, inexpensively and efficiently as possible (and for the lawyers acting for the parties to assist the parties to comply with this duty): see ss 37M(1), 37N(1) and (2) of the FCA Act.
15 Hence, the question of statutory compensation is to be "determined", as best one can procedurally, by reference to three so-called "test case" individuals. These are two former Qantas employees, Mr Christopher Carney and Mr Nicholas Bennett, and a former QGS employee Ms Leonie Piggott (test case individuals). Mr Carney and Mr Bennett were covered by the Qantas Airways Limited and QCatering Limited - Transport Workers Agreement 2018 (QAL Agreement), and Ms Piggott was covered by the Qantas Ground Services Pty Limited Ground Handling Agreement 2015 (QGS Agreement).
16 The issues to be resolved at present are what, if any, loss suffered by each test case individual has been established to be compensable, having been "because of" the proven contravention of s 340(1)(b) and whether orders providing for statutory compensation for the test case individuals ought to be made. Apparently, the Union is content to rely on the prospect of there being an outbreak of cooperation between the parties in extrapolating my findings below to the broader cohort. One hopes they are right because how my findings as to common issues are to bind non-parties and provide any definitive legal certainty is unexplained (given I am deprived of the ability to make orders under s 33ZB of the FCA Act as would be the case with a class action). Further, except by reference to the application of general principles of preclusion regarding contested issues, it is presently opaque as to how any individualised findings, as a practical matter, will inform the resolution of the claims by other affected employees absent some form of consensus.
[13]
B GENERAL FINDINGS RELEVANT TO THE COMPENSATION CLAIM
[14]
B.1 Approach to findings in LJ and RJ
17 In this section I deal with findings other than those that relate to the individual circumstances of the test case individuals.
18 Additional evidence was adduced by both parties at this compensation hearing, which went beyond the personal circumstances of the three test case individuals and addressed broader issues or matters of context. Neither party disagreed that in determining the facts relevant to the present task of exercising a statutory discretion, it was open to the Court to rely upon any facts found in the LJ or RJ but importantly, to the extent any new evidence qualified or modified facts previously found in the LJ or the RJ, it was also open to the Court to make additional findings on the same topics or to revisit or qualify previous findings made (given the necessity to have regard to all of the evidence in ascertaining the facts relevant to the current compensation enquiry).
19 In the LJ, I noted that the context and steps leading up to the outsourcing decision were highly relevant to the extent that they impacted upon the subjective reasons for making the outsourcing decision in late November 2020: LJ (at 250 [13]). To this end, I made numerous findings in the LJ concerning and relevant to the intentions of Qantas at the time (and around the time) of the outsourcing decision.
[15]
B.2 The further evidence and relevant findings
20 In making my earlier findings relevant to the intentions and motivations of Qantas, I placed importance on the contemporaneous documentary case (LJ (at 254 [29])) to the limited extent those documents emerged as the unvarnished product of the conduct of internal dealings or communications between the contesting parties (LJ (at 251 [17])); and I was sceptical about relying uncritically upon affidavit evidence given by those called by Qantas in chief. At the outset, it is worth noting that my concerns surrounding the accuracy and value of affidavit evidence filed by Qantas and the completeness of the documentary record, expressed in the LJ, were fortified considerably throughout the compensation hearing.
21 More specifically, as I noted throughout the compensation hearing, while the written evidence was carefully drafted and settled by lawyers, I am unconvinced the initial affidavits filed by Qantas prior to the liability hearing, as they presented the decision-making process, revealed anything like a candid and complete narrative (T633.10-14).
22 It is worth commencing with an important example of additional evidence which shed light on what actually happened and presents a useful snapshot of how Qantas approached the proposed outsourcing.
23 It is to be recalled that by the end of April 2020, transformation opportunities for Qantas in the context of the pandemic were beginning to be discussed: LJ (at 280 [97]). On 1 May 2020, a GMC meeting was held, and a presentation was made that included a "Summary of GMC ideas and prioritisation criteria". On the slides for this meeting, under the heading "Operational Transformation", was a dot point "Ground Handling model/outsourcing approach". The "Prioritisation Criteria" listed included: "vanishing window of opportunity"; "value"; and "feasibility". The evidence of Mr Hughes was that "vanishing window of opportunity" was a reference to the pandemic causing an almost complete reduction in flights and the consequently lower operational risk of outsourcing: LJ (at 281 [99]). It became evident that by and at the time of this GMC meeting, the potential to outsource had been identified, and the prevailing operating environment presented a realistic opportunity to outsource ground handling.
24 Following the GMC meeting and the subsequent setting of financial targets on 20 May 2020, various conversations and communications occurred between Mr Paul Jones (former Chief Operating Officer of Qantas Airlines, and prior to mid-2020, Executive Manager of Freight & Australian Airports), Mr Colin Hughes (Executive Manager of Qantas Airports), and Mr Paul Nicholas (Head of Strategic Business Planning).
25 On Monday, 1 June 2020, two important video conferences took place. Mr Brad Popple (a solicitor at Freehills), took notes of what occurred at these two conferences. The first conference commenced at about 4pm and involved Mr Simon Brown (head of industrial relations for Qantas' airports business), Ms Sonia Millen (Qantas' executive manager of industrial relations), Mr Ian Oldmeadow and Mrs Justine Oldmeadow (external industrial relations advisers), Mr Rohan Doyle (an industrial relations partner at Freehills) and Mr Popple. They were then joined after about an hour by Mr Jones, Mr Nicholas, Ms Natalie Thomson (who held the title of "National Manager People and Culture") and Mr Hughes. Mr Hughes explained in his evidence that the Qantas personnel joined the conference in the same room at Qantas' offices as Mr Brown and Ms Millen (T288.29-32).
26 During those conferences, five options presented in a slide pack were discussed, which included the proposal to outsource (T419.33-6). The options presented in this slide pack were to be presented to Mr Alan Joyce (then group CEO) the following day (2 June 2020), so that Mr Joyce could "understand the whole range of options" and "identify all the options in between": Ex F (at 159).
27 Despite the length, given their value in ascertaining what went on and the need for context, it is worth setting out the meeting notes of 1 June 2020 in full (Ex F (at 154-162)). I have bolded some of the more significant representations made:
SB - just want to talk through the pack and the high points, and pressure test the timelines in the pack.
SB - sent through draft pack yesterday to Oldmeadows regarding draft consultation timeline. At 5pm we have Paul Jones form (sic) airports to pick it up. Want to pressure test timeline, from best case, worst case (from our perspective) and middle ground. Throw to RD regarding the options.
IO - have you given advice on prospects beyond timescale?
RD - have given some advice on GP risk in conference but that is about it. Advice was based on the slide pack that we reviewed, generally, the reasons being put forward in support of the below the wing proposal were sound subject to ensuring that any documentation supports the reasons set out in the slide pack, and subject to the decision makers being able to convince the court and be believed in the witness box. Reasons were lawful ones.
IO - what's the reason?
RD - primarily, reducing extent to which cost base is fixed and to increase the variability in the cost base. Make sure that the business is nimble.
IO - what does that mean? Does it mean suppliers don't have redundancy costs? Why would they be more nimble?
RD - according to the pack, those external suppliers are able to spread their labour across different customers.
IO - but what about for shocks like this one?
RD - if we're only paying on a cost per turn basis, we don't have to pay if we're not flying?
IO - do you actually believe that those contracts exist? You need to know that to give the advice I would have thought.
RD - depends on RFP process.
IO - no, depends on the usual arrangements with our suppliers. If they won't give us those contracts, then that constrains the rationale. Just trying to work out what this flexibility is that you've given advice on.
RD - let's take a step back. Look at objectives in slide pack. Those objectives are lawful. You will go to market. They will give you proposals. Either they will meet your objectives, or they won't. If proposals don't meet objectives and we proceed, then that will call into question the legitimacy of the proposal.
IO - how can you give advice in the abstract, when you don't know what.
RD - no we need to reassess.
IO - once we go, we are dead in the water. If you're saying we have to wait till we get the bids in to work out if its legal, we're in the shit.
RD - well, really, you can't get really assess GP risk until you see how they perform in the witness box.
RD - Ian, the only thing I or anyone can do in terms of advising on GP risk is give you a view on whether the reasons you give me are lawful or not.
IO - in the past, we have worked through in the past on a white board, what are the probability that they will be able to shoot a hole in the reasons. It's a bit late to say we won't know until it's all done, that's a bit late.
[16]
I Risk, reward and Mr David
37 In the LJ, despite the submissions of the Union to the contrary, on the evidence then before me, I found that it was necessary to find Mr David was the ultimate decision maker: LJ (at 249 [6]). At the time the outsourcing decision was made, Mr David reported to Mr Joyce (and Messrs Jones and Hughes reported to Mr David). I found Mr David held the responsibility of and accountability for Qantas' domestic and international airline business, including responsibility for the outsourcing decision, which was recommended to him by Mr Hughes and endorsed by Mr Jones: LJ (at 278 [87]). While at the time of the LJ I was uncertain about the subjective decision-making process of Mr David, I found that Mr David made the outsourcing decision for reasons which included the so-called "three imperatives".
38 Qantas' three commercial imperatives at the time were to: (a) deliver cost savings for the ground operations of around $100 million per year when things returned to normal; (b) provide the ground operations on a fully variabilised "cost per turn" basis (hence Qantas would only pay when an aeroplane needed to be "turned" at an Airport); and (c) obviate the need for capex of $80 million over the next five years in updated equipment to perform the services in-house: LJ (at 298 [156]). Importantly, the proposal to outsource was perceived (and I suspect always perceived) as offering the best chance of meeting the three commercial imperatives: LJ (at 292-293 [134]). Again, this conclusion is fortified by the new material revealed at this hearing.
39 The "Qantas Group Three Year Financial Plan" (Recovery Plan) was discussed, and approved, on 19 June 2020 at a Qantas Board meeting. In a slide deck presented at that meeting, a slide under the heading "Proposed Qantas Airports Transformation Initiatives", stated the following (LJ (at 292-293 [134])):
Industrial Risk Assessment
Above the wing: VR expected. Agreement on surplus possible with ASU.
ASU EA open
Overall rating: [Low]
Below the wing: TWU response to strategic review. Expected legal challenge and public brand campaign. Delays to in-house bid process. QGS EA open. QAL EA to open 1 January 21. PIA possible
Overall rating: [High]
40 On 25 June 2020, Qantas announced the Recovery Plan: LJ (at 295 [140]). Given the significant benefits that the option to outsource presented, I found that these benefits outweighed the likely legal and industrial risks as they had been explained: LJ (at 298-299 [156]). Indeed, the perceived benefits to be gained from the making of the outsourcing decision were sufficently significant that Mr David was willing to make the outsourcing decision, despite Mr Oldmeadow remaining "very concerned about the overall risks": LJ (at 299 [156]). Notably, the four key risks associated with the outsourcing decision were identified as being operational continuity risk, legal risk, media risk, and government risk: see Ex F (at 251-253). The recently revealed information at this hearing confirms my earlier finding that despite the identification of significant risks associated with the making of the outsourcing decision, Qantas nonetheless decided to proceed with the proposal: LJ (at 284-286 [116]-[117], 288-290 [125]-[127]).
41 To this end, in the RJ, I found that "Qantas would do all it could to minimise the costs of ground handling to the extent it could do so, and that all relevant decisions it would make would be informed by reducing the costs of ground handling" (RJ (at 154-155 [75])). Further, in the RJ, I stated that the findings I had made, and the evidence at the hearing, all pointed to the notion that if there were a lodestar in divining the actions of Qantas in the environment that it found itself, it was the minimisation of costs, and that Qantas, at all material times, would have tried, if the rewards outweighed the perceived risks, to minimise the cost of ground operations (at 175-176 [154]).
42 Importantly, however, while outsourcing "best facilitated the pressing commercial aims of Qantas", I found this did not mean that Mr David was not subjectively conscious of other considerations, not inconsistent with the three imperatives: LJ (at 322 [272]). The operational disruption occasioned by the COVID-19 pandemic meant that the risk/reward analysis that had previously prevented outsourcing being considered a viable option became, for what was considered a limited time, viable: LJ (at 308 [201]). It is speculative to make findings as to the relative importance or hierarchy of all the factors informing the decision (a fortiori the recommendation that informed the decision).
[17]
II Context and Mr Jones and Mr Hughes
43 On several occasions, Qantas submitted (both in this Court and elsewhere) that no definitive conclusions were reached on the evidence and it failed at trial simply because of the application of a reverse onus in assessing the evidence of Mr David. Expressed at this level of generality, this submission is incomplete and serves to distort my fact finding and reasoning process. It is necessary to make a brief detour to explain why.
44 In the LJ (at 312-315 [225]-[239]), I considered, in some detail, the principled approach when several individuals are in some way involved in the decision-making process and the state of the authorities, including Elliott v Kodak Australasia Pty Ltd [2001] FCA 1804; (2001) 129 IR 251 and Construction, Forestry, Mining and Energy Union v Clermont Coal Pty Ltd [2015] FCA 1014; (2015) 253 IR 166. I observed that in the latter case, Reeves J noted (at 198 [121]) that:
… where the reasoning process is dispersed through an assessment process involving a number of persons…the judgment in Kodak requires me to examine the reasoning process employed by each person whose involvement had a material effect on the ultimate decision. This inquiry…focuses on the conscious reasoning processes of those who had a material effect on the ultimate outcome to determine whether their reasoning processes were free of the alleged prohibited reason or reasons. If one or more of the reasons employed by one or more of them was a prohibited reason, that will impugn the ultimate decision. This is what I consider the Full Court meant by "inadvertently" adopting an "undisclosed prohibited reason" in Kodak …
(References omitted).
45 I also observed (LJ (at 315 [237])) that Qantas did not demur from this approach (nor reserve a formal submission these cases were wrong). To the contrary, Qantas expressly accepted in submissions that the principles in "Kodak and Clermont are applicable to the extent that Mr David adopted the evaluative assessments of his management team in Australian Airports (Messrs Jones, Hughes and possibly Nicholas)": LJ (at 315 [237]).
46 In the LJ, after referring to a case that had not been cited in submissions (Wong v National Australia Bank Limited [2021] FCA 671) I noted that broad principles of general application as to decision making need to be carefully examined. Every decision is made in a context and is the work of a human actor; and decisions can be complex things involving the application of rational thought but can also involve confusion and illogicality that are part of the human experience. It seemed to me what was called for was a bespoke analysis depending upon the circumstances of the making of the decision which is sought to be impugned.
47 In the LJ (at 249 [6]), I also drew attention to the fact that the outsourcing decision was not made in a vacuum and emphasised the need to assess Mr David's evidence (as best I could) contextually and while considering the circumstances leading up to the decision. It was in this context that I turned to the influence of Mr Jones and Mr Hughes and made findings as to the subjective motivation of each of them. In all the circumstances, I found it unnecessary in the LJ to decide the case based on the application of the principle emerging from Kodak and Clermont but, on the current state of the authorities, the principle provides a further basis for justifying my conclusion that Qantas engaged in contravening conduct.
48 Returning to my current task, it was necessary to remind Qantas during the compensation hearing that the findings of fact I made in the LJ as to the state of mind of Mr Jones and Mr Hughes may not have been determinative of how I went about deciding liability in the LJ, but that they could not be ignored or minimised for other purposes, including in considering the appropriate counterfactual analysis to apply in assessing the claims for compensation (T561.1-3).
49 Given their significance, it is worth briefly summarising the role of these two men and their respective contributions. I do not propose to rehearse the detailed chronological narrative which lead to the making of the outsourcing decision, which can be found in the LJ (at 280-306 [94]-[189]).
50 Mr Jones is no longer employed by Qantas but is the former Chief Operating Officer of Qantas Airlines, and prior to mid-2020 (when Mr Jones took on that position), he was Executive Manager of Freight & Australian Airports. He was also apparently in direct communication with Mr Joyce as to consideration of the relative risks associated with different options or courses of action that might be adopted by Qantas. In any event, in April 2020, Mr Jones instructed Mr Hughes to commence work to identify potential options to achieve financial targets in response to the pandemic: LJ (at 266 [59]). I found Mr Hughes recommended the outsourcing decision, and that Mr Jones endorsed this decision: LJ (at 278 [87]).
51 As noted above, the decision-making process was adopted, and a decision maker was selected, acutely conscious of the reality that the decision would be inevitably challenged, and the adopted processes and the identity of the decision maker were informed by legal advice as to how the outsourcing decision could be optimally defended by lawyers. It will be recalled that since the LJ, evidence has emerged that in response to Qantas' solicitor asking who the decision maker would be, Mr Oldmeadow said to Mr Jones: "Paul you will be the decision maker, or Andrew David" to which Mr Jones responded "yes but because the financial targets have been set for me, so how far do we want to separate out the decision maker from that". Needless to say, the fact that decision making processes were adopted following discussions of this sort did not emerge from the evidence adduced by Qantas at the initial hearing.
52 In the end, the conclusion is inescapable from the materials that Mr David was fastened upon because persons within Qantas, informed by industrial and legal advice, considered that his selection best assisted the inevitable legal defence of the outsourcing decision in this Court.
53 I was, and remain, positively satisfied that "Mr Jones perceived a need for the outsourcing decision to be made prior to Qantas being presented with the prospect that the inevitable industrial backlash could have, as part of its response, protected industrial action" (LJ (at 308 [201])) and a substantial reason for Mr Jones endorsing the recommendation of Mr Hughes was the Relevant Prohibited Reason: LJ (at 330 [304]).
54 It follows that in the mind of Mr Jones, part of the reasons for recommending the making of the outsourcing decision to Mr David was to prevent affected employees disrupting services in 2021 by taking protected industrial action when, it was hoped, air travel services might be getting back to usual. Indeed, in the mind of Mr Jones, in the absence of prompt action on outsourcing, there was a real risk that the Union would exploit the opportunity afforded by both the QAL and QGS Agreements being past their nominal expiry date in 2021, and would then be able to exert industrial power which could cause significant disruption when growing domestic demand for air travel may have returned to more normal levels: LJ (at 283 [109]).
55 Mr Hughes was the Executive Manager, Qantas Airports from September 2019 to February 2021. In that role, Mr Hughes was given the task of developing a plan "as to how the Australian Airports Business could deliver operational changes to support Qantas' recovery from the COVID-19 pandemic". From May 2020 onwards, Mr Hughes, with the assistance of Mr Nicholas, developed several options for the Australian Airports Business for the GMC. Mr Hughes did not attend all, nor actively participate in, the GMC meetings, but Mr Jones did attend several relevant meetings and actively participated, and Mr Hughes assisted in preparing slide decks for Mr Jones' presentations.
56 As noted above, I found Mr Hughes was more likely than not motivated by the Relevant Prohibited Reason in the same way as Mr Jones given the nature of their working relationship, the communications between them, and the fact that there was no suggestion that there was any difference between their views as to the risks, rewards and proposed reasons for outsourcing: LJ (at 330 [305]).
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B.4 Relevance of what happened including the additional findings
57 Despite my concerns, expressed above, as to the uncertainties in identifying the true picture, my findings as to what occurred in the real world (given the nature of my earlier findings and the supplementary evidence adduced at this hearing) are relevant to the approach taken generally by Qantas as to the commercial opportunity presented by outsourcing and hence are necessary to bear in mind when returning below to findings as to what would likely have happened in the "but for" world (that is, if no contravening conduct had taken place).
58 But prior to addressing this issue, it is appropriate to turn to the applicable legal principles.
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C RELEVANT PRINCIPLES
59 The power of the Court to award non-penal remedies arises under s 545(1) of the FWA, which includes an order for statutory compensation as specified in s 545(2)(b). Relevantly, the Union seeks the following:
6. Orders pursuant to s 545(1) and/or 545(2)(b) of the [FWA] that Qantas pay compensation for economic loss to Affected Qantas Employees;
…
(ii) in relation to those Affected Qantas Employees who have elected not to be reinstated or are not subject of an order for reinstatement, in relation to economic loss occasioned up to the date of these orders and in such further amount as determined by the Court.
7. Orders pursuant to s 545(1) and/or 545(2)(b) of the [FWA] that Qantas pay compensation for economic loss to affected QGS Employees;
…
(ii) in relation to those Affected QGS Employees who have elected not to be reinstated or are not subject of an order for reinstatement, in relation to economic loss occasioned up to the date of the orders and in such further amount as determined by the Court.
8. Orders pursuant to s 545(1) and/or 545(2)(b) of the [FWA] that Qantas pay compensation for non-economic loss to Affected Qantas Employees and Affected QGS Employees as determined by the Court.
60 Sections 545(1) and (2) of the FWA provide:
Orders that can be made by particular courts
Federal Court and Federal Circuit and Family Court of Australia (Division 2)
(1) The Federal Court of the Federal Circuit and Family Court of Australia (Division 2) may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
(2) Without limiting subsection (1), orders the Federal Court or Federal Circuit and Family Court of Australia (Division 2) may make include the following:
(a) an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;
(b) an order awarding compensation for loss that a person has suffered because of the contravention;
(c) an order for reinstatement of a person;
(d) an order requiring a person to comply, either wholly or partly, with a notice (other than an infringement notice) given to the person by an inspector or the Fair Work Ombudsman.
61 In this section I will make some observations as to the general principles governing an order for compensation under s 545, along with the appropriate causation inquiry and approach to evaluating loss.
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C.1 Construction of s 545(1) of the FWA
62 As I observed in Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union (No 4) [2021] FCA 1481 (at [26]), as part of the statutory objective of providing a balanced framework for cooperative and productive workplace relations, s 545 orders, including the examples listed in s 545(2), are directed to preventing the occurrence of an apprehended contravention, remedying the effects of a committed contravention or compensating victims for the consequences of the contravention. If loss is suffered because of a contravention, if appropriate, an order can be made to remedy that result.
63 Three preliminary observations are worth making as to the application of s 545(1).
64 First, s 545(1) is a broad section which vests the Court with a relatively unconfined discretion to fasten upon a remedy it considers appropriate depending on the particular facts and circumstances of a case where there has been a contravention, or a proposed contravention, of a civil remedy provision: Dafallah v Fair Work Commission [2014] FCA 328; (2014) 225 FCR 559 (at 595 [148]-[149] per Mortimer J); Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) 262 CLR 157 (at 190-191 [103]-[106] per Keane, Nettle and Gordon JJ with whom Gageler J agreed (at 174-175 [51])); Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union (the Hutchison Ports Appeal) [2019] FCAFC 69 (at [135] per Ross J). The wide import of the discretion conferred by s 545(1) is indicated by the fact that the Court "may" make any order it considers appropriate (see s 33(2A) of the Acts Interpretation Act 1901 (Cth)).
65 Secondly, the scope of what may be considered "appropriate" for the purpose of s 545(1) must not be limited artificially, and is only constrained by limitations strictly necessary pursuant to the language and purpose of the section: ABCC v CFMEU (at 190 [103] per Keane, Nettle and Gordon JJ with whom Gageler J agreed (at 174-175 [51])). To this end, s 545(1) provides no indication of any specific considerations to be taken into account by the Court in exercising its discretion (see FWO v CFMMEU (at [135])), and the list of examples provided in s 545(2) as to the types of remedial orders that may be made is non-exhaustive.
66 Thirdly, the types of orders that will be "appropriate" include preventative, remedial or compensatory orders, but do not include penal orders - the sole repository of which is s 546 of the FWA: ABCC v CFMEU (at 193 [110] per Keane, Nettle and Gordon JJ, with whom Gageler J agreed).
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C.2 Principles relevant to compensation pursuant to s 545(2)(b) of the FWA
67 Qantas submits that the present case can be summarised as one concerning "a loss of opportunity or chance". While this is true to an extent (in the sense that the affected employees were in secure employment and were later retrenched and prevented from retaining that opportunity as a result of Qantas' contravening conduct (T549.36-38)) it is important not to become distracted when exercising the statutory discretion conferred under s 545(1), such as the award of compensation as referred to in s 545(2)(b). While principles of loss of chance or opportunity in assessing common law damages are useful guideposts in assessing compensation, it is wrong to assume that these principles can or should be applied automatically or uncritically.
68 In Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union (No 3) [2021] FCA 348; (2021) 304 IR 280, I outlined the correct approach to assessing any award of statutory compensation under s 545 of the FWA, including the appropriate approach to causation. Much of what follows is taken from that case.
[22]
I The causation inquiry
69 For compensation to be awarded under s 545, the Court must be satisfied that there exists the appropriate causal connexion between the contravention and the loss claimed: Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333; (2011) 193 FCR 526 (at 592 [423] per Barker J). In this sense, a precondition for an award of compensation is that the loss suffered by the applicant has been suffered because of the relevant contravention: FWO v CFMMEU (at [132]). The appropriate compensation to be awarded under s 545 is limited to the loss caused by the contravention and the onus rests with the claimant to prove its loss: although, in some cases, the nature and circumstances of the wrongdoer's conduct may support an inference or presumption that shifts the evidentiary burden: Berry v CCL Secure Pty Ltd [2020] HCA 17; (2020) 271 CLR 151 (at 168-169 [28]-[29] per Bell, Keane and Nettle JJ).
70 Determining whether there is a causal connexion involves "not an examination of what did happen, but an assessment of what would or might have occurred, but which could no longer occur (because of the contraventions)": Maritime Union of Australia v Fair Work Ombudsman [2015] FCAFC 120 (at [28] per Allsop, Mansfield and Siopis JJ). In other words, it might be said it involves (as with causation inquiries in other areas of the law) consideration of the counterfactual. With reference to s 545(2)(b) of the FWA, the Full Court (at [30]) reasoned that "[w]hat such damage or loss is (in the present context) that must be proved on the balance of probability will be governed by an understanding of the statute" and the Court referenced the "protective purpose" of provisions such as s 346 of the FWA:
What such damage or loss is (in the present context) that must be proved on the balance of probability will be governed by an understanding of the statute. Given the evident protective purpose of provisions such as s 792 of the WR Act and s 346 of the FW Act, there would be no sensible statutory purpose in denying a proposition that the damage or loss in relation to prospective employment can be constituted by the loss of an opportunity or chance to be considered for employment as a result of, or because of, the contravention (which then has to be given a value to inform the order for compensation); and there would be no sensible statutory purpose in limiting the compensation to damage or loss proved by reference to the proof of events that would, on the balance of probability, have or have not occurred. Thus, if the relevant contravention by a party has prejudiced a person in prospective employment, it would conform entirely with the statutory purpose to identify the damage or loss by reference to, indeed as, that prejudice. Depending on the circumstances, such prejudice may best be seen as the loss of the chance or opportunity of particular employment. That certainly was the relevant prejudice here, and it can be seen to have been proved on the balance of probability - indeed, to the point of demonstration.
71 Context is important. Notwithstanding this, it is useful to consider the question of causation in the FWA in a way that involves at least some appreciation of how causation operates within the law generally, and also in the context of statutory compensation for breaches of other norms of conduct. In this regard, it is noteworthy that the satisfactory approach to the issue of causation has proved to be one of the most troublesome issues to have vexed the High Court in recent decades.
72 It might be said that through a long process the High Court has embraced the observation of Mahoney JA in Barnes v Hay (1988) 12 NSWLR 337 (at 353), taken up by McHugh J in Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 (at 491 [98]) and repeated by Kirby J in Travel Compensation Fund v Tambree [2005] HCA 69; (2005) 224 CLR 627 (at 647 [60]), that the determination of causation is a "normative decision" which involves a "functional evaluation of the relationship and the purposes and policy of the relevant part of the law".
73 In the context of s 82 of the Trade Practices Act 1974 (Cth), in I & L Securities Pty Limited v HTW Valuers [2002] HCA 41; (2002) 210 CLR 109, Gleeson CJ said (at 119 [26]):
The relationship between conduct of a person that is in contravention of the statute, and loss or damage suffered, expressed in the word 'by', is one of legal responsibility. Such responsibility is vindicated by an award of damages. When a court assesses an amount of loss or damage for the purpose of making an order under s 82, it is not merely engaged in the factual, or historical, exercise of explaining, and calculating the financial consequences of, a sequence of events, of which the contravention forms part. It is attributing legal responsibility; blame. This is not done in a conceptual vacuum. It is done in order to give effect to a statute with a discernible purpose; and that purpose provides a guide as to the requirements of justice and equity in the case. Those requirements are not determined by a visceral response on the part of the judge assessing damages, but by the judge's concept of principle and of the statutory purpose.
74 In summary, and at some risk of oversimplification, the more recent pronouncements of the High Court on causation in a statutory context emphasise that:
(1) the answer to a question of causation may differ according to the purpose for which the question is asked: Travel Compensation Fund (at 642 [45] per Gummow and Hayne JJ);
(2) the attempted application of "common sense" alone is of little utility: Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 221 CLR 568 (at 596-8 [96]-[100] per Gummow, Hayne and Heydon JJ); Travel Compensation Fund (at 645 [45], 646-7 [58] per Kirby J);
(3) the application of a "but for" test has an important role as a negative criterion (in that it will usually exclude causation if not satisfied), but is inadequate as a comprehensive positive test: Travel Compensation Fund (at 638 [25] per Gleeson CJ), citing Medlin v State Government Insurance Commission (1995) 182 CLR 1 (at 6 per Deane, Dawson, Toohey and Gaudron JJ); Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494 (at 512-513 [42] per McHugh, Hayne and Callinan JJ);
(4) the application of tests of causation at common law can provide a useful analogy but cannot confine the statute: Marks v GIO Australia Holdings (at 512 [41], 529 [103] per Gummow J); Murphy v Overton Investments Pty Limited [2004] HCA 3; (2004) 216 CLR 388 (at 407 [44] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ); and
(5) factors relevant to the existence of causation in the relevant statutory sense will include:
(a) the purpose of the particular cause of action;
(b) the nature and scope of the defendant's obligation in particular circumstances: Allianz Australia Insurance Ltd (at 596-8 [96]-[100] per Gummow, Hayne and Heydon JJ); Travel Compensation Fund (at 645 [45] per Kirby J).
75 I adhere to the view that this reasoning, which developed as applicable to other statutory schemes that provide for compensation for breach of civil remedy provisions, is applicable in the context of s 545(2)(b) of the FWA. Granted, a given passage in a statute must be construed by reference to the context in which the phrase appears and read in a manner which gives effect to its presumed legislative object and purpose: see Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 (at 381 [69] per McHugh, Gummow, Kirby and Hayne JJ). But the words "because of" (and other like formulations of the test for causation) have a well-established meaning in the context of principles of statutory compensation generally, and like wording is used elsewhere.
76 It is also worth stressing that it is unnecessary to prove some sort of sole cause to establish the necessary causal connexion; it is enough to demonstrate that the contravention of a relevant provision of the Act was a cause of the loss and damage sustained: Patrick Stevedores Holdings Pty Limited v CFMMEU (No 4) (at [27]).
[23]
II The compensation inquiry
77 In assessing whether one should exercise the statutory discretion to make a compensation order under s 545 and the terms of the order, it is necessary to bear in mind the focus of an order for compensation is "in a loose sense, the restoration of those affected by a contravention to the positions they would have occupied but for its occurrence": Shizas v Commissioner of Police [2017] FCA 61 (at [209] per Katzmann J). To this end, an order under s 545 does not confer power to grant remedies at large based on general considerations of fairness (FWO v CFMMEU (at [149])), but rather is directed to what is reasonable in the circumstances to compensate for the loss caused by the contravention: MUA v FWO (at [20]); see also Patrick Stevedores Holdings Pty Limited v CFMMEU (No 3).
78 Reflecting the breath of the discretion, what is reasonable in the circumstances could be for the Court to order compensation that is less than full compensation: Dafallah (at 596 [157]). However, if a loss has been shown to be caused by a contravention, it is difficult to imagine a situation where a commensurate award for compensation for the loss would not be appropriate (Retail and Fast Food Workers Union Incorporated v Tantex Holdings Pty Ltd [2020] FCA 1258 (at [162] per Logan J)). As I observed in Patrick Stevedores Holdings Pty Ltd v CFMMEU (No 4) (at [18]), care needs to be taken in reaching firm conclusions based upon general conceptions because the statutory language requiring the order to be appropriate points to the need for the Court to form a view that the order is "judicially appropriate", or "just". That is to say, it requires a contextualised assessment of the particular circumstances, applying a judicial form of reasoning: see also Construction, Forestry, Maritime, Mining and Energy Union v Fremantle Port Authority [2024] FCA 848 (at [138] per Colvin J).
79 Given the nature of the inquiry, in some cases, this assessment may involve some imprecision. However, consistently with the principled approach to assessing common law damages, the Court must do as "best it can", even where a degree of imprecision is involved having regard to the Court's overall objective to provide a just remedial response.
[24]
C.3 The counterfactual inquiry
80 As I observed in Patrick Stevedores Holdings Pty Limited v CFMMEU (No 4) (at [64]), determining the appropriate counterfactual is a fact-specific inquiry. It necessarily requires the application of an assumption that there is an ability to "specify some definite possible world that is 'similar' to our actual world save that in that world the defendant did not do what [the defendant] did in the actual world": M Moore, "Causation in the Law" in E N Zalta (ed), Stanford Encyclopedia of Philosophy (Stanford University, Winter 2019) (at [5.1.1]).
81 The general proposition for approaching a counterfactual analysis is that it is best to approach the task from the perspective of doing as little violence to the known facts as is possible: Lehrmann v Network Ten Pty Limited (Trial Judgment) [2024] FCA 369 (at [974]). A fair and reasonable approach would usually involve an assessment as to whether the claimant would have suffered the same loss had the contravening conduct not occurred, or in other words, whether the contravening conduct was necessary for the loss: Lewis v Australian Capital Territory [2020] HCA 26; (2020) 271 CLR 192 (at 413-414 [151] per Edelman J). Here, of course, as I have explained, there is a lack of clarity about what went on in the real world which increases the difficulty of this task.
82 It also appropriate that like at common law, in making this assessment in the counterfactual, the only fact or circumstance that should be assumed to be changed is the act or acts constituting the contravening conduct - any other facts or circumstances should not be interfered with: see Lewis v ACT (at 261 [178] per Edelman J); see also Bartlett v Australia & New Zealand Banking Group Ltd [2016] NSWCA 30; (2016) 92 NSWLR 639 (at 659 [83] per Macfarlan JA); Martinez v Griffiths [2019] NSWCA 310 (at [36] per Meagher JA). It would generally be an appropriate exercise of discretion that if, once any act or acts of contravention have themselves been removed from the factual matrix, it is revealed that, absent the unlawful conduct, the outcome would nonetheless have been the same, the applicant will not be considered to have suffered any loss or damage as they would have been no worse off had the contravening conduct not occurred: see Berry (at 168-169 [28]).
83 In considering what would have occurred in the counterfactual (with the wrongful act having been removed), inferences will need to be drawn from the known facts to determine the most likely scenario on the balance of probabilities: Lewis v ACT (at 209 [35] per Gageler J); see also Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 (at 353 per Mason CJ, Dawson, Toohey, and Gaudron JJ).
84 In the context of formulating an appropriate counterfactual, Qantas is not prevented from constructing a lawful alternative to what in fact occurred, provided it is appropriate to do so in the factual circumstances: Berry (at 171 [31]). This principle finds its foundation within the concept that the purpose of compensatory damages (like the principled exercise of the statutory discretion here) is compensation for the loss suffered because of the wrong, rather than as a form of punishment.
[25]
I The nature of the inquiry
85 The common law approach to damages provides a useful guide in assisting the just exercise of the statutory discretion. I will not repeat my detailed explanation of the principled way one evaluates the two inquires called for by a loss of opportunity case in Lloyd v Belconnen Lakeview Pty Ltd [2019] FCA 2177; (2019) 377 ALR 234 (at 321-322 [341]-[349]).
86 It suffices to note that generally questions of the future or hypothetical effects of a wrong in determining compensation or damages are not to be decided on the balance of probability that they would or would not have happened, as is the case with establishing causation: MUA v FWO (at [28]); Hotson v East Berkshire Area Health Authority [1987] AC 750 (at 792-793 per Lord Ackner). It is the fact of injury or loss itself which must be proved on the balance of probability: Sellars v Adelaide Petroleum NL (at 348). In comparison, the assessment of future or hypothetical effects of a wrong in determining compensation is done by reference to the degree of probability of the effects - the probabilities and the possibilities: Malec v JC Hutton Pty Ltd (1990) 169 CLR 638 (at 642-643 per Deane, Gaudron and McHugh JJ); Sellars v Adelaide Petroleum NL (at 352-356). As stated in Berry (at 175 [36]), "the value of the lost opportunity is to be ascertained by reference to hypotheses and possibilities which, though they may not be capable of proof on the balance of probabilities, are to be evaluated as a matter of informed estimation". The approach of quantifying the value of the lost opportunity by "informed estimation" was recently applied by the High Court in Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17; (2024) 98 ALJR 719 (at 735 [57] per Edelman, Steward, Gleeson and Beech-Jones JJ).
87 I approach my current task in conformity with these principles recognising that making a discretionary order for statutory compensation by reference to degrees of probability or possibility ensures the Court takes into account any uncertainty in its assessment of the likelihood that a predicted hypothetical scenario would have eventuated had the contravening conduct not occurred: see Malec v JC Hutton Pty (at 642-643); Hotson v East Berkshire Area Health Authority (at 792-793); Sellars v Adelaide Petroleum NL (at 353). But as we will see, it is important not to overcomplicate the task in a case such as the present when the approach to the exercise of the discretion in this case is informed by the reality that the test case individuals have proven the contravening conduct caused the loss of opportunity for continuing employment (which had real value) and the probabilities are such that the valuation of that opportunity (that is, the likely duration of that future employment) can be predicted with a reasonable degree of confidence.
[26]
D THREE COMPETING CASES ON THE COUNTERFACTUAL
88 Between the Union and Qantas, three suggested counterfactuals emerged - one proposed by the Union, and two put forth by Qantas. In this section, I summarise the parties' key contentions in support of these counterfactual scenarios.
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D.1 The Union's counterfactual
89 The Union's proposed counterfactual is that employment of the test case individuals would have continued until retirement. The Union encouraged the Court to assess compensation on this basis, subject to any vicissitudes (T552.1-11).
90 The Union contended that, in the counterfactual world, the reason that the outsourcing decision would not have been made would have been because in weighing the four key risks - industrial, governmental, media, and legal - the assessment of the legal risk would have changed due to some awareness that a contravention would likely arise because of the motivations of the individuals concerned (T554.27-34).
91 While the Union submits the employees would have remained in their employment with Qantas, the Union accepted Qantas would not have done nothing and therefore suggested it would have embraced some other course. Mr David did not accept that another one of the other options would necessarily have been pursued (T422.42-45).
92 The Union contends that what Qantas would have done in counterfactual 2020 is essential to assessing what it might have done in counterfactual 2021. In proposing what it suggests would have occurred, the Union placed considerable reliance on the evidence given by Mr Nicholas McIntosh, the National Assistance Secretary of the Union: Affidavit of Nicholas McIntosh dated 19 March 2024 (at [1]). While I have had regard to Mr McIntosh's evidence, it presented a speculative and Panglossian account of the Union's future within Qantas which was removed from the reality of Qantas' three commercial imperatives, and its targeted strategic thinking throughout the COVID-19 pandemic.
93 For completeness, I should note what the Union submits would have occurred.
94 First, Qantas would have rightsized its workforce by implementing one of the following two options: (1) rightsizing Qantas' ground handling workforce to reflect the future anticipated demand of the business and (2) rightsizing the business to October 2020 demand to achieve the "year two cost target", remove surplus risk with growth provided by market supply and minimise capital required by approximately $40 million. It is worth noting that it is agreed as between the parties that had Qantas not decided to outsource its ground handling operations in November 2020, Qantas would have stood down large numbers of their ramp, baggage and fleet employees from September 2021 until November 2021: Statement of Agreed Facts 16 December 2021 (Agreed Facts 2021) (at [71]); Statement of Agreed Facts 2 September 2022 (Agreed Facts 2022) (at [2]).
95 The Union submits that if Qantas had determined to retain its in-house workforce, the first option would have been pursued. To this end, it is argued that there would have been significant costs savings achieved via a substantial redundancy programme, the consequence being that the circumstances in which any consideration of outsourcing would have occurred in 2021 would not have been the same as in 2020.
96 Secondly, the Union submits that if outsourcing had not occurred in 2020, Qantas would have been required to address issues it had identified with its government-sponsored enterprise (GSE) strategy. In January 2020, Qantas had determined to embark upon renewal of its GSE and had developed a GSE replacement strategy (T257.35-39). The Union contends that had outsourcing not occurred and the in-house workforce been retained, GSE renewal would have needed to occur and would have needed to commence forthwith (T260.25-40). If GSE renewal occurred in counterfactual 2020, the Union submits that this would have been a circumstance which would make outsourcing in 2021 less likely.
97 Thirdly, the Union submits that Qantas would have moved to make savings identified in the inhouse bid (IHB), if it had not made the outsourcing decision. It is said that had an IHB been accepted or the outsourcing decision not made, there would have been engagement between Qantas and its workforce, along with the Union regarding improving efficiencies and cost savings.
98 Fourthly, it is said that had Qantas decided not to outsource in November 2020, the Union would have taken steps to pursue bargaining in 2021 with Qantas. The Union submits that this bargaining would have involved it seeking provisions in new agreements that would have made any future outsourcing difficult. It is the Union's submission that this fact of bargaining, and the potential of actual protected industrial action being taken given that both agreements would have been open, would have fundamentally changed the risk equation in terms of legal risk (with employees able to exercise workplace rights to engage in enterprise bargaining and protected industrial action) and industrial risk.
[28]
D.2 Qantas' first counterfactual
99 Qantas tendentiously referred to its first counterfactual as the "logical" counterfactual. Throughout the judgment, I instead refer to it neutrally as the first counterfactual.
100 The first counterfactual was raised for the first time on 12 April 2024 with the exchange of the first round of final submissions (T516.27-33). Notwithstanding it had not previously been suggested and all arguments advanced by Qantas to that time had been inconsistent with it occurring, I accepted Qantas should be able to press the first counterfactual in Transport Workers' Union of Australia v Qantas Airways Limited (Order to Recall Witnesses) [2024] FCA 572, which I delivered on 20 May 2024. It is unnecessary to rehearse those reasons.
101 Qantas now submits that the initial question for determination is, "would Qantas have decided to outsource its remaining ground handling operations at the 10 airports when it did in 2020, for reasons that did not include the proscribed reason?". Qantas submits that the answer to this question is "yes" on the basis that the commercial imperatives were manifest and compelling, and Qantas saw the benefits as outweighing the risks.
102 Qantas submits that because there was no positive finding that a proscribed reason animated the mind of Mr David (the decision maker), and the outsourcing decision was nonetheless made, each affected employee would have been retrenched at the same time in the hypothetical world, as they were in the factual world. On this basis, applying the first counterfactual, the Union cannot establish on the balance of probabilities that any of the test case individuals lost an opportunity to remain employed with Qantas after they were retrenched, or alternatively, if the Union crossed this causation threshold, the application of the first counterfactual would see an exceedingly low valuation of the lost opportunity, given the high likelihood that Qantas would have lawfully outsourced anyway at the time it did.
[29]
D.3 Qantas' second counterfactual
103 Qantas' second (and original) counterfactual is that absent contravening conduct, Qantas would nevertheless have decided to outsource its ground handling operations at the ten airports, lawfully, by August 2021. In August 2021, Qantas submits that it would have announced its decision to outsource the ground handling operations, and this would have triggered a process that included the Union putting forward an IHB. Oddly, at least to my mind, in its written evidence, Qantas persisted in giving the ongoing impression, which I emphatically rejected at the liability hearing, that Qantas might have genuinely considered accepting an IHB. In any event, more realistically, and given the commercial imperatives, Qantas submits it would have confirmed its outsourcing decision by around November 2021, announced it, and then implemented it by late 2021 or early 2022.
104 Adopting the second counterfactual, Qantas submits the Union will have established causation of a lost opportunity of some value, but that the valuation of that opportunity is to be confined in time. In this hypothetical context, the employment of each test case individual would have lawfully ended around 12 months after their employment did in fact end.
105 Should the second counterfactual be accepted, Qantas contends that two of the test case individuals have income deficits (around $30,000 for Mr Carney, and $4,000 for Ms Piggott), and that the other test case individual, Mr Bennett, has an income surplus of around $250. It is Qantas' submission that no compensable non-economic loss has been established for any of them.
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E.1 Introduction
106 For reasons I will explain, in broad terms, the second counterfactual reflects the reality. The more prolonged the crisis became, the greater the likelihood reward outweighed risk. I am satisfied that by 2021, it became even more obvious that the rewards were clear, and if the risks were appropriately minimised and managed, Qantas would proceed, irrespective of the consequences imposed upon the workers to be retrenched - so much is clear not only from my earlier findings but is made even plainer when one now has access to the candid communications of 1 June 2020 revealed during this hearing involving Mr Oldmeadow. Consistently with the second counterfactual, if the relevant officers within Qantas perceived they could likely defend the outsourcing decision legally and that the industrial and governmental risks were manageable, then it would have proceeded.
107 Having said this, there must be consideration given to the other counterfactual suggestions the outsourcing decision would have been made either earlier or would never have been successfully implemented (although, as I explain below, I am not satisfied these possibilities have any substance on the evidence).
108 In this section I will deal with the evidence that leads me to the conclusion that outsourcing along the lines of Qantas' second counterfactual is compelling. This involves a consideration of the COVID-19 environment at the time, who the likely decision maker would have been, the decision-making process that I suspect would have been undergone and how the decision would have been made. I then address matters which might be thought to bear upon the probabilities (in this case the virtual certainty) of employment ending by around the time posited by the second counterfactual.
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E.2 The worsening and prolonged impacts of COVID-19
109 Since Australia closed its international borders on 20 March 2020, an almost total cessation of international commercial passenger flights continued throughout 2020 and until November 2021, when international borders reopened for Australians: Agreed Facts 2021 (at [38]); Agreed Facts 2022 (at [6]). By 21 February 2022, Australia had reopened its international borders to fully vaccinated travellers, with some restrictions remaining: Agreed Facts 2022 (at [7]).
110 From approximately mid-2021, the Delta variant of COVID-19 emerged in Australia, and resulted in: (a) a lockdown in Sydney and parts of New South Wales from late June 2021; (b) a lockdown in Melbourne from August 2021; (c) interstate border closures, including Western Australia and Queensland effectively closing their border to New South Wales and Victoria; (d) the New Zealand government suspending the Trans-Tasman travel bubble with Australia from 26 June 2021; and (e) ongoing quarantine requirements attaching to any permitted international travel and most interstate travel: Agreed Facts 2021 (at [39]).
111 On 6 August 2021, the "National Cabinet" released a "National Plan" to transition out of ongoing lockdowns, border closures, quarantining and other restrictions, premised upon incremental milestones reached in respect of Australia's vaccination rates: Agreed Facts 2021 (at [40]). Under the National Plan, the existing lockdowns, border closures and other restrictions on movement would not be significantly relaxed until 80% of the Australian population (over the age of 16) as a national average were fully vaccinated: Agreed Facts 2021 (at [41]). Notably, even by 25 May 2021, vaccinations had only just, in the week prior, become available to all people in Australia 50 years and over: Ex F (at 468).
112 In around November 2021, the Omicron variant of COVID-19 progressively emerged internationally and then throughout Australia, leading to a range of developments which included: (a) the implementation of a temporary ban on travellers who were not Australian citizens, permanent residents or their immediate family members from particular countries, and a 14-day quarantine for other travellers from these specified countries, irrespective of their vaccination status; (b) 72 hours' home isolation from all international arrivals including Australian citizens, permanent residents and immediate family members entering Australia; (c) delays to the reopening of Australia's borders to international skilled and student cohorts, and travellers from Japan and South Korea until 15 December 2021; and (d) 14-day hotel quarantine for interstate travellers entering Western Australia. Throughout December 2021 to February 2022, Australia's border continued to be closed to citizens of most foreign countries who did not hold Australian visas or travel exemptions: Agreed Facts 2022 (at [8]-[9]).
113 While travel between Victoria and New South Wales became largely unrestricted for fully vaccinated travellers by November 2021, by March 2022, all interstate border restrictions had been lifted to fully vaccinated interstate travellers: Agreed Facts 2022 (at [10]).
114 Evidence produced in the Agreed Facts reveals that prior to the Delta outbreak in 2021, statistics which forecasted flight departures for domestic and international Qantas regular public transport (RPT) had become more promising. It is worth reproducing an example of such statistics below, which shows Qantas' departure forecasts for domestic and international RPT flights (combined) operated by Qantas, or its subsidiaries operating under the QantasLink brand, as a percentage of the departures in the corresponding month in calendar year 2019, from April to June 2021, September to December 2021 and February to March 2022 (Supplementary Agreed Facts, Table 5):
115 Despite all the difficulties occasioned by the pandemic, Mr Joyce, on behalf of Qantas, made media announcements to the market that conveyed a degree of optimism regarding a way forward, and Qantas' eventual and inevitable recovery. No-one invites me to make a finding that Mr Joyce made misleading comments to the market, and I take these media announcements as reflecting the genuine view of the CEO, on behalf of Qantas, as to the true position that Qantas found itself in at the time that they were made.
116 For example, in a media announcement titled "Qantas Group Welcomes Federal Government's Aviation Support Package" dated 11 March 2021, Mr Joyce was recorded as having said that "[w]ith the vaccine rollout now giving more certainty that state borders will stay open, this is the perfect time to provide stimulus and get people travelling domestically again, particularly given there won't be any international tourists for another seven months" (Ex F (at 445-447)). Mr Joyce was also recorded as having said that "[t]his stimulus package will bring our domestic crews back to work faster and help them ramp up their hours closer to pre-crisis levels". Further, while it is unclear whether this statement is directly attributable to Mr Joyce, in the same media announcement, it was recorded that "Qantas and Jetstar are at about 60 per cent of their pre-COVID levels of domestic flying for the third quarter of this financial year and project this will increase to around 80 per cent in the fourth quarter. The stimulus program[me] gives more certainty that increase will occur and, depending on take-up, is expected to accelerate it".
117 As I noted in the RJ, however, although there may have been growing momentum around recovery (as reflected in flight forecasts and public pronouncements) particularly before the Delta outbreak, actual flying activity had decreased, there had been ongoing stand-downs of employees, and Qantas continued to face financial and operational difficulties as a result of the ongoing pandemic, including uncertainty associated with the level of flying activity: RJ (at 175 [152(6)]). Further, in the first half of 2021, any forecasted recovery was hampered by episodic lockdowns and restrictions, along with uncertainty for any domestic travellers (Ex 1 (at 186, 188, 210); T210.34-39, T219.1-220.11, T343.1-13). Forecasts were made on the basis that there would be no further outbreaks, border closures or governmental restrictions such as quarantine requirements, but lockdowns and restrictions occurred in response to the emergence of the Delta and Omicron variants of COVID-19 in mid-2021 and November 2021 respectively: Agreed Facts 2021 (at [39]), Agreed Facts 2022 (at [8]). In addition, Qantas' international business was virtually dormant throughout 2021 (Agreed Facts 2021 (at [38]); T210.17-21, T211.17-29, T218.44-219.23, T463.19-464.10) and was not expected to return until late 2021/early 2022 (T210.17-21, T211.17-29, T218.44-219.13, T463.19-464.1).
118 As such, notwithstanding growing momentum around recovery, for financial years 2020, 2021 and 2022, Qantas recorded approximately $6.2 billion in cumulative statutory losses: Agreed Facts 2022 (at [13]). Its overall financial position and performance was significantly worse in 2021 than it was in 2020, with losses of revenue and book losses accumulating over the course of 2020 and into 2021: Agreed Facts 2021 (at [49]-[53]); Agreed Facts 2022 (at [11]-[13]); RJ (at 142 [28(5)]-[28(6)], 155 [75(1)]). Qantas' financial results are usefully summarised in the following table (see Agreed Facts 2022 (at [12])):
FY2022 ($M) HY2022 ($M) 119 FY2021 ($M) (% against FY2019) 120 FY2020 ($M) (% against FY2019) HY2020 ($M) FY2019 ($M)
Revenue and other income 9,108 3,074 5,934 14,257 9,464 17,966
(51%) (33%) (79%)
Net passenger revenue 5,951 1,534 3,766 12,183 8,305 15,696
(35%) (24%) (78%)
Underlying before tax profit (loss) (1,859) (N/A) (1,277) (1,826) (N/A) 124 771 1,326
(9%)
Statutory before tax profit (loss) (1,191) (N/A) (456) (2,351) (N/A) (2,708) (N/A) 648 1,192
Net debt (3,937) (5,524) (5,890) (4,734) (5,273) (4,710)
(83%) (125%) (100%)
Cash and cash equivalents $3.3B (150%) $2.7B $2.2B (100%) $3.5B (159%) $1.74B $2.2B
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121 The prolonged impacts of COVID-19 on Qantas' financial performance are telling. In his oral evidence, Mr Hughes spoke to the enhanced risk that the COVID-19 pandemic presented Qantas in 2021 (T380.4-8), emphasising that the circumstances had become worse - the pandemic had continued, and Qantas' overall financial position had deteriorated significantly from June 2020 to February/March 2021 (T342.17-19). On that basis, Mr Hughes considered that the need for Qantas to access the financial opportunity presented by the outsourcing proposal would have been more compelling (T380.4-8).
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E.3 The counterfactual decision maker
122 While Mr David retired from 30 September 2023 (T382.1), in 2021, he still held the position of Qantas Domestic and International CEO (T382.11-13). Contrary to the Union's submissions, given my findings Mr David was selected as the relevant decision maker in 2020, it is more likely than not that he would have been chosen again as the 2021 decision maker (as the best person having regard to the need to increase the prospects of any outsourcing decision being legally defensible). Mr David also gave evidence that he would have been the person making the ultimate decision in counterfactual 2021 (T383.43-47).
123 From September 2019 to February 2021, Mr Hughes was an executive manager of Australian airports at Qantas. Following this, Mr Hughes assumed a different role within Qantas as an executive manager in shared services (T235.33-47). By virtue of Mr Hughes' involvement in the outsourcing proposal process in 2020, his experience, and the fact that he was still closely connected to the airlines business (T604.44-45), Mr Hughes was likely to have involvement in the making of any decision to outsource in 2021, as he had in 2020.
124 Given that Mr Jones left Qantas in December 2020 (T615.1-2), he would not have had any involvement or influence.
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E.4 The counterfactual decision-making process
125 Notwithstanding that there was a somewhat rosier picture emerging in the February/March 2021 period as to increasing domestic demand, any forecast had to be, at least in Mr Hughes' mind, "tempered with the view that there will be outbreaks, because that's exactly what had happened and, again, it's factually what did happen because there was a significant outbreak that - driven by the Delta - which effectively became really the nadir of the pandemic from an operational perspective" (T343.9-13).
126 Mr Hughes was already completely sold on outsourcing, and I have no doubt whatsoever that he would have recommended outsourcing from March 2021: Ex 1 (at 193). Consistently with this assessment, Mr Hughes gave evidence it would have been a "low bar" for him to recommend that Mr David consider the outsourcing proposal (T605.4), and he would have initiated the conversation with Mr David that he should consider the outsourcing option again as a way to meet Qantas' financial targets (T206.38-209.21, T341.36-38, T342.13-15).
127 As matters continued to worsen in 2021 with the emergence of the Delta-variant in mid-2021, and disruptions to Qantas' flight network became endemic and prolonged, the inevitability of Mr Hughes pressing the outsourcing proposal is beyond serious contention. Particularly given Qantas was considering further measures to control its operating losses, such as further costs reductions, the standing down of staff, and selling its Mascot premises (T382.43-383.4, T464.18-37; Ex 1 (at 242)).
128 In this context, around mid-2021, Mr David would have gone through the process of requiring Mr Hughes and the airports team to go through the motions of "revisiting" the outsourcing option, and presenting a recommendation (T207.43-208.2; T382.43-383.19; Ex 1 (at 232, 243)) and by July 2021, Mr David would have been in a position to make a decision to outsource for the GMC's consideration (T384.16-29; T390.31-41; T394.25-28; T448.39-451.25).
129 Mr David gave evidence that the conversations that he would have engaged in with the GMC and Mr Joyce would have been no different to those which were had in 2020 (T394.14-15). Mr David stated that (T394.15-28):
There were GMC meetings being held almost continuously given the pressures we were under and in those meetings, I would have tabled this initiative. It would have been discussed. And once there was an understanding of the benefits, the risk analysis would have been done through subcommittees. We would have taken that back to GMC. And almost all of these things were discussed in GMC rather than one-on-one because Mr Joyce always appreciated the various opinions around the room being aired together so you could get all the responses. So I would have expected in '21 it would have played out like it played out in 2020.
And in 2021, had either GMC, the board or Mr Joyce relieved you to any extent of the requirement to strip out $900 million of annual costs in your business within three years?---No. No. Those pressures were still there. And as I said, if anything they were more urgent given the financial situation we found ourselves in.
130 Mr David continued to explain that the process of engagement with the Qantas board would have involved engaging in discussions assessing and considering the nature and extent of the risks which the outsourcing decision presented, and how those risks might be best managed. To this end, he stated that (T394.46-395.17):
And in counterfactual 2021 what, if any, engagement would you have had with the board?---It would have been - the process that I've just described would have been exactly the same process we would have gone through in '21. And I would have expected the board to have reached a similar conclusion based on all the things I have just said.
131 I should do as little violence to real world events as possible. Given that a substantial amount of the work that was required to be done in order to put Qantas in a position where it would be ready to announce and implement the outsourcing proposal in 2021 would have been completed in June to August 2020, and hence any additional work would have built upon previous work, Mr David gave evidence that Qantas would have been able to "move a lot quicker" in progressing the outsourcing option on the second counterfactual (T390.31-391.9). I broadly accept this evidence although it is an exercise in hubris for a fact finder to think they could be definitive about timelines in the counterfactual and, as I will explain, such precision is not required.
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E.5 The making of the decision
132 Qantas was, however, specific. It made the submission that, by early August 2021, Mr David would have decided to outsource the ground handling operations, subject to consideration of an IHB (T390.43-391.9). It is worth recalling, as I noted above, that at around this time (6 August 2021), the announcement of the National Plan had made it plain that the only way out of the extended border closures and lockdowns was by 80% of the adult population becoming fully vaccinated (which was projected to be in December 2021 (Agreed Facts 2021 (at [40]-[42])).
133 I am also comfortably satisfied that, at this time, subject to going through the Kabuki-dance of "considering" an in-house bid, given there would be virtually no international flying and very low domestic flying until December 2021, every effort would have been made to pursue outsourcing (T390.31-41, T454.10-15, T463.28-464.1; Ex 1 (at 232, 242)).
134 Mr David and Mr Hughes considered that the same key risks associated with the making of the outsourcing decision in 2020 would have been the same risks for consideration in the 2021 counterfactual world. In summary, Mr Hughes and Mr David gave evidence that the assessment of each of the four key risks would have been materially the same in 2021, as in 2020 - each would have assessed operational continuity risk and legal risk as low, but the media and government risks as relatively higher (T218.44-224.39, T234.19-25, T384.43-392.39). In assessing these four risks in counterfactual 2021, Mr Hughes stated the following (T234.20-41):
And taking account of all of those matters, what would have been your position?---My position would have been I would have recommended that we proceed with a proposal to outsource. That would have been almost illogical for me not to have that position, effectively. So the business had financial targets. Those financial targets were set with regard to how the business needed to recover, coming out of the pandemic, with an expectation that it would be competing with a leaner and meaner domestic competitor under private equity ownership, and there was a lot that had been damaged through the pandemic in terms of capabilities that we would need to be able to build back and invest in. That was going to require funds to do that. Obviously, there was a significant aircraft order coming, given the fact that it had been deferred through COVID. So the reality was the targets were real. They were significant, and we had a proposal that effectively said you can save $100 million, avoid $80 million in capital, and variabilise your cost base. I can't think of any Qantas manager that wouldn't have recommended consideration of that proposal. I mean, it's hard to think why that would be the case.
135 As I have repeatedly said, the process was undertaken to facilitate the decision being made in a way which best minimised legal risk, but I have no doubt that if those responsible within Qantas believed they could achieve the outsourcing, then they would pursue it. The worse things became in the short term, the greater the appetite for risk.
136 On Qantas' case, the only material change in terms of the risk calculus was the fact that the workers employed by Qantas were able to take protected industrial action (T199.44-45). It is helpful to recall here that the Relevant Prohibited Reason infecting the outsourcing decision in 2020 was adverse action being taken by Qantas to prevent the exercise of a workplace right, being the ability for its employees to organise and engage in protected industrial action and participate in bargaining in 2021. Notably, the QAL Agreement expired on 31 December 2020, and the QGS Agreement expired on 1 September 2019. To this end, albeit that the risk of protected industrial action being taken by the Union employees was greater in the sense that there was a group of 560 workers who could take protected action in 2021, the evidence of Mr David as extracted below was that any protected industrial action, if taken, would have had a minimal impact due to low levels of flying, and thus have presented a minimal risk to operational continuity.
137 With regard to operational continuity risk, Mr David stated the following (T385.7-386.10; T388.28-389.12; T389.28-36; T390.20-28):
MR DALTON: Could I start with operational continuity risk, the first risk you identified. In July and August 2021, what would have been your own understanding of the nature of that risk?---Of the operational continuity.
Yes, risk to operational continuity?---It was the - the same as it was in 2020, and that was namely the risk of protected industrial action and the impact that would have had on - on the operational continuity and also the ability of third-party providers to transition across to take over the work.
And just dealing with the second one there, that transition to third-party providers, so in July and August 2021 when you're considering whether or not to go ahead with outsourcing, what would your view of that risk been?---Well, as I said, it's twofold. One is the obvious risk of protected - - -
Sorry, I was directing you to the second risk that you had identified, that risk of transition?---In terms of transition to - - -
Yes, to - - -?--- - - - third-party providers.
third-parties?---So in terms of transition to third-party providers, the key focus would have been on the fact that there was very low levels of flying and also associated lower levels of passengers and bags, so less flights, less passengers, less bags. And then so in that context, I would have looked at it and had a view that the third-party providers would be capable of taking on the work given those lower levels of flying, passengers, bags.
Yes. And in terms of the first risk that you had identified, what would your expectation have been of the airport's team in assessing that risk? What would you have been looking for them to have looked at and addressed?---Well, in 2020, one of the EBAs was open QGS. In 2021, they were both open. I think it's probably subjective opinion and views as to whether they would have taken PIA or not, recognising this is also a counterfactual, but I - I would have asked them to assume the worst case. It was plan for the worst and hope for the best, and I would have assumed - gotten them to assume that PIA was being taken by both groups. Now, the reality of that happening .....QGS, my understanding, had never taken PIA. I think the last time QAL taken PIA was in 2011. Nevertheless, I would have expected the team to plan and prepare for worst-case scenario. We would also have to be cognisant of what bargaining was going on at that stage, if any, and where it had got to.
All right. So assuming that PIA could be taken, what was your understanding around this time, July/August 2021, of the potential impact of that PIA on operational continuity?---Well, as it was - as I said before, in relation to the ability of the third-party providers to take over, I would have expected the impact to have been minimised because of the low levels of flying. We were down to - reduced levels of flying. We were down to 35 per cent in August and similar numbers in September and October, and there were less - as I said also, the load factors were lower, and the associated - and bags were lower as well, so because of that - it was very similar to where we were in 2020. We were back to similar low numbers of passengers, bags, flights.
…
Now, as to industrial risks of a TW campaign, again in counterfactual 2021, how would you have approached the assessment of that risk?---In a similar way to the approach with legal, I would have expected Colin Hughes to have engaged with Sonia Millen and also with experts that we had internally and externally, namely, Simon Brown, who was the head of IR for Qantas and reported to Sonia, and external advice from Ian Oldmeadow who had - we had engaged and - and used in the past. And back in 2020, what was you assessment of the level of that risk?---The - the risk in terms of - - - The industrial risk - - -?--- - - - the - the industrial risk? - - - of TW reaction?---Well, we expected that they would - would react to it, both in- both in media campaigns and lobbying of government, and that expectation would have been the same in '21. Just explain why you believe that you would have been assessing that risk in an equivalent way in 2021?---That was the advice that came back from - from Sonia and Paul in 2020 and would have been, I expect, the same in '21 from Colin as well, and also if I would go back to the 2020 process, there were a number of GMC subcommittee meetings looking at all the risks and there were one or two GMC meetings as well - same issue - and Ian Oldmeadow I recall being in a couple of those meetings and he personally would - he expressed concerns about the TWUs reaction. You would expect that. It was the subject matter in this area and - and that - and he expected they would react in an assertive way in response to our decision to outsource, so I was aware that it was - it was a risky area. Yes.
And based on your knowledge and awareness of facts and circumstances in 2021, is there any reason why you would have a different view of the level of that industrial risk as compared to 2020 - - -?---No.
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E.6 What Qantas was most likely to have done in the counterfactual
143 During closing submissions, I repeated a point I had made several times: that in 2021, Qantas was focussed laser-like on looking after its commercial interests and would attempt to cut costs wherever it could. In this sense, even though there were some risks in outsourcing, the notion that Qantas would not have used the ongoing and prolonged financial crisis to achieve the desired end of outsourcing is untethered to the objective facts. It must not be forgotten that the outsourcing decision would save approximately $100 million a year (Qantas Airways Limited v Transport Workers' Union of Australia (at 160-161 [111] per Kiefel CJ, Gageler, Gleeson and Jagot JJ)).
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F CONTINGENCIES
144 During oral evidence, the following exchange occurred between senior counsel for the Union at the time, Mr Gibian, and Mr David (T422.33-36):
[Y]ou can't give evidence on a hypothetical with any certainty, correct? ---Well, I think that probably counts for any hypothetical, doesn't it?
Yes. It does.
145 This observation was particularly apposite, and accords with the observation made by Professor David Hamer in his article "Chance would be a fine thing: Proof of causation and quantum in an unpredictable world" (1999) 23(3) Melbourne University Law Review 557 (at 559) - namely, that "[t]he past has already happened and is, in principle, knowable. The future, on the other hand, is a matter of chance, and is a far less certain object of knowledge".
146 In this section, I will explore matters raised by the parties as alternative events and some other issues raised by the parties as to the correct counterfactual.
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F.1 Matters or events relating to certainty of lawful 2021 outsourcing
147 Having considered the cases of each party as to what was likely to have happened and determined that an outsourcing decision would have been made in late 2021, it is necessary for me to explain my view as to why the criticisms of the evidence supporting the second counterfactual are not compelling and why the alternative scenarios presented cannot be accepted.
148 In broad terms, there are four matters or events which emerged during final submissions, and to which I will now turn.
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I The uncertainty as to evidence of the 2021 outsourcing
149 The Union made the submission that the second counterfactual should be viewed with a degree of scepticism because it is "inevitably self-serving to a high degree" and is "incapable of being disproved in some strict sense because it is a statement of what a person says they would have done in a circumstance which never in fact took place" (T23.40-43). Senior counsel for the Union made the point that the only evidence sought to be advanced in support of Qantas' counterfactual was given by Mr Hughes and Mr David, who were both "integral players" in the contravening conduct (T23.43-46). In closing submissions, senior counsel for the Union summarised this submission as follows (T553.31-46):
… [T]he evidence of Mr Hughes and Mr David in that respect, we think, should be given very little weight. They are contraveners, they were persons involved in the contraveners' contraventions your Honour has found. They are giving evidence on a hypothetical. I mean, I'm not critical for them giving that evidence. They were asked to give that evidence, but it's inevitably self-serving. It's easy to say, and virtually impossible to disprove in a strict sense, because it's individuals saying, well, I don't accept his Honour's findings that we contravened in 2020 or that I had any illicit purpose, but I've been asked to talk about whether I have done it again in 2021. And I know that's to Qantas's advantage, and I say I would have.
150 I have considered the chance that the oral evidence given by Mr David and Mr Hughes was necessarily speculative and, to an extent, self-serving, but this has not detracted from its weight - the oral evidence was wholly consistent with the business imperatives as Qantas perceived them (including prioritising cost cutting and placing less value on retaining its workers).
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II The possibility lawful 2020 outsourcing could have occurred
151 As to Qantas' first counterfactual, given the opacity as to a true picture of what went on in 2020 to which I have already referred, the extent of influence that the Relevant Prohibited Reason had on the overall making of the decision is very far from clear. This uncertainty surrounding what went on in the real world causes insuperable difficulties in attempting to remove surgically the proscribed reason from the 2020 decision to outsource.
152 I do not have any confidence whatsoever that absent the Relevant Prohibited Reason, the 2020 outsourcing decision would have been made. While Qantas asserts there were sound commercial reasons justifying the outsourcing decision, I am far from persuaded there was any real possibility the outsourcing decision would nonetheless have been made in 2020 (rather than later) because of the extent to which the Relevant Prohibited Reason did motivate Mr Jones and Mr Hughes to recommend and advocate for the making of the outsourcing decision to Mr David at that time. I adhere to the view (expressed in the LJ (at 328-329 [299])) that the closeness of the working relationship between the two men gives me some pause in accepting that Mr David was ever differently motivated than Mr Jones. The repeated efforts of Qantas to ignore the positive findings made in the LJ cannot distract from their importance and the barrier they pose in reaching any level of satisfaction a decision made for only lawful reasons, would have been made at that time.
153 Indeed, as to the point of the decision being made only for lawful reasons in 2020, echoing the comment made by Gageler J in Lewis, "[i]t cannot simply be assumed that a power to [outsource] that could have been exercised lawfully would have been exercised lawfully if that power had not in fact been exercised unlawfully": Lewis (at [39]). It follows that in cases such as the present, the respondent cannot avoid the need to compensate by merely showing that it could have made the decision to outsource lawfully; it must demonstrate that the decision in fact would have been made lawfully: see also Berry (at 171-172 [33]).
154 The difficulties about the evidence in relation to the first counterfactual were exacerbated by reason of the fact that the evidence given by Mr David and Mr Hughes throughout the reinstatement hearing was premised on Qantas' second counterfactual and this was the primary focus of the evidence given at the compensation hearing. Ultimately, there was a want of persuasive evidence supporting the first counterfactual. As the newly revealed information makes even clearer, there was robust resistance to the decision by Mr and Mrs Oldmeadow in 2020 and an appreciation of the extent of the risks. Notably, Mr Oldmeadow again did not give evidence at this hearing, despite his important role and his contemporaneously recorded doubts. To repeat, I am far from satisfied that absent the Relevant Prohibited Reason, there is a significant possibility that the outsourcing decision would have been made as posited by Qantas' first counterfactual. This conclusion necessarily bears upon my assessment of the probability, or inevitability, that termination of employment would have occurred in late 2021 or early 2022 (which I explain below).
155 The present case can be distinguished from Australian Workers' Union v CBI Constructors Pty Ltd [2016] FCA 745; (2016) 261 IR 215, which Qantas submits presents an analogous counterfactual task. In that case, Jessup J was able to conclude that the relevant decision would have been made when it was in fact made, even if the proscribed reason did not exist. Justice Jessup was able to reach that conclusion considering a plethora of relevant contextual evidence which his Honour was able to separate from the proscribed reason. As I have already noted, given my findings in LJ as properly understood, and the unsatisfactory and unpersuasive evidence adduced to support Qantas' first counterfactual, this case does not allow for such a separation that could inform an estimation regarding the likelihood of counterfactual 2020 outsourcing.
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III Chance that outsourcing decision would not have been lawfully made in 2021
156 The motivation and desire to outsource is one thing. Achieving that aim lawfully is another.
157 When giving oral evidence, Mr David was steadfast in his assertions that had he been aware of any possibility that the outsourcing decision would be considered unlawful in the counterfactual world, he would not have followed through with the decision under any circumstances.
158 I asked Mr David to assume he was aware, in 2020, that Mr Jones and Mr Hughes were motivated by the Relevant Prohibited Reason and he decided (because he regarded it as necessary not to engage in contravening conduct), to forbear going ahead with the outsourcing in November 2020. I then asked him whether, in these circumstances (and given what then happened in 2021), the outsourcing decision would have been later made in 2021. The following exchange then occurred (T468.30-40):
And as I understand your evidence, you would have regarded it as even more necessary in order to take steps to pursue those commercial imperatives in order to proceed with outsourcing in 2021 and you would have also been very careful, in 2021, to do it in a way that you would regard it as lawful?---I think, if, in 2020, we had decided not to do it because of the concerns you're raising - - -
Yes?--- - - - I can't see any way we would have done it in '21. I wouldn't have done it in '21. So for me, if we didn't do it - 2020, if there was a concern in terms of that risk in 2020, there's history, and I do not see how I would have got to a position in '21, despite what I've outlined in terms of the financial pressures, I wouldn't have been prepared to say. We do it.
159 I was initially troubled by this evidence, but I am satisfied that it is irrelevant. It builds into the counterfactual an added complication, being a consciousness by Mr David in 2020 of a fact (that Mr Jones and Mr Hughes were motivated by a Relevant Prohibited Reason) of which I am not affirmatively satisfied he was aware and then it further pre-supposes that he would, by reason of being aware of that fact, have acted in a particular way. This does far more violence to the known facts than is necessary or appropriate.
160 Separately from this point, however, and bearing upon the probabilities, the Union stressed it should not be assumed that if Qantas decided to outsource in 2021, it would have been a lawful decision, given that Mr David and Mr Hughes would have been involved in the decision-making process (T31.33-32.8).
161 I accept Mr David's evidence that a substantially similar process of obtaining advice as to the lawfulness of the outsourcing decision would have occurred in 2021. Given the involvement of some of the same actors in the making of the counterfactual decision, I have considered the possibility of different and hypothetical unlawful conduct occurring in circumstances where no outsourcing decision was made in 2020 (and hence no contravening conduct occurred at that time). It was not suggested by Qantas that in assessing the likelihood of the second counterfactual, I must put out of my mind any chance that a hypothetical counterfactual decision in 2021 might have been made unlawfully.
162 But one cannot say because Mr Hughes would have been likely to have had a similar influence over the making of any decision to outsource in 2021, he would have been motivated the same way in 2021 as he was in 2020. As I have explained, the Relevant Prohibited Reason arose in the factual circumstances that existed at that time. As I further noted in the LJ, the operational disruption occasioned by the pandemic meant that the risk/reward analysis that had previously prevented outsourcing being considered a viable option became viable, and Mr Jones considered that the outsourcing decision should be made prior to Qantas being presented with the prospect that industrial backlash could result in protected industrial action due to "open EBAs". To this end, there was a "vanishing window of opportunity" (see LJ (at 308 [201])).
163 What would have been the position in 2021?
164 There was some evidence at the hearing about the bargaining that would have occurred in 2021 following the expiry of the QAL and QGS Agreements. It is quite impossible to reach any sensible, even tentative, conclusions about what would have occurred in this regard.
165 What relevantly matters is Mr David gave evidence, which I have accepted, that assuming there was an ability for protected industrial action to be taken at the time of the second counterfactual in 2021, it would not have had an impact on the making of an outsourcing decision at that time because any industrial action would have been ineffective given the operational disruption then existing. In this sense, an aspect of the window of opportunity existing in 2020 would also have been present in counterfactual 2021.
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IV Qantas decided not to outsource because of positive forecasts and open EBAs
166 The Union contends that the relevant hypothetical is one in which Qantas had investigated outsourcing, including by engaging in the request for proposal and IHB process, evaluating the risks of outsourcing and obtaining legal advice, but ultimately decided not to outsource its ground handling operations at the time. The Union argues that the appropriate counterfactual and reason why Qantas would have determined not to proceed with outsourcing is most likely because Qantas would have been advised that outsourcing would be unlawful, meaning that the legal risk would have been too great to proceed with the outsourcing decision.
167 In this respect, the Union also emphasised that the outsourcing decision was viewed as a one-off opportunity in 2020, and that it would not have occurred in 2021 due to predictions of growing domestic demand in 2021 (T421.36-37), and risks to operational continuity emerging if the decision were retimed (T421.44-45). To support this contention, the Union had regard to Mr David's talking points for the GMC, and particularly the statement that "if we do not make the decision to exit at this time and select Option 1, it is hard to see the conditions in which we would ever have the opportunity to execute full exit again" (Ex F (at 252)).
168 In closing submissions, senior counsel for the Union summarised this point as follows (T555.1-6):
… [T]he better evidence as to what was likely to happen in 2021 was what the actual individuals thought and perceived in 2020, which was that they didn't think it would happen in 2021 if they didn't proceed with the outsourcing in 2020, in circumstances of growing domestic demand and - in 2021. And whilst things didn't turn out in 2021 necessarily as was expected, as we've explained in the written submissions, what did happen in 2021 did represent a set of circumstances that Mr Hughes, Mr David and everyone else involved in the process in 2020, didn't think would allow the outsourcing to occur in 2021. There was growing domestic demand in the first half at least. There were open EBAs, or would have been, and it was not perceived that that change would be possible in 2021, in those circumstances.
169 I do not consider these arguments to be at all persuasive having regard to the oral evidence adduced at the compensation hearing as to what the likely corporate intention of Qantas would have been in 2021 (which is consistent with at least some of the intentions of officers of Qantas since the crisis first arose - as best those intentions can be gleaned from the contemporaneous records). I am amply satisfied that the reality is that despite some positive forecasts emerging in 2021, Qantas continued to experience significant and continued revenue diminution. The financial problems persisted and worsened, and the outsourcing proposal remained the option which overwhelmingly best served the economic interests of Qantas in 2021. If the risks were not prohibitive, Qantas would have proceeded.
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F.2 Informed estimations regarding the second counterfactual and contingencies
170 For reasons I have explained, it would be to engage in impermissible speculation to find the outsourcing decision would have been made in 2020 in the absence of the unlawful reasons I found motivated Mr Jones and Mr Hughes and impacted upon the advice relied upon by Mr David (and no doubt overcame the concerns of Mr and Mrs Oldmeadow). The careful design of the decision-making process and the deliberate selection of the decision maker best equipped to withstand legal challenge and the state of the documentary record, which plainly does not reflect the oral communications we now know took place, including with the CEO, makes what happened not only opaque but has consequences for assessing what would have happened absent the contravening conduct. The submission that because this option best facilitated the commercial imperatives and hence the outsourcing would have happened in 2020 is wholly simplistic. I have given thought as to whether assigning a percentage degree of probability to such an eventuality would be appropriate, but to do so would amount to pure speculation rather than a principled process of informed estimation.
171 Further, I recognise that a substantially similar process of obtaining advice as to the lawfulness of the outsourcing decision would have occurred in 2021. Given Mr Hughes would be involved, it might be thought there is a risk Mr Hughes would have recommended the making of the decision to Mr David for an unlawful reason. But this is again wholly speculative. The circumstances concerning the possibility of protected industrial action were different and the crisis had continued and thus, from an overall financial perspective, worsened. One must assess a hypothetical outsourcing decision made later during the Delta lockdowns in the context of no earlier unlawful action having taken place. Other than suspicion and mere conjecture, there is no principled basis to find Mr Hughes (or someone else involved in the decision making at that time) would have attempted in 2021 to prevent employees exercising their workplace right to engage in protected industrial action (being a reason proscribed by s 340(1)(b) of the FWA).
172 What then is the consequence of all this?
173 Given Qantas' laser-like determination to focus on cutting costs and the lack of priority it placed on the continuing employment of the affected workers, it is wholly unrealistic to think that outsourcing would never have occurred, and that a decision to do so would not have been made by around the time posited by the second counterfactual. Having regard to the circumstances proved in the evidence, and particularly having regard to the perceived exigencies of the problems facing Qantas in 2021, the degrees of probabilities or possibilities are such that absent the contravening conduct I am satisfied that Qantas would have definitely decided to outsource by late 2021.
174 At the risk of repetition, this seems to me to be the inevitable conclusion of an informed estimation and serves as an appropriate basis upon which to exercise my discretion to award compensation.
175 As I have sought to stress, the approach to common law damages is a useful guide but is not proscriptive and s 545(1) of the FWA vests the Court with a relatively unconfined discretion to fasten upon a remedy it considers appropriate depending on the particular facts and circumstances of a case where there has been contravening conduct.
176 But just because there is certainty as to termination of employment, this does not mean the timing is not open to some imprecision. At my conclusion of my examination of evidence, there remain real uncertainties as to the timeline that what have applied in the counterfactual and to give a patina of precision by selecting a particular date of termination has obvious limitations. But I must do the best I can and to fix a date by which compensation for those affected can be calculated effectively. As noted above, there was an almost total cessation of international commercial passenger flights until February 2022 and by March 2022, all interstate border restrictions had been lifted to vaccinated interstate travellers. It is appropriate to calculate compensation on basis that it has been established that outsourcing would have occurred, in the counterfactual world, 12 months after each of the test case individuals ceased employment.
177 Given my finding as to the appropriate counterfactual, I will proceed to make a discretionary order for compensation on the basis that the Union has established causation of a lost opportunity of some value, which is to be confined in time.
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G COMPENSATION AND INDIVIDUAL FINDINGS
178 Each of the test case individuals ceased employment with Qantas in March or April of 2021 (T19.39-41) after having been informed of Qantas' decision to outsource its ground handling operations in early December 2020.
179 In this section, I will introduce the test case individuals, and the questions that must be determined to reach a conclusion regarding the appropriate amount of compensation to be awarded.
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I Ms Piggott
180 Ms Piggott is 57 years old: Affidavit of Leonie Piggott dated 30 September 2022 (Piggott Affidavit 30 September 2022) (at [1]). She was employed by QGS from 5 June 2018 to 14 April 2021: Agreed Facts 2022 (at [54], [64]); Piggott Affidavit 30 September 2022 (at [8]). She worked in fleet presentation at Sydney International Airport (a function outsourced to Airline Cleaning Services Pty Ltd t/a Cabin Services Australia: Agreed Facts 2021 (at [31(a)(ii)])): Agreed Facts 2022 (at [52]); Piggott Affidavit 30 September 2022 (at [7]).
181 At all times during her employment with QGS, Ms Piggott was employed on a permanent part-time basis to perform shift work: Agreed Facts 2022 (at [53]). Her ordinary contracted hours were 20 hours per week: Agreed Facts 2022 (at [55]).
182 Ms Piggott's taxable income in the year ending 30 June 2019 was $47,307. Ms Piggott's gross employment income from QGS was $49,079: Agreed Facts 2022 (at [68]).
183 The QGS Agreement applied to Ms Piggott's employment. Although it does not ultimately matter, I should note that if Ms Piggott had not been retrenched and if she remained employed by QGS today, the Qantas Ground Services Pty Limited Ground Handling Agreement 2022 (2022 QGS Agreement) would have applied to her employment on and from 28 December 2022. The provisions of the 2022 QGS Agreement are such that, Ms Piggott would have, in effect, experienced an 8.3% pay increase, from 1 September 2022 and a 3% pay increase on 1 September 2023. The 2022 QGS Agreement provides for a further 3% increase on 1 September 2024.
184 On 10 December 2020, having been informed of the Outsourcing Decision, Ms Piggott informed Qantas of her preference for: (1) job swap; (2) other redeployment opportunities; and (3) redundancy with an exit date in March 2021: Agreed Facts 2022 (at [60]); Piggott Affidavit 30 September 2022 (at [16]). Ultimately, she was retrenched. Her employment ceased on 14 April 2021: Agreed Facts 2022 (at [64]); Piggott Affidavit 30 September 2022 (at [21]). She was paid $9,288.40 upon termination, which included $3,624.55 received as a redundancy payment: Agreed Facts 2022 (at [74]); Piggott Affidavit 30 September 2022 (at [23]).
185 Since 27 June 2022, Ms Piggott has been employed as a Customer Service Agent by Swissport Pty Ltd (Swissport): Agreed Facts 2022 (at [86]); Piggott Affidavit 30 September 2022 (at [42]); Affidavit of Leonie Piggott dated 12 February 2024 (Piggott Affidavit 12 February 2024) (at [11]). Ms Piggott currently works around 20-22 hours each week: see Piggott Affidavit 12 February 2024 (at [14]). Ms Piggott's gross income for FY2022/2023 was $62,081.34 (comprising $280.19 from Woolworths and $61,801.15 from Swissport): Piggott Affidavit 12 February 2024 (at [5]).
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II Mr Carney
186 Mr Carney is 58 years old: Affidavit of Christopher Carney dated 30 September 2022 (Carney Affidavit 30 September 2022) (at [1]). He was employed by Qantas from 23 June 2004 to 30 March 2021: Agreed Facts 2022 (at [24], [29]); Carney Affidavit 30 September 2022 (at [7]). He worked in the ramp function at Canberra Airport (a function outsourced to Swissport: Agreed Facts 2021 (at [31(k)]); Agreed Facts 2022 (at [23]); Carney Affidavit 30 September 2022 (at [8]).
187 Mr Carney was initially employed by Qantas on a part-time basis. From 20 May 2008, Mr Carney became employed by Qantas on a full-time basis: Agreed Facts 2022 (at [25]).
188 During FY19, Mr Carney's taxable income was $97,159. His gross employment income from Qantas was $103,240 plus an allowance of $1,925: see Agreed Facts 2022 (at [31]).
189 On 10 December 2020, having been informed of the outsourcing decision, Mr Carney informed Qantas of his preference for redundancy (with no interest in a job swap or redeployment): Agreed Facts 2022 (at [28]); Carney Affidavit 30 September 2022 (at [47]). Consistent with that preference, Mr Carney's employment ceased on 30 March 2021: Agreed Facts 2022 (at [29]); Carney Affidavit 30 September 2022 (at [51]). Mr Carney received a net payment of $92,628.45 (with $10,048 in tax withheld), which included $71,278.77 received as a redundancy payment: Agreed Facts 2022 (at [34]); Carney Affidavit 30 September 2022 (at [52]).
190 Mr Carney first found new employment in October 2021. Since 17 January 2022, he has been in permanent employment as a ground handler for Vee H Aviation Pty Ltd (Corporate Air): Agreed Facts 2022 (at [44]-[45]); Carney Affidavit 30 September 2022 (at [66]). Mr Carney's gross income for FY2022/23 was $79,905.66: see Affidavit of Christopher Carney dated 15 February 2024 (Carney Affidavit 15 February 2024) (at [5]).
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III Mr Bennett
191 Mr Bennett is 58 years old: Affidavit of Nicholas Bennett dated 30 September 2022 (at [1]) (Bennett Affidavit 30 September 2022). Mr Bennett was employed by Qantas from 12 May 1999 to 30 March 2021: Agreed Facts 2022 (at [95], [98]); Bennett Affidavit 30 September 2022 (at [12], [47]). At all times, Mr Bennett worked at Sydney International Airport.
192 Mr Bennett was initially employed by Qantas on a part-time basis, and on 30 November 2004, became employed by Qantas on a full-time basis: Agreed Facts 2022 (at [95]).
193 From the time that Mr Bennett was first employed by Qantas to around 2007, Mr Bennett's position was Airline Service Operator, working in the ramp area. For a number of these years, Mr Bennett acted in the role of Senior Airline Service Coordinator. Around 2012, Mr Bennett moved into a role in Qantas' ground handling operations. From about 2012 to the time of Mr Bennett's retrenchment, he worked in the "push back" sector of Qantas' ground handling operations. Mr Bennett was permanently moved to Qantas' ground handling operations around 2015. His position was Airline Services Operator - International Push Back Driver. Mr Bennett was classified as a Level 4C employee under the QAL Agreement: Bennett Affidavit 30 September 2022 (at [18]).
194 In the financial year ending on 30 June 2019, Mr Bennett's taxable income from Qantas was $83,694. His gross employment income from Qantas was $86,714 plus an allowance of $1,209: Agreed Facts 2022 (at [100]).
195 On 10 December 2020, Qantas informed Mr Bennett of their decision to outsource, and invited him to complete a preference form. Through this preference form, Mr Bennett indicated that his preference was to be made redundant with an exit date in March 2021, and that he was not interested in other redeployment opportunities or a job swap: Agreed Facts 2022 (at [97]); Bennett Affidavit 30 September 2022 (at [45]). Consistent with Mr Bennett's preference, on 24 March 2021, Qantas provided Mr Bennett a notice of termination with a termination date of 30 March 2021: Agreed Facts 2022 (at [98]); Bennett Affidavit 30 September 2022 (at [49]). He was paid $127,234.72 (with $14,606 withheld in tax) upon termination, which included $96,375.96 received as a redundancy payment: Agreed Facts 2022 (at [103]); Bennett Affidavit 30 September 2022 (at [50]).
196 Mr Bennett found new full-time employment in June 2021: Agreed Facts 2022 (at [108]-[109]). Since 4 September 2023, he has been employed by Prixcar Transport Services Pty Ltd (Prixcar): Affidavit of Nicholas Bennett dated 14 February 2024 (Bennett Affidavit 15 February 2024) (at [12]-[13]). In his current employment with Prixcar, Mr Bennett's base salary is around $72,496.67 per annum. He receives an $18 meal allowance plus overtime payments of 150% of his base salary when he works two hours overtime, and he receives 200% of his base salary when he works two hours after that. Mr Bennett also receives a 30% loading for working night shifts, which he does.
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G.2 Questions for determination regarding calculation of compensation
197 In relation to each of the three test case individuals, I am required to determine (see Agreed Issues of Fact and Law for Determination filed 6 June 2022 (at Sections A, B, C and D)):
(1) what past economic loss, if any, did the test case individuals suffer because of Qantas' contravening conduct?
(2) what future economic loss, if any, will the test case individuals suffer because of Qantas' contravening conduct?
(3) what non-economic loss, if any, did the test case individuals suffer because of Qantas' contravening conduct?
(4) having regard to such losses, if any, as determined by subparagraphs (1)-(3) above, what order, if any, by way of compensation for the loss is appropriate?
198 To calculate the compensation to be awarded to each individual, a useful document titled "Joint list of issues regarding calculation of loss" (MFI-15) was provided to the Court. During oral submissions, some of these issues were condensed with reference to a document that Qantas provided, which was titled "Respondent's Note - Matters pertaining to calculations" (MFI-17) (T665.33-36). The Union provided a version of this document called "Applicants' Note - response to Respondents' note on matters pertaining to calculations" (MFI-18), which added an additional column of its responses to MFI-17. With reference to the joint list of issues, condensed as they were in part by the note provided by Qantas, the relevant issues going to the calculation of compensation for the test case individuals are as follows:
(1) What discount should be applied in respect of counterfactual stand-downs? (relevant to joint issue 6)
(2) Should social security payments (carer payments to Mr Carney, unspecified Services Australia payment to Mr Bennett, COVID-19 support to Ms Piggott) be accounted for as earnings? (relevant to joint issue 8)
(3) Does loss cease at time of "effective mitigation" or should future "gains" be taken into account? (relevant to joint issue 11)
(4) How should future economic losses be discounted? (relevant to joint issue 13)
(5) Should redundancy payments received by test case individuals be taken into account? (relevant to joint issue 14)
(6) If redundancy payments should be taken into account, should payments in lieu of notice be included in that accounting? (relevant to joint issue 15)
(7) What, if any, amount of non-economic loss should be awarded? (relevant to joint issue 16)
(8) Did Mr Bennett act unreasonably so as to affect his entitlement to compensation? (relevant to joint issue 20)
(9) Should gross or net income flows be used? (relevant to joint issues 2 and 19)
(10) Should superannuation be taken into account? (relevant to joint issues 1, 3, 5 and 12)
(11) Are stated incomes inclusive or exclusive of superannuation? (relevant to joint issues 4 and 7)
(12) How should counterfactual and actual future income flows be determined? (relevant to joint issues 3 and 12)
(13) Should future annual and long service leave accruals be factored into counterfactual calculations? (relevant to joint issue 10)
199 I will address these questions in turn in the following section.
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G.3 Answers to calculation of compensation questions
[50]
I Question one
200 The parties agree that the test case individuals' notional Qantas income in 2021 should be discounted to account for likely standdowns, but do not agree on the relevant discount to be applied. Mr Hughes' evidence does not establish to my satisfaction that the percentages reflecting likely stand-downs are accurate estimations considering the agreed facts. There is significant uncertainty in this regard and these matters cannot be determined with any precision. In the circumstances, I consider it reasonable to apply the Union's proposed discount of 25% for six months of income for Mr Carney and 40% for six months of income for Mr Bennett and Ms Piggott.
[51]
II Question two
201 Social security payments should not be accounted for as earnings in the calculations. The evidence is such that I am unpersuaded these payments should be deducted from compensation otherwise payable on the basis that, for example, the payments would not otherwise have been received if the test case individuals remained employed by Qantas, or because they effectively substitute income.
[52]
III Question three
202 Future economic "gains" should not be "set off" when calculating compensation. Any prediction of future economic "gains" is entirely speculative on the evidence before me. The test case individuals have been employed in their current employment since, at the earliest, January 2022, and it cannot simply be assumed that they will continue to be employed by the same employer, in the same role, and earning the same amount until retirement so as to reduce their actual proven loss. I am not satisfied the test case individuals will, in fact, earn higher wages than they otherwise would have at Qantas until retirement. In my view, this approach of "setting off" future economic "gains" would be contrary to the principled exercise of my discretion.
203 Consistently with the Union's submissions, Mr Bennett's loss ceased around 4 September 2023, and Ms Piggott's loss ceased around 30 June 2022.
[53]
IV Question four
204 In respect of calculating future economic losses, a discount rate of 3% per annum should be applied to obtain the present value of any future income stream: see Todorovic v Waller (1981) 150 CLR 402 (at 424 per Gibbs CJ and Wilson J).
[54]
V Question five
205 Having accepted a counterfactual much like that posited by the second counterfactual, the issue as to whether redundancy payments received in 2020 should be set off against any award of statutory compensation for economic loss does not arise. This is because, applying the second counterfactual, each test case individual would have generated an entitlement to, and received, substantially the same redundancy payments in any case approximately a year later.
[55]
VI Question six
206 As noted in the answer to question five above, the issue of accounting for redundancy payments received by the test case individuals does not arise. As such, it is not necessary to consider whether payments in lieu of notice should be included in the accounting of redundancy payments. Further to this, and consistent with my answer above, payments in lieu of notice would have been received by the test case individuals a year later regardless.
[56]
VII Question seven
207 The power under s 545(1) of the FWA to make appropriate remedial orders extends to an award of compensation for non-economic loss including for distress, hurt, humiliation or other emotional harm arising because of a contravention: ALAEA v International Aviation Service Assistance Pty Ltd (at 595-596 [443], [447]-[450] per Barker J); Fair Work Ombudsman v Maritime Union of Australia (No 2) [2015] FCA 814; (2015) 252 IR 101 (at 113 [65] per Siopis J).
208 As is well recognised, the assessment of compensation for emotional distress or the like is inherently imprecise and non-scientific (FWO v MUOA (No 2) (at 113 [68])) due to the fact that the Court is required to place a monetary value on something that is not easily able to be financially quantified: Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82; (2014) 223 FCR 334 (at 359 [94] per Kenny J). In this sense, it has been observed that it is impossible to precisely translate such non-economic loss into a monetary sum: O'Brien v Dunsdon (1965) 39 ALJR 78 (at 78 per Barwick CJ, Kitto and Taylor JJ). Nevertheless, the Court must, doing the best that it can, award an amount it considers to be reasonable compensation for the non-economic loss sustained, taking into account the individual facts of each case: O'Brien v Dunsdon (at 78 per Barwick CJ, Kitto and Taylor JJ).
209 Each of the test case individuals gave evidence of the non-economic loss they believed they suffered because of the outsourcing decision: Bennett Affidavit 30 September 2022 (at [61]-[82]); Bennett Affidavit 15 February 2024 (at [26]-[32]); Carney Affidavit 30 September 2022 (at [74]-[92]); Carney Affidavit 15 February 2024 (at [9]-[13]); Piggott Affidavit 30 September 2022 (at [56]-[75]); Piggott Affidavit 12 February 2024 (at [15]-[19]).
210 I accept the test case individuals suffered in the following ways as a result of Qantas' contravening conduct. Mr Carney gave evidence of feelings of loss of security, anger, hurt, humiliation and distress from his employment being terminated, which manifested itself in an inability to sleep, racing thoughts, and panic attacks. While the hurt, humiliation and distress experienced by Mr Carney did not lead to the development of any psychological injury or mental illness, his suffering was, nonetheless, appreciable. Ms Piggott gave evidence of experiencing significant distress and emotional hurt. While Ms Piggott's suffering did not result in any new diagnosis or permanent aggravation of existing mental health conditions, her suffering did cause her to experience irritability, frustration, a loss of motivation, anxiety, a decline in her physical health, and an inability to eat, feelings of nausea and trouble sleeping. All of these things were said to have affected Ms Piggott's relationship with her husband and children. Qantas' conduct caused Mr Bennett to develop a major psychiatric illness. Mr Bennett suffered acute symptoms arising from major depression, including suicidal ideation, low mood, anxiety, sleep disturbance, depleted motivation and increased problematic alcohol use. While Mr Bennett's psychiatric condition is in partial remission, these symptoms persisted for many months and adversely affected Mr Bennett's quality of life to a substantial degree.
211 Qantas did not require the test case individuals for cross-examination to contest their affidavit evidence which gave rise to the compensation claims for non-economic loss. I cannot accept Qantas' written submissions to the extent that they impugn the evidence given by the test case individuals. As I noted in Westpac Banking Corp v Forum Finance Pty Ltd [2021] FCA 807 (at [9]), as a general proposition, unchallenged evidence which is not inherently incredible ought to be accepted unless facts otherwise established by the evidence or particular circumstances point to its rejection: Precision Plastics Pty Limited v Demir (1975) 132 CLR 362 (at 370-371 per Gibbs J, with whom Stephen and Murphy JJ generally agreed); Ashby v Slipper [2014] FCAFC 15; (2014) 219 FCR 322 (at 347 [77] per Mansfield and Gilmour JJ).
212 An amount of compensation for non-economic loss suffered should be awarded. Qantas' submission that any non-economic loss actually suffered by the test case individuals would have been suffered regardless a year later on the second counterfactual lacks any evidentiary foundation. As I have explained, the circumstances would necessarily have been different, and the non-economic loss arises from the contravening conduct. There is an enormous difference between being dismissed unlawfully and having one's employment ended lawfully. Although I accept there would have been some vexation, trauma and distress associated with a later counterfactual lawful termination, I have taken that into account in assessing the compensation which (it must be recalled) flows not from a loss of employment, but from the contravening conduct and consequential suffering upon the happening of the contravening conduct in 2020.
213 Importantly, as I explained above, I am not assessing loss and then exercising a discretion to make a compensation order in a conceptual vacuum. I am giving effect to a statute, being the FWA, with a discernible purpose; and that purpose informs the requirements of justice in these three cases. It is unnecessary that the contravening conduct is the sole cause of what was eventually suffered by the test case individuals, it suffices it has been established on the evidence that it was a cause of the loss and damage sustained because of unlawful conduct: Patrick Stevedores Holdings Pty Limited v CFMMEU (No 4) (at [27]).
214 I have been referred to a litany of cases that each turn on their own facts. While some guidance as to the awarding of a sum for non-economic loss may be gleaned from looking to determinations in other cases, it is important to keep in mind that the award of damages should not be assessed by "performing arithmetic adjustments to prior determinations": Hughes v Hill [2020] FCAFC 126; (2020) 277 FCR 511 (at 521 [48] per Perram J). I have had regard to the cases to which I have been referred but given the exercise is of (at best) limited assistance, it is unnecessary to step through them for present purposes. A further difficulty of Qantas pointing to other cases where awards have been modest is that in this case, unlike many others, there was no challenge to the evidence of subjective hurt or vexation or other manifestations of non-economic loss.
215 In the end, after considering the unchallenged evidence specific to each test case individual, I consider that the non-economic loss amounts proposed by the Union overestimate, and those proposed by Qantas significantly underestimate, the appropriate awards of non-economic loss for each test case individual. Doing the best that I can in exercising the statutory discretion, I consider that the following amounts of compensation for non-economic loss reflect the harm sustained by each of the three individuals in a way that is appropriate, just, and rational:
(1) compensation for non-economic loss in the amount of $30,000 for Mr Carney;
(2) compensation for the somewhat more serious non-economic loss of Ms Piggott in the amount of $40,000; and
(3) compensation for the significantly more serious non-economic loss of Mr Bennett in the amount of $100,000.
[57]
VIII Question eight
216 This is not a question of so-called "mitigation" (a term I have elsewhere described as inapposite in this context: see Kumova v Davison (No 2) [2023] FCA 1 (at [98])). Properly analysed, it is a matter of causation. I am not prepared to make a finding that Mr Bennett acted unreasonably, so as to affect his entitlement to compensation (or, more accurately, that some supervening event meant the necessary casual connexion was lost). The assertion made by Qantas that Mr Bennett conducted himself unreasonably (arising from his affidavit evidence) was not put to him in cross-examination. Mr Bennett was never afforded the opportunity to respond and, to the extent it matters, I am not satisfied he has acted anything other than "reasonably". More relevantly, the unchallenged evidence requires the conclusion that all the damage identified, including aggravation to his pre-existing major depression (which has partly abated) was materially contributed to by the contravening conduct.
[58]
IX Question nine
217 Subject to any further submission, I incline to the view that the compensation awarded to each test case individual should be a gross amount. Whether it is preferable to use gross amounts throughout the calculation process is a matter to be considered further by the parties following the delivery of these reasons.
[59]
X Question ten
218 The test case individuals' superannuation contributions should be considered when determining the level of "loss" suffered by the test case individuals. The rate at which the superannuation contributions should be taxed remains opaque in both parties' submissions and is a matter to be addressed by the parties following the delivery of these reasons (if it cannot be agreed).
[60]
XI Question eleven
219 The evidence does not establish that the amounts paid to Mr Bennett and Mr Carney are inclusive of superannuation payments. Thus, the stated incomes of Mr Bennett and Mr Carney are to be treated as being exclusive of superannuation payments. It is agreed between the parties that Ms Piggott's income is expressed as being exclusive of superannuation payments.
[61]
XII Question twelve
220 It seems to me that counterfactual and actual future income flows should be determined using total income figures on both sides of the ledger. While superannuation contributions may not necessarily be considered "income", these contributions should be considered as part of the test case individuals' overall assessment. Absent agreement, the rate at which these superannuation contributions are taxable is a matter to be addressed by the parties in submissions following the delivery of these reasons.
[62]
XIII Question thirteen
221 Annual and long service leave entitlements accrue over time and are typically taken during employment. But, as Qantas stresses in other parts of its case, these were no ordinary times. An inference the employees would have taken annual leave given the lockdowns is too speculative in the absence of evidence as to what these test case individuals during this very unusual additional year of employment. The evidence establishes a prima facie entitlement and the proposition they would have taken the leave in the circumstances that would have prevailed in 2021 and early 2022 was not put to them. In these circumstances, in the exercise of my discretion, it is appropriate to credit the test case individuals for annual and long service leave accruals arising during this period.
[63]
H FUTURE STEPS
222 As noted above, I propose to relist the proceeding to hear any residual argument in relation to the final calculation of compensation. One hopes in the light of these reasons the parties can agree on the necessary calculations. To facilitate the minimisation of disagreement, I propose to make an order pursuant to s 37P(2) of the FCA Act providing that either agreed or competing short minutes of order are provided to my Chambers by 8 November 2024 and for the matter then to be relisted on 15 November 2024.
223 But we have only dealt with the test case individuals. Following the entry of final orders, and subject to hearing from the parties, my present intention is to make a further order requiring the parties to again attend a mediation to identify the total amount of compensation payable to all affected workers. If failing mediation there is no resolution of this broader issue, then I propose to direct each party to provide thereafter a submission as to what they consider to be their best estimate of the total amount that would be payable (accepting this figure will necessarily involve a significant degree of approximation).
224 My present view is that after receiving these documents there will probably be a sufficient basis for me to move to the final part of this case, which will be concerned with both determining the application by the Union for a penalty to be imposed upon Qantas and ancillary orders and the resolution of any outstanding issues relating to differences as to quantifying total compensation.
225 Without assigning blame to either party, hopefully some commonsense can prevail after all the disputation that has taken place, including three separate hearings, six first instance judgments, three appeals (two by Qantas and one by the Union), various notices of contention and interlocutory disputes. As was noted as recently as last week, the resources of the Court are finite and every case which is not settled must be heard and determined; consequently, the Court encourages parties to settle their litigation, and it is in the interests of the administration of justice that they do so: Saw v Seven Network (Operations) Ltd [2024] FCA 1210 (per Perram J (at [8])). Vast legal costs have been expended by both sides, and particularly by Qantas who have retained no less than five senior counsel during the course of the matter and numerous solicitors at one of Australia's pre-eminent law firms. Both sides have engaged in rhetoric about being willing to resolve all issues with promptitude. It may be a triumph of hope over expectation, but my desire is for the Court to move quickly to resolve any penalty and the balance of compensation issues. Apart from any public benefit, finality would help bring a degree of closure to those affected workers who have been wronged, particularly for those who experienced emotional and financial stress.
I certify that the preceding two-hundred and twenty-five (225) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.
IO - need to road test it now. Once we go, we're off the races with the TWU.
RD - road test, is what are the objectives, and are they sound. If you're taking there's no way we're going to be able to meet the objectives, then that is a real problem.
IO - if objective is variability in a COVID event, then I reckon you're playing with yourself. If its variability in labour, then all the other provides have the same difficulty that we do. QGS has capacity, as they are basically on the Award.
RD - yes but QGS, you have the same amount of labour irrespective of demand.
IO - not true. We have 5% casual and 5% perm and 90% part time who we can vary their hours.
RD - yes, the theory is fine, but you're right we need to test the practice. But if in theory you can obtain an external provider on a per turn basis. In theory, that objective is a lawful one. If you're saying that's unachievable in the market, then you're right, we need to look at that.
IO - That's too late at the RFP stage.
RD - how do we know then, how do we test it?
IO - because the market has been there for the past 30 years. ***[JO talking in background all the way through]. Can't wait till that point. We will get contracts in place that are by turn, with zero costs if zero turns - frogshit. We will get murdered in the witness box.
SB - In fairness, those questions are for the business at 5pm.
RD - no that's not a fair characterisations of the advice. What are the concerns that you have with the reasons, that you think might be unlawful.
IO - what does variability mean? If it means what you said it means, I don't think it's achievable. You have to price in massively for an event. Anyway, I might be naive, but I wouldn't sing that contract. And if you're saying the only time we work that out is when we get bits, it's too f***ing late mate.
RD - I'm just saying that the slide pack doesn't suggest that this is being done for unlawful reasons.
IO - GMC has been told we're 100% sound on legal reasons, but when I press on the reasons, we're in a world of f***ing hurt mate.
RD - the ones set out in the slide pack are ok. Variable cost base is one, second is reduced cost targets based on projections.
IO - slide pack I saw said you save $100m by going down this track vs $30m by going down the other track. Assume you've looked at that?
RD - looked at what?
IO - what causes the savings.
RD - w..
SB - well in respect of cost savings, there's a piece of work to break down the cost targets, that work hasn't been done yet.
IO - ok. [J/O - move on].
RD - I have to clarify the advice that's been given. The pack I've been given sets out the objectives for the project. Those objectives are entirely lawful. That's the advice that I've given. Now, if those objectives aren't believed, that's a problem, and enables the Court to look deeper and decide they don't believe the decision maker. We test legitimacy - how are cost targets developed? Arbitrary? Just designed to achieve outcome. I don't have instructions, have made it clear that we need to test this. Second, testing the RFPs. Now if they don't, and we have to pay a fortune to achieve variability. That raises questions. Another day it gets tested, is in the witness box.
IO - the award unless I've f***ing gone mad applies to those provides, so they're going to be limited in employing casuals. You know that. So to say there is more variability. I don't understand. I'll ask the managers.
RD - yes I agree. We need to test it and ask the managers.
IO - how does it reduce CAPEX?
RD - we have a large and impending need to purchase equipment.
IO - it's about 30 or 50m. The CAPEX we pay for. In the contract, they will have an amount for CAPEX. They will have a higher cost of capital than QAL, most do, because they don't have our rating.
SB - the other issue is that ground handling isn't a core business or competency. Thirty solution already there. Most ports already have third.
IO - so you understand, I have a view that we should be working to get out of ground handling. But, my issue is that the reasons you have been given may not stand up if the union has a good crack, and they will have a good crack.
RD - fine, but the pack that I'm talking about deals with different issues. Deals with consultation and in house bid. Sets out and identifies the obligations under the TWU with in house bid and consultation. They arise at separate times. The in house bid is obviously prior to contract award. Consultation technically is after contract award. Understand that historically there has been extensive consultation prior to contract award. But we need to go through it after contract award as well.
RD - key issue here is really IHB obligation under TWU EA. Slide 4, breaks down the provisions of that entitlement. Reasonableness undefined and unclear. But there are 2 purposes. One is to prepare and respond to the proposal. 2 is to prepare in house bid.
RD - slide 5 - we deal with some ideas about the ways that you can help shorten the time period required for an in house bid.
IO - can I just ask to begin with. One of the things we have always done when we go through these processes. Whether back room in Perth or Adelaide, or outsourcing of PER MEL and BNE airports is to have a specification that was developed by the company setting out exactly what we are asking people to tender on, what does the schedule look like, number of turns per hour, how many people, what type of aircraft. You need that to be able to give a price.
SB - question is how advanced is the business in preparing that?
IO - yes, how can you prepare bid if you're not a commercial, like these guys, if you don't have that information. You can't prepare a bid unless you know what the requirements are. So to do that, you need to know the schedule requirement, the KPIs for delivery of bag off belt, requirements for time for turnaround of aircraft, what is the cleaning spec, has it changed as a result of COVID, etc. You need to have all that data, and who is the one measuring performance? Staff? Contractor? Do you need to build into your contract a compliance group? They need that and so do the bid people and the employees? SO when you look at the date, where all this is going to be ready in about 4 weeks. I've gotta tell ya, these guys have no chance at all in having this ready. And then they have to scale up into the future, and because they're only looking at today.
SB - that is a date proffered by the business.
IO - yes I know. There's a lot of stuff in here I don't know how you can advise on. They're asking you to make assumptions that I think are a bit unfair.
RD - I'm not making assumptions - I'm told that the 29th is the day we go to market. If that isn't the date then we need to push it out.
IO - lets go through, when I was talking about asking you to do things. Your next slide on key risks. I don't know if you guys have had a look at Michael Kaine's behaviour since he became gen sec. He's running campaigns and using social media. He's a lawyer. He's going to fight. If you look at his behaviour as opposed to Sheldon. He hates us, he hates Qantas. Any idea that we're not going to have everything thrown at us. Risk profile undercooks it significantly.
SB - yeah I spoke with RD about this on Friday. I think that given the COVID pandemic, the Court might accept some shorter timeframes and things. But the converse is that the external societal and industrial response is likely to be even stronger than it would have been absent COVID situation. You've got ScoMo and Sally holding hands and talking about accords. That's probably a valid distinction. Industrial response will be extremely strong. They will through everything at delaying and frustrating process.
IO - and they have a strong view that if you want variability in labour you want casual. And one of the key things that Canberra is offering is maximum of 12 months, which is in the award anyway. Hatcher sitting in the Commission, Bromberg in the Court. Why has Qantas have this imperative? We have no competition. Hello? Is that for me Ian? Well this is the world we're in.
RD - every business has an imperative to save cost and maximise shareholder value. It's a valid objective, in fact on one view one you have to pursue.
JO - yes but we're off in reason again. Can we come back to risk. One thing we're struggling with, we don't think the moderate risks are moderate, we think they are high. The TWU will do everything to frustrate the process. And why wouldn't you when everyone is on job keeper. Very high risk of Court and Commission proceedings, they will want more time. They will want all the things you characterise as moderate. I just think UIA is probably and PIA are the only ones that are ok. The rest are all high.
RD - there might be definition issue. It is about the risk of further delay. Of course they will pursue them. But our risk rating is of them being successful.
JO - The risk is high and they will absolutely get sympathy from the FWC. What's the rush? They're on jobkeeper you're not paying their salary. We think 2 months, quite apart from how they will prepare the material in 2 months, we're disagreeing with the moderate assessment, we think it's a high risk. We think the 2 months will totally blow out.
RD - yes but the FWC doesn't have power to stop anything. No status quo power. Might get industrial pressure.
JO - WE are going to look like the biggest bastards unhung if we say to some baggage handler, and we've provided consultants to help people understand how to read a big, if we say they have 3 days, any Court or Commission in the land will embarrass us.
RD - our assessment assumed that you're giving them heals of help.
JO - you can't give them weeks and weeks if there's only 2 months in the process.
RD - have they been tested in a Court?
IO - yes in the Commission they have.
RD - we're in heated agreement about the fact that the shorter timeframe increases risk.
IO - our recommendation is to change to high. But we're giving you the benefit of industrial advice, but you can do what you like.
JO - extraordinary risk of Government and ACTU pressure. Deserves its own call out because that's not so much about time. Could also influence as a risk in its own right our relationship with government and the possibility of legislative. Change. Job keeper is to keep jobs, but Qantas can take job keeper and then make people redundant and give the work to someone that can stand people down more easily.
IO - anyway, I think its undercooked. Look, just as a hint for the future, I would have rung Simon or Ian and got some input.
RD - yes but that's why it's a draft, so we can have this discussion.
IO - but you don't want to change it.
RD - I haven't said that at all. We agree it's an aggressive timeline.
JO - but the problem is the audience that will read moderate as achievable. But the problem is these things are all high risks. Media campaign is not moderate. They have airport rallies on this Wednesday. On same job same pay and securing the supply chain. Now if we are going to sack everyone to give the work to Swissport, who he has already taken on, so to put the risks as moderate is undercooking it.
RD - if you're saying that the pack makes it sound like 2 months will be smooth sailing, then we haven't got our message right.
IO - the amount of work you're going to have to do to do 8 ports around Australia when everyone is stood down, its fanciful. Some of the yellow stuff. We will struggle, I'm prepared to put a grand on the table that it's not complete in 6 months. Other risk, is that halfway through it becomes such a shitpiss that halfway through we retreat. And if we do we will have allowed Kaine to unite his forces, when QGS has only 40 - 50% membership and we've had 2 non-union EAs. [JO - and they're a good workforce].
RD - yes, this is just about the IHB process. I'd be surprised if a Court said, sorry Qantas, despite your well reasoned objectives, we're going to injunct you.
IO - well I've just gone through why you have problems with reasons, but you've now just reverted to "if your reasons are valid". [JO - and I don't agree about the Court]. And I'm not certain about how the Court will behave. I think Bromberg will have a lot of fun if they got hold of it. There is this question of reasonableness, and I don't think 2 or 3 days will be reasonable.
RD - but I haven't said 2 or 3 days? This is a longer timeframe? 2 months? That's after they've been given all the documentation, and we're doing everything we can in our power to help them.
SB - is it worthwhile, because a number of these questions are better put to the business. Is it right to say that the timeline will also have regard to the reasons. Should we pressure test the rationale for the proposal this afternoon rather than talking about timeframe? Even though that will come as a surprise to the business.
RD - I'm in your hands.
SB - that might be a way to proceed.
RD - good to hear how the business responds to some of the questions that Ian has
IO - yes well QGS is pretty close to the award so I just don't get it. Maybe I'm just naive. Anyway.
SB - well I'll open up the meeting in that way.
IO - well the other thing is framing up the RFP. You know Simon, you've been through it, it takes forever.
SB - yes, some has been done for Crystal but yes there will be a lot left to do. Rohan are you happy to refer to a draft rationale, and use that as a way to redirect to reasons when working for the next hour.
IO - is there anything you would change in your advice now?
RD - on GP, no, but on the timeline pack, then yes we can clarify because some things seem to have been misinterpreted.
5pm meeting - includes Paul Jones; Paul Nicholas; Nat Thomson; Colin Hughes; Sonia and Simon in one room
SB - there is a link or one pager being sent around. Paul can explain it, but it shows the full gamut of options that have been considered.
PJ - ok, so I don't know how much context everyone has, because we have walked through a pack with HSF previously. Ian?
IO - well, I've seen some documents, the stuff you put to GMC the other day, but I haven't seen too much. I've seen a draft on timeframes. It's a very admirable thing you want to do, the question is whether we can get there. There's some stuff I've heard verbally on reason, which I'm a bit concerned about to be honest.
PJ - ok so let me take a step back. Some important things. As an umbrella for the company, we have been set targets for our areas. I have been given a financial target from corporate that I have to hit. And secondly, I have to be able to variables within airports the dollars over time. So there is an end point dollar number. So there is a dollar number and a variability piece to that. The third point, is that we have CAPEX needed in this business, and it's very clear that we don't want to invest capital in non-core areas of our business, and we've also got effectively a point of view of what is core and what is non-core, from an airline point of view, in terms of what other airlines do. So it's a combination of a number of those items that we are using to look at the options we have to work out what are the viable options to meet the objectives for the business. So it's about cost, variability, and core and non core, when looking at all the options in a re-start scenario. Then we also have a clear point of view about re-start. So to give you an idea, we need a domestic business of about 88%, and an international business of about 60% after 2 years. So for international for example, we won't start until the middle of next year. So international business doesn't exist until then.
PJ - so we have looked at three scenarios, we have looked at October next year when we have a better idea of what's happening, so we rightsize to then. And then in International you rightsize in October next year. That's the base line, and when you look at that, you have to be able to believe that you will be able to agree with the TWU the variability levels that you need. And there is quite a significant list of things you need to negotiate to hit the variability targets without redundancy.
PJ - then on CAPEX. So there's a second scenario, which is if you hit the cost and variability targets, and you choose when you do that, but you really want to do it up front. It aligns all your dollars to core and non-core. That end has a much higher governmental and industrial response. They are the two bookends. Then there is a middle scenario, exit out of ramp and bag. We didn't take that to Alan. Only took the two bookends. The middle scenario is quite a long way away. Then we've added two other scenarios. Alan on Friday wanted to understand the whole range of options, and then identify all the options in between so we can have a conversation around trade offs. Then the other option is broader redundancy programme. So what I thought I thought be worthwhile would be to go through the 5 options. Go through them, and then reasons. Picked up clearly on your word admirable Ian, so we want to look at the reasons issues because we will never have another time like the present.
IO - I think not being in ground handling is the right thing, I've always held that view. You know what I mean by admirable. 5 options.
CH - so we want to take steps toward that objective of getting out. Option 1 - really been the planning assumptions. Take 2 points of view of when stand down will end (Domestic - Oct / Int - Jul next year). Then go to what we think demand will be. 12 and 14% no regrets redundancies (based on 88% and 60%). Assumption this is all done on VRs. Problem with that scenario, in terms of construct. But doesn't deliver financial target $80m yr 1, $100m yr 2. So for a numbers perspective doesn't give us what we need. Because there is also about $28m worth of risk, because we need that from the TWU to get those targets. Across all work grounds, assumed can sustain stand down until Oct this year for Domestic, and Jul next year in Int.
SM - they are assumptions in any event, and further assumptions will just add layer on layer of risk.
IO - I was just thinking, if Job keeper got extended would this change the financials if we were one of the groups that got the extension, would that change financials.
CH - not on operating costs, because those costs are people who are working. Would change risk profile on surplus. Would de-risk 19+9 (value of the surplus) but wouldn't change. Conceptually Ian, stand down finishes in Oct. In, from 22 to 60 from July to July.
IO - if we got jobkeeper to subsidise for 6 months?
CH - wouldn't change cost of right sized workforce, but would change the 19m.
CH - That doesn't address GSE investment target.
IO - That's over 5 years. And if we get someone else to do the investment, that will be cheaper?
CH - yes we did RFI late last year. Got price data on cost per turn from the market. Used that market pricing in this analysis. So in other words, if you go down these scenarios. Where you get to zero, all that is a market price including deployment of capital. Other thing to add is there is serious capacity in market and will be for some time. So we know that suppliers have a lot of capital. Plus our $80m is not $80m elsewhere. We have higher specification, and our assets are much older than most other business. And that $80m is very much safety based.
IO - so how do you get - I've looked a fair bit at GSE over the years - there are some issues there. We always have different specs. I thought as part of the spec we would be requiring some levels of the capital. And we would have some capacity to maintain the operation if we have breakdown. So I'm surprised we could have a lower cost, they will have higher cost of capital.
CH - well every data point we have from the market would back these numbers in. Option 2 - what demand is there in the business in Oct, and right size to that basis. So don't have a view about 2 years out. Just looking at rightsizing at today. Future growth comes to third party. VR - this is quite bullish, to get up to 50% on VRs. Probably a debatable point. Been ambitious on VR takeup on all these options.
SB - and assumption about CRs in QAL. VR and CR in option 2.
CH - You have to do QGS because you have to do QGS before QAL if you're CRing, so you end up with a non-optimal workforce mix. Doesn't achieve financial targets. Option 3 - have baggage, FP, ramp - none is core, furthers from core, Fleet presentation. Only 2 airlines in world that clean own aircraft, and only in 4 ports. Step 1, get out of that in entirety. Then run VR in bag and ramp. That leads to about 1400 redundancies. GSE is less, obviously avoiding issues there. Option 4 - get out of bag and fleet in entirety and VR in ramp in both workgroups. Surplus in both but manageable we think. Option 5 - out entirely.
IO - variability - keeps getting mentioned as a reason we're doing this.
CH - 2 factors, have been through one of the largest structural impact airline industry ever seen. Need cost base to look at uncertain outlook. That's the main point. What we've been through over the last period time, we are essentially a fixed cost business, and we need to option to be able to do that.
IO - can I tease this out. So you're saying we get an activity based price are you? On cost per turn. And if some event happens, like we decide not to fly to gold coast, we could walk away at zero cost?
CH - well look at what's happened in some examples. Who bears cost of redundancy? They build it into cost model.
IO - that's my point. All subject to the same award.
PJ - but that's built into our numbers. The risk of redundancy. In fact of you think about it now, you have a market place right now, you have an excess capacity in the market. They have a big cost problem.
IO - The modern award is the NES. So they have a lower redundancy cost than we have.
CH - only reason this pays back is because of the penetration it gives you. You have a blended redundancy cost.
IO - but the reason for the variability is about the instrument and the labour cost. If the variability is because we don't wear the redundancy, that's a labour cost argument.
CH - yes but Ian its uncertain. Who knows what the business will look like. If demand is lower then we have much more limited options in management.
IO - with due respect you have greater flexibility in your group because QGS redundancy is less than any other group in QAL.
PJ - yes but that variability comes with massive unit cost outcome, because you can't sack QAL. We're constricting the argument. The marketplace offers services from about 5 or 6 providers that are shared. International and domestic. They have capacity and scale, they are across customers.
IO - but now you're drifting into another argument that is about white space. If I'm a contractor in an airport and I have 4 people I'm doing work for. If we pull the plug, you're not going to be able to redeploy.
PJ - but we're not the biggest. We're quite small in international.
IO - who is bigger than us in Syd. And Melbourne. Not Adelaide. Don't know about Perth.
PJ - can we go through the other pack. Because I wasn't to go through the reasons. Because Ian you're testing the reasons.
JO - bit confused about this issue of Swissport. Proposition that they are scheduled to scale back down, and can swing surplus labour to other provider. That assumes that other providers are flexing up. Because on my understanding they don't redistribute across contracts other than maybe occasionally.
PJ - cost issue is associated with labour productivity. Not just cost. Variability is in the marketplace offering.
JO - but what is the variability
PJ - the market place offers the ability to buy X amount of turns for Y price. It's why Jetstar, link and us have used it. It is the best way to address variable schedule.
JO - so they price in us switching on and off
PJ - yes they price in some variability in their pricing. But that's a matter for them. All I'm saying is that, that is a matter for them. Based on that data, it leads to option 5.
JO - so labour cost, is because less people required per turn?
PJ - don't' know, probably a whole lot of reasons built into it. Whole multitude of reasons as to why we have a different rate and capacity to be variable.
JO - so we will need to provide them cost per turn to try and match it.
PJ - yes but they would also need to match capital investment capability?
JO - no.
IO - can we get the GSE separately?
PJ - yes but have to add the cost in. It's inefficient.
PJ -slide 9. This just goes through options went through earlier on. 12% won't get back, no regrets. If only rightsizing to 188. Surplus. Where is TWU going to come from. Will want redundancy for the surplus rather than management options. What can we manage ourselves. Surplus is $37m, but think we can solve for $13m. So then there is $24m left. Things that we can't do without the union's agreement. This is option 1. Even if we get our full $37m, doesn't meet our cost targets.
PJ - slide 10.
IO - two reasons you want to do this. Variability. And I think that is risky if you look underneath it. It very easily leads into a labour cost debate. So I'm worried about that. And I've also got a niggle about CAPEX being the rationale. But I'm concerned about reason.
RD - yes, will go to Federal Court, and the reasons will be tested in cross examination.
IO - once you're into labour, you're in trouble, aren't we?
RD - potentially. But not necessarily. It all depends on what the decision maker says about the reasons. Too early to give you a number on prospects, but the reasons in the slide pack are lawful. We don't even know who the decision maker is. Who is it? What are they going to say when asked about their reasons for the decision.
IO - Paul you will be the decision maker, or Andrew David.
PJ - yes but because the financial targets have been set for me, so how far do we want to separate out the decision maker from that. It's under those constructs, including our inability to spend capital. That's what leads you to the very clear outcome here. I have met cost targets, increased variability etc. I've received all those inputs and got this result.
IO - how do you solve the issue with the above the wing.
PJ - different recommendation for above the wing - different set of charts. More core.
IO - so Linda gets a chance?
PJ - nothing to do with what union you're talking about. But also the financial payback above the wing not as good. Not the same number of operators. So market difference, and a CAPEX different. $160m above wing, $230m below. There is capital above the wing. But it's a transitional to digital.
IO - so with the 230, the savings on capital is about 16m over 5 years. That is 16m per year. How much reduction if you were to put it into an operating cost would you save by going to third party.
CH - there is a capital cost and a GSE operating costs, which is a combination of labour and parts. Workforce planning etc.
IO - won't that be costed into their bid.
CH - yes that's the benefit.
IO - they would have planning.
CH - but it won't be as expensive.
PJ - I need clarity on point of view of confidence about ability to deliver on these options. But from legal and industrial point of view, what timeline is reasonable, and what is the level of risk. Felt as though for each of these, HSF advice was we could pick these options, not without risk, but need to go to Alan tomorrow.
IO - would be very good if HSF could think more about the reasons and pressure test the reasons. I am concerned about the reasons being unstiched. But I think that if you unpick the reasons in front of a Bromberg we would be in trouble. Would be also worth getting Frank's view. We need to get a feeling for risk. Can I then come to some of the other stuff on timeline and risk for implementation. Can't wait for RFP process to pressure test. Wouldn't embark on this without a written legal advice with all the risks. Need to get Frank's views.
RD - yes advice will talk about the reasons that have been given and asking whether they are reasonable.
SM - happy to pressure test, but it's a matter of time. None of the people on this call have set the timeline.
PJ - we have said that at a surface level we think this is something you can do. Still need to go through the pressure testing process. Nothing so far that says this can't be done.
IO - I think that's a step too far. I wouldn't say that but you're entitled to. I have been through some significant outsourcing projects and there are some significant risks in timetable. Every time it has taken a significant amount of time. One thing is preparing the RFPs. I don't know where you're up to on that. But we need an RFP to give to all of the committees of the airports to sensibly provide a bid. And within that there will be various KPIs and it will be based on certain level of activity, now and in the future. And they will be putting a price on that. We also got tangled up in the FWC. We're talking 2 to 6 months. No hope in 2 months. Not even in 6. Union will play this very arso. Kaine is also very different. He will play it very different to Sheldon. He will run it very hard. He's a lawyer and likes litigation. Need to map these issues out for Alan. It's going to be a very bloody fight. And who knows where the Government will go at the moment. As I said I support the objective, but I'm very nervous about it. Those timetables won't be met. It will be very tough.
PJ - so if not option 5. Which one and why?
IO - I need to have a think about that.
PJ - putting out there. We had a cluster of COVID in Adelaide. And we turned on to Swissport within 24 hours. Also have an open legacy agreement toward the end of the year. If we don't take this opportunity we never will.
IO - comment about how difficult it is to get QAL out. Have done far better than we thought. And we have always argued that another third party should have come in along the way. Agreement on where to go, question is how. Revolution is higher risk than evolution.
PJ - it's only the IHB process that means I'd ever bring any of this back.
IO - that might be Adelaide, but it took Oceana 3 months to get ready for Jetstar.
PJ - yes but they were building a workforce. They have a stood down workforce, and we don't have flight operations. I need alignment on timeline.
IO - let's hope we're aligned, but I need to speak with HSF.
SM - Thurs.
IO - ok, Thurs. 4 - 6.
28 What does one take from these candid, contemporaneous representations? Several things are noteworthy and emerge clearly.
29 First, this was a case where proposed "reasons" were identified for a decision well in advance of it being made and legal advice was obtained as to whether the identified "reasons" would withstand scrutiny if a decision was made which had significant industrial risk.
30 Secondly, the long-standing industrial relations adviser to Qantas, Mr Oldmeadow, who had been involved in what he described as "some significant outsourcing projects", "always held" the view Qantas "not being in ground handling [was] the right thing", but was concerned (and apparently somewhat agitated) by the risk that the reasons would not withstand scrutiny (including by a senior judge of this Court he identified) and was of the view that the GMC had been told "we're 100% sound on legal reasons", but "when [he] press[ed] on the reasons, we're in a world of f**king hurt".
31 Thirdly, further connected to the issue of risk, Mr Oldmeadow perceived that Mr Kaine (the National Secretary of the Union) "will run it very hard. He's a lawyer and likes litigation" and regarded there as being a "need to map these issues out for Alan. It's going to be a very bloody fight. And who knows where the Government will go at the moment". Mr Jones was of the view that he needed "clarity on point of view of confidence about ability to deliver on these options. But from legal and industrial point of view, what timeline is reasonable, and what is the level of risk. Felt as though for each of these, HSF advice was we could pick these options, not without risk, but need to go to Alan tomorrow". Mr Joyce again did not give evidence so what he said about these matters remains mysterious, but there is no basis to conclude that the reference to "Alan" was anything other than a reference to Mr Joyce.
32 Fourthly, the identity of the decision maker was fastened upon after the reasons were identified and legal advice obtained; at the time of this meeting, the legal advice was that it was "too early to give you a number on prospects, but the reasons in the slide pack are lawful. We don't even know who the decision maker is. Who is it? What are they going to say when asked about their reasons for the decision". Qantas was advised by its solicitor that the "reasons being put forward in support of the below the wing proposal were sound" but was subject to the risk of a decision maker (who had not been settled upon) being believed in the witness box.
33 Fifthly, Qantas was also advised by its solicitor that the reasons "in support of the below the wing proposal" would be lawful but this was, "subject to ensuring that any documentation supports the reasons set out in the slide pack".
34 Sixthly, in the LJ (at 328-329 [299]), I explained that the liability case was expressly run by Qantas on the basis that there was no difference between Mr Jones' reasons for his involvement and that of Mr David and that Mr Hughes recommended the making of the outsourcing decision to Mr David and for those same reasons, Mr Jones agreed with and endorsed that recommendation; and for essentially the same reasons, Mr David made the outsourcing decision. There was no evidence there was any difference between the principal actors in: (a) the way they thought about the differences in approach between above the wing and below the wing workforces; or (b) the risks and rewards of outsourcing. In particular, the evidence (including as supplemented at this hearing) lends support to the conclusion there was no material difference between the motivations and assessments of risk of Mr Jones and his subordinate, Mr Hughes.
35 But we are still looking through a glass darkly. The reality that contemporaneous business records were prepared with an eye to eventual disclosure in litigation thought to be inevitable and the unreliability of the affidavit evidence have presented real challenges to fact finding in this case. This problem has been exacerbated by the fact that no minutes or notes were discovered of the GMC or a GMC Sub-Committee or the Project Restart Steering Committee (formed by the GMC): LJ (at 253 [22]). What was communicated orally, of which there is no record, remains obscure, and, as I found (LJ (at 283 [108])), the use of a "voice over" expedient by Mr Jones in dealing with the GMC, on one occasion, was an attempt to prevent his real views being recorded in a contemporaneous document likely to be preserved. In this regard, it is notable that one of the most revealing documents in the case (the handwritten notation from Mr Jones: "Voice-over labour Gov Lockin benefits + open EBAs 2020 DEC": see LJ (at 266-267 [63], 272 [67], 281-282 [102]-[103])) was only disclosed because a standard discovery order was made (opposed by Qantas) and because Mr Hughes just happened to scan the handwritten notes made by Mr Jones and sent the scanned annotated document to Mr Nicholas (LJ (at 266 [62])).
36 Although, in the end, these concerns about the completeness of the evidence are heightened by the revelation of specific discussions between Mr Jones and the absent Mr Joyce whereby the CEO, as early as May, "wanted to understand the whole range of options" (held at a time when Qantas "will never have another time like the present") leaves me with a sense of disquiet and uncertainty as to precisely what went on within the upper echelons of Qantas leading up to the outsourcing decision. What can be said is that any decision to outsource in 2020 was not straightforward and despite the enthusiasm of some, those with the most industrial relations experience were chary about Qantas going down the outsourcing road.
in 2021?---No.
…
Just explain how you would have gone about appraising (sic) yourself, or updating yourself, about the nature and level of the industrial relations risk in 2021?---Well, it was a very similar process to 2020. There were a number of offices, I've already said, I think. There was subcommittees within the GMC where - and I would have participated in those, and those risks would have been discussed. I would have also been briefed separately from Sonia and Paul and - and Colin in 2020, and Colin and Sonia in '21. And you assess that risk. And I understood that there was considerable risk but, at the end of the day, as the decision-maker, I had to assess those risks against the - the rewards associated with the commercial benefits of outsourcing.
…
And, just to be clear, your view - your own view - about those risks?---That they were manageable in the context of the size of the commercial rewards; in the context of the extraordinary situation we found ourselves in, and which is why initiatives like this were on the table, because of the impact of COVID on the business.
And based on your knowledge and awareness of facts and circumstances in 2021, in July and August of 2021, is there anything in those facts and circumstances that would have led you to form a different view of the level of that TWU reaction risk at that time?---No.
138 I accept the evidence that Qantas would have regarded the not insignificant risks as "manageable in the context of the size of the commercial rewards in the context of the extraordinary situation" Qantas faced in 2021, with the ongoing diminution in revenue and diminished flight activity.
139 In relation to legal risk, the approach to the making of the outsourcing decision would not have differed in any material way in counterfactual 2021. To this end, Mr David stated that (T385.1-5; T388.15-26):
HIS HONOUR: I take it to mitigate the legal risks in the counterfactual in 2021, you would have adopted the same approach as you adopted in 2020, and that is having the solicitors and counsel involved instructing you - sorry, in giving advice in relation to the process to be undertaken; would that be fair?---Yes, that's exactly right, your Honour, yes.
…
MR DALTON: Mr David, what was your understanding of the level of legal risk in 2020?---That's - I've - I will provide the same answer as I've provided in court previously. What was explained to me was that the commercial reasons for outsourcing were lawful reasons and it was on that basis that I moved ahead with this. It was on that basis that I engaged with GMC and with the board. And in counterfactual 2021, there any facts and circumstances that you're aware of that would have changed your understanding of the nature of that legal risk and the level of that legal risk?---No. If anything, the commercial imperatives had become more pressing and more urgent. The losses in - in August 2020, we made the decision. We had lost 4 billion in revenue. By this point in '21, we had lost 16 billion, and forecast it was going to be 20 by the end of the year.
140 This was not an "organic" business process whereby a decision was made and, upon it being challenged, legal advice was sought to defend it. This was lawyered all the way and up to the hilt. Processes were put in place (including such as the granting of a power of attorney as discussed in the LJ) and decision maker was selected, informed by advice from lawyers. After all, Mr David (and everyone else apparently) always thought "there would be a legal challenge in relation to any decision to outsource" (T300.36-37). Mr Hughes considered the Union would pursue any legal avenue available to oppose or delay the implementing of any outsourcing decision (T267.12-14).
141 Regarding government and media risk in the counterfactual 2021, Mr David stated that (T392.20-39):
Yes?---And it would have been a concern in '21. It was a concern because Qantas was one of the main recipients of JobKeeper. I think in total we got $850 million from the government through the JobKeeper scheme exactly as it was titled. It was designed to keep people in jobs. 50 per cent of that went directly to employees that were stood down, and the other 50 per cent was used to subsidise workers that we had stood up. So I was very cognisant, as we all were, that us outsourcing 1700 workers in the context of JobKeeper scheme was an issue that needed to be managed carefully with government. But the counterbalance to that was the huge pressure and losses Qantas was undertaking as a result of the impact of COVID on the business. And they are well-documented. By March 2021, the JobKeeper program had finished. There were some other aviation support programs underway. I believe the domestic one was tiny in comparison. I think it was about $8 million. And I think there might have been one for international, or there was one for international. I think it was $86 million. So we would have had to take all that into consideration. But when I look at that and go in 2020, we got the government to a position to understand that we had to make this decision because of the financial pressures. I'm confident we would have reached the same outcome with the government in '21 if we were in this counterfactual, ended up in this situation that we're talking about.
142 After assessing the commercial risks and benefits associated with the making of the outsourcing decision in counterfactual 2021, Qantas would have confirmed the decision and after announcing its decision, Qantas submits, with some precision, that the transition to third party providers would have occurred towards the end of 2021 or February 2022 at the latest (T201.3-5).