Fair Work Act 2009
s.604—Appeal of decision

Appeal against decision [[2016] FWC 6473] of Commissioner Ryan at Melbourne on 9 September 2016 in matter number B2016/604.

[1] On 9 September 2016, Commissioner Ryan issued a Decision 1 (“Decision”) which found that a majority of the employees of Kantfield Pty Ltd T/A Martogg & Company (“Appellant”) covered by the Manufacturing and Associated Industries and Occupations Award 2010 (“Award”) wanted to bargain for an enterprise agreement. The Commissioner made a determination2 to that effect in favour of the Australian Workers’ Union (“Respondent”) pursuant to section 237 of the Fair Work Act 2009 (Cth) (“the Act”). The Commissioner determined that a majority support determination should be made as a majority of employees engaged in the performance of work covered by the Agreement wanted to bargain with the Appellant for an enterprise agreement.

[2] On 21 September 2016, the Appellant lodged a Notice of Appeal appealing the Commissioner’s Decision. We heard the appeal on 24 October 2016 and decided to uphold the appeal and quash the original Decision. We informed the parties that we would provide reasons for reaching this conclusion. 3 Our reasons are provided below.

[3] At the hearing on 24 October 2016, Mr A. Aleksov of counsel sought permission to appear for the Appellant and Mr M. Harding of counsel sought permission to appear for the Respondent. Given the complexity of the matter, and having regard to section 596 of the Act, permission was granted to both parties to be represented.

The Decision

[4] The Commissioner identified three possible points in time that could be appropriate to determine whether a majority of employees wanted to bargain with the Appellant. Two of those possible points in time were posited by the Respondent as the initial ballot conducted on 25 May 2016 or the subsequent ballot undertaken on 8 June 2016. The third possible point in time was submitted by the Appellant as 9 September 2016, that is, the time of the decision when the Commissioner would have had the most current information available before him.

[5] The Commissioner stated that, in all of the circumstances, the time at which the petition was taken on 25 May 2016 represented the most appropriate time for determining whether a majority of employees wanted to bargain with the Appellant.

[6] Therefore, the Commissioner was satisfied and made a determination to the effect that, as at 25 May 2016, a majority of employees employed by the Appellant wanted to bargain for an enterprise agreement.

The Appeal

[7] The Appellant submitted three grounds of appeal which the Respondent disputed.

[8] At the heart of the dispute was whether the Commissioner erred in his application of section 237 of the Act. That is, regarding the decision as to whether a majority of employees want to bargain is to be made on the basis of the Respondent’s petition on 25 May 2016 or the material before the Commissioner on 9 September 2016.

Appellant’s Submissions

[9] The Appellant contended that permission to appeal should be granted on the basis that the appeal raises questions of general importance concerning the construction of section 237 of the Act. The Appellant further contended that permission to appeal should be granted on the basis that the appeal raises important issues relating to the appropriate methods in determining whether a majority of employees want to bargain.

[10] Grounds 1 and 3 of the appeal contended that Commissioner Ryan had erroneously applied sections 237(2) and 237(3) of the Act. The Appellant posited the statutory requirement under section 237 that a decision-maker arrive at a state of satisfaction as a pre-condition to an exercise of statutory power requires the decision-maker to feel an actual persuasion, an inclination of the mind towards assenting to, rather than rejecting a proposition. 4 Further, that the decision-maker is not to apply point-in-time limitations in performing their statutory task. That is, the decision is to be made on the basis of evidence as it stands at the time of the decision.5 In particular, the Appellant cited Mason J in Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, 45 (“Peko-Wallsend”):

“… there may be found in the subject matter, scope and purpose of nearly every statute conferring power to make an administrative decision an implication that the decision is to be made on the basis of the most current material available to the decision-maker.”

[11] The Appellant submitted that the presumption in Peko-Wallsend that a decision is to be made on the most current material available to the decision-maker is rebutted by section 237(2)(a)(i), namely, by the expression “at a time determined by the FWC”. However, the Appellant contended that the power conferred on the FWC to apply a point-in-time limitation under this section was directed at fixing a time to determine only the persons employed. On this basis, the Appellant contended that the section does not confer a broader power to “fix” historical or future points in time for other aspects of section 237. Consequently, the Appellant asserted that the question before the FWC under section 237(2)(a) should be whether, as at the time the FWC comes to make a decision on the question, a majority of employees (which employees may be identified as at a fixed point in time other than the time of the decision) want to bargain.

[12] Grounds 2, 4, 5 and 6 of the appeal asserted that Commissioner Ryan did not utilise an appropriate method available to him in determining whether a majority of employees wanted to bargain, and that the ballots should have been administered by the Australian Electoral Commission. The Appellant contends that, as the Commissioner considered section 237(2)(a) of the Act empowered the FWC to determine a point in time other than when a majority of employees could be said to want to bargain, this resulted in the FWC erroneously accepting the Respondent’s petition as the appropriate method for such a determination. The Appellant asserted that the Commissioner was distracted by his own view that an optional vote would most likely lead to a failure of the majority support application. In this regard, the Appellant contended there was no reason in law or in principle why the mere possibility of an employee abstaining from voting, or not voting, should be regarded as a matter of concern. Therefore, the Appellant stipulated that the Commissioner misconstrued sections 237(2) and 237(3) by considering that he was obliged to actually determine the definitive views of employees and not allow scope for inertia, neutrality or disinterest. The Appellant further submitted that the Commissioner’s misconstruction of these sections is supported by the Commissioner’s assertion that there was little or nothing the FWC could do to ensure that the employees received a balanced message. The Appellant stated such assertions were incorrect and the FWC had power under section 237(3) of the Act to provide information to employees to correct any imbalance of information. For example, the FWC could have required that an information sheet accompany any postal vote ballot papers. 6

[13] The third ground of appeal was that the decision of Commissioner Ryan gave rise to an apparent tension in authority with the decision of Senior Deputy President Richards in ASU v Regent Taxis Limited [2009] FWA 1642. This is because, as the Appellant submitted, SDP Richards impliedly adopted the same construction of section 237(2)(a) as the Appellant has in the present case.

Respondent’s Submissions

[14] The Respondent submitted that permission to appeal should not be granted and the appeal should not be upheld for four reasons.

[15] Firstly, the appeal did not raise matters of general concern. Rather, the Commissioner’s determination turned on matters specific to circumstances that were before the FWC. One such matter pertained to the Appellant’s conduct, and the effect of that conduct, immediately prior to undertaking its own compulsory ballot of all relevant employees. 7

[16] Secondly, in relation to Ground 1 posited by the Appellant, the Respondent contended it was incorrect to label what his Honour said in Peko-Wallsend as a “presumption”. Rather, the Respondent asserted, his Honour, in that case, merely observed that the subject matter, purpose and scope of a statute conferring power to make an administrative decision will usually support an inference of the kind stated. In this regard, it is contended that the terms of section 237(3) import into the assessment required by section 237(2)(a) multiple discretions on the subject of the method to be used to inform the Commissioner’s satisfaction as to the existence of a majority. Therefore, all that is necessary is that the Commission consider the method selected as appropriate to expose a majority. The Respondent noted three statutory indications in favour of this view:

(a) Section 237(2)(a) stipulates that the time at which the FWC may determine whether a majority exists is to be based on those employed at a time the FWC determines;

(b) Generally, in the course of performing this and other functions under the Act, the FWC may inform itself as it considers appropriate. 8 Nothing in section 237(2) indicates a more particular method of information is to be applied; and

(c) The Act prefers bargaining, which is made clear in sections 3(f), 134(1)(b) and 171(a) of the Act. In this regard, the discretions exercised by the FWC under section 237 are required to be exercised in ways that promote that statutory preference.

[17] The Respondent posited that it may be accepted that the decision of the Commissioner is to be made on the basis of the evidence before him in the exercise of his discretion. Further, the Respondent contended that the Appellant’s submission at [22] was of no matter. Namely, the use of the word “want” in section 237(2) is consistent with the purpose of the provision. The Respondent asserted that whether a majority “want” to bargain is a factual conclusion and, necessarily, the satisfaction exists at a point in time, or it does not, and the Commissioner had this in mind. 9 Further, the Respondent contended that the essence of the Appellant’s submissions at paragraphs [24] – [26] were that the Commissioner could not have been persuaded of the existence of a majority. The Respondent posited that this submission was baseless and, plainly, the Commission did not hold the “requisite opinion”.10 Moreover, the Respondent submitted that the Commissioner did not conclude that employees were required to be “fully informed about whether bargaining was in their interests”11 as the basis for rejecting the Appellant’s ballot as the appropriate method. Furthermore, the Respondent contended that the Appellant overlooked the fact that the Commissioner had considered and rejected reliance on the Appellant’s ballot, and had considered and rejected reliance on a further ballot conducted by the Commission or the AEC. Therefore, on those findings, the most current information available to the Commissioner was the result of the Respondent’s petition, which satisfied the Commissioner that a majority existed.

[18] Regarding Ground 3 of the Appellant’s submissions, the Respondent submitted that the Commissioner had regard to the change of mind evidence and, in doing so, he correctly observed that a person may later change their mind regardless of what method is used to test for majority support. 12 The Respondent contended that section 237 does not require an exhaustive assessment of employee intention over time by the Commission. Rather, the existence of a majority may be tested by an appropriate point in time method, such as a petition which was used. The Respondent contended that there was sufficient evidence to support the requisite state of satisfaction. Namely, if it was open to the Commissioner to select the Respondent’s petition as the appropriate method (which it is contended it was), then it was open to the Commissioner to accept its outcome. Further, any later change of mind by the employees was not determinative, and if it were, it would render section 237(2) unstable and thereby liable to assumptions or speculation about a subjective state of affairs pertaining to employees whose state of mind may change more than once according to the circumstances. Therefore, the Respondent contended that, rather than exposing a discretionary error, the Appellant merely submitted for the adoption of a different “appropriate” method on appeal.

[19] Thirdly, in relation to Grounds 2, 4, 5 and 6, the Respondent’s submissions are outlined in accordance with the following headings:

Optional Voting

[20] The Respondent contended that the Commissioner’s so-called “failure to appreciate” that it was permissible to adopt a method whereby an employee did not indicate whether or not they want to bargain under section 237(3) did not justify intervention by the Full Bench.

[21] Further, the Respondent submitted that the Commissioner was correct to point to the preference of the Act for collective bargaining and to conclude that the Commission ought not to adopt a method with a strong tendency to result in a majority not voting in favour of bargaining. In saying this, the Respondent stated the Commissioner was plainly speaking of a method that increased the likelihood of non-participation in the ballot and it was open for the Commissioner to make that assessment.

[22] The Commissioner’s “concerns about the wisdom of an optional vote” 13 were relevant to an assessment of what may or may not be an appropriate method. Moreover, no discretionary error was exposed in relation to whether the Commissioner viewed abstention from voting as a matter of concern. Further, the Respondent contended there was no merit in the Appellant’s submission that the Respondent bore the burden of persuasion and that the Appellant was entitled to the “benefit of the doubt”.

Balanced Message

[23] In relation to the Appellant’s submission that the Commissioner could have ordered a new ballot and had power under section 237(3) to ensure employees received a balanced message by the provision of information via an information sheet, the Respondent contended that it was not open to the Appellant on appeal to contend for a course of action it did not ask for. In any event, it was open to the Commissioner to reach the conclusion that he did and no error is disclosed.

The Alleged Adoption of Positions Concerning the Success or Failure of Majority Support Determinations

[24] The Respondent referred to the Appellant’s allegation that the Commissioner was “adopt[ing] positions which affect the success or failure, one way or another, of majority applications.” 14 The Respondent highlighted that what these positions may be is not identified. In referring to this allegation, the Respondent submitted the Commissioner’s stated concern was not the success or other failure of majority support applications, but rather, the effect of an optional ballot on the Commissioner’s ability to ascertain the existence of a majority.

Further Issue if Appeal is Dismissed

[25] The Respondent submitted that the Appellant was obliged under section 173 to give notice of representational rights referred to in section 173(1) no later than 14 days after 9 September 2016 (the date of the Decision). The Respondent contended the Appellant failed to do so, thereby rendering any enterprise agreement made now or, indeed, at any time after 23 September 2016 incapable of approval by the FWC. 15

[26] Due to the failure of the Appellant to comply with section 173(3), the Respondent submitted it will be necessary for the Full Bench to take further action additional to merely dismissing the appeal, should it decide that such an order is appropriate. The Respondent contended that if the appeal is dismissed, it is open to the Full Bench to vary the date the determination was made pursuant to section 603(1) of the Act, which would promote the objects of the Act.

[27] Fourthly, the Respondent contended the Appellant’s reliance on ASU v Regent Taxis Ltd [2009] FWA 1642 was misplaced. The Respondent submitted that SDP Richards, in that case, did no more than conclude at [14] that section 237(1)(a)(i) required the FWC to decide for itself, at the time of determination, the number of employees employed by the employer in order to determine whether a majority existed to support a determination being made. In particular, the Respondent noted that SDP Richards gave no consideration, expressly or impliedly, to whether a petition could support the FWC’s satisfaction that there existed a majority and so require a determination to be made.

Consideration – Permission to Appeal

[28] The FWC will grant permission to appeal only if it is in the public interest to do so. 16 The test of assessing whether a matter is in the public interest is discretionary and involves a broad value judgement.17 In GlaxoSmithKline Australia Pty Ltd v Colin Makin,18 the Full Bench summarised the test for determining the public interest as follows:

“[26] Appeals have lain on the ground that it is in the public interest that leave should be granted in the predecessors to the Act for decades. It has not been considered useful or appropriate to define the concept in other than the most general terms and we do not intend to do so. The expression ‘in the public interest’, when used in a statute, classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only by the objects of the legislation in question. [Comalco v O’Connor (1995) 131 AR 657 at p.681 per Wilcox CJ & Keely J, citing O’Sullivan v Farrer (1989) 168 CLR 210]

[27] Although the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters, it seems to us that none of those elements is present in this case.”

[29] Alternately, the second ground for granting permission to appeal is that the decision is attended with sufficient doubt to warrant its reconsideration or that substantial injustice may result if leave is refused. 19

[30] In determining whether permission to appeal should be granted we have reviewed and considered all material filed by the parties including all submissions, correspondence and relevant authorities.

[31] We find that permission to appeal should be granted in this matter. We are of the view that the appeal raises important questions concerning the application of section 237 of the Act in circumstances where the Commissioner’s discretion to determine whether a majority of employees wanted to bargain is an issue in the dispute. We consider this to be an important matter regarding the Commissioner’s approach in making such a determination and, therefore, the dispute arising in this case is a matter of public interest. It is on this basis that permission to appeal is granted.

Consideration – The Appeal

[32] We note that a decision under appeal is of a discretionary nature and such a decision can only be successfully challenged on appeal if it is shown that the discretion was not exercised correctly. We note that it is not open for us to substitute our view on the matters that fell for determination before the Commissioner in the absence of error of an appellable nature in the Commissioner’s original Decision. As the High Court said in House v The King 20:

“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.”

[33] The Appellant submitted that the Commissioner erred in construing the operation of section 237 of the Act.

[34] Section 237(2) states as follows:

Matters of which FWA must be satisfied before making a majority support determination

(2) FWA must be satisfied that:

(a) a majority of the employees:

(i) who are employed by the employer or employers at a time determined by FWA; and

(ii) who will be covered by the agreement;

want to bargain; and

(b) the employer, or employers, that will be covered by the agreement have not yet agreed to bargain, or initiated bargaining, for the agreement; and

(c) that the group of employees who will be covered by the agreement was fairly chosen; and

(d) it is reasonable in all the circumstances to make the determination.

(3)  For the purposes of paragraph (2)(a), FWA may work out whether a majority of employees want to bargain using any method FWA considers appropriate.

[35] The power to apply a time-based limitation is confined to section 237(2)(a)(i) and not section 237(2)(a) more broadly. That is, the power to apply a point-in-time limitation in section 237(2)(a)(i) is directed to fixing the time at which the FWC is to determine who are the persons employed only. Therefore, it does not confer a broader power to “fix” historical or future points in time for other aspects of section 237.

[36] In Peko-Wallsend, Mason J stated:

“… there may be found in the subject matter, scope and purpose of nearly every statute conferring power to make an administrative decision an implication that the decision is to be made on the basis of the most current material available to the decision-maker.”

[37] Applying Peko-Wallsend, it follows that the decision as to whether a majority of employees want to bargain is to be made on the basis of the most current material available at the time of the decision. Having considered all of the submissions and authorities filed by the parties, we agree that it was not open to the Commissioner to determine a point in time other than the time of the decision as the time at which a majority of employees could be said to want to bargain. As such, we are not satisfied that it was open to the Commissioner to reach the determination that he reached.

[38] Therefore, we are of the view that the Commissioner did not take into account a material consideration in the House v The King sense, namely, the most current available information to him at the time in determining whether a majority of employees wanting to bargain existed. In light of this, and having considered the relevant principles of law, we are of the view that the Appellant has demonstrated a House v The King error in the Commissioner’s decision. We are not required to identify an appellable error in every ground of appeal for there to be a quashing of the decision; a quashing of the decision is warranted upon an appeal bench identifying error in accordance with House v The King. Having identified an error in accordance with House v The King, we are, therefore, satisfied that the appeal must be upheld and that the original Decision must be quashed.

Conclusion

[39] Permission to appeal is granted.

[40] The appeal is upheld.

[41] The Decision is quashed.

[42] The matter is referred to Commissioner Johns.

VICE PRESIDENT

Appearances:

Mr A. Aleksov of counsel for the Appellant

Mr M. Harding of counsel for the Respondent

Hearing details:

10.00am

24 October 2016

Sydney by video link to Melbourne.

 1   [2016] FWC 6473.

 2   PR585288.

 3   Transcript, PN263.

 4   Plaintiff M64/2015 v Minister for Immigration (2015) 327 ALR 8, [64].

 5   Shi v Migration Agents Registration Authority (2008) 235 CLR 286; Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24, 45 (Mason J).

 6   AWU v BlueScope Lysaght [2011] FWA 7525; Australasian Meat Industry Employees Union v Churchill Management Pty Ltd [2014] FWC 1118; National Union of Workers v Adelaide Poultry & Ors [2015] FWC 1968.

 7   The Australian Workers’ Union v Kantfield Pty Ltd T/A Martogg & Company [2016] FWC 6473, [32] and [67]-[68].

 8   Fair Work Act 2009 (Cth) s 509(1).

 9   [2016] FWC 6473, [66].

 10   Respondent’s submissions, [15].

 11   Ibid.

 12   [2016] FWC 6473, [35].

 13   Respondent’s submissions, [27].

 14   Appellant’s submissions, [37].

 15   Uniline Australia Ltd [2016] FWCFB 4969, [78]-[110].

 16   Fair Work Act 2009 (Cth) s 604(2).

 17   Esso Australia Pty Ltd v AMWU; CEPU; AWU [2015] FWCFB at [6].

 18   [2010] FWAFB 5343 at [27].

 19   Esso Australia Pty Ltd v AMWU; CEPU; AWU [2015] FWCFB 210 at [7].

 20   [1936] HCA 40.

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