Application by Catalina Country Club Ltd - [2013] FWCA 2005

1

[2013] FWCA 2005

DECISION
Fair Work Act 2009 
s 225 - Application for termination of an enterprise agreement after its nominal expiry date

Catalina Country Club Ltd
(AG2012/13817)

CATALINA COUNTRY CLUB ENTERPRISE AGREEMENT 2009

Licensed and registered clubs

DEPUTY PRESIDENT SAMS SYDNEY, 17 APRIL 2013

Application to terminate expired agreement - opposition of bargaining representative -
negotiations for a new agreement - starting point of a 4% wage increase from 1 December 
2012 - one-on-one meetings - employer’s difficult financial position - cost savings, reduced 
hours and services - principles of enterprise bargaining - employer’s guarantee to maintain 
current rates of pay - limitations on terminating expired agreements - not contrary to the 
public interest - special and unique circumstances - views of the employees, employer and 
bargaining representative - application granted - retrospective operation - orders made.

BACKGROUND

[1] This decision will determine an application made under s 225 of the Fair Work Act 

2009 (the ‘Act’), which seeks the Fair Work Commission’s (the ‘Commission’) approval to

terminate the Catalina Country Club Enterprise Agreement 2009 [AE8713683] (the 

‘Agreement’). The Agreement passed its nominal expiry date of 7 September 2012, but 

continues to operate unless, or until it ceases to operate by the circumstances envisaged by s 

54(2) of the Act which are as follows:

‘(2) An enterprise agreement ceases to operate on the earlier of the following days:

(a) the day on which a termination of the agreement comes into operation under 
section 224 or 227;

(b) the day on which section 58 first has the effect that there is no employee to whom 
the agreement applies.

Note: Section 58 deals with when an enterprise agreement ceases to apply to an 
employee.’


AUSTRALIA FAIR WORK COMMISSION




 



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[2] The application to terminate the Agreement was made on 28 November 2012 by Clubs 

NSW on behalf of the Catalina Country Club Ltd (the ‘Club’). The application is opposed by 

the Liquor and Hospitality Division - United Voice (the ‘Union’), a bargaining representative 

on behalf of a number of the employees of the Club. 

[3] At the time of the hearing, the Club operated two sites in Batemans Bay, New South 

Wales - the Club and the Bowling Club - the latter being acquired by the Club in 2009/10 and 

which closed in late March 2013. Both sites presently employ 71 staff, 45 of whom are 

covered by the Agreement. They include the classifications one might ordinarily encounter in 

a registered club, such as bar stewards, waiters, cooks, general hands in the bar, kitchen and 

dining areas, gaming room attendants, security, clerical, reception and other administrative 

staff. 

[4] For some months, the Club and the Union have been negotiating a new enterprise 

agreement. However, to date they have been unsuccessful. In a ballot of the employees, on 

1 November 2012, a proposed agreement was rejected by a vote of 7 in favour and 21 against. 

As a result, the existing Agreement remains in place until replaced or terminated, pursuant to 

s 54(2)(a) of the Act. 

[5] One of the main issues in dispute concerns the Union’s insistence that a 4% pay 

increase should have been paid to employees on 1 December 2012 before any consideration 

of the terms of a new agreement. The Club insists that it is simply not in a financial position 

to accede to this claim as a starting point, or at all. In addition, it has proposed that while no 

employees will suffer a reduction in their present rates of pay, any future Minimum Wage 

decisions of the Fair Work Commission (the ‘Commission’) in July each year, under the 

Registered Licensed Clubs Award 2010 [MA000058] (the ‘Modern Award’), will be absorbed 

into the current higher rates of pay under the Agreement.

[6] The stated reason for the Club’s stance - indeed the very reason it has sought the 

Commission’s approval of this application - is that it is in such a parlous financial situation 

that it cannot afford to pay any higher rates of pay without jeopardising the hours of work 

and/or the jobs of employees of the Club. I shall return shortly to the evidence of the Club’s 

Chief Executive, Mr Daryl Wilson, in this respect.








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[7] As I apprehend it, the Union’s argument in respect of the 1 December 2012 4% pay 

increase arises from the terms of Cl 27 of the existing Agreement, which is expressed as 

follows:

‘27. Salary and allowance increases
1. The employer recognises the ongoing commitment by staff to improved 
productivity and efficiency initiatives in this agreement and rewards people both 
individually and collectively to ensure the attraction and retention of people and 
enhance their performance through appropriate pay structures and remuneration 
packages.

2. The salary increases applicable to the rates set out under this agreement shall be as 
follows:

a) The greater of CPI or 4% from the commencement of the first pay period 
after 1 December 2009; and

b) The greater of CPI or 4% from the commencement of the first pay period 
after 1 December of each year thereafter whilst this agreement is in 
operation.

3. The allowances set out in this agreement shall be increased:

a) By the value of CPI from the commencement of the first pay period after 1 
December 2009;

b) By the value of CPI from the commencement of the first pay period after 1 
December of each year thereafter whilst this agreement is in operation.

4. Increases to salary and allowances shall be rounded up to the nearest whole cent 
[My emphasis].’

[8] It is said that because the Agreement remains in force after its nominal expiry date has 

passed, the open ended words in subclause 2(b) ‘whilst this agreement is in operation’ do not 

limit the 1 December date to increases during the nominal term of the Agreement. Strictly 

speaking, this issue is not relevant to whether the Club has satisfied the tests the Commission 

is required to take into account when considering an application to terminate an agreement 

under s 226 of the Act. Nevertheless, these facts and circumstances do provide a helpful 

background to this matter and perhaps my later comments on the Union’s submissions, will 

recalibrate the negotiations towards a fruitful outcome. 

[9] Obviously, the practical effect of the grant of this application will be to revert the 

employees’ terms and conditions of employment to those set out in the Modern Award; 








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although I accept the Club’s assurances that this is not its intention. Realistically, it seems that 

the intention of the Club is to release itself from the obligation to pay a 4% salary increase 

from 1 December 2012, particularly given that it seeks that the operative date for any order 

terminating the Agreement be the date of the application (28 November 2012). Such an 

operative date would nullify the assumed basis for any claim that the 4% increase is payable 

under the terms of Cl 27 (‘whilst this agreement is in operation’, which it remained so on 1 

December 2012). I shall return to this subject later.

APPLICABLE LEGISLATION

[10] At this juncture, it is appropriate to set out below the terms of ss 225 to 227 of the Act 

and make some preliminary findings thereto:

225 Application for termination of an enterprise agreement after its nominal 
expiry date

If an enterprise agreement has passed its nominal expiry date, any of the following 
may apply to the FWC for the termination of the agreement:

(a) one or more of the employers covered by the agreement;

(b) an employee covered by the agreement;

(c) an employee organisation covered by the agreement.

226 When the FWC must terminate an enterprise agreement

If an application for the termination of an enterprise agreement is made under 
section 225, the FWC must terminate the agreement if:

(a) the FWC is satisfied that it is not contrary to the public interest to do so; 
and

(b) the FWC considers that it is appropriate to terminate the agreement taking 
into account all the circumstances including:

(i) the views of the employees, each employer, and each employee 
organisation (if any), covered by the agreement; and

(ii) the circumstances of those employees, employers and organisations 
including the likely effect that the termination will have on each of 
them.

227 When termination comes into operation








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If an enterprise agreement is terminated under section 226, the termination operates 
from the day specified in the decision to terminate the agreement.

[11] There is no doubt that the application is competently before the Commission. For the 

purposes of s 225(a) of the Act, the Club is entitled to make the application as the employer 

covered by the Agreement. I now proceed to outline the evidence adduced during the hearing 

of the application in Moruya, New South Wales on 18 March 2013.

THE EVIDENCE

For the Club

[12] Mr Wilson has been the Chief Executive Officer (CEO) of the Club since 2011,

having had 30 years experience in the club industry, particularly in financial management. Mr 

Wilson identified, in his written statement, a number of benefits which are in excess of the 

terms and conditions of the Award and the Act. These include:

‘(a) Treating the individual employee's birthday as a Public Holiday for that 
individual employee. (Clause 4 ‘Definitions and Interpretation’)

(b) Limit of 12 hours per shift and 38 hours per week for casuals. (Clause 18 
‘Casual Employment’)

(c) Salary increases of CPI or 4% from 1 December 2009 and the same 
increases for all following years of 4% per annum from 1 December each year 
whilst the Agreement is in operation. (Clause 27 ‘Salary and Allowance 
Increases’)

(d) Retention of most of the old NAPSA allowances (Clause 33 ‘First Aid 
Allowance’; Clause 34 ‘Special Clothing’ and Clause 35 ‘Tool Allowance’

(e) Inclusion of the Award provisions for shift allowances (Clause 36 ‘Broken 
Period of Work Allowance’ and Clause 42 ‘Night Shift Penalty’)

(f) Cashing out of Annual Leave (Clause 46 ‘Annual Leave’)

(g) Retention of the 1/12 annual leave component for casuals from the NAPSA.

(h) Enhanced access to Long Service Leave (Clause 49 ‘Long Service Leave’)

(i) Provision of additional paid parental leave and pre-natal leave (Clause 48 
‘Parental Leave’).

(j) Additional paid leave (Clause 52 ‘Defence Reserve Leave’; Clause 54 
‘Study Leave’ and Clause 64 ‘Cultural and Ceremonial Leave’)








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(k) Cash payment of $200 healthy lifestyle payment (Clause 61 ‘Healthy 
Lifestyle Entitlement’)

(l) 2 hours pay per employee per annum to attend Union meetings. (Clause 71 
‘Annual Union Meetings’)

(m) Retention and preservation of ‘pre 1999’ employees NAPSA provisions.’

[13] Mr Wilson claimed that there were only two Agreement terms which were of benefit 

to the Club. These are:

‘(a) Clause 19 ‘Higher Duties’ - payment of actual hours worked rather than the 
minimum 2 hours for the entitlement of payment of the whole of the shift.

(b) Meal Break only provided after more than 5 hours work. (Clause 44 ‘Rest 
Breaks’).’

He concluded that there are negligible provisions to reduce costs, increase productivity and 

increase efficiency and noted that rates of pay are 5-6% higher than the Award rates.

[14] Mr Wilson deposed that the financial position of the Club is ‘far from healthy’. In the 

last three years it has recorded losses of:

 2009/10 - $479,881

 2010/11 - $1,056,808

 2011/12 - $30,610

Labour costs had increased 33% from 2009-2011 ($2,584,059 - $3,439,181).

[15] Mr Wilson said the Club took over the Bowling Club in 2009 and formally 

amalgamated with it in 2010. In 2009 the Bowling Club was facing closure. The Club decided 

to attempt to rescue it for the benefit of the community and to save lawn bowls in the town. 

However, this has proved to be a significant financial burden on the Club of approximately $3 

million. It has proved very difficult to turn the Bowling Club’s financial position around and 

this situation continues to drain any surpluses generated from the Club. 

[16] Mr Wilson noted that while there has been an increase in overall revenue, overall 

expenditure associated with the acquisition of the Bowling Club has also increased. In 

addition, the labour costs under the current Agreement have increased significantly. Mr 








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Wilson relied on the Club’s Annual Report and Balance Sheet to demonstrate the drain on the 

Club’s resources. He identified a number of steps, taken by Management over the last three 

years, to address these concerns, such as:

 an overall reduction in rostered hours;

 some redundancies;

 reduced services and operating hours of the bar, bistro, child-minding and courtesy 

bus; and

 reduced funding to community and sporting organisations.

[17] Mr Wilson deposed that the Club would be lucky to ‘break even’ in the present 

financial year due to the continuation of very difficult circumstances. Staff hours have been 

dramatically cut, income is down 9%, although costs have been reduced by 10%. It was Mr 

Wilson’s view that the Club cannot trade out of its current financial situation if the labour 

costs in place under the Agreement remain in place. He believed that ongoing staff cuts and 

reduced hours for employees will be necessary. Mr Wilson said that Management and the 

Board were seriously considering the closure of the Bowling Club to mitigate against further 

losses.

[18] Mr Wilson outlined the current state of the negotiations for the new agreement. The 

Club’s view is that the new agreement must hold labour costs close to their existing levels, by 

moving closer to the Award provisions. 

[19] Mr Wilson believed the Union represented about 10% of the employees to be covered 

by the Agreement. He believed the draft put to the employees on 1 November 2012 was a fair 

and reasonable outcome, providing for the maintenance of current rates of pay, with projected 

Award increases absorbed into the current rates. There would be a gradual move to Award 

provisions in respect of some penalties and allowances, in addition to providing some 

flexibilities and restoring efficiencies. 

[20] Despite the negative vote for the draft agreement, Mr Wilson believed it had the 

support of the majority of employees. He claimed that when it was rejected, the Club had no 

option but to seek to terminate the Agreement. Proposals to revisit the negotiations were 

recently exchanged, but no agreement has been reached. The Club continues to maintain that 

wage costs must be reduced to more realistic levels over time, without disadvantaging or 








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impacting on the employees’ current take-home pay. To this end, a 4% wage increase from 1 

December 2012 was an increase that had not been budgeted or projected for and would have a 

significant negative impact on jobs and the employees’ hours of work.

[21] In a supplementary statement prepared in the week before the hearing, Mr Wilson 

explained that he had recently sought to canvas the views of the majority of the employees 

concerning the proposed termination of the Agreement. These views were sought in 

individual meetings held in conjunction with their six month performance reviews. He said 

there was no coercion involved in this process. He recorded the answers to a series of 

questions and asked the employees to verify their responses by signing the questionnaire. 23 

questionnaires were tendered in evidence.

[22] The terms of the questions and the preamble were as follows:

‘I’m going to ask you some questions about the termination application of the 2009 
Enterprise Agreement. The purpose of these questions is simply to gauge the views of 
the staff and get some feedback from the staff about the application. You are under no 
obligation whatsoever to answer these questions; however it’s important that we 
ascertain the views of the staff.

If you feel uncomfortable, we would be happy for you to have a witness present whilst 
we ask these questions.

When you answer the questions, it is my intention to note what you have said and at 
the end I will ask you to look at the notes that I have made and sign off to say that 
these notes are a true and correct representation of your answers. You should also be 
aware that the notes that I have taken may be used as evidence in the Fair Work 
Commission to demonstrate one way or another, the views of the staff.

1. Have you read the memo that has been sent to all staff about the application to 
terminate the EA?
Yes / No

2. Do you understand the impact the current 2009 EA has had upon the financial 
situation of the Club? Would you like some further information in relation to 
the Club?
Yes / No

3. Do you understand the impact that the current 2009 EA has had upon the hours 
of work and the number of jobs at the Club?
Yes / No

4. Are you aware that if the 2009 Agreement remains in place this will have a 
further impact on hours of work and jobs at the Club?








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Yes / No

5. Do you have any comment on that?

6. If the application is successful, the Club has given an understanding not to 
decrease your current rate of pay, do you understand what that means?
Yes / No

7. How do you feel about that?

8. In respect to the allowances and penalties, it is the Club’s position that those 
amounts will be transitioned over time back to the Award rates. Do you 
understand what that means?
Yes / No

9. How do you feel about that?

10. We will be able to have 1 more opportunity to negotiate an Agreement with the 
Union before the hearing to terminate the Agreement. Do you have any ideas 
as to what you would like to see in the Agreement, or do you have any ideas 
about what we may be able to include in the Agreement to increase 
productivity and efficiencies in the Club.

11. Is there anything further that you wish to add?’

[23] Mr Wilson said the questioning was informal and employees were told that if they felt 

uncomfortable about the process, they were not required to answer. Mr Wilson said he had 

interviewed about 75% of the employees. Accordingly, he had formed the view that the 

majority were now aware of the Club’s current financial position and the impact the 

Agreement was having on staff levels and rostered hours. He believed the majority of 

employees would prefer to retain their existing jobs, rather than maintain the current 

Agreement. They would prefer job security and were comfortable with the assurance that the 

current rates of pay will be maintained. Mr Wilson claimed that one of the Union’s members

(and a witness in this case), Ms Schuyt, had actually told him she had been misled by the 

Union regarding penalty rates. 

[24] In detailing the changes which would apply if the Agreement is terminated, Mr Wilson

believed they will have little or negligible impact on the employees’ current take-home pay. 

He added that if any individual employee is significantly impacted, he would be willing to 

make changes, if warranted. He also noted that there were a number of conditions that 

affected only a few employees. 








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[25] Mr Wilson deposed that the Board had now taken the regrettable decision to close the 

Bowling Club from 28 March 2013. The decision was taken after several unsuccessful 

attempts to introduce greater efficiencies. Unfortunately, however, the venue continued to 

record significant losses. The Club’s financial institutions had given on ultimatum in respect 

of any further finance. Despite the closure, Mr Wilson believed the Club would continue to 

record losses and that therefore the Club’s proposals must be implemented in order to avoid 

reduced hours and job losses. Nevertheless, negotiations are continuing with the employees 

and the Union in respect of a new agreement, he said. 

[26] In oral evidence, Mr Wilson updated the financial forecast of the Club for the current 

financial year. He expected a loss of approximately $100,000 and an impairment loss from the 

Bowling Club of $3.5 million. This would not include a further 4% wage increase from 

1 December 2012. The Bowling Club had been suffering losses of $10,000 a week, which left 

the Club with no other option. As a result of the closure of the Bowling Club, three staff 

would need to be redeployed.

[27] Mr Wilson said that there had been two recent meetings with the Union (6 and 13 

March 2013). However, while he conceded the Union had given ground on some minor 

issues, the guaranteed 4% wage increase remained the stumbling block. He said that any wage 

increase will result in reduced hours for employees - ‘it was that simple’. 

[28] Mr Wilson said that in relation to Ms Schuyt’s claim as to her birthday day off, 

investigations revealed she was not rostered to work on the day (Saturday) and a pro rata 

payment was made to her on the following Monday. In respect of Mr Connell’s claim as to his 

birthday day off, Mr Wilson said it was Mr Connell who had actually requested to work on 

the day. He had received an additional annual leave day. 

[29] Mr Wilson referred to the Agreement’s dispute settlement procedure and the 

maintenance of the status quo. This situation had only occurred once in the past three years 

and that dispute resulted in the Fair Work Commissioner himself being confused as to the 

wording of the dispute settlement procedure. 








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[30] In answer to questioning from me, Mr Wilson confirmed that if this application is 

successful, the existing rates of pay will be maintained and will not be reverted to the Award 

rate. However, he added that, going forward, the 4% increase was not sustainable.

[31] In cross-examination, Mr Wilson was subject to detailed questioning on the Club’s 

financial position. He made the following points:

 the Club had not traded well for six years;

 when the Club took over the Bowling Club, the Bowling Club had recorded a 

$72,000 trading loss;

 the Club made a trading loss for 2009/10 of $479, 000;

 in 2011/12 while the Club was making a small profit, this was offset by the losses 

of the Bowling Club;

 the impairment profit is the assets of the Bowling Club - the land, fixtures and 

fittings of the Bowling Club;

 it was not a wise business decision to take over the Bowling Club. It had been done 

for community minded purposes;

 the cost to the Club of the takeover of the Bowling Club was $3 million;

 the changes made to hours of work and opening hours were not major changes for 

the purposes of the consultation clause in the Agreement, as they were 

implemented to make the business more efficient. 

[32] Mr Wilson agreed that the majority of the Club’s employees are casuals. If the 

Agreement was terminated and the 1/12th annual leave loading component was removed, it 

would be absorbed in the monetary value of the wages. Mr Wilson said he had not considered 

converting casual employees to part-time as a cost-saving measure. The Union had never put 

this proposal during the negotiations. In any event, he believed the savings would be very 

minimal. Mr Wilson confirmed that the Club’s proposal for a new agreement would see any 

future Fair Work Commission increases in Award wages, absorbed into the existing rates 

under the Agreement.

[33] Mr Wilson said that before the employee vote in November 2012, information 

sessions held by the Club were poorly attended. Other information given to employees was 

‘concerning’. Mr Wilson believed that if a vote was retaken, the result would be very 








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different. His concerns went not only to the 45 employees covered by the Agreement, but the 

impact of any changes to the Agreement on the Club’s total employees of 71. 

[34] Mr Wilson was questioned about the Club’s delay in paying an earlier 4% increase 

from December 2011. He said the Union had filed a dispute with Fair Work Australia (as it 

was then known) after the employees agreed to defer the increase. It was eventually paid in 

March 2012. He agreed the Club had not sought to vary or terminate the Agreement at the 

time.  

[35] In respect of the employee questionnaires, Mr Wilson denied that employees were not 

informed their six month staff review would include voluntary questions about the Club’s 

financial position and terminating the Agreement. He added that no one had declined to do so. 

Mr Wilson wanted to get a true indication of every individual and not just the views of the 

three Union members. He did not believe the employees were intimidated by talking to the 

CEO. The employees had all been given a letter outlining the Club’s position and they were 

asked if they had any questions. In respect of Ms Schuyt, Mr Wilson said that she had actually 

said, ‘I was lied to by the Union’.

[36] Mr Wilson was questioned further about the different dispute procedures under the 

Award and the Agreement in which consent arbitration is in the Award, but arbitration by 

right is available to all employees under the Agreement. He accepted consent arbitration 

meant that both parties must agree to the Commission arbitrating the dispute. However, he did 

not consider this as a loss for employees. 

[37] Tendered through Mr Wilson was an email dated 13 March 2013 from an employee of 

the Club, Mr Phillip Thistlethwaite to Ms Cushla Hands, Business Development Manager in 

which Mr Thistlethwaite said, inter alia:

‘The purpose of this email is to state to all concerned that there is a fair proportion of 
staff members employed by Club Catalina who are satisfied with their employment 
conditions and quite happy to have the EPA [sic] revised. I for one would like to put 
on record that I am satisfied that management are doing everything possible to sustain 
a viable business at Club Catalina’

It was said that this communication was unsolicited but nevertheless, represented the views of 

a number of employees.








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[38] In re-examination, Mr Wilson gave the following evidence: 

 to his knowledge the Club had only three employees who were members of the 

Union;

 no casual employee had ever asked to be converted to part-time;

 the Club had neither expected or budgeted for the December 2012 4% wage 

increase (it had expected that either a new Agreement would be in place or the 

Club would revert to the old one);

 the Club had doubled its debt and has not reduced any debt in six years;

 employees were advised, in a memo, of the Club’s proposal to terminate the 

Agreement and why;

 employees do not usually have support persons for their performance assessments;

 the issues of consent arbitration and the status quo were raised in a recent 

negotiations meeting;

 he was aware of only one previous dispute which went to the Commission;

 the status quo position can be of benefit to both parties, as the Club would also lose 

the status quo provision in the dispute settlement procedure.

For the Union

Mr Scott Connell

[39] Mr Connell has been employed by the Club for nineteen years and is the current Union 

delegate. It was Mr Connell’s evidence that he was aware of the effect that the Club’s present

application would have on employees. Specifically, he said he could not recall being paid 

overtime for working on his birthday. 

[40] As to the Healthy Lifestyle Entitlement, he had exercised the alternative option of 

paying for $10 social membership of the Club. He was unaware of any other employees who 

had made a claim for the entitlement. Mr Connell also said that if the Agreement is terminated 

he would lose the option to ‘cash out’ some of his annual leave.

[41] Mr Connell referred to the different disputes procedures under the Agreement and the 

Award. He was concerned by the loss of binding arbitration in the absence of consent and the 

facility to maintain the status quo in the event of any dispute.








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[42] Mr Connell is a pre-1999 employee for whom certain conditions are preserved. 

However, he believed that he would lose an additional rostered day off.

[43] In further evidence in chief, Mr Connell said he believed the Union had between 22 

and 28 members. He based this assessment on personal knowledge and a list he had seen

some months ago. He agreed that that number may have reduced in recent times.

[44] In cross-examination, Mr Connell said that three members attended a Union meeting 

held on 12 March 2013 called to discuss the enterprise agreement. Mr Connell accepted that 

the evidence he was giving in these proceedings was not necessarily representative of his 

members, but concerned his own personal circumstances. Mr Connell said he had not 

approached the Club about his birthday arrangements, but he was happy with them. Mr 

Connell said that if the Award was in place, he would also lose a ten minute meal break, and 

an additional rostered day off. He agreed that the Modern Award provided for a rostered day 

off.

[45] Mr Connell said he was aware of only one dispute which went to Fair Work Australia 

in the last three years. He agreed that matter had been conciliated. He believed that if the 

Union had to rely on the consent of the Club, the Club would never agree. However, he 

accepted it could work strategically for both parties to refuse consent. He conceded that this 

outcome was fair and reasonable. Mr Connell agreed that the status quo provision in the 

Agreement was very similar to that in the Award. 

[46] In re-examination, Mr Connell acknowledged he did not have experience in 

interpreting legislation or Awards.

Ms Natasha Schuyt

[47] Ms Schuyt has been employed by the Club on a permanent part-time basis since 

October 2004. She is a single parent with a young son. Her roster includes regular weekend 

shifts. Ms Schuyt believed that she would lose weekend penalties and allowances and she will 

be financially disadvantaged if the Agreement was terminated. Ms Schuyt said she has only 

claimed once for the Healthy Lifestyle entitlement of a gym joining fee of $99. She 

understands the entitlement is not an automatic payment. 








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[48] Ms Schuyt said that she was concerned at being denied access to the Commission 

under the disputes procedure if the Club did not consent. She was also concerned about losing 

options for ‘cashing out’ long service leave, and not being paid when a public holiday falls on 

her rostered day off.

[49] In further evidence in chief, Ms Schuyt said that she attended her staff appraisal with 

Mr Wilson on 26 February 2013. She had not been advised beforehand that she would be 

asked about terminating the Agreement. She denied telling Mr Wilson that she had been 

misled by the Union about the operation of penalty rates. Rather, it was Mr Wilson who 

suggested it and she merely responded with words to the effect of ‘Why would the Union lie 

about such a matter?’ Ms Schuyt had not felt comfortable about these questions. She could 

not recall having earlier received a letter from the Club about its position concerning the 

Agreement. She agreed Mr Wilson told her she had a right to decline answering the questions. 

Regardless, she felt that she had to answer them. He did not inform her that her answers may 

end up in evidence in formal proceedings.  She signed the completed questionnaire after Mr 

Wilson briefly showed it to her.

[50] In cross-examination, Ms Schuyt could not recall if Mr Wilson read out the complete 

document to her. She agreed there had been an earlier memo on a payslip about the 

Agreement, but she probably did not take much notice of it. Another document dated 25 

February 2013, was given to her during her appraisal meeting. Ms Schuyt thought the meeting 

was just a normal discussion between an employee and an employer. She now wished that she 

had had a witness with her. 

[51] Ms Schuyt agreed that Mr Wilson had explained the effects of maintaining the 

Agreement. She had replied that she would prefer her job to remain. She acknowledged Mr 

Wilson told her that her current rate of pay would not change. However, she queried why the 

Union would be saying the opposite. She said the Union had told her, some time ago, that 

penalty rates would be affected. She agreed Mr Wilson told her that allowances would be 

transitioned over time to the Award rates. 

[52] Ms Schuyt was unable to give an approximate figure of what she would lose if the 

Agreement was terminated. She queried the Club’s assurances that the rates of pay would not 

be altered, unless there was a formal agreement to that effect. 








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[53] Ms Schuyt continued to believe that as she worked Friday - Sunday, she would be 

disadvantaged as she would lose her weekend penalty rates. Mr Arnold pursued questioning 

of Ms Schuyt as to any disadvantage and said that even if  the 17.5% annual leave component 

was removed from the Agreement, the weekend penalty rates would more than cover its loss.

[54] Ms Schuyt acknowledged she did not know how many disputes had gone to 

arbitration. However, she believed the Club would decline to give consent to allow the 

Commission to arbitrate in the event of  a dispute. She did not believe it was very fair for the 

boss to be able to decide what issue goes to arbitration and what does not. She conceded there 

was no evidence of this having happened in the past.

[55] Ms Schuyt believed that, despite her current rates of pay being maintained, they will 

fall over time as they are absorbed into the Award rate. She accepted there was no reduction

in weekend or shift penalties. Ms Schuyt said she understood that the Club had made a firm 

commitment to maintain current wage rates.  Nevertheless, she remained very unhappy about 

some penalties and allowances moving to the Award levels. 

[56] In re-examination, Ms Schuyt could not recall whether Mr Wilson had read the 

question and answer sheet word for word. She did not have an opportunity to read it during 

the session. Ms Schuyt said she had signed the questionnaire because she thought it was part 

of her staff appraisal. She claimed to have only had three staff appraisals in 8 ½ years of 

employment. She had felt comfortable participating in them in the past. 

[57] Ms Schuyt deposed that no one from the Club had advised her of the actual effects the 

termination of the Agreement would have on her. Ms Schuyt reaffirmed that her question to 

Mr Wilson was ‘Why would the Union misinform staff on penalty rates?’

SUBMISSIONS

[58] Both parties provided a written outline of submissions supplemented orally at the close 

of the evidence.

For the Club








[2013] FWCA 2005

17

[59] Mr G Arnold, from Clubs NSW, outlined the history of the making of the Agreement 

and the legislative provisions under which this application must be considered by the 

Commission. He submitted that once the Commission is satisfied that to terminate the 

Agreement would not be contrary to the public interest, and that it would be appropriate to do 

so, and having taken the views and the effects of the termination on the parties into account, 

the Commission has no discretion but to terminate the Agreement; See: Re B & D Automatic 

Access Systems Certified Agreement 1997/1998, Q3986.  

[60] It was further submitted that the public interest test is not one restricted to the 

immediate parties, but must be broadly applied; See: Kellogg Brown & Root Pty Ltd and 

others v Esso Australia Pty Ltd [2005] AIRC 72 (‘Kellogg Brown’) and Re Queensland 

Electricity Commission; Ex parte Electrical Trades Union of Australia [1987] HCA 27 (‘Re 

Queensland Electricity Commission’). 

[61] Mr Arnold relied on Mr Wilson’s evidence to demonstrate that the Agreement:

 contains few provisions which positively contribute to efficiency and productivity or 

would offset any wage increase;

 contains wage rates that are far beyond the rates in the Modern Award;

 the penalties and allowances are now well ahead of the same or similar allowances in 

the Modern Award; and

 has put the Club at a competitive disadvantage to other Clubs in the local area.

[62] Mr Arnold emphasised the poor financial position of the Club and the likelihood of 

ongoing losses into the future. Mr Wilson gave uncontested evidence of the results of these 

financial circumstances (see paras [15]-[17]).  The public interest extends beyond the Club to 

the impact its viability and possible closure has on the broader community.

[63] Mr Arnold submitted that the Agreement, in its current form, is not achieving 

productivity and is therefore inconsistent with the Objects of the Act (ss 3(f) and (g)). As a 

medium size business, the Commission should be mindful of this fact and not be particularly 

swayed by decisions of the Commission in respect of large enterprises, such as those referred 

to in Tahmoor Coal Pty Ltd re Tahmoor Colliery Enterprise Agreement 2006; Tahmoor 








[2013] FWCA 2005

18

Washery Workplace Agreement 2006 [2010] FWA 6468 (‘Tahmoor Coal’) and Re Mount 

Thorley Operations Enterprise Agreement 1996 (1999) 94 IR 57 (‘Mt Thorley’).

[64] In oral submissions, Mr Arnold said the only evidence advanced by the Union went to 

the individual impact (minor as it was) on two employees. Such evidence could not engage 

the public interest. Mr Arnold noted that the Agreement was negotiated in better times and it 

had probably not been the smartest decision of the Club to enter into the Agreement as it was. 

Mr Arnold said that, from his knowledge, the Club’s competitors all operate under the terms 

of the Modern Award. 

[65] Mr Arnold put that the Club’s recent decision to close the Bowling Club was a clear

indication of the financial position it was in. The closure will have a significant impact on the 

local community, the employees, local contractors and suppliers.

[66] Mr Arnold put that the imbalance in this case is not as Mr Acev suggests; rather, the 

imbalance lay against the Club in its efforts to negotiate a reasonable and practical enterprise 

agreement. 

[67] Mr Arnold dealt with Mr Wilson’s efforts to obtain the views of the employees. Mr 

Wilson decided it was best to seek their individual views due to the possibility that they may 

have been receiving inaccurate information or they did not understand the true effect of the 

Club’s proposals.

[68] Mr Arnold submitted that an employer is entitled to expect that the terms of an 

agreement that has been reached will be honoured. Despite the fact the Agreement remains in 

force after its nominal expiry date, the Club could not afford wage increases for which it had 

not budgeted. Mr Wilson’s view was that he was hopeful an agreement with more modest

increases would have been agreed before 1 December 2012 or, alternatively, that the existing 

Agreement would have been cancelled. He had moved swiftly to make this application on 27 

November 2012, after the Agreement’s expiry. It is that date on which any order for 

termination should operate from under s 227 of the Act.

[69] Mr Arnold submitted that even if all the employees said they did not want to terminate 

the Agreement, (which is not the evidence in this case), that would not be the exclusive test. 








[2013] FWCA 2005

19

The public interest goes much further than just the views of the employees. The Commission 

is also required to have regard to the views of the employer and each employee bargaining 

organisation. 

For the Union

[70] Mr C Acev submitted that the consideration by the Commission of the public interest 

in s 226 of the Act should be directed to the consequences of the Agreement’s termination. By 

the use of the word ‘appropriate’, the Commission should not adopt a rigid or literal definition

of the provisions and in the exercise of discretion under s 226. The Commission would also 

be mindful of the objectives of the Act. 

[71] Mr Acev relied on the decision in Mt Thorley to demonstrate that the objects of the Act 

are to encourage the making of agreements, rather than the imposition of unilateral decisions

by the employer. One of the affects of the termination of the Agreement would be to remove 

an incentive for the parties to finalise the negotiations for a new agreement; See also: 

Tahmoor Coal.

[72] Mr Acev added that the termination of the Agreement would create a substantial 

imbalance in the respective bargaining positions of the parties. The Club would achieve 

everything it wanted and would gain a ‘major windfall’ being freed of the obligation to pay

the 4% wage increase due on 1 December 2012. 

[73] Mr Acev identified the following provisions that benefit employees, the loss of which 

would be a financial advantage for the Club:

 Part 4, cl. 24(k) - Employee birthday;

 Part 2, cl 11 - Dispute Resolution procedure not requiring consent for arbitration by 

the Commission;

 Part 3, cl 14 - Probation only 3 months;

 Part 3, cl 18 - Casual minimum 3 hours engagement;

 Part 3, cl 23 - Status quo provision;

 Part 3, cl 24 - Severance pay scale higher than that under Modern Award;

 Part 4, cl 27 - 4% Salary increases each December;

 Part 4, cl 33 - First Aid Allowance higher than that under Modern Award;








[2013] FWCA 2005

20

 Part 4, cl 34 - Special clothing allowance;

 Part 4, cl 35 - Tool Allowance;

 Part 5, cl 44 - Paid ten minute rest break;

 Part 6, cl 46 - Annual leave loading calculation;

 Part 6, cl 53 - Paid Emergency Services leave;

 Part 7, cl 61 - $200 per year reimbursement for ‘Healthy Lifestyle’;

 Part 8, cl 64 - Paid cultural leave of three days; and

 Part 8, cl 71 - Paid Union meetings.

Mr Acev noted that a number of these benefits had actually been proposed by the Club in the 

2008/2009 negotiations for the Agreement. 

[74] Mr Acev acknowledged that the acquisition of the Bowling Club was, and is, the main 

reason for the Club’s financial difficulties. Its closure, while regrettable, would assist the Club 

to trade out of its current financial situation, due to a lower cost structure and the retention of 

realisable assets. 

[75] In supplementing his submissions, Mr Acev noted that the Agreement was actually 

prepared by the Club without any Union involvement. It cannot now blame the perceived 

failings of the Agreement on the employees. Mr Acev claimed that the Club has simply 

presented insufficient evidence to demonstrate that the Agreement should be terminated. He 

was very critical of Mr Wilson’s reliance on one-on-one meetings with employees, when the 

only other person who gave evidence about the meetings gave a very different picture of what 

had occurred. Moreover, the only reliable evidence of the employees’ views was the 

overwhelming rejection of the Club’s enterprise agreement in a secret ballot in November 

2012. The result demonstrated that it was not only Union members who shared the Union’s 

views.

[76] Mr Acev said that it was very naive to think that an employee faced with a reduction in 

hours or remuneration would not agree with the boss. The results of the meetings could not be 

objective without the employees being subject to cross examination.








[2013] FWCA 2005

21

[77] On the other hand, Mr Acev said the Commission would feel comfortable in relying on 

the views of Mr Connell and Ms Schuyt who, despite any formal training, knew what would 

be lost in terminating the Agreement and how it would affect them and other employees.

[78] Mr Acev submitted that the Club’s financial position was one of its own making. Poor 

business decisions should not mean employees lose benefits or conditions. The termination of 

the Agreement would also result in the arbitrary removal of whatever ‘is in the bag’ to 

negotiate with. This outcome seriously undermines the bargaining process. Mr Acev

acknowledged that the Agreement was a very attractive deal, which is why it is being so 

passionately defended.

[79] Mr Acev opposed any retrospective operation of an order to terminate the Agreement, 

should the Commission be satisfied it must make such an order. The date of the application 

would provide a further ‘windfall’ for the Club by denying employees their right to 4% wage 

increases from 1 December 2012. He submitted that just because the wording of the clause is 

unique, if does not follow that it should not be honoured as a valid and operative clause.

[80] In reply, Mr Arnold conceded that the acquisition of the Bowling Club may not have 

been the best decision for the Club, but such decisions are made by clubs because of their

community presence and focus. By 2009, he Bowling Club was already in strife and there was 

an expectation its financial position could be reversed.

[81] Mr Arnold noted that Ms Schuyt’s evidence that the termination of the Agreement 

would result in a loss of penalty rates was wrong. This probably arose from misinformation 

from the other side. 

CONSIDERATION

Relevant principles and authorities

[82] Both parties relied on a number of authorities, the majority of which were decided 

under the corresponding provisions under the Workplace Relations Act 1996 (WR Act). 

[83] Section 170MH(1)(2) and (3) of the WR Act provided as follows:








[2013] FWCA 2005

22

“170MH Terminating a certified agreement in public interest after nominal 
expiry date

            (1) After the nominal expiry date of a certified agreement:

                    (a) the employer; or

                    (b) a majority of the employees whose employment is subject to 
the agreement; or

                    (c) an organisation of employees that is bound by the agreement 
and that has at least one member whose employment is subject to the 
agreement;

may apply to the Commission to have the agreement terminated.

            (2) On receiving the application, the Commission must take such steps as it 
considers appropriate to obtain the views of persons bound by the agreement about 
whether it should be terminated.

            (3) If, after complying with subsection (2), the Commission considers that it is 
not contrary to the public interest to terminate the agreement, the Commission must, 
by order, terminate the agreement.

[84] It will be readily apparent that while both s 226 of the Act and s 170MH(2) and (3) of 

the WR Act require the Commission to ‘consider that it is not contrary to the public interest to 

terminate the agreement’, the Fair Work Act imports a new and significant factor for the 

Commission to take into account. I shall come back to this matter momentarily.

[85] Two decisions by single members under the current Act were also cited. There is 

apparently no Full Bench guidance relevant to the provisions of s 226 of the Act. That said, I 

note that all of the authorities have at least one common feature. The effect of terminating a 

particular agreement was that employees covered by the agreement would suffer some 

financial detriment by reverting to the Award safety net or the Modern Award. For example, 

in Mt Thorley it was said to be a loss of $5,000 and in Trade Polishers Pty Ltd v Automotive, 

food, Metals, Engineering, Printing and Kindred Industries Union [2003] AIRC 1394 (‘Trade 

Polishers’), the loss of an enhanced severance package. 

[86] These were important considerations which the Commission took into account and 

would also inform the Commission as to why employees would obviously not have agreed to 

the termination of their Agreement. To my mind, the circumstances of this case are different,

at least in this discrete aspect. No employee is to suffer a reduction in their current rates of








[2013] FWCA 2005

23

pay, notwithstanding that the Award rate will be lower if the Agreement is terminated. In 

other words, given the guarantees made to the employees and this Commission by the Club, 

the effect of the termination of the Agreement will not result in any loss of current earnings. I 

note however, that future Minimum Wage increases will be absorbed into the current rates 

and some other conditions will be lost or absorbed over time.

[87] I turn now to the notion of the public interest in the present context. Of course, as 

Boulton J said in Mt Thorley: ‘the public interest is a broad concept and embraces 

considerations beyond the interests of the immediate parties before the Commission.’ There is 

nothing particularly remarkable about this statement; See also: Re Queensland Electricity 

Commission and Re Australian Insurance Employee Union; Ex parte Academy Insurance Pty 

Ltd (1988) 28 IR 214. In Kellogg Brown, the Full Bench said: 

‘[23] The notion of public interest refers to matters that might affect the public as a 
whole such as the achievement or otherwise of the various objects of the Act, 
employment levels, inflation, and the maintenance of proper industrial standards. An 
example of something in the last category may be a case in which there was no 
applicable award and the termination of the agreement would lead to an absence of 
award coverage for the employees. While the content of the notion of public interest 
cannot be precisely defined, it is distinct in nature from the interests of the parties. And 
although the public interest and the interests of the parties may be simultaneously 
affected, that fact does not lessen the distinction between them.’

[88] That said, however, I agree with Lawler VP that the statutory provisions in respect of

terminating agreements under the WR Act focussed on the public interest test alone; See: 

Kellogg Brown, supra above. The provisions of s 226 of the current Act require another 

discretionary consideration due to the use of the word ‘appropriate’ in s 226(b). Both legs of s

226 must be considered before the mandatory trigger to terminate is pulled. In this respect, his 

Honour observed at paragraph 33:

‘[33] While there is a history of provisions empowering the AIRC to terminate 
statutory collective agreements, prior to the enactment of s.226 of the FW Act the 
focus on when that power should be exercised has been on “the public interest”. 
Section 226 of the FW Act is the first time that this power has been made subject to a 
criterion of “appropriateness”. The inclusion of that criterion is of particular 
significance and means that some of the earlier authorities are of limited assistance in 
determining whether the termination of an expired agreement is “appropriate”.’

[89] After discussing the meaning of ‘appropriate’ his Honour posed these questions:








[2013] FWCA 2005

24

‘[38] How, then, is the tribunal to determine when a termination will be appropriate? 
What are the criteria by which appropriateness is to be determined?

[39] It goes without saying that what is effectively a discretion conferred by s.226 
must be exercised judicially, that is, in accordance with the intent of the legislation and 
any principles emerging from the authorities, and not on the basis of any personal 
whim or ideological predisposition. The problem as things presently stand is that there 
is little by way of developed principle to guide the exercise of the effective discretion 
conferred by s.226.’

Views of the Employees

[90] There was much debate during the course of the proceedings, as to the genuine views 

of the employees concerning the termination of the Agreement and its consequences. This is 

obviously a relevant matter I am required to take into account under s 226 of the Act. 

[91] It hardly needs saying in these circumstances, that this issue is subject to claims and 

counter-claims by the opposing parties. Apart from the impracticability of the Commission 

undertaking an exercise of ascertaining the views of each and every employee to be effected, 

there are various options, including a secret ballot, which can be open to objective analysis as 

to the views of the employees. A union will often rely on the results of meetings of members, 

a petition or survey (as in Trade Polishers) or, as in this case, a representative sample of the 

affected employees. 

[92] On the other hand, Mr Wilson took a direct, and rather unconventional approach - no 

doubt driven by the fact that the Union does not represent all employees and probably not 

even the majority affected. While I do not cavil with the sincerity of Mr Wilson’s motivation 

or his assessment of what the employees told him in one-on-one meetings, I must say, I find 

this approach a little unorthodox and somewhat unrealistic. Despite assuring employees that 

their answers were voluntary and would not be adversely used against them, it seems to me 

that the tone and implication of the questions, particularly in the context of being asked during 

their six month performance reviews, had the effect that an overwhelming endorsement of 

their employer’s position was more than likely to be the result. After all, if it boils down to an 

answer to questions which imply higher rates of pay or no job at all, it is not too difficult to 

imagine what the answers are likely to be. This is especially relevant when the questioner is 

not only a management person, but someone of no less status than the CEO. 








[2013] FWCA 2005

25

[93] That is not to say that the results of the one-on-one meetings between Mr Wilson and 

the employees should be discounted entirely. I only observe that such evidence should be 

treated with some caution. This is particularly so given, firstly, Ms Schuyt’s evidence about 

the distortion of the answers she gave as recorded by Mr Wilson; secondly, the recent 

agreement vote which was overwhelmingly against the Club’s proposal; and thirdly, the 

inability to properly test the views of the employees in a proper evidentiary sense.

[94] Mr Wilson asserted that the Union did not represent the majority of the employees to 

be covered by the Agreement, and it had misled the employees as to the true effect of the 

Club’s position. I do not doubt that in a heated ‘battle’ for the hearts and minds of employees 

in circumstances where conditions or entitlements are at risk, campaign rhetoric may not 

exactly match the facts. However, I would not expect a responsible Union, such as United 

Voice, to deliberately misrepresent the factual position. Even if it did, it was entirely open for 

the Club to take whatever steps were necessary to inform employees of the true position. 

Obviously, it was in a far better strategic position to do so. From the material I have seen thus 

far, that is exactly what it has done. It may well have been successful.

[95] The Union strongly denied that it had misled the employees as to the effect of 

terminating the Agreement. However, on Ms Schuyt’s evidence, it would appear she 

misunderstands the Club’s position. She claimed that she would not receive ‘the value of 

weekend penalties or allowances I get for working weekends’. This is incorrect. Her oral 

evidence demonstrated that she had an incorrect understanding of the effect the termination of

the Agreement would have on her. If her position is representative of other employees, it is 

little wonder the vote for the new agreement was lost. Importantly, however, it casts some 

doubt on the Union claim of widespread hostility to the Club’s position and gives greater 

weight to the outcome of the one-on-one meetings Mr Wilson had with employees. 

[96] That said, I do not doubt that termination of the Agreement will result in some 

detriment to the employees, although specifically not in respect to penalty rates. There 

appears to be a consensus as to the effect of terminating the Agreement on employees (see 

para [12] and [73] above). The task of the Commission is to balance these detriments with the 

public interest. In any event, it is not inconceivable that further negotiations for a new 

agreement may result in some or all of the identified losses being restored or modified. To my 








[2013] FWCA 2005

26

mind, the real problem for the Club is the impact a 4% wage increase upfront will have on its 

bottom line.

[97] The Club also relied on an email from Mr Thistlethwaite. While I allowed the limited 

tender of the email, given that Mr Thistlethwaite purported to represent the views of others 

and was not available for cross examination, little weight can be attached to this evidence. It 

was hearsay on hearsay.

[98] Two further matters need mentioning. Firstly, it is completely understandable that 

most employees will resist any detrimental change to their conditions or entitlements. It is 

only human nature. However, this statutory exercise is not a popularity contest. This section 

of the Act expressly sets out that it may not be contrary to the public interest to terminate an 

expired enterprise agreement notwithstanding the opposing views of the Union or the 

employees. Of course, their views are relevant and important, but not decisive. It seems to me 

that should the Agreement not be terminated, the effect on employees may be that their

current income is reduced, or, more drastically, they may have no job at all, because of the 

Club’s genuine financial difficulties. I accept this is not a threat, but a reality. In my opinion, 

such a consequence must enliven the public interest. It would be derelict of the Commission 

to ignore such a consequence. 

[99] Secondly, as I have just mentioned, the views of the employees are not the only 

matters which the Commission must take into account in this case. On the face of the clear

statutory provisions, no one single factor has primacy over the others, which includes all of 

the circumstances, such as the views of the employer, employees and the Union and the effect 

of the termination of the Agreement on the employees, the employers and the Union. In my 

opinion, the effects of not doing so, are also relevant considerations. In this respect I refer to 

the views of Munro J in Joy Manufacturing Co Pty Ltd - re Joy Mining Machinery (Moss 

Vale Site) Certified Agreement 1998 [2000] AIRC 335 (‘Joy Manufacturing’) at paras [33]-

[34]:

‘[33] The Act does not require determinative weight to be given to the views of persons 
bound by the relevant agreement. Rather it would appear that such views merely create 
the framework within which to assess the determinative consideration, contrariety with 
the public interest. Presumably, if all persons bound support the termination of the 
Agreement, no need exists for a close scrutiny of public interest considerations. Where 
some persons bound seek in effect to have the Act operate to continue the relevant 
agreement in force, the issue that is thereby raised is to be resolved by a determination 








[2013] FWCA 2005

27

as to whether termination of the relevant agreement would be against the public 
interest. In that determination, the factors and considerations most likely to be relevant 
to the assessment of the public interest are those advanced by persons bound by the 
agreement who oppose the application for termination of it.

Identifying the Public Interest and Considerations Relevant to It:

[34] However, it does not follow, in my view, that all considerations that may appear 
to be relevant to the merits of terminating an agreement from the parties point of view 
are considerations relevant to establishing public interest in the effect of terminating 
an agreement. The public interest is, or should be treated as a term of art. The public 
interest may be different to that of the parties. The concept of public interest is often 
difficult to apply. That is because it depends upon an assessment of considerations and 
values often of an abstract character, that are taken to constitute it. The concept of 
public interest does not in my view embrace considerations which are essentially 
derivative from the individual interest of the employer, or employees. That is not to 
deny an individual interest may have an overlapping public interest dimension. The 
individual interest in freedom of association, or in freedom from certain kinds of 
discrimination, is an instance. However, in my view, it is necessary to examine 
whether a consideration does go in any material or substantive way to the public 
interest as distinct from the interests of the protagonists before the Commission.’

[100] One further matter seems to me to be of some significance when balancing the views 

of the employees, the employers and the Union. The Union put no conclusive evidence as to 

the proportion of the 45 employees who are to be covered by the new agreement, who are 

Union members. On one view, this might be irrelevant, particularly considering the 

overwhelming vote against the draft agreement in November 2012. Of course, one cannot 

make the assumption that the majority against were all Union members. Indeed, I doubt they 

were. I understand the Union relied on the fact that they were not all Union members to 

demonstrate a wider view that its position is supported by Union and non-Union members 

alike. I do not necessarily see it that way.

[101] Mr Wilson’s resort to one-on-one meetings was triggered by his belief that the Union 

had very few members - maybe three or four. Both Union witnesses were Union members and 

Mr Connell is the Union delegate. A Union convened meeting attracted only three employees. 

Mr Acev said he believed the membership to be ‘roughly between 22 and 28’, yet he provided 

no other evidence or views of the employees, save for Mr Connell and Ms Schuyt. 

[102] In my opinion, the number of Union members is likely to be under 10 and certainly 

not the majority who are covered by the Agreement. I turn now to the financial circumstances 

of the Club. 








[2013] FWCA 2005

28

The Club’s financial position

[103] Mr Acev sought to debunk the Club’s assertions of financial difficulties by selectively 

referring Mr Wilson to comments in the Club’s financial reports. Despite Mr Acev’s valiant

endeavours, I do not think he, or the Union, seriously doubt the financial difficulties being 

experienced by the Club. Moreover, the Union has not established any sound basis for 

believing it was otherwise.

[104] The reality is that the Club has not made a profit for over three years and has suffered 

cumulative losses of $1,567,299 during this period (noting, although it may be coincidence, 

the period corresponds with the nominal term of the Agreement). The Club’s position has 

been exacerbated by its acquisition of the Bowling Club in 2009. While this decision was 

seemingly well motivated by a strong community spirit, it was probably a poor fiscal decision

in hindsight. There was no challenge to the Club’s records or Mr Wilson’s evidence that this 

acquisition had drained at least $3 million from the Club’s resources in a very short period. 

Nor was there any challenge to the evidence of cost cutting measures Mr Wilson referred to at 

para [16] above. In addition, there was no contradiction to Mr Wilson’s assertion that the 

Club was unlikely to break even this financial year with its present cost structure. In a 

dramatic recent development, the Club has regrettably made the decision to close the Bowling 

Club on 28 March 2013. 

[105] Given all of these circumstances, one is led to the inevitable conclusion that the Club 

will continue to haemorrhage financially, at least in the short term. Mr Wilson strongly 

asserted that the only measure to avoid further cutting employees’ hours or jobs is to retain 

the existing labour cost structure, without adding to it. This means offering no further wage 

increases or improvements in conditions in a new agreement, albeit with a guarantee that no 

employee’s pay will be reduced. However, any future Minimum Wage Review increases are 

to be absorbed into the current higher rates under the Agreement. 

[106] Given the factual matrix and Mr Wilson’s long experience in club administration and 

finance, I am prepared to accept his evidence in this respect. There was no evidence to the 

contrary. 








[2013] FWCA 2005

29

[107] It seems to me that the role of the Commission, in the present context, is to facilitate 

the best outcome for the Club’s long term future and for the employees’ jobs and income 

security. If that is what the policy intent of s 225 to s 227 is, then I wholeheartedly and gladly 

embrace it. In addition one should not lose sight of both the objects of the Act and the objects 

of this Part specifically. 

[108] Objects (f) and (g) of the Act are as follows:

‘(f) achieving productivity and fairness through an emphasis on enterprise-level 
collective bargaining underpinned by simple good faith bargaining obligations and 
clear rules governing industrial action; and

(g) acknowledging the special circumstances of small and medium-sized businesses.’

[109] Section 171 of the Act introducing Part 2-4 is as follows: 

‘171 Objects of this Part

The objects of this Part are:

(a) to provide a simple, flexible and fair framework that enables collective 
bargaining in good faith, particularly at the enterprise level, for enterprise 
agreements that deliver productivity benefits; and

(b) to enable the FWC to facilitate good faith bargaining and the making of 
enterprise agreements, including through:

(i) making bargaining orders; and

(ii) dealing with disputes where the bargaining representatives request 
assistance; and

(iii) ensuring that applications to the FWC for approval of enterprise 
agreements are dealt with without delay.’

[110] Lawler VP in Tahmoor Coal stressed the relevance of the objects of the Act in the 

present context. He said at paras [49]-[51]:

‘[49] The objects in s.3(f) and s.171(a) are particularly relevant. They indicate that 
collective bargaining in good faith for an enterprise agreement is the central way in 
which, in the framework that has been established by the FW Act, productivity 
benefits are to be achieved. 








[2013] FWCA 2005

30

[50] The object in s.171(b) is also clearly relevant. It emphasises that a key role of 
FWA is to facilitate good faith bargaining and the making of enterprise agreements. 
This suggests that that one of the effects of termination which should be considered is 
whether termination will enhance or reduce the prospects of the parties concluding a 
new agreement through bargaining. 

[51] The object in s.3(a) is advanced by a termination of an agreement where this 
would promote productivity. However, the object in s.3(a) is expressed in general 
terms whereas the objects in s.3(f) and s.171(a) are more specific. Given that principle 
of construction that the specific overrides the general, this suggests that the emphasis 
on promoting productivity (part of the object in s.3(a)) is primarily to be achieved 
through collective bargaining in good faith (the objects in s.3(f) and s.171) rather than 
by other means, such as termination of an expired agreement.’

[111] His Honour went on to say at paras [54]-[55]:

‘[54] I respectfully agree with his Honour that it is not intended by the legislation that 
agreements should remain in place indefinitely and that it is unreasonable to lock an 
expired agreement in place indefinitely. On the other hand, this does not mean that a
party to an agreement has a prima facie right to have the agreement terminated merely 
because the agreement has passed its nominal expiry date. 

[55] It seems to me that under the scheme of the FW Act, generally speaking, it will 
not be appropriate to terminate an agreement that has passed its nominal expiry date if 
bargaining for a replacement agreement is ongoing such that there remains a 
reasonable prospect that bargaining (in conjunction with protected industrial action 
and or employer response action) will result in a new agreement. This will be so even 
where the bargaining has become protracted because a party is advancing claims for 
changes that are particularly unpalatable to the other party. While every case will turn 
on its own circumstances, the precedence assigned to achieving productivity benefits 
through bargaining, evident in the objects of the FW Act, suggests that it will 
generally be inappropriate for FWA to interfere in the bargaining process so as to 
substantially alter the status quo in relation to the balance of bargaining between the 
parties so as to deliver to one of the bargaining parties effectively all that it seeks from 
the bargaining.’

1 December 2012 wage increase

[112] On any objective view, the terms and conditions of the Club’s existing Agreement are 

generous, particularly given the current state of the club industry in regional New South 

Wales. Mr Acev conceded as much. It is perhaps unhelpful and unnecessary to speculate on 

the reasons why the 2009 negotiations produced the result they did. Unexceptionally, the 

Union’s position for the next agreement is to build on its earlier achievements from a starting 

point of a 4% wage increase said to be payable from 1 December 2012. The Club denies that 

it has an obligation to pay the increase, but more importantly, it cannot afford to do so, given 

its present dire financial position. 








[2013] FWCA 2005

31

[113] The more general question to be answered here is whether wage increases, specified as 

applying on an unlimited annual basis, continue to be payable after the expiry of the 

Agreement’s nominal term. Neither party could identify any authority of the Commission as 

to this specific point. Similarly, my research has been unable to uncover any assistance in this 

regard. At the outset, I would observe that the relevant clause (see para [7]) was poorly 

drafted. In the strict sense, I can appreciate why the Union believes that its interpretation is 

correct. Nevertheless, it would appear no action has been initiated by the Union for a breach 

of the Agreement or to otherwise have its interpretation of the provision tested; See:

Postscript later.

[114] That said, for my own part, I consider that the Union’s position is untenable as a 

matter of principle and logic. I make this finding for the following reasons: Firstly, the

fundamental principle underpinning enterprise bargaining is to provide certainty to the parties 

as to wages and conditions during the nominal term of an agreement. For the employees, this 

usually means a guaranteed regular wage outcome over a number of years and for the 

employer, the capacity to budget and forward plan with the certainty of known outcomes 

locked in. As Watson VP said in Energy Resources of Australia Ltd v Liquor, Hospitality and 

Miscellaneous Union [2010] FWA 2434 at paragraph 26:

‘It is clear that enterprise agreements are intended to apply for a limited period and 
either be renegotiated, renewed, varied, replaced, terminated or left unaltered 
depending on negotiations between the parties and the operation of the legislative 
provisions.’

[115] Secondly, it seems to me that the principles underpinning enterprise bargaining would 

be further undermined because there may be reluctance on the part of a Union or the 

employees to negotiate a new agreement based on a serious change in the employer’s

financial circumstances. To illustrate my point - assume a very good agreement is negotiated 

in good times for regular, but non-specified, six month wage increases of 4%. At, or near, the 

expiry of the agreement, the employer is keen to negotiate a new agreement to address a 

dramatic turnaround in its financial situation. The Union could simply delay and obfuscate 

over the employer’s request and maintain that any wage increases falling due after the expiry 

of the agreement’s nominal term, should continue to be applied. To me, such an outcome 

would discourage bargaining and be inconsistent with the principles of enterprise bargaining 

and the objects of the Act.








[2013] FWCA 2005

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[116] Thirdly, in the absence of any evidence to the contrary, I simply cannot imagine that it 

was the parties’ intention when they negotiated the Agreement that wage increases would 

continue to occur after the Agreement’s nominal term. It is trite to observe that wages and 

salaries are usually the central focus of any agreement negotiations. Specificity and certainty 

is critical to the employer making wage offers which it considers realistic and affordable. It 

would be nonsense to assume the employer would enter into meaningful negotiations 

knowing that it had agreed to wages outcomes beyond the life of the agreement it had 

committed to. While I have not been asked to interpret the meaning of the words in Cl 27 it 

seems to me that the following passage concerning the interpretation of industrial instruments 

of Madgwick J in Kucks v CSR Ltd (1996) 66 IR 182, is apposite in this case:

‘It is trite that narrow or pedantic approaches to the interpretation of an award are 
misplaced. The search is for the meaning intended by the framer(s) of the document, 
bearing in mind that such framer(s) were likely of a practical bent of mind: they may 
well have been more concerned with expressing an intention in ways likely to have 
been understood in the context of the relevant industry and industrial relations 
environment than with legal niceties or jargon. Thus, for example, it is justifiable to 
read the award to give effect to its evident purposes, having regard to such context, 
despite mere inconsistencies or infelicities of expression which might tend to some 
other reading. And meanings which avoid inconvenience or injustice may reasonably 
be strained for. For reasons such as these, expressions which have been held in the case 
of other instruments to have been used to mean particular things may sensibly and 
properly be held to mean something else in the document at hand.’

[117] Fourthly, I do not think that in its ‘heart of hearts’ the Union really believes it is 

justified in maintaining its position. Mr Acev described the Club’s refusal to pay the increase 

as a ‘windfall’ for it. On sober reflection, I rather think that it is the other way round.

[118] Fifthly, while not expressly stated in the Act, there is no doubt that expired enterprise 

agreements continue in force and operation beyond their nominal term, unless one of three 

circumstances occur:

 the Agreement is terminated by agreement between the employer and the 

employees, pursuant to s 223 of the Act. This will usually occur as a result of the 

negotiations for a replacement Agreement for the expired one;

 the Agreement is terminated under s 226 of the Act (as is sought here); and








[2013] FWCA 2005

33

 the Agreement is replaced by a new Agreement covering the same employer and 

employees. (ss 54(2)(b) and 58).

  

[119] It may be safely assumed that the legislature has deliberately made it more difficult to

terminate an existing expired agreement because, unlike its predecessor legislation, there is no 

capacity for the unilateral termination by an employer of an expired agreement, simply upon 

the giving of written notice. It follows that the continued operation of an expired agreement is 

desirable for the following policy reasons:

 it permits the parties to negotiate from the standpoint of the status quo and there is 

no significant shift in the balance of the forces of bargaining; and

 employees do not suffer an immediate reduction in the terms and conditions of 

their expired agreement.

Roe C said in Royal Automotive Club of Victoria [2010] FWA 3483 at para [23]:

‘It has certainly been the case since the introduction of a legislative scheme for 
collective bargaining in Australia that the platform for bargaining replacement 
agreements has been with very few exceptions the old agreement.’

[120] When viewed in this light, it seems to me the position of the Union is even more 

unsustainable. This is so because:

 the status quo at the expiry of the Agreement is not maintained. The Union has a 

clear unforeseen advantage in the negotiations, even where they had not yet 

commenced;

 the platform for bargaining for a replacement Agreement is not the old Agreement, 

but rather the old Agreement plus 4%;

 the Club has given unequivocal assurances that no employee’s base rate of pay as it 

was at the expiry of the Agreement will be reduced, even if the effects of the s 226 

application reverts employees to the terms and conditions of the Award.

[121] Sixthly, there must be some doubt that the Union is bargaining in good faith if it 

insists on a condition precedent before any other agreement or revised terms or conditions for 

a new agreement with the Club are considered.








[2013] FWCA 2005

34

[122] Seventhly, many agreements have a provision which requires the parties to commence 

negotiations for a new agreement prior to the agreement’s expiry. One of the reasons for this 

is precisely to avoid the current difficulty arising. Of course, I am conscious of the fact that in 

some negotiations the employer and the bargaining representatives will agree to apply any 

changes not yet agreed upon, from the expiry of the replaced agreement. But this topic

becomes an ingredient itself in the melting pot of the negotiations.

[123] In my view, while ss 226(a) and (b) are separate considerations, there will often be an 

overlap between the views of the parties, any effect on them and the public interest. See: Joy 

Manufacturing, supra above. For example, it would not be contrary to the public interest to 

terminate the Agreement if the effect on the employees of not doing so was reduced hours of 

work or the loss of employment in a small regional community. Given this overlap, I find that 

it would be appropriate to terminate the Agreement after having had regard to the views of the 

employees, the employer and the Union and the likely effect on them by doing so. In 

summary, my reasons for doing so are as follows:

 no employee will suffer a reduction in their existing rate of pay, notwithstanding 

that it is higher than the Modern Award rate;

 even if the result of termination was to place the employees on the Modern Award 

rates, this could not be said to be contrary to the public interest unless, other 

particular circumstances applied;

 the terms of a new agreement should be finalised on a sounder footing, without 

uncertainty, speculation or unrealistic expectations;

 there is no evidence that the Club is seeking to reduce wages and conditions as a 

tactic in bargaining;

 the parties are well aware of their respective positions as to the terms of a new 

agreement, and are unlikely to move in any substantive way;

 there has been no protected industrial action or threat of such action since the 

expiry of the Agreement, the rejection of a new draft agreement and the initiation 

of these proceedings;

 I am satisfied that terminating the Agreement will not result in a change in the 

relative bargaining strength of the parties;

 the uncontested evidence demonstrates that the Club is in difficult financial 

circumstances;

 the importance of maintaining employment in a small country town;  








[2013] FWCA 2005

35

 it would bring the Club’s labour costs more in line with its competitors in the local 

area, the RSL Club being an example; 

 the Club is a medium sized business, but nevertheless, a prominent employer in the 

local area;

 given the assurances given by the Club, it would not be unreasonable to expect 

that, at the very least, the rates in any new agreement will be higher than the 

Modern Award. Indeed, this is how it was expressed in the 1 November 2012 draft 

put to the vote of employees. For the years 2013 to 2015 existing rates would be 

adjusted by 1.5% or the Minimum Wage Review decisions, whichever is the 

greater. 

[124] The final matter to be determined by the Commission is the date of operation of the 

order to terminate the Agreement. In most circumstances orders, decisions and determinations 

of the Commission operate from the date of publication of the Commission’s decision; see 

Federated Ship Painters and Dockers Union of Australia v Adelaide Steamship Co Ltd (1960) 

94 CAR 579 at pp 619-620. However, it is to be observed that there is no statutory prohibition 

on the retrospective application for an order to terminate an expired enterprise agreement. 

Moreover, the terms of s 227 of the Act would appear to contemplate such an outcome. The 

Club seeks the order to terminate the Agreement to be the date of the application, ie. 28 

November 2012. Obviously, the choice of that date is to put beyond doubt any perceived legal 

obligation on the Club to pay the 1 December 2012 wage increase of 4%.

[125] Ordinarily, I would be hesitant to make orders of retrospective operation in a matter 

such as this, particularly where the rights of, or obligations on parties may be materially 

affected. However, I am persuaded to do so in this case for the following reasons:

 these are special and unique circumstances;

 the Club has guaranteed to maintain the current rates of pay for all employees, 

notwithstanding the termination of the Agreement. I accept its bona fides in that 

regard;

 my earlier observations as to the effect of cl 27 of the Agreement.

[126] In addition, the Club has never said, nor do I apprehend it would seek to recover any 

benefit it would otherwise be legally entitled to deduct, by the retrospective application of the 








[2013] FWCA 2005

36

order. In other words, an order would have no practical detriment for any of the employees if 

the order was made today, prospectively or retrospectively, save of course, for the conclusion 

I have reached on the 4% wage increase due on 1 December 2012.

[127] For the reasons herein expressed, I am satisfied it would not be contrary to the public 

interest and it would be appropriate to terminate the Catalina Country Club Enterprise 

Agreement 2009 effective from 28 November 2012. Orders to that effect are published 

contemporaneously with this decision.

Postscript

[128] After I reserved my decision in this matter, the Union filed a dispute notification with 

the Club, pursuant to s 739 of the Act. The subject matter was the Club’s refusal to pay the 

4% wage increase said to be payable under  cl 27 of the Agreement on 1 December 2012. 

Given that issue is now the subject of my formal reasons in this matter, I invite the Union to 

consider the utility of the Commission listing the s739 dispute. However, I do not discount the 

possibility that further negotiations between the Union and the Club concerning a new 

agreement might well be assisted with the Commission’s involvement in a less formal way,

through conciliation conferences. If that was the underlying purpose of the Union’s dispute 

notification, I am happy to make myself available. On the other hand if the Union believes my 

reasons for decision in this matter, necessitate another member of the Commission to do so, I 

will endeavour to make the appropriate arrangements. I direct the Union to advise my

Chambers of its position on this matter within seven days.

DEPUTY PRESIDENT

Appearances:
Mr G Arnold of Clubs NSW for the applicant.
Mr C Acev of United Voice.


COMMISSION FAIR WORK COMM AUSTRALIA THE SEAL OF




 



[2013] FWCA 2005

37

Hearing details:
2012
Sydney: 
19 December 2012

2013.
Moruya:
18 March 2013

Printed by authority of the Commonwealth Government Printer

Price code G, AE871368 PR535336

Cases cited by this decision: