1
Fair Work Act 2009
s.604—Appeal of decision
INPEX Australia Pty Ltd
v
The Australian Workers’ Union
(C2020/9251)
VICE PRESIDENT CATANZARITI
DEPUTY PRESIDENT SAUNDERS
COMMISSIONER LEE
SYDNEY, 25 FEBRUARY 2021
Appeal against decision [2020] FWC 6006 of Deputy President Binet at Perth on 14
December 2020 in matter number B2020/286 – majority support determination – appealable
error re fairly chosen finding – decision quashed – application dismissed.
Introduction
[1] INPEX Australia Pty Ltd (INPEX) has appealed a decision1 of Deputy President Binet
made on 14 December 2020. The Deputy President’s decision relates to an application for a
majority support determination made by the Australian Workers’ Union (AWU) under s 236
of the Fair Work Act 2009 (Cth) (Act). In her decision, the Deputy President determined that
the group of employees who would be covered by the AWU’s proposed enterprise agreement
was fairly chosen within the meaning of s 237(2)(c) of the Act. The Decision includes
findings in relation to whether INPEX should be given access to unredacted copies of
petitions obtained by the AWU from relevant employees, the method that should be used to
determine whether a majority of employees want to bargain, and the time at which the
majority is to be determined. The Deputy President also made directions on 14 December
2020 in relation to the conduct of the balance of the proceedings before her. By consent of the
parties, those directions were vacated and the whole of the Deputy President’s decision was
stayed, pending the hearing and determination of this appeal.2
[2] INPEX relies on seven grounds of appeal. Grounds 1 and 2 contend error in relation to
the Deputy President’s findings that the group of employees to be covered by the proposed
enterprise agreement (a) is geographically, operationally, and organisationally distinct and (b)
was fairly chosen. Ground 3 relates to the Deputy President’s finding that the AWU had
standing to make an application under s 236 of the Act. Grounds 4 and 5 concern the Deputy
President’s refusal to permit INPEX to inspect and address the content of the petitions.
Ground 6 relates to the Deputy President’s findings in relation to the method to be used to
1[2020] FWC 6006
2 PR725882
[2021] FWCFB 1038
DECISION
E AUSTRALIA FairWork Commission
[2021] FWCFB 1038
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work out whether a majority of employees want to bargain. Ground 7 contends that the
Deputy President erred in making determinations for the purposes of s 237(2)(a)(i) of the Act.
[3] The AWU contends that there is no appealable error in the Deputy President’s
decision, and it is not in the public interest to grant permission to appeal. It is contended by
the AWU that INPEX has filed its notice of appeal simply because it does not like the
decision made by the Deputy President and would prefer a different outcome.
Background
[4] INPEX operates facilities for the extraction and processing of natural gas off the coast
of Western Australia, and an onshore facility in the Northern Territory. In 2014, INPEX and
its employees in the classifications of Operations Technician (Trade and Processing) and
Operations Technician (Services) made the Ichthys Operations Multi Location Agreement
2014 (Agreement). The Agreement passed its nominal expiry date in October 2018 but
continues to operate.
[5] At the time the Agreement was made, the project by which INPEX proposed to extract
and process natural gas from off the Western Australian coast was in its construction phase.
The work performed by employees who voted on the Agreement in 2014 was primarily
directed to planning for and preparing the various tasks which would be necessary for the
construction phase and transition to steady state operations. This included performing many
duties which are no longer performed by any INPEX employees.
[6] The project is now in the operations phase and the employees who are covered by the
Agreement perform substantially different work to that performed by the employees who
were covered by the Agreement at the time it was made.
[7] On 3 March 2020, the AWU wrote to INPEX and proposed to commence bargaining
for a new enterprise agreement. The AWU proposed that the same classifications of
employees who are covered by the Agreement be covered by the new proposed agreement.
These employees work at one of three facilities: (1) the Ichthys Explorer central processing
facility, which is located about 220km off the coast of Western Australia; (2) the Ichthys
Venturer floating production, storage and offloading facility, which is moored about 3.5km
away from the Ichthys Explorer central processing facility; and (3) the Ichthys LNG onshore
processing facilities at Bladin Point, Northern Territory.
[8] There is no dispute that the AWU’s proposed enterprise agreement will not cover all
of INPEX’s employees.
[9] On 23 April 2020, INPEX informed the AWU that it did not agree to bargain. On 25
May 2020, the AWU filed its application under s 236 of the Act for a majority support
determination. The application stated that the AWU had received signed individual petitions
from a majority of INPEX’s relevant employees, and that it would provide these petitions to
the Commission on a confidential basis to enable the Commission to confirm that a majority
of relevant employees have indicated a desire to bargain.
[10] By directions dated 23 June 2020, the Deputy President identified two questions to be
answered prior to the determination of the application. The first was the method by which the
Commission should determine whether a majority of relevant employees want to bargain for
[2021] FWCFB 1038
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an enterprise agreement. The second was whether the group of employees who would be
covered by the AWU’s proposed agreement was fairly chosen. The parties were given an
opportunity to file and serve evidentiary material and submissions in relation to these
questions. The AWU did not file any evidence in relation to the fairly chosen question and did
not make any submissions as to whether the group of employees to be covered by the
proposed agreement is geographically, operationally, or organisationally distinct. The two
questions identified by the Deputy President were determined on the papers by consent of the
parties.
[11] In her initial decision of 24 August 2020,3 the Deputy President determined, at [50],
that a ballot of the relevant employees, conducted by the AEC, was the most appropriate way
to determine whether a majority of employees want to bargain; and at [60], that she was
satisfied that the group of employees to be covered by the proposed agreement was fairly
chosen. On the same day, the Deputy President made an order for the conduct of the ballot.
On 26 August 2020, INPEX filed an appeal against the Deputy President’s initial decision and
the orders associated with it.
[12] On 7 October 2020, a Full Bench of the Commission granted permission to appeal
from the Deputy President’s initial decision, quashed that decision and the associated orders,
and remitted the application to Deputy President Binet for redetermination.4 The Full Bench
concluded that the Deputy President had erred in failing to make a finding as to whether the
group of employees is geographically, operationally or organisationally distinct, ordering the
AEC to conduct a ballot, and making orders for a ballot without inspecting the petitions.
[13] On 15 October 2020, the Deputy President made directions which required, inter alia,
the AWU to “file with the FWC further submissions and evidence with respect to whether the
group of employees who will be covered by the Proposed Agreement is fairly chosen” by
4pm on 22 October 2020. The AWU filed submissions dated 22 October 2020, which
addressed whether the group of employees is geographically, operationally, or
organisationally distinct, in addition to the overall question as to whether the group was fairly
chosen. The AWU also filed a statement of Mr Douglas Heath, Organiser, in relation to the
steps taken to obtain signed petitions from relevant employees. Mr Heath’s statement did not
address the fairly chosen question. The AWU did not file any evidentiary material in relation
to that question or the anterior question of whether the group of employees is geographically,
operationally, or organisationally distinct.
[14] By written submissions dated 22 October 2020, INPEX pointed out that there was no
evidence or material before the Commission which could enable determination of the question
of whether the group of employees is geographically, operationally, or organisationally
distinct. INPEX made the same point in its written submissions in reply dated 29 October
2020 and its submissions (by email) dated 16 November 2020. In its 29 October 2020
submissions INPEX also responded to the AWU’s specific submissions concerning the
question of geographical, operational, or organisational distinctiveness. As to geographical
distinctiveness, INPEX submitted that many of its employees who would not be covered by
the AWU’s proposed enterprise agreement worked at the same three locations as the
employees who would be covered by it.5 That submission was not challenged by the AWU.
3 [2020] FWC 3843
4 [2020] FWCFB 5321
5 Appeal Book page 181 at [13c]
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[15] On 29 October 2020, the AWU filed further written submissions in which it stated that
it relied on its earlier submissions filed on 2 July 2020 and 22 October 2020 in relation to the
fairly chosen question.
[16] On 13 November 2020, INPEX filed further written submissions in which it contended
that it was necessary for there to be material before the Commission as to the geographical
location, organisation, and operational responsibilities of the employees who would not be
covered by the proposed agreement, so that the questions of distinctiveness under s 237(3A)
of the Act could be assessed. In circumstances where there was no such material before the
Commission, INPEX contended that it was not open for the Commission to make findings
about whether the group of employees is geographically, operationally, or organisationally
distinct, and the application should be dismissed.
[17] The Deputy President determined the fairly chosen question, as well as the other
matters addressed in her decision dated 14 December 2020, on the papers.
Ground 2 – fairly chosen
INPEX’s submissions
[18] By ground 2, INPEX contends that the Deputy President’s finding, at [39], that the
group of employees is geographically, operationally, and organisationally distinct within the
meaning of s 237(3A) was erroneous in three respects.
[19] First, INPEX submits that the Deputy President made the finding in the absence of
rationally probative material or, in the alternative, drew inferences from material which was
not reasonably capable of supporting the inferences made, in a way that constitutes
jurisdictional error. Further, or in the alternative, INPEX contends that it was irrational or
illogical for the Deputy President to make the finding on the basis of the material before her.
[20] Secondly, INPEX submits that the Deputy President reversed the correct onus. It is
contended that an applicant in a majority support determination application bears the onus of
satisfying the Commission that a majority of employees want to bargain. The Deputy
President made a determination as to a state of satisfaction under s 237(3A) after identifying,
at [38], that INPEX had not filed any evidence to suggest that the AWU’s submissions with
respect to the operational, organisational, or geographic distinctiveness of the group of
employees was “untrue”. The Deputy President did so in circumstances where the AWU had
chosen not to file any evidence in support of its submissions, and where the Deputy President
did not refer to or give weight to this failure in her reasons. In doing so, INPEX contends that
the Deputy President effectively reversed the onus of proof, and erroneously treated the fact
that an asserted fact was not contradicted as a sufficient basis to be satisfied of the asserted
fact.
[21] Thirdly, INPEX submits that it was unreasonable for the Deputy President to make the
finding that the group of employees is geographically, operationally, and organisationally
distinct. In the absence of any evidence of the question of distinctiveness filed by either party,
INPEX submits that the Deputy President preferred the AWU’s written submissions to those
filed by INPEX. The reason for the Deputy President’s preference, so INPEX contends,
appears to be that INPEX failed to file evidence that rebutted the AWU’s written submissions
[2021] FWCFB 1038
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or suggested that they were “untrue”. However, INPEX submits that this was either or both
arbitrary and capricious where:
(a) The Deputy President did not draw any adverse inference from the AWU’s decision
not to file evidence as to distinctiveness on two separate occasions, despite being
directed to do so, and without giving an explanation for the decision. It is submitted
that the inference that should have been drawn was that the AWU could not produce
any evidence of geographical, operational, or organisational distinctiveness that would
have assisted its case.
(b) The AWU’s forensic decision to refrain from filing evidence as to distinctiveness
deprived INPEX of any opportunity to test, through cross examination, the matters
which were simply asserted in the AWU’s written submissions as establishing
geographic, operational, and organisational distinctiveness.
(c) The circumstances in (a) and (b) should have operated together to deprive the AWU’s
submissions of any probative value.
[22] INPEX further submits that the Deputy President’s erroneous findings as to the
geographical, operational, and organisational distinctiveness of the group of employees
materially infected her ultimate finding that the group was fairly chosen as, if the group is not
geographically, operationally, or organisationally distinct, it becomes necessary to identify
what, if any, factors outweigh the absence of such characteristics and also give significant
weight to the lack of distinctiveness in determining whether the group was fairly chosen.
AWU’s submissions
[23] The AWU submits that INPEX’s second ground of appeal is without merit and must
be dismissed.
[24] The AWU contends that, for the purposes of making a finding in relation to s 237(3A),
the Deputy President had regard not only to the submissions of the AWU dated 22 October
2020, but to the submissions and evidence of INPEX and the finding in 2014 by
Commissioner Cloghan that the group of employees covered by the Agreement was fairly
chosen. Taken together, the AWU submits that this materially is reasonably probative to
support a finding that the employee group is geographically, operationally, and
organisationally distinct.
[25] The AWU submits that INPEX’s proposed level of required evidence and submissions
runs completely counter to the requirement in s 577(b) of the Act for the Commission to
perform its functions and exercise its powers in a manner that is “quick, informal and avoids
unnecessary technicalities”. The AWU also contends that INPEX ignores the existence of s
591 of the Act, in that INPEX appears to be trying to persuade the Commission that it must be
bound by the rules of evidence in its consideration of s 237(3A). The AWU also submits that
the required level of evidence asserted by INPEX for a positive finding to be made regarding
distinctiveness is well beyond that ordinarily and routinely filed and accepted in both majority
support determination applications and enterprise agreement approval applications.
[26] The AWU contends that INPEX’s submissions concerning the supposed reversal of
the onus are without merit. It contends that a relevant factor in the Commission’s
[2021] FWCFB 1038
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consideration of whether a group of employees was fairly chosen includes whether the
employer has identified any groups of employees that ought to be included or excluded in
order for the group to be fairly chosen.
[27] The AWU submits that INPEX’s suggestion that it was unreasonable for the Deputy
President to find that the group of employees was distinct is incorrect. It is submitted that the
Deputy President made findings on distinctiveness after having regard to the submissions
from both the AWU and INPEX, evidence from INPEX, and the fairly chosen determination
made by Commissioner Cloghan in 2014.
[28] The AWU contends that the Deputy President made no errors in her finding as to the
distinctiveness of the group of employees, or in being satisfied that the group was fairly
chosen. It contends that INPEX is merely dissatisfied with the decision and would prefer a
different outcome.
Consideration
[29] The Commission is not a court. It is not bound by the rules of evidence.6 It is required
to perform its functions and exercise its powers in a manner that is quick, informal and avoids
unnecessary technicalities.7 But when the Commission makes a finding of fact, it must
proceed by reference to rationally probative material.8 That material may include, inter alia,
evidence or, in an appropriate case, submissions. For example, it may be appropriate for a
finding of fact to be made on the basis of an unchallenged submission made by one party,
particularly when the other party is legally represented.
[30] The exercise of a statutory power of an administrative character, including a power
that is discretionary in nature, will usually be beyond jurisdiction unless the implied
conditions of rationality, reasonableness and fairness are complied with.9 We consider that the
discretionary power to make a majority support determination under ss 236-237 of the Act is
such a power.
[31] Irrationality and illogicality have emerged from the implied condition of
reasonableness.10 Justices Crennan and Bell explained these concepts in Minister for
Immigration and Citizenship v SZMDS:11
“… Whilst there may be varieties of illogicality and irrationality, a decision will not be
illogical or irrational if there is room for a logical or rational person to reach the same
decision on the material before the decision maker. A decision might be said to be
illogical or irrational if only one conclusion is open on the evidence, and the decision
maker does not come to that conclusion, or if the decision to which the decision maker
came was simply not open on the evidence or if there was no logical connection
between the evidence and the inferences or conclusions drawn.”
6 Section 591 of the Act
7 Section 577(b) of the Act
8 Assistant Minister for Immigration and Border Protection v Splendido [2019] FCAFC 132 at [107]-[108]
9 Ibid at [106]
10 Mt Arthur Coal Pty Ltd v Goodall [2016] FWCFB 5492 at [51]
11 (2010) 240 CLR 611 at [135]; applied in Mt Arthur Coal Pty Ltd v Goodall [2016] FWCFB 5492 at [52]
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[32] On the question of geographical distinctiveness, at first instance the AWU did not
adduce any evidence but it submitted that the group of employees to be covered by the
proposed agreement is geographically distinct from other INPEX employees because the
employees within the group are engaged to perform work at three identifiable workplaces and
only these workplaces. Further, the AWU contended that these workplaces are intrinsically
connected and together form the Ichthys LNG project. Two of the workplaces are located
offshore and nearby to one another. The third is located onshore but is connected to one of the
others by a physical pipeline. INPEX did not challenge the factual matters contained in these
submissions. INPEX did, however, submit that many of its employees who will not be
covered by the proposed agreement also work at these three locations. The AWU did not
challenge or contradict this submission.
[33] We agree with INPEX’s submission that distinctiveness within the meaning of s
237(3A) of the Act is necessarily a relative, not absolute, concept, and necessarily requires a
comparison between the employees who will be covered by the proposed agreement and those
who will not.
[34] The only material before the Deputy President concerning the geographical location of
INPEX’s employees who would not be covered by the proposed agreement was INPEX’s
unchallenged submission that many of those employees also work at the three locations where
the employees to be covered by the proposed agreement work. Taking that information into
account, it was not open on the material before the Deputy President to find that the group of
employees to be covered by the proposed agreement is geographically distinct. The same
conclusion must also be reached even if INPEX’s unchallenged submission concerning the
work locations of its employees who would not be covered by the agreement were put to one
side. On that assumption, there was no material before the Deputy President as to where
employees who would not be covered by the proposed agreement work. Absent probative
material as to the geographical work location of employees who would not be covered by the
proposed agreement, it is not possible to compare the geographical work locations of those
covered by the agreement with the geographical work location(s) of employees not so covered
and it is not open to find that the employees covered by the proposed agreement is
geographically distinct. The Deputy President erred by so finding.
[35] As to operational distinctiveness, the term “operational” refers to an industrial or
productive activity.12 The performance of a different role, task, skill or function is not
sufficient to establish operational distinctiveness.13
[36] At first instance the AWU did not adduce any evidence in relation to operational
distinctiveness but submitted that the employees covered by the proposed agreement are
engaged in the discrete industrial or productive activity of production, transmission, and
processing of liquified natural gas – specifically in connection with the Ichthys LNG project.
The AWU submitted that the group of employees is operationally distinct on this basis and all
employees of INPEX engaged in this industrial activity are included in the group of
employees covered by the proposed agreement. INPEX did not challenge or contradict the
factual aspects of these submissions. An inference which may be drawn from the AWU’s
submissions is that all of INPEX’s employees who would not be covered by the proposed
agreement are not engaged in the industrial or productive activity of production, transmission,
12 QGC v AWU [2017] FWCFB 1165 at [44]
13 Ibid at [44]
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and processing of liquified natural gas. The drawing of this inference makes possible a
comparison between the operational activities of the group of employees covered by the
proposed agreement and the employees not so covered. In circumstances where one group of
employees is involved in the industrial or productive activity of production, transmission, and
processing of liquified natural gas and none of the employer’s other employees are engaged in
this activity, a finding of operational distinctness is available. Although the Deputy President
did not explain her reasoning for finding that the group of employees covered by the proposed
agreement is operationally distinct, we consider that this finding was open on the probative
material before the Commission.
[37] As to organisational distinctness, the term “organisation” refers to the manner in
which the employer has organised its enterprise in order to conduct its operations.14 The
performance by a group of employees of duties which are qualitatively different from duties
performed by other employees may weigh in favour of a conclusion that the group is
organisationally distinct; however, the mere performance by a group of employees of different
tasks or roles to others may not be sufficient to render it organisationally distinct where the
employees work in an integrated way with other employees to perform a particular business
function.15
[38] At first instance the AWU did not adduce any evidence in relation to organisational
distinctiveness but submitted that the group of employees is organisationally distinct because
they are employed in “blue collar” or “hands on” classifications, as opposed to “white collar”
or management positions. At first instance INPEX contested these submissions and contended
that the historical delineations between “blue collar” and “white collar” workers are
inappropriate to its operations where its workforce operates complex plant and equipment.
[39] At first instance the AWU made no submissions, and led no evidence, as to the way in
which INPEX has organised its enterprise, including in relation to the degree, if any, of
integration between employees covered by the proposed agreement and employees not so
covered. There was no material before the Deputy President that explicitly identified the
existence of the so called “white collar” or management positions within INPEX’s workforce,
and no material as to the positions, duties or responsibilities of the employees who would not
be covered by the proposed agreement. Further, in circumstances where the employees to be
covered by the proposed agreement work at the same geographical locations as many
employees not so covered and INPEX’s workforce operates complex plant and equipment, the
AWU’s submissions – unsupported by evidence or other probative material – concerning the
labels “blue collar” and “white collar” were vague and had little meaningful content. Even if
it could be inferred that there were qualitative differences in the duties, tasks or roles
performed by “blue collar” employees and “white collar” employees within INPEX’s
workplace, that would not in itself be sufficient to establish organisational distinctness in the
absence of any material concerning the degree of integration between the two groups. For
these reasons, we consider that it was not open on the material before the Deputy President to
find that the group of employees to be covered by the proposed agreement is organisationally
distinct. The Deputy President erred by making such a finding.
[40] For the reasons given, we uphold ground 2. Further, as INPEX submits, it is clear from
paragraph [47] of the decision that the Deputy President’s finding that the group of employees
14 Ibid at [44]
15 Ibid at [44]-[45]; Aerocare Flight Support Pty Ltd v TWU (2017) IR 385 at [27]
[2021] FWCFB 1038
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is geographically, operationally, and organisationally distinct infected her ultimate finding
that the group was fairly chosen. This is a sufficient and appropriate basis to uphold the
appeal and quash the decision. We therefore do not need to consider the balance of the appeal
grounds.
Conclusion and orders
[41] We have decided to grant permission to appeal in the public interest, because the
decision is affected by significant errors.
[42] We make the following orders:
(1) Permission to appeal is granted.
(2) Ground 2 of the appeal is upheld.
(3) The decision ([2020] FWC 6006) is quashed.
[43] In addition, pursuant to s 607(3)(b) of the Act, we consider it appropriate to make a
further decision in relation to the matter that is the subject of the appeal. Our decision in that
regard is to dismiss the AWU’s application for a majority support determination. We have
made that decision for a number of reasons. First, the AWU has been given multiple
opportunities to put before the Commission evidence and other probative material in relation
to the fairly chosen question and the anterior question of whether the group of employees is
geographically, organisationally, or operationally distinct. The AWU has repeatedly made a
forensic decision not to file any evidence in relation to these matters. It has filed submissions,
but the material contained within those submissions includes very limited information in
relation to the group of employees who will not be covered by the proposed agreement.
Secondly, on the material before the Commission we accept that the group of employees is
operationally distinct, for the reasons set out above. But, for the reasons we have given, it is
not open on the material before the Commission to find that the group of employees is
geographically or organisationally distinct. Further, on the basis of the very limited probative
material before the Commission we are not satisfied that the group of employees was fairly
chosen. It follows that a majority support determination cannot be made (s 237(1) and (2) of
the Act).
[44] INPEX accepts, correctly in our view, that the dismissal of the AWU’s present
application will not prevent the AWU from filing a new application for a majority support
determination. If such a new application is filed, it will no doubt be necessary to obtain up to
date information from the relevant employees as to whether they want to bargain with INPEX
for an enterprise agreement, particularly having regard to recent redundancies and new
employees being hired by INPEX, together with the fact that some of the petitions obtained
from the employees are more than two years old.
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VICE PRESIDENT
Appearances:
Mr I Neil SC and Ms R. Kumar of counsel for INPEX Australia Pty Ltd
Mr Z. Duncalfe for the AWU
Hearing details:
2021
Sydney (by telephone)
17 February
Printed by authority of the Commonwealth Government Printer
PR727296
OMMISSION CO THE SEAA THE FAIR WORK
