DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

Esso Australia Pty Ltd
v
Australian Workers' Union; Australian Manufacturing Workers' Union; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
(C2019/5898)

Appeal against decision [[2019] FWC 6143] of Deputy President Gostencnik at Melbourne on 5 September 2019 in matter number AG2016/4853

[1] Esso Australia Pty Ltd (Esso) has lodged an appeal, for which permission to appeal is required, against a decision of Deputy President Gostencnik issued on 5 September 2019 1 in which he dismissed Esso’s application made pursuant to s 225 of the Fair Work Act 2009 (FW Act) to terminate the Esso Offshore Enterprise Agreement 2011 (Agreement). Esso contends in its appeal that the decision was attended by appealable error in that Esso was denied procedural fairness in respect of two findings made by the Deputy President and that one of the findings was made on the basis of no, or no probative, evidence. It seeks that the decision be quashed and the matter remitted to the Deputy President for rehearing.

[2] Section 225(a) provides that an employer covered by an enterprise agreement which has passed its nominal expiry date may apply to the Commission for the termination of the Agreement. In respect of any application made pursuant to s 225, s 226 provides:

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.

[3] The industrial and legal context in which Esso made its application to terminate the Agreement requires some explanation because it directly bears upon the aspects of the decision which are the subject of challenge in the appeal. Esso operates offshore oil and gas platforms in the Bass Strait, and processes the products obtained at their plants at Longford and Long Island Point in Victoria. The employees who work on the offshore platforms are covered by the Agreement, and the employees at Longford and Long Island Point were covered by the Esso Gippsland (Longford and Long Island Point) Enterprise Agreement 2011 (2011 Longford/LIP Agreement) until it was replaced by the Esso Gippsland (Longford and Long Island Point) Enterprise Agreement 2017 (2017 Longford/LIP Agreement). Both the Agreement and the 2011 Longford/LIP Agreement had a nominal expiry date of 1 October 2014.

[4] In mid-2014, the three union respondents to this appeal - the Australian Workers’ Union (AWU), the Australian Manufacturing Workers’ Union (AMWU) and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) - commenced bargaining with Esso for a proposed agreement or agreements to replace the Agreement, the 2011 Longford/LIP Agreement and one other agreement, the Esso Gippsland (Barry Beach Marine Terminal) Enterprise Agreement 2011. This bargaining was conducted jointly on behalf of the offshore and the onshore workers by the unions as their bargaining representatives. From early 2015 the AWU, which represents the majority of employees, organised and its members engaged in industrial action in support of their bargaining claims.

[5] In early March 2015, bans on the performance of certain categories of work at the Longford and Long Island plants were imposed by the AWU and its members. On 6 March 2018, Esso sought and obtained an order from the Commission made pursuant to s 418 of the FW Act 2 (Order) which required the AWU to stop organising and its members to stop undertaking bans on the performance of equipment testing, air freeing and leak testing work at the Longford plant effective from 6.00pm that day. The Order was made on the basis that the bans in place on that work were not properly encompassed by the notice of protected industrial action which the AWU had earlier given to Esso pursuant to s 414 of the FW Act on 3 February 2015, and thus did not constitute protected industrial action. The Order applied only to the AWU and employees at the Longford plant, and did not apply to any of the offshore employees.

[6] The AWU’s members at the Longford plant did not comply with the Order, and the industrial action in question did not wholly cease until 17 March 2015. Esso then commenced proceedings in the Federal Court alleging, among other things, that the AWU had contravened s 421 of the FW Act by failing to comply with the Order. It also contended that, as a result of the AWU’s contravention of the Order, it could no longer organise protected industrial action as the bargaining representative of employees of Esso in support of its bargaining claims by reason of the operation of s 413(5) of the FW Act. Section 413(1) provides that s 413 sets out the “common requirements for industrial action to be protected industrial action for a proposed enterprise agreement.” Section 413(5) contains one of those requirements and provides:

Compliance with Orders

(5) The following persons must not have contravened any orders that apply to them and that relate to, or relate to industrial action relating to, the agreement or a matter that arose during bargaining for the agreement:

(a) if the person organising or engaging in the industrial action is a bargaining representative for the agreement—the bargaining representative;

(b) if the person organising or engaging in the industrial action is an employee who will be covered by the agreement—the employee and the bargaining representative of the employee.

[7] The Court (Jessup J), in a decision published on 24 July 2015, relevantly determined that the AWU had contravened s 421 of the FW Act by failing to comply with the Order, but this did not prevent it from organising future protected industrial action because the requirement in s 413(5) only operated in respect of non-compliance with an order that was extant at the time such industrial action occurred. 3 This aspect of the Court’s decision was affirmed by the Federal Court Full Court in a decision issued on 25 May 2016.4 On 21 June 2016, Esso applied to the High Court for special leave to appeal the Full Court’s decision, including in respect of its construction of s 413(5).

[8] On 3 August 2016, Esso filed the application to terminate the Agreement (as well as the 2011 Longford/LIP Agreement) that is the subject of the decision under appeal (termination application). On 30 November 2016, the three unions sent Esso notices of intention to take protected industrial action in respect of employees covered by the Agreement and the 2011 Longford/LIP Agreement. Shortly afterwards, the Victorian Minister for Industrial Relations applied for orders pursuant to s 424 of the FW Act to suspend or terminate protected industrial action in respect of the proposed agreement(s) to replace the Agreement and the 2011 Longford/LIP Agreement. The making of this order was supported by the three unions and not opposed by Esso. The Commission made an order to the effect sought by the Minister on 7 December 2016 5 (s 424 order) on the basis of findings that protected industrial action was threatened, impending and probable, would endanger the welfare of part of the population and would cause significant damage to an important part of the Australian economy. The following day, Esso sought and was granted an adjournment sine die of its termination application.

[9] On 16 December 2016, the High Court granted Esso special leave to appeal the Federal Court decision to which we have earlier referred.

[10] Subsequent to the making of the s 424 order, the parties embarked upon the post-industrial action negotiating period contemplated by s 266(3). This resulted in agreement being reached as to the terms of a new agreement to apply to the Longford and Long Island plants. The new agreement, the 2017 Longford/LIP Agreement, commenced operation from 11 April 2017. However no agreement was reached with respect to the offshore employees, and consequently a Full Bench of the Commission conducted a hearing in relation to the terms of the industrial action related workplace determination required to be made under s 266(1) of the FW Act in respect of them. The Full Bench reserved its decision on 17 October 2017. However, before the Full Bench could issue its decision, on 6 December 2017 the High Court issued its judgment in Esso Australia Pty Ltd v The Australian Workers’ Union 6 in which, by majority, it upheld Esso’s appeal and determined that s 413(5) was to be construed as applying to past contraventions of orders. The effect of this was that the AWU was incapable of complying with the condition in s 413(5) for the taking of protected industrial action in respect of bargaining with Esso for the replacement agreement(s) because of its failure to comply with the Order. The orders made by the High Court included a declaration that:

“….by operation of s 413(5) of the Fair Work Act 2009 (Cth), the industrial action organised by the respondent in relation to a replacement enterprise agreement or agreements for the Esso Gippsland (Longford and Long Island Point) Enterprise Agreement 2011, the Esso Offshore Enterprise Agreement 2011 and the Esso Gippsland (Barry Beach Marine Terminal) Enterprise Agreement 2011, subsequent to the respondent's contravention on 6 March 2015 of the order made by the Fair Work Commission on that date was not protected industrial action.”

[11] In light of the High Court’s decision, Esso then applied to the Commission for the revocation of the s 424 order pursuant to s 603 of the FW Act. In a decision published on 13 July 2018, 7 a Full Bench of the Commission granted the application on the basis that the s 424 order was made on the premise that the industrial action notified by the AWU on 30 November 2016 would be protected, when as a result of the High Court decision it could not be by reason of s 413(5). The s 424 order was revoked from the day on which it was made, with the result that the workplace determination proceedings were rendered nugatory. The Victorian Minister then applied for judicial review of the Full Bench’s decision in the Federal Court, but this application was dismissed on 19 February 2019.8

[12] On 27 July 2018, Esso wrote to the Commission seeking to re-enliven its termination application in respect of the Agreement. The termination application was ultimately heard by the Deputy President on 4 and 7 February 2019, with further submissions made on 3 and 11 June 2019 and, as earlier stated, the Deputy President handed down his decision in the matter on 5 September 2019.

The decision

[13] The decision under appeal is lengthy but, because of the narrow compass of the issues raised in the appeal, it is only necessary to refer in detail to limited parts of the decision. In broad summary, after reviewing (as we have) the tortuous history of the bargaining and associated litigation and identifying the principal claims which had not been resolved in the bargaining process, the Deputy President dealt in turn with each of the matters required to be considered under s 226. In relation to s 226(a), the Deputy President, after giving extensive consideration to the evidence and submissions advanced by the parties, concluded that the termination of the Agreement was not contrary to the public interest. 9 As to s 226(b)(i), the Deputy President concluded that the views of Esso, the unions and the affected employees did not weigh against a conclusion that it was appropriate to terminate the Agreement.10

[14] The Deputy President then turned to s 226(b)(ii) and gave consideration to the following specific matters raised by the unions concerning the likely effect of the termination of the Agreement on the employees covered by it:

•  the impact on employees’ safety of the introduction of a 14:14 roster cycle (which Esso wished to implement but was prevented from doing so under the terms of the Agreement) and any consequent fatigue effects; 11

•  the effect of a 14:14 roster cycle on family life and social inclusion; 12

•  the loss of wages and conditions; 13 and

•  changes to the bargaining dynamic. 14

[15] Esso’s appeal grounds are centred on the Deputy President’s consideration of the last of the above matters. The Deputy President began by saying in this connection:

“[185] I return then to the change in the bargaining dynamic that would be brought about by the termination of the Agreement and in particular the likely effect on employees. Esso says that a change in the bargaining dynamic would more likely result in an agreement than maintenance of the current dynamic. It is difficult to argue against this proposition because the changed dynamic includes the prospect of returning the employees to the terms of the Hydrocarbons Award. This has the propensity to focus attention and to see the changes currently opposed in a different, and relatively more favourable light. It is uncontroversial that the award terms are substantially inferior to those in the Agreement. Faced with a choice of making a new agreement which increases existing wages but a 14:14 roster cycle and reverting to the Hydrocarbons Award, coupled with the disarming of the AWU and its members of the capacity to take protected industrial action, it is more than likely the choice will be a new agreement.”

[16] The Deputy President accepted that, for the AMWU and the CEPU and their members, collective bargaining could continue in the usual way with the use of protected industrial action to exert legitimate industrial pressure. 15 However he found that the position was different for the AWU and its members. After reviewing the statutory scheme and the relevant history of the matter, the Deputy President said:

“[195] In the normal course of events, the termination of an enterprise agreement after its nominal expiry date will leave the bargaining parties with all of the available remedial and coercive weaponry that the scheme allows. In this matter, this will be the case in respect of Esso, the CEPU and the AMWU. However, the availability of protected industrial action to be organised by the AWU and to be engaged in by its members who will be covered by the proposed agreement is not available because of an earlier contravention of an order made by the Commission under s.418 of the Act. That consequence is envisioned by the scheme in s.413(5). Again, in the normal course of events there is nothing unusual or unfair in such an outcome. But this is not strictly speaking a normal case, and not just because of the extended history of bargaining and litigation.”

[17] The Deputy President then reviewed the circumstances by which the AWU and its offshore employee members came to be prevented from taking industrial action by the operation of s 413(5), including by reference to the detailed analysis contained in the 24 July 2015 judgment of Jessup J as to the factual circumstances attending the non-compliance with the Order by employees at the Longford plant. 16 The Deputy President noted that the Longford plant employees and the AWU, to whom the Order was directed, had since made an enterprise agreement,17 and then concluded (footnote omitted):

“[213] The AWU was held to have been in breach of the Order by reason, inter alia, of the conduct noted earlier above. The industrial action organised and taken in breach of the Order was centred on a disputed interpretation of scope of the notified industrial action, which was resolved in Esso’s favour. The AWU member employees of Esso who are affected by this application were not bound by the Order and did not engage in the contravening conduct. Nevertheless, as the contravening conduct was engaged in by their bargaining representative, the AWU, and as the contravention of the Order applying to the AWU related to industrial action relating to, the agreement that would apply to the AWU member employees of Esso who are affected by this application, these employees cannot now, nor if the Agreement is terminated, afterwards organise or engage in protected industrial action. This is the effect of s.413(5) of the Act.

[214] This will continue to be the case unless AWU member employees of Esso appoint another person or other people as their bargaining representative for the proposed agreement or revoke the AWU’s status as bargaining representative pursuant to s.176(1)(b) of the Act.

[215] In the result, the termination of the Agreement will in my view change the bargaining dynamic to such a degree and to bring about unfairness to many of the affected employees. In my view, the resulting unfairness is not immediately answered by the capacity of these employees to substitute a resourced, organised and experienced bargaining representative in the AWU for one or more persons who are not likely to be organised, resourced nor experienced.”

[18] The Deputy President then concluded in relation to the issue of the change to the bargaining dynamics (emphasis added):

“[216] The fair scheme of bargaining established by the Act envisioned the capacity to engage in protected industrial action and as we have seen also removes that capacity in the face of a contravention of a relevant order of the Commission. This is rightly a consequence of contravening conduct. But all of the relevant circumstances need to be considered. The only “sin” committed by AWU members affected by this application, is to have the AWU as their bargaining representative. The effect of terminating the Agreement on these employees, who are the majority of affected employees will be significant. They will lose the leverage obtained in the Agreement to bargain against change or at least to bargain for greater benefits in exchange for the change, and will not have available the capacity to apply legitimate bargaining pressure through protected industrial action. Such a dramatic change to the bargaining dynamic in the circumstances of this case is a weighty matter tending against a conclusion that it is appropriate to terminate the Agreement. It gives Esso all the leverage and most of the affected employees none. In assessing all of this, it is necessary to consider and to weigh the fact that industrial action was engaged in or at least threatened by the offshore AWU member employees after the earlier mentioned contravening conduct by the AWU and some onshore employees. That action was likely unprotected. That action occurred or was threatened against the backdrop of litigation which in effect was considering the status of action organised and taken after the contravening conduct. The issue was in dispute. I therefore do not ascribe any significant weight to this circumstance in assessing the position of the employees for the purposes of s.226(b)(ii).

[217] Although it is the case that the AWU member employees cannot presently organise or take protected industrial action, neither can Esso introduce (even after consultation) the changes it seeks, unilaterally. If the Agreement is terminated, the AWU member employees remain industrially impotent while the shackles to change are removed. The industrial fight in which the parties are engaging becomes too unfair. Taken together, the circumstances of and the likely effect on employees weighs against a conclusion that it is appropriate to terminate the Agreement, the last mentioned matter significantly so.”

[19] The Deputy President then addressed the circumstances of and likely effect that termination of the Agreement would have on Esso, and concluded that this was a matter weighing in favour of a conclusion that it was appropriate to terminate the Agreement. 18 The Deputy President next concluded that the diminution of rights and benefits the unions had under the Agreement which would be an effect of termination weighed against a conclusion that it was appropriate to terminate the Agreement but, insofar as the AWU’s capacity to bargain would be undermined by its inability to organise and take protected industrial action, it had brought this on itself by its conduct in not complying with the Order and accordingly this did not weigh against a finding that termination was appropriate.19

[20] The Deputy President then stated the following overall conclusion in respect of s 226(b):

“[249] As should be evident from the foregoing discussion, the answer to the question posed by the heading immediately preceding this paragraph is neither obvious nor easy. The answer, as the statute envisages, is arrived at by taking into account all of the relevant circumstances, including those specifically identified in s.226(b) of the Act. Some of the relevant circumstances that arise for consideration under s.226(a) are also relevant here. I rely on what is said about these matters earlier in considering the public interest question and these are not repeated here. However, such weight as they have for or against the question whether termination of the Agreement is not contrary to the public interest, also applies to the issue of appropriateness raised by s.226(b). Where, as in this case, the many circumstances identified, point in different directions, they must be given weight and balanced, one against the other and as a whole. Reasonable minds may differ on the conclusion following that exercise in a case of this kind. This is not an easy case. However, a judgment needs to be made. On balance, taken together the circumstances which weigh against a conclusion that it is appropriate to terminate the Agreement outweigh those which point the other way. In the circumstances of this case I do not consider, at this time, that it is appropriate to terminate the Agreement.

[250] As should be evident from my reasons, the unfairness to AWU member employees resulting from the weakening of their bargaining position and the corresponding strengthening of Esso’s, that would be brought about by terminating the Agreement, weighs significantly in my conclusion. The weight that is to be attributed to this consideration also depends on the circumstances. The weight that might be attributed to this matter, in circumstances where there is some evidence that the relevant employees know that they can appoint a bargaining representative other than the AWU and thus organise and engage in protected industrial action but nonetheless choose not to appoint another person or at least remove the authority of the AWU to act as a bargaining representative, would likely be less, perhaps significantly less, than the weight that I have attributed to the consideration in this case. There is no evidence that employees have given consideration to this issue or that the possibility of changing horses is known to them.”

Appeal grounds and submissions

[21] Esso’s appeal grounds and submissions raise three contentions of error, two of which allege a denial of procedural fairness. The first (Ground 1 in the notice of appeal) relates to the reference in paragraph [250] of the decision to there being no evidence that AWU members knew or had considered the possibility of appointing a bargaining representative other than the AWU and thus restoring their capacity to take protected industrial action. In relation to this finding, Esso submitted that:

•  it was never in issue that AWU members might not have known of their capacity to appoint another bargaining representative, and it would have been expected that the AWU, as a large, influential and experienced bargaining representative which had extensively litigated the s 413(5) issue might have informed its membership of the consequences of the litigation and their options moving forward;

•  the case was conducted consistent with that expectation, and no AWU witness gave evidence about this nor was any submission made that the Commission should take account of this;

•  the Deputy President placed significant weight on the issue despite it not being a matter arising in the litigation;

•  the absence of evidence on this issue could easily have been cured by Esso by cross-examining the AWU’s witnesses on the issue, or by writing to the AWU and the offshore workforce notifying them of the fact, but it was deprived of taking any or all of those steps because the issue was never in play or suggested until the decision was issued.

[22] The second alleged denial of procedural fairness (Ground 3) concerns the weight given by the Deputy President in paragraph [216] of the decision to the fact that the only “sin” committed by the AWU offshore employees to cause them to lose the right to take protected industrial action was to have the AWU as their bargaining representative, since they did not themselves contravene the Order. Esso submitted that it was never suggested by the AWU by way of evidence or submissions that the offshore AWU members were less or differently culpable for the consequences of the contravention of the Order or that they should be held blameless for it. Had Esso been made aware that this was an issue, it could and would have agitated the issue through evidence, cross-examination and submissions on the question of the common purpose and central organisation and prosecution of the AWU campaign by all members, onshore and offshore. However Esso was deprived of the opportunity to contest this because it was not an issue in the litigation conducted by the parties.

[23] The third contention of error (Ground 2) is raised in the alternative to the first, and likewise concerns paragraph [250] of the decision. Esso contends that in that paragraph the Deputy President made a finding, to which he gave significant weight, that the AWU members had not given consideration to the issue of changing bargaining representatives and did not know they could do so as a means of re-enlivening their ability to take protected industrial action. It was submitted that there was no, or no probative evidence to support his finding.

[24] Esso submitted that the decision was attended by sufficient doubt to warrant its reconsideration by way of the grant of permission to appeal; however, it accepted that if none of the grounds of appeal succeeded, permission to appeal would likely be refused.

[25] The AWU, the AMWU and the CEPU submitted that the decision had to be read in its totality, and represented a weighing-up of competing considerations bearing upon the appropriateness of termination which were the subject of findings that were not challenged in the appeal. In particular there was no challenge to the findings that AWU members will not have the ability to take protected industrial action, are thus “industrially impotent”, and that this was a weighty or significant matter in the exercise of the discretion. The impugned part of paragraph [250] of the decision did not constitute a finding, as alleged by Esso; it was merely a comment or explanation as to the possible findings that might have been made if other evidence had been adduced in place of the finding based on the evidence that was adduced. The lack of the ability of AWU members to take protected industrial action was raised by the unions in their opening submissions, and the issue of the members’ knowledge of any capacity to take an alternative course which allowed them to take protected industrial action thereby inhered in the issues to be decided. In response, Esso could have but did not put forward the answer which was available, namely that the employees could nominate a different bargaining representative, and chose not to adduce evidence about this nor to cross-examine the AWU’s witnesses about it. Accordingly it was not open for Esso to complain about any denial of procedural fairness. In any event, the impugned part of paragraph [250] was not an operative part of the decision. Nor did it constitute a finding that needed to be the subject of supporting evidence but merely a hypothetical aside.

[26] The unions also submitted that Esso’s ground of appeal concerning paragraph [216] of the decision was misconceived, because the reference to the “sin” of the AWU members merely concerned the fact that they could not take protected industrial action because the AWU was their bargaining representative and did not relate to the events of 2015. Read this way, it was merely an aspect of the issue concerning the capacity to take protected action. Alternatively, if paragraph [216] was to be read as a reference to the contravention of the Order, the fact was that the offshore AWU members were innocent in that the Order never applied to them, and they were caught up in the legal consequence produced by s 413(5) only because they were members of the AWU.

Consideration

Permission to appeal

[27] We consider that permission to appeal should be granted having regard to the industrial significance of the decision and the history of disputation and litigation which we have earlier summarised.

Relevant principles re procedural fairness

[28] It is not in contest that the Deputy President was required to afford procedural fairness to the parties which appeared in the proceedings before him, since those parties had a direct interest in the fate of Esso’s application to terminate the Agreement. However, that requirement did not extend to a necessity to provide each party with a warning as to each and every finding which might be made adverse to their interests. In Re Refugee Tribunal; ex parte Aala, 20 McHugh J stated an important caveat to the principle concerning warning parties of potential adverse findings (emphasis added):

“One of the fundamental rules of the fair hearing doctrine is that a decision-maker should not make an adverse finding relevant to a person’s rights, interests or legitimate expectations unless the decision-maker has warned that person of the risk of that finding being made or unless the risk necessarily inheres in the issues to be decided.” 21

[29] To similar effect, the High Court in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs 22  quoted with approval the following statement made by a Full Court of the Federal Court in Commissioner of the Australian Capital Territory Revenue v Alphaone Pty Ltd 23 (emphasis added):

“Where the exercise of a statutory power attracts the requirement for procedural fairness, a person likely to be affected by the decision is entitled to put information and submissions to the decision-maker in support of an outcome that supports his or her interests. That entitlement extends to the right to rebut or qualify by further information, and comment by way of submission, upon adverse material from other sources which is put before the decision-maker. It also extends to require the decision-maker to identify to the person affected any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made. The decision-maker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material. Subject to these qualifications however, a decision-maker is not obliged to expose his or her mental processes or provisional views to comment before making the decision in question.”

[30] The rules of procedural fairness “do not have immutable fixed content” but may vary dependent upon what is necessary to avoid practical injustice in the circumstances of the particular case. 24 There are a number of matters which, we consider, bear at the outset upon what the rules of procedural fairness required in the case before the Deputy President. The first is that, self-evidently, Esso, the AWU and the other unions are substantial and sophisticated organisations when it comes to the conduct of industrial relations. The second is that the history of disputation and litigation which we have earlier described has meant that Esso and the unions are intimately familiar with the legal and practical issues concerning the taking of protected industrial action in relation to the bargaining dispute between them. Third, the parties were granted permission for legal representation in the proceedings before the Deputy President pursuant to s 596(2) of the FW Act, and pursuant to that permission they utilised a very high level of legal representation. Those matters taken together tend to render it counter-intuitive that the Deputy President needed to forewarn Esso of any finding he intended to make on the subject of the capacity of the AWU and its members to organise and take protected industrial action that was adverse to Esso’s interests unless such a finding was not reasonably foreseeable.

Grounds 1 and 2

[31] Taking into account these preliminary observations, we turn first to the impugned part of paragraph [250] of the decision, consisting of the final two sentences of that paragraph. We do not consider that, on a fair reading of those two sentences taken in the context of the decision as a whole, they form an operative part of the decision or constituted a finding of fact. At the point that the two sentences are set out in the decision, the Deputy President had already (in paragraph [249]) stated that he had formed the view, on balance, that it was not appropriate to terminate the Agreement and (in the first sentence of paragraph [250]) that in reaching this conclusion he had given significant weight to the unfairness to AWU members that would result from the imbalance in their respective bargaining positions should the Agreement be terminated. Read with the earlier parts of the decision, particularly paragraph [185] (which we have earlier set out), it is apparent that this is a reference to Esso’s entitlement to introduce unilaterally its desired 14:14 roster cycle upon termination of the Agreement compared to the incapacity of the AWU and its members to organise and take protected industrial action by virtue of the operation of s 413(5).

[32] The impugned sentences in paragraph [250] involve an observation that in a hypothetical different case where there had been evidence of a consideration by employees of the alternative of replacing the AWU with another bargaining representative so that the effect of s 413(5) could be avoided, this issue of the imbalance in bargaining power might have been given a different and probably lesser weight. However that did not constitute a finding that there had in fact been no such consideration by the AWU’s members. The relevant sentences simply do not read as a finding to that effect and there is no reason why, having regard to the content of the decision as a whole, that the making of such a finding should be implied. Paragraphs [249]-[250] constitute a conclusory section of the decision based upon the findings of fact and intermediate conclusions which the Deputy President had already stated, and it would be perverse to read the relevant sentences as constituting a new factual finding made at the heel of the hunt. Paragraph [250] is, in substance, no more than a recapitulation of what the Deputy President had already stated in paragraph [217], about which Esso makes no complaint. The hypothetical observation makes no additional contribution to the reasoning for the already-stated conclusion in the case and may consequently be characterised as inessential to the decision if not gratuitous in nature.

[33] In any event, even if the impugned sentences are to be regarded as findings or operative reasons supporting the outcome determined, we do not consider that they involve any denial of procedural fairness to Esso because they deal with a matter which inhered in the issues in dispute and were obviously open on the material known to the parties. The history which we have earlier outlined shows that Esso litigated, all the way to the High Court and ultimately successfully, the proposition that the relevant effect under s 413(5) of the AWU’s contravention of the Order was that it could no longer organise and the members it represented could no longer take protected industrial action in connection with the bargaining dispute. That formed a critical part of the context in which the termination application was litigated before the Deputy President.

[34] Esso positively contended, in its written opening submissions dated 7 November 2018, that termination of the Agreement would improve the prospects of a new agreement being reached because the veto which employees had under the terms of the Agreement upon the introduction of a 14:14 roster would be removed. Esso submitted, as an aspect of this contention, as follows (emphasis added, footnote deleted):

“37. This is not a case of termination of agreements being pre-emptory. The bargaining process under the existing dynamics has well and truly run its course. Collective bargaining remains available to the parties. The parties will remain bound by the good faith bargaining requirements in the FW Act. They will be able to exert legitimate industrial pressure to bargain and reach agreement.”

[35] On one view it is rather surprising that Esso advanced the emphasised proposition in its submissions given all that had occurred. In any event, the unions’ opening submissions (dated 21 January 2019) advanced the following propositions in response (emphasis added, footnotes deleted):

“(c) Termination will undermine bargaining

46. Esso asserts that termination of the Agreement will promote bargaining for a new agreement. However, it will not be bargaining of a kind countenanced by the objects or the collective bargaining provisions of the Act.

47. Esso cannot be forced to agree to a new enterprise agreement. If the Commission terminates the Agreement, Esso will have no reason and no incentive to make a new agreement because the Award gives Esso all of the conditions which it has been unable to agree with the Unions.

48. Alternatively, if Esso does seek a new agreement, the bargaining is likely to be entirely one-sided, as will be any resulting agreement. The Commission should not lightly condone such an outcome, given that the Fair Work Act seeks to promote “fair” collective bargaining [s 3(f), s 171(a)].

49 Apart from being one-sided because of the lack of incentive for Esso, as discussed above, bargaining will further be one-sided because AWU members will not be able to have the AWU as their bargaining representative and retain their ability to take protected industrial action in support of their claims.”

[36] It is to be noted that the emphasised part of the submission explicitly linked the incapacity to take protected industrial action with the retention of the AWU as the employees’ bargaining representative. This clearly raised the potential alternative (which, we consider, should have been apparent to Esso anyway) that the employees who were AWU members and had the AWU as their default bargaining representative pursuant to s 176(1)(b) of the FW Act could replace the AWU with another bargaining representative pursuant to s 176(1)(b) and/or s 178A(2) and thus avoid the bar on the taking of protected industrial action imposed by s 413(5). This was a matter which thereby inhered in the issue in dispute concerning the effect of termination of the Agreement upon the bargaining power of the parties.

[37] Esso’s response to the unions’ case in the above respect was limited but implicitly accepted the proposition that the AWU and its members could not organise or engage in protected industrial action while the AWU remained the bargaining representative. Esso’s closing written submissions dated 7 February 2019 included the following (footnote omitted):

“88. There are no immediate or material effects on the unions covered by the Offshore EA. The unions remain the default bargaining representatives for the negotiations for any replacement agreement, and they remain able to exercise all the rights due to them under and in accordance with the FW Act, the Hydrocarbons Award and related legislation.

. . . .

98. Under the statutory scheme, a change in bargaining dynamics as a consequence of termination of an expired enterprise agreement is not necessarily a bad thing, and has to be considered in the specific context.

Termination will undermine bargaining

99. The Unions submit that if the Agreement were terminated, the bargaining would be one-sided, and Esso would lack incentive to bargain. But the flip-side has been the bargaining dynamic for the last 4 years. The Unions (and more importantly the Esso offshore employees they represent) have had little incentive to bargain or compromise. Going on decades of history, under the status quo the employees are unlikely to approve any proposed agreement that allows Esso to introduce a 14:14 roster.

100. It is appropriate now to terminate the Agreement to allow a change in the dynamics where the bargaining parties have something at stake. Termination of the Agreement is more likely than the status quo to facilitate further progress in the bargaining process. It is more likely to encourage the Unions to make compromises to secure an in-principle agreement that they would be prepared to recommend to the workforce…

101. Importantly, termination of the Agreement is more likely than the status quo to provide some incentive for the workforce to vote up a replacement enterprise agreement. Esso has incentive to achieve agreed terms rather than potentially lengthy consultation and disputes.”

[38] In its oral closing submissions, Esso again emphasised the benefit to the bargaining dynamic that would be caused by the removal of a veto on the introduction of the 14:14 roster, and implicitly accepted the premise of the unions’ submissions when it said: “There is still the option of industrial action by some of the unions” 25 (emphasis added).

[39] It seems to us obvious that Esso might have responded to the unions’ submissions by saying that termination of the Agreement would not unfairly weaken the bargaining position of AWU members because they had the option of restoring their capacity to take protected industrial action by changing their bargaining representative. Whether this had been considered and its practicability could then have been explored with the AWU’s witnesses in cross-examination. However, this was not the case that Esso chose to advance; rather, its case was in substance that the weakening of the bargaining position of the AWU and its members was a good thing because it would compel them to enter into a new agreement on terms favourable to Esso. This resulted in there being no evidence concerning the potential alternative that was at least legally, if not practically, available to the AWU’s members.

[40] In the circumstances described, we consider that it was open to the Deputy President to observe, as he did, that no evidence had been adduced in relation to any consideration by the AWU’s members of the potential alternative course and that the weight that he had attached to the imbalance in bargaining power that would follow the termination of the Agreement might have been diminished had such evidence been before him. The requirement under s 226(b)(ii) that account be taken of the circumstances and likely effect of termination on (relevantly) employees and organisations, the case advanced by the unions pursuant to that provision, and the case which Esso chose to advance in response, made it readily foreseeable that the Deputy President might make an observation in these terms. Procedural fairness did not in the circumstances require the Deputy President to forewarn Esso of the possibility that such an observation might be made.

[41] For the reasons given we reject grounds 1 and 2 of the appeal. As to ground 1, there was no denial of procedural fairness. As to ground 2, the impugned sentences in paragraph [250] cannot be read as a finding of fact, and accordingly no question of the evidence upon which any such finding was made arises.

Ground 3

[42] In relation to Esso’s challenge to paragraph [216] of the decision, we accept that the reference in that paragraph to the AWU members’ “only sin” in having the AWU as their bargaining representative is to be understood as referring to the fact that s 413(5) produced the result that they could not engage in protected industrial action notwithstanding that they had not themselves breached the Order. The context provided by the preceding paragraphs, particularly paragraphs [195] and [213] (set out above) makes this clear enough. However we do not consider that by making this statement the Deputy President failed to afford Esso procedural fairness. It was clearly known to the parties and not in dispute that it was the contravention of the Order by the AWU via its members at the Longford plant which caused the position that the offshore AWU members, to whom the Order did not apply, could not take protected industrial action while the AWU remained their bargaining representative. It was clearly an unusual situation that the contravening conduct of AWU members at the Longford plant brought about that outcome, particularly as the Longford plant employees had long since reached a new agreement with Esso, and it was readily foreseeable that some comment might be made about it.

[43] It borders on fanciful to suggest that, had it been forewarned of such a finding, Esso might have advanced a case demonstrating some form of accessorial liability or moral culpability on the part of the offshore AWU members. In the long history of disputation and litigation, no contention to that effect has ever been raised by Esso. Nor would any such case have operated to displace the simple fact that it was the contravening conduct by the AWU’s members at the Longford plant which caused s 413(5) to operate the way that it did with respect to the AWU’s offshore members. Ground 3 is therefore also rejected.

[44] None of the appeal grounds has been upheld, and accordingly the appeal must be dismissed.

Orders

[45] We order as follows:

(1) Permission to appeal is granted.

(2) The appeal is dismissed.

VICE PRESIDENT

Appearances:

F Parry QC and M Follett of Counsel for the Appellant.

H Borenstein QC and J Fetter of Counsel for the Respondents.

Hearing details:

2019.
Sydney:
14 November.

Printed by authority of the Commonwealth Government Printer

<PR717090>

 1   [2019] FWC 6143

 2   PR561701

 3   Esso Australia Pty Ltd v The Australian Workers’ Union [2015] FCA 758, 253 IR 304 at [117]-[120], [126]-[148]

 4   Esso Australia Pty Ltd v The Australian Workers' Union [2016] FCAFC 72, 245 FCR 39, 258 IR 396 per Buchanan J, with whom Siopis and Bromberg JJ relevantly agreed, at [146]-[162]

 5   PR588352

 6   [2017] HCA 54, 263 CLR 551

 7   [2018] FWCFB 4120

 8   Minister for Industrial Relations for the State of Victoria v Esso Australia Pty Ltd [2019] FCAFC 26

 9   [2019] FWC 6143 at [144]

 10   Ibid at [147]

 11   Ibid at [149]-[169]

 12   Ibid at [170]-[178]

 13   Ibid at [179]-[184]

 14   Ibid at [185]-

 15   Ibid at [186]

 16   Ibid at [196]-[211]

 17   Ibid at [212]

 18   Ibid at [218]-[239]

 19   Ibid at [240]-[248]

 20   [2000] HCA 57, 204 CLR 82

 21   Ibid at [101]

 22   [2006] HCA 63, 231 ALR 592, 81 ALJR 515 at [29]

 23   [1994] FCA 1074, 49 FCR 576 at 591-592

 24   HT v The Queen [2019] HCA 40 at [18]

 25   Transcript, 7 February 2019, PN1151