FEDERAL COURT OF AUSTRALIA

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Aurizon Operations Ltd [2015] FCAFC 126

THE COURT ORDERS THAT:

1.    The application be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

1    In this application for certiorari and mandamus directed to the Fair Work Commission (“the Commission”), the applicants are the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, the Queensland Services, Industrial Union of Employees, the Australian Federated Union of Locomotive Employees, the Automotive, Food, Metals, Engineering, Printing and Kindred Industries’ Union and the Australian Rail Tram and Bus Industry Union. The act of the Commission of which they complain was the termination, pursuant to s 226 of the Fair Work Act 2009 (Cth) (“the FW Act”), of 12 enterprise agreements by which the applicants, and the first, second and third respondents, Aurizon Operations Ltd, Aurizon Network Pty Ltd (“Aurizon Network”) and Australia Eastern Railroad Pty Ltd (“the respondents”), were bound. The application for the agreements to be terminated had been made by the respondents under s 225 of the FW Act on 12 May 2014. It is the Commission’s decision of 22 April 2015 granting that application which is the subject of the present challenge by the applicants.

2    The parties to the agreements had been engaged in collective bargaining, pursuant to Div 3 of Pt 2-4 of the FW Act, for a new agreement, or agreements, since April 2013. Each of the existing agreements specified 31 December 2013 as its nominal expiry date. The parties had, therefore, been bargaining for about eight months when the point arrived at which the conditions for the making of an application under s 225 were satisfied. That application was made on 12 May 2014.

3    The applicants have two grounds for certiorari and mandamus in this court. Their first ground concerns para (a) of s 225 of the FW Act. We shall elaborate upon that ground below, but in essence it is that, in its assessment of where the “public interest” lay, the Commission misread the relevant objects of the FW Act, thereby misapprehending the nature of the power which it was exercising: Craig v South Australia (1995) 184 CLR 163, 177. Specifically, it is said that the Commission erroneously failed to recognise that altering the negotiating balance as between parties engaged in collective bargaining by removing rights and obligations arising under previous agreements would be discordant with the relevant objects of the legislation.

4    The object of the FW Act, and the objects of Pt 2-4 thereof, lay at the centre of the applicants’ first ground. The former is the subject of s 3 of the FW Act:

The object of this Act is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by:

(a)    providing workplace relations laws that are fair to working Australians, are flexible for businesses, promote productivity and economic growth for Australia’s future economic prosperity and take into account Australia’s international labour obligations; and

(b)    ensuring a guaranteed safety net of fair, relevant and enforceable minimum terms and conditions through the National Employment Standards, modern awards and national minimum wage orders; and

(c)    ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind given that such agreements can never be part of a fair workplace relations system; and

(d)    assisting employees to balance their work and family responsibilities by providing for flexible working arrangements; and

(e)    enabling fairness and representation at work and the prevention of discrimination by recognising the right to freedom of association and the right to be represented, protecting against unfair treatment and discrimination, providing accessible and effective procedures to resolve grievances and disputes and providing effective compliance mechanisms; and

(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.

5    Part 2-4 of the FW Act is concerned with “enterprise agreements” and it is here that the presently relevant provisions, additionally to s 3 set out above, are to be found. The objects of Pt 2-4 are set out in s 171, as follows (where, as elsewhere in the FW Act, the Commission is described as “the FWC”):

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.

6    Division 2 of Pt 2-4 sets out the character of enterprise agreements that may be made under the FW Act, and the different types of such agreements that are permissible. Division 3 deals with the process of collective bargaining leading to the making of enterprise agreements, and should be read in conjunction with the applicable provisions of Pt 3-3, to which we shall turn presently. Division 4 deals with the approval of enterprise agreements, both by the employees concerned and, subsequently, by the Commission. Division 5 deals with what are the mandatory terms of enterprise agreements, and Div 6 deals with rates of pay. Division 7, which deals with “variation and termination of enterprise agreements” contains the provisions under which the Commission made the decision now being challenged. We shall return to some relevant provisions of this division presently. Division 8 deals with the Commission’s “general role in facilitating bargaining”. The remaining provisions of Pt 2-4, in Divs 9, 10 and 11, deal with specific matters that are of no direct relevance in this proceeding.

7    The broad subject covered by Pt 3-3 of the FW Act is “industrial action”. Division 2 of that part is central in the scheme of collective bargaining established by the FW Act, and is headed “protected industrial action”. Broadly speaking, and subject to compliance with a number of specific requirements of the legislation, employees and unions (and, in some circumstances, employers) may take industrial action in the context of negotiations for a new enterprise agreement. As the name suggests, industrial action of this kind is “protected” from certain legal consequences that would, or might, otherwise apply. There is no need to rehearse the scope of these protected industrial action provisions, but it should be noted that, by ss 413(6) and 417 of the FW Act, industrial action before the nominal expiry date of an existing enterprise agreement is proscribed, and would not be protected.

8    Returning to Div 7 of Pt 2-4 of the FW Act, Subdiv C thereof is concerned with “termination of enterprise agreements by employers and employees”. It provides for a procedure whereby the employer covered by an enterprise agreement may secure the consent of the relevant employees jointly to approach the Commission to approve the termination of that agreement. Under s 223, if the Commission is satisfied that the appropriate procedures have been followed and that there are no other reasonable grounds for believing that the employees have not agreed to the termination of the agreement, and if it considers that it is appropriate to approve the termination, taking into account the views of any relevant employee organisation, it must approve the termination. The termination of an agreement by these procedures may occur at any time.

9    Additionally, Subdiv D of Div 7 provides for the termination of an enterprise agreement after its nominal expiry date. This subdivision consists of ss 225, 226 and 227, the terms of which are as follows:

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

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

It was Subdiv D of Div 7 which applied in the circumstances of the present case.

10    In its decision of 22 April 2015, the Commission referred to the relevant provisions of the FW Act and continued:

The legislative scheme therefore enables and facilitates good faith bargaining for an enterprise agreement. It also facilitates the making of enterprise agreements but does not mandate that result. Once an enterprise agreement is made and approved by the Commission, it seems clear that the legislative scheme does not intend that such agreements operate in perpetuity. Agreements have a finite nominal life. At the end of the nominal life of an agreement, bargaining parties may bargain for a new agreement utilising all of the tools available under the Act; or a person to whom an agreement applies may take steps to bring the agreement to an end in accordance with the provisions of the Act; or both may occur.

On the present application, no criticism was ventured of the Commission’s perception of the legislative scheme in these terms.

11    Referring to the terms of s 226(a) of the FW Act, the Commission cited the following passage from the decision of a Full Bench of the Industrial Relations Commission in Re Kellogg Brown and Root, Bass Strait (Esso) Onshore/Offshore Facilities Certified Agreement 2000 (2005) 139 IR 34, which was concerned with a corresponding, albeit not identical, provision of the Workplace Relations Act 1996 (Cth) (139 IR at 40):

The absence of any reference to the interests of the negotiating parties in s.170MH(3) is significant. It follows that the views of persons bound by the agreement may be relevant to the exercise of the discretion if they shed light upon the effect of termination on the public interest, but they should not be given any independent weight. To do so would be to import into the application of the section something which on its proper construction it does not include.

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.

To the extent that s 226 of the FW Act is concerned with the public interest, the Commission expressed the view that this passage remained “apposite”. Again, the applicants expressed no criticism of this approach, so far as it went.

12    The Commission next referred to the following passage in the reasons of Vice President Watson in Energy Resources of Australia Pty Ltd v Liquor Hospitality and Miscellaneous Union [2010] FWA 2434 at [24]-[27]:

Enterprise bargaining lies at the heart of the workplace relations system and has done so since the early 1990s. Enterprise instruments have had different titles and have been subject to different rules, but there is nevertheless consistency in many respects.

Enterprise Agreements made and approved under the FW Act, Workplace Agreements made under the WR Act, and Certified Agreements made under the Industrial Relations Act 1988 have all been required to have a specified duration with an upper limit on that duration.

The prevailing legislative provisions have provided for the continuation of agreements after their nominal expiry date subject to an ability to make application to terminate the Agreement. Different tests have applied, some more limited than the current provisions and some less restricted. 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.

Neither was this passage the subject of any criticism on behalf of the applicants.

13    The Commission next referred to the decision of Vice President Lawler in Re Tahmoor Coal Pty Ltd (2010) 204 IR 243. His Honour had said (204 IR at 255):

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.

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.

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.

14    Vice President Lawler had referred to Energy Resources, and said (204 IR at 256-257):

While his Honour emphasised only the object in s 3(a), for the reasons I have given, I consider that the objects in s 3(f) and s 171 are also of particular importance and should be seen as qualifying the general object in s 3(a). I respectfully agree with the outcome in [Energy Resources]. However, it needs to be born in mind that the circumstances in that case were very unusual indeed. The agreement in question was some 10 years past its nominal expiry date and had a continuing application to only three employees - less than one per cent of the employer’s workforce. The remainder of the relevant workforce was employed on statutory individual contracts and the terms and conditions of their employment would not be directly affected by termination of the agreement in that case. Clearly enough, [Energy Resources] was not a case where bargaining for a replacement agreement had been ongoing since the passing of the nominal expiry date of the agreement in question.

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.

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.

15    Having set out this passage from Tahmoor Coal, the Commission continued:

In our view, there is no statutory imperative that the promotion and delivery of productivity benefits at an enterprise level is primarily or exclusively to be achieved through enterprise bargaining in good faith rather than by other means. True it is that bargaining, where it occurs, must occur consistently with the good faith bargaining requirements. But there is no imperative that an agreement must result in productivity improvements. Much less is there any requirement that a resulting agreement must deliver a productivity benefit at the enterprise level. Good faith bargaining for an enterprise agreement may, or may not, deliver productivity benefits at any enterprise level.

The statute also mandates that on application by the person covered, an agreement that has passed its nominal expiry date must be terminated if the circumstances identified in s. 226 exist. Productivity benefits might also be delivered by terminating an agreement that has passed its nominal expiry date. Such benefits might be delivered through a combination of both means.

As we have already observed, s. 226 forms part of a scheme in Part 2–4 of the Act to which the object in s. 171 is directed. Self evidently s. 226 is then a part of a scheme of provisions through which the parliament intended that the object might be achieved. There is no basis for concluding, at a level of generality, that continuing the operation of an agreement that has passed its nominal expiry date (whether bargaining is continuing or not) will be any more an effective means by which the object in s. 171 is to be achieved than terminating that agreement. Continuing the operation of an agreement that has passed its nominal expiry date may impede rather than enable an enterprise agreement to deliver productivity benefits at an enterprise level. It may also impede rather than promote good faith bargaining resulting in an agreement which delivers those benefits. The same may be true for the termination of the agreement. Ultimately, the circumstances will dictate the matter.

In our view, to approach the construction of s. 226 in the manner suggested in Tahmoor Coal, particularly at [55] results in a predisposition against the termination of an enterprise agreement that has passed its nominal expiry date. There is no indication in the section or elsewhere in the Act that this should be the case. Section 226 operates according to its terms. Its application is guided by the language and purpose of the provision by reference to the language and purpose of the Act as a whole so that the meaning and effect of the provision is properly understood. Further, there is nothing in the structure or content of the Act to suggest that its object (of providing a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians) is to be exclusively or primarily to be achieved by enterprise level collective bargaining.

16    The Commission said that paras (a)-(g) of s 3 of the FW Act were not properly described as objects of the Act. The object of the Act was to provide a balanced framework for cooperative and productive workplace relations that promoted national economic prosperity and social inclusion for all Australians, the means of achieving this being the matters set out in paras (a)-(g). Those means did not “have any particular hierarchy or precedence.”

17    The Commission continued:

Further there is not, in our view, any conflict or inconstancy between s 3 (or any of its paragraphs) and s 171 of the Act. Section 171 contains the particular objects of Part 2–4 of the Act. Its terms do not conflict with or qualify s 3 of the Act and can be read harmoniously with s 3 of the Act. Section 171 is relevant to the construction and application of s 226 of the Act, but in our view, it does not operate on s 266 in the manner suggested in Tahmoor Coal. On our reading of ss 3 and 171, there is nothing in those provisions, when read harmoniously, that would suggest that the emphasis on promoting productivity (in s 3(a)) is primarily to be achieved through collective bargaining in good faith (in s 3(f) and s 171) rather than by other means, such as termination of an expired agreement. Moreover, such a construction assumes some incompatibility with terminating an enterprise agreement that has passed its nominal expiry date and collective bargaining. In our view the two are not incompatible.

18    The Commission said that, when read harmoniously with s 3, s 171 did not qualify or restrict the exercise of the power of termination under s 226 of the Act in the manner suggested in Tahmoor Coal, and continued:

Section 226 of the Act is part of the simple, flexible and fair framework, established by Part 2–4 to which the objects in s 171 relate. There is nothing inherently inconsistent with the termination of an enterprise agreement that has passed its nominal expiry date and collective bargaining in good faith. There is nothing incompatible with the termination of such an agreement and the continuation of collective bargaining that has commenced in good faith at an enterprise level for an enterprise agreement that delivers productivity benefits. The framework that is established by Part 2–4 provides for applications and orders to be made for the termination of an enterprise agreement that has passed it nominal expiry date. It is not too difficult to suppose that such an agreement in particular circumstances might no longer deliver productivity benefits, or that such an agreement has never done so. It is not too difficult to suppose that the termination of such an agreement might better support good faith bargaining for an agreement that delivers productivity benefits at the enterprise level.

19    The Commission said that there was “no express or contextual indication that the objects in s. 3 or s. 171 operate on s. 226 in the way suggested in Tahmoor Coal”, adding that Tahmoor Coal involved “an incorrect interpretation of the interrelationship of the objects in s. 3 and s. 171” of the FW Act.

20    The Commission proceeded to apply the terms of s 226 to the facts of the case, concluding that termination of the enterprise agreements binding on the respondents would not be contrary to the public interest, and that it was appropriate to terminate those agreements. Because of the high-level nature of the jurisdictional challenge to the correctness of the Commission’s approach advanced by the applicants in this proceeding, there is no need for us to canvas those aspects of the Commission’s decision.

21    In their outline, the applicants identified the essence of that challenge as the Commission having “asked itself the wrong question and/or made an error of law”. On no view, however, did the Commission ask itself the wrong question. The questions posed by s 226 of the FW Act were specifically asked, and answered. As the applicants’ case was developed in argument, however, it became clear that the essence of their complaint was that the Commission misunderstood the way in which the objects of the FW Act informed the assessment of where the public interest lay under s 226(a). Specifically, it was said to be a jurisdictional error for the Commission to have perceived it to be an object of the FW Act to promote productivity per se, rather than, in the words of s 3, to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians by, inter alia, achieving productivity through an emphasis on collective bargaining, or, in the words of s 171, to provide a simple, flexible and fair framework that enables collective bargaining in good faith.

22    We do not accept that the Commission made a jurisdictional error of this kind. Indeed, we consider that the answer to the applicants’ case in court has already been provided in the Commission’s own reasons. In our view, the Commission’s own description of the statutory environment which informed its task under s 226, as summarised in paras 15-18 above, was unexceptionable. Save to make the limited number of points which follow below, we would not wish to add anything to that description.

23    First, both s 3 and s 171 of the FW Act set out the objects of the provisions to which they refer (the FW Act as a whole and Pt 2-4 respectively). While the Commission would undoubtedly be required to exercise any otherwise unconfined discretion in a way that was not antagonistic to these objects, it must be remembered that the primary means by which the legislature sought to achieve them was to enact the detailed provisions of the FW Act itself. It will be the section, or group of sections, that applies directly that will most usefully indicate what it was the legislature was seeking to achieve in a particular situation. What the Full Court said about s 208 of the FW Act in Toyota Motor Corporation Australia Ltd v Marmara (2014) 222 FCR 152, 178-179 [86] was an instance of this approach.

24    Secondly, the importance of enterprise agreements in the regulation of terms and conditions of employment under the FW Act cannot be gainsaid. Neither can the central role of collective bargaining in that arena. But we would agree with the Commission insofar as it observed that there is no indication in the FW Act that the existence of a previously-negotiated enterprise agreement should, a priori, be regarded as providing particular encouragement to collective bargaining. Indeed, the legislation contemplates that, at least generally, once a new enterprise agreement has been made, it will apply to those covered by it at least until its nominal expiry date. Under such an environment of stable industrial regulation, what need there would be for further collective bargaining is not immediately obvious. This perception of the scheme of the FW Act is, of course, consistent with the terms of s 417 – and its companion provision, s 413(6) – which proscribe industrial action until the nominal expiry date of the applicable enterprise agreement.

25    Thirdly, and relatedly, the period after the nominal expiry date of an enterprise agreement is likely to be the very time that the parties concerned are engaged in serious, if not disputatious, collective bargaining. There is, of course, no suggestion in the FW Act that the relevant employer and its employees would not commence to bargain before, even well before, that date (as happened in the present case), but, if they do so and conclude the terms of a new agreement, the existing agreement will cease to apply immediately it passes its nominal expiry date (s 58(2)(d)(ii)). Alternatively, if there is no new agreement until after the existing agreement has passed its nominal expiry date, the existing agreement will cease to apply when the new one comes into operation (s 58(2)(e)). In the context of an ongoing, single-enterprise, business, the most obvious situation in which recourse might be had to s 226 of the FW Act would be where an existing agreement had passed its nominal expiry date (a jurisdictional fact under the section) but where no new agreement had been made. This is the very situation in which collective bargaining is likely to be proceeding; and it is the only time in which industrial action associated with such bargaining might be – subject to compliance with other statutory requirements – protected under Div 2 of Pt 3-3 of the FW Act. The proposition that, as a matter of statutory policy, there should be a predisposition towards regarding it as contrary to the public interest to terminate an enterprise agreement during a period when collective bargaining is taking place must, in the circumstances, be regarded as a most unlikely one.

26    For the above reasons, we would reject the applicants’ first ground.

27    The applicants’ second ground alleges that the Commission failed to take into account what was described as “a significant relevant consideration” when forming its views about the public interest for the purposes of s 226(a) of the FW Act. That consideration was identified as being “that termination of the agreements was bound to have an effect on an access undertaking that the respondents had had to give under the Queensland Competition Act 1997 (sic).” In order to understand this submission it is necessary to say something about the regulatory environment in which the respondents operate in Queensland.

28    The central Queensland coal network (“the CQCN”) comprises 2,700 km heavy haul rail, signalling and other assets, known as the “below-rail” assets. Aurizon Network, a wholly owned subsidiary of Aurizon Holdings Limited, subleases the rail corridor and leases the rail infrastructure. It is the sole supplier of these below rail services on the CQCN. Other coal hauliers who provide transportation services using locomotives, rolling stock and associated assets, the “above-rail” services, have to secure access to Aurizon Network’s below-rail services in order to undertake coal haulage using the CQCN.

29    The regulation of such access was provided for under the Queensland Competition Authority Act 1997 (Qld) (“the QCA Act”). One of the regulatory devices, provided for in the QCA Act, was an “access undertaking”. The Queensland Competition Authority (“the Authority”) had power to approve such “access undertakings” for “services”. Railway lines were facilities by which “services” were provided. Access undertakings, given under the QCA Act, were required to contain, inter alia, provisions for preventing an access provider from recovering, through the price of access to the service, costs that were not reasonably attributable to the provision of the services: see s 137(1A). The owner or operator of a “declared service”, such as Aurizon Network, could provide the Authority with a “draft access undertaking”: see s 136(1). Upon receipt of such an undertaking, the Authority was required to consider it, and either to approve, or to refuse to approve, it: see s 136(4). If the Authority refused to approve the undertaking, it was obliged to issue a notice stating the reasons for the refusal and to stipulate the manner in which it considered that the undertaking should be amended in order to make it acceptable: see s 136(5). Once in force, an undertaking was subject to amendment: see s 139(2).

30    Aurizon Network’s ability to set prices was constrained by requirements, imposed under the QCA Act, which fixed its maximum allowable revenue. Under the QCA Act, the Authority was required to have regard to a number of matters when approving Aurizon Network’s proposed maximum annual revenue and tariffs. One of these considerations was that the revenue must, at least, be enough to meet the efficient costs of providing third party access to the service.

31    In 2010 Aurizon Network proffered access undertakings to the Authority. In October 2010 the Authority approved the undertakings. These undertakings were to remain in force (subject to amendment) until 30 June 2015.

32    On 11 August 2014, Aurizon Network submitted a new draft access undertaking to the Authority, which it anticipated would supersede the then extant undertaking upon its expiry. In September 2014, the Authority published a “draft decision” relating to Aurizon Network’s draft. The Authority foreshadowed that it would refuse to approve the undertaking. The main reason for the Authority’s refusal was that it considered that the maximum allowable revenue proposed by Aurizon Network was too high. This was because it considered that Aurizon Network had over-estimated the revenue it would need in order to meet its operating and maintenance costs. These costs could, it found, be substantially reduced over a four year period. It proposed a revised access undertaking that it was prepared to approve.

33    Although these exchanges were the subject of evidence and submissions which were considered by the Commission, the material was by no means comprehensive. Aurizon Network’s draft access undertaking was not put in evidence. There was no evidence as to the labour cost components of Aurizon Network’s operating and maintenance costs in relation to employees covered by the enterprise agreements. Only six of the 12 terminated enterprise agreements related to Aurizon Network and “below rail” activities. No attempt was made to quantify the impact of any reduction in labour costs which might result from the termination of these enterprise agreements. No distinction was made between “below-rail” and “above-rail” services for these purposes.

34    In its draft decision, the Authority sought to estimate Aurizon Network’s operating and maintenance costs during the currency of the foreshadowed undertaking. Its starting point for determining the operating costs was the actual costs incurred in 2012-13. The maintenance costs were estimated on the basis of the actual figures from the 2011-12 year. Various adjustments were made to take account of contingencies, but the draft decision did not specify any particular adjustments which were made to take account of changes to labour costs. This was significant because of proposed reductions in the workforce subject to the agreements.

35    It was common ground that, in considering the question of whether it was satisfied that it was not contrary to the public interest to terminate the enterprise agreements, the Commission did not refer to the impact of termination on Aurizon Network’s actual costs and its actual allowable revenue and, more broadly, the regulatory regime.

36    The applicants submitted that this omission constituted a jurisdictional error.

37    The respondents contended that there was no requirement that the Commission consider competition settings when forming its judgment under s 226(a).

38    It is well established that a failure to have regard to a relevant consideration may vitiate an administrative decision. The leading authority is Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24. In the principal judgment in that case Mason J advanced a number of propositions which are relevant for present purposes. They were:

    “The ground of failure to take into account a relevant consideration can only be made out if a decision-maker fails to take into account a consideration which he is bound to take into account in making that decision …” (at 39) (Original emphasis).

    “If the relevant factors … are not expressly stated [in the governing statute], they must be determined by implication from the subject-matter, scope and purpose of the Act” (at 39-40).

    “Not every consideration that a decision-maker is bound to take into account but fails to take into account will justify the court setting aside the impugned decision and ordering that the discretion be re-exercised according to law. A factor might be so insignificant that the failure to take it into account could not have materially affected the decision …” (at 40).

    “… in the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision-maker and not the court to determine the appropriate weight to be given to the matters which are required to be taken into account in exercising the statutory power …” (at 41).

39    It is important to notice that Mason J did not impose, on decision-makers, an obligation to search for and find mandatory considerations, in all cases in which legislation fails to prescribe specific considerations to be brought into account in the exercise of power. As Jessup J pointed out in Moana v Minister for Immigration and Border Protection [2015] FCAFC 54 at [7], what Mason J had said:

… was that, where the discretion was unconfined in this way, the court would not find that the decision-maker was bound to take a particular matter into account unless an implication to that effect was to be found in the subject matter, scope and purpose of the relevant statute. That is to say, only if it were apparent from the subject matter, scope and purpose of the Act that the power in question ought not to be exercised without taking a particular consideration into account would a court hold that the power could not be so exercised.

(Original emphasis).

40    The FW Act did not require the Commission to have regard to any particular considerations when deciding whether or not it was satisfied, for the purposes of s 226(a), that it was not contrary to the public interest to terminate an agreement. The applicants must, therefore, establish, by reference to the subject-matter, scope and purpose of the FW Act, that the Commission was obliged to have regard to the “significant relevant consideration”, identified by them, when determining where the public interest lay. That consideration, as has already been noted, was “that termination of the agreements was bound to have an effect on an access undertaking that the Respondents had had to give under the [QCA Act].”

41    The necessary implication is to be drawn from the terms of the FW Act and not the QCA Act. The relevant legislative context is set out above at paras 4-9. The FW Act is concerned with the regulation of the terms and conditions upon which employees are engaged. More broadly, as the Full Bench of the Industrial Relations Commission held in Re Kellogg Brown and Root, in the passage quoted at para 11: “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 [FW] Act, employment levels, inflation, and the maintenance of proper industrial standards.” It is not immediately obvious why the impact of the termination of an enterprise agreement under the FW Act on elements of a State competition regime should have been treated as a mandatory consideration when the Commission was deciding whether it was satisfied that such termination would not be contrary to the public interest.

42    It may be assumed that the termination of the agreements was likely to have some impact on the manner in which the undertakings, given to the Authority by Aurizon Network, would operate in the future. It may also be assumed that the proposed terminations might, thereby, in some indirect way, impinge on the public interest. The 2010 undertaking was, however, about to expire. A replacement undertaking was in the process of being put in place in accordance with the processes prescribed by the QCA Act. The outcome of the process was not known, and could not have been known by the Commission at the time at which it made its decision. The limited evidence before it would have enabled it to conclude that Aurizon Network and the Authority were at odds about the terms of any new undertaking, and that discussions between them were ongoing. The impact of termination on the 2010 undertaking and its proposed successor could only have been a matter of speculation. Termination of the agreements may or may not have advanced the objectives of competition legislation. This step may, for example, have reduced Aurizon Network’s costs. The savings may have been passed on to other coal haulers in lower access charges. They might, however, have been retained by Aurizon Network.

43    That is not to say that such an impact could not have been considered by the Commission as one of the many countervailing considerations which might have informed its judgment under s 226(a). One can, however, readily understand why the Commission would have been reluctant to pronounce on the likely impact of a termination decision given, the limited evidence before it, the uncertain outcome of the ongoing exchanges between Aurizon Network and the Authority and the ever present scope for variation of any existing undertaking. These observations do, however, serve to highlight the conceptual difficulty in elevating such matters to the status of considerations which the Commission was bound to take into account. They also highlight the unlikelihood of any such matters weighing heavily in the Commission’s decision making under s 226(a).

44    In our view, there is no foundation in the terms of the FW Act for the implication that the Commission was bound to have regard to an undetermined effect of termination of agreements on an unsettled access undertaking, given under State competition legislation, when deciding whether it was satisfied that it was not contrary to the public interest to terminate the agreements. Moreover, it is difficult to accept, having regard to the state of the evidence, that the Commission would have regarded this matter as one which could materially have affected its decision.

45    This ground should be rejected.

46    The application should be dismissed.

Associate:

Dated:    3 September 2015