FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Mining & Energy Union v Wagstaff Piling Pty Ltd

[2012] FCAFC 87

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

BUCHANAN AND KATZMANN JJ:

1    This case arises out of a dispute about the proper interpretation of certain provisions of a “union collective agreement” relating to safety at the workplace and, in particular, whether an employer was entitled to require its employees to submit to compulsory random drug and alcohol testing.

2    The Construction, Forestry, Mining & Energy Union (“CFMEU”), one of the parties to the agreement, is aggrieved by a decision of a Full Bench of Fair Work Australia (“FWA”). FWA is constituted under the Fair Work Act 2009 (Cth) (“the FW Act”). The Full Bench determined that there was nothing in the agreement to prevent Wagstaff Piling Pty Ltd (“Wagstaff”), the other party to the agreement, from requiring (directly or indirectly) that its employees undergo random drug and alcohol testing. It therefore upheld an appeal from a decision of a Commissioner who had expressed a contrary opinion. In this proceeding the CFMEU applies under s 39B of the Judiciary Act 1903 (Cth) for writs of certiorari to quash the decision of the Full Bench and mandamus to require FWA to hear and determine the appeal according to law. In short, the CFMEU argues that the Full Bench exceeded its jurisdiction by expressing an incorrect opinion about the meaning and operation of the relevant provisions of the agreement. The allegedly correct opinion is that the agreement implicitly precluded compulsory random drug and alcohol testing.

Background

3    The original dispute arose from the implementation by Thiess Pty Ltd (“Thiess”) of its random drug and alcohol testing policy. Thiess was the principal contractor on the Tulla – Sydney Alliance Project, a project to upgrade a motorway for the Victorian Government. Wagstaff was contracted to do the piling work. It was a term of a number of contracts Wagstaff had made with Thiess that Wagstaff comply with Thiess’ Fitness for Work policy, a feature of its occupational health and safety program. Cl 6.1 of the policy provided that it was a condition of the Project that all individuals submit to drug and alcohol testing if randomly selected during the nominated testing period. The first-mentioned objective of the drug and alcohol testing for which the policy provided was the creation of “a safe and healthy work environment for all project team members free from the hazards associated with the effects of drugs and alcohol in the workplace”. The procedures operated for over 12 months before the CFMEU raised an objection to them.

4    The CFMEU claimed that Wagstaff (along with 11 other sub-contractors) was in breach of the drug and alcohol policy provided for in various enterprise agreements. It notified a dispute to the Victorian Building Industry Disputes Panel. The Panel said that random testing was not provided for in the drug and alcohol policy incorporated into the agreements and expressed the view that employees should not be subjected to involuntary random testing. It recommended that random testing cease. Wagstaff then asked FWA to review the Panel’s recommendation in accordance with the dispute settlement procedure in the enterprise agreement. Thiess was admitted as an intervener. The question referred to FWA was whether the agreement prevented mandatory drug and alcohol testing of employees.

5    A Commissioner of FWA held that Wagstaff could not impose a regime of drug and alcohol testing because the agreement did not provide for drug and alcohol testing. The Commissioner held that, because the agreement was silent, an entitlement to test for drugs or alcohol could not be read into it.

6    Wagstaff appealed to a Full Bench. The appeal was subject to the Full Bench granting “permission” to appeal (FW Act, s 604).

7    On the appeal the CFMEU defended the Commissioner’s decision, arguing that the policy was founded on consultation and cooperation, not compulsion, and that to impose a regime of random mandatory drug testing was “inimical to the bases underpinning the policy”. The Full Bench gave Wagstaff permission to appeal, determined that the Commissioner’s conclusion was “without proper foundation” and upheld the appeal. The Full Bench held that the fact that the agreement was silent on the question of mandatory drug and alcohol testing did not entitle the Commissioner to conclude that such testing was not permissible. In effect, it found that the Commissioner had asked himself the wrong question, that is whether the agreement specifically enabled Wagstaff to conduct mandatory drug and alcohol testing. Consequently, it set aside the Commissioner’s determination and went on to determine for itself the issue the Commissioner was asked to address, namely, whether the agreement prevented Wagstaff from requiring an employee to submit to random drug and alcohol testing. The Full Bench answered that question in the negative.

The relevant terms, scope and operation of the enterprise agreement

8    The union collective agreement at the heart of the dispute is the Wagstaff Piling Pty Ltd and CFMEU Piling Industry Enterprise Agreement 2008 – 2011 (“the agreement”). It was made under s 328 of the Workplace Relations Act 1996 (Cth) (“WR Act”), since repealed.

9    Clause 48 was in the following terms:

48. DRUGS & ALCOHOL POLICY

The parties acknowledge the affect (sic) that employees with drug and/or alcohol problems can cause in the workplace. Any employee with such a problem can lead to a loss in productivity, an unsafe workplace and loss of morale amongst the company. To this end the parties encourage such persons with a problem to seek help.

To that end the parties agree to apply the Drug & Alcohol policy as contained in Appendix I.

10    Appendix I contained the Victorian Building Industry Alcohol & Other Drugs Policy (“the Policy”). The Policy was developed by representatives of unions and employers in the building industry. It was launched in 1993. The approach was largely collaborative. The preamble to the Policy makes it clear that its objective was the provision of safe and healthy workplaces. It noted that the attainment of that objective can be undermined by the hazardous use of alcohol and other drugs. Its stated aim was to facilitate the implementation of practical ways in which building workers could address alcohol and other drug issues affecting them, their families and fellow workers. It emphasised that “safety is paramount on building sites” and that its primary goal was the prevention of safety and health problems. Its goals included the maintenance of “optimum safety on site” and the reduction of “the harmful impact of alcohol and other drug use”.

11    Clause 3 of Appendix I provided:

3. Persons Affected by Alcohol and/or Other Drugs

3.1    A person who is under the influence of alcohol and/or any other drug will not be allowed to work on a building site whilst he/she is incapable of performing safe work practices.

3.2    Any person who believes another person on site is a risk to his/her own or another’s safety should advise an Occupational Health and Safety representative in confidence. The OH&S representative shall take appropriate action, based on his/her assessment of the situation.

3.3    If the matter remains unresolved, the OH&S Committee and management in consultation with the person concerned and the person’s representative will decide whether that person is capable of performing safe work practices.

3.4    Disciplinary action may be taken by management following consultation with the OH&S Committee and the person’s representative.

3.5    If disciplinary action is to be taken, one verbal warning, one written warning shall apply.

3.6    The OH&S Committee will, as a matter of course, follow up to ensure that the person is aware of the policy and resources available to people with alcohol and/or other drug problems, or other problems which may underlie them.

12    As a collective agreement, the agreement was a workplace agreement under the WR Act (WR Act, s 4) and therefore a WR Act instrument, which continued in existence despite the repeal of the WR Act in 2009: Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (“Transitional Act”), Sch 3 Pt 2 cl 2.

13    The agreement contained its own mechanism for resolving disputes. Clause 10 of the agreement provided for a procedure for the resolution of work related grievances by the parties or their representatives and, if the matter remained unresolved, for referral in the first instance to the Victorian Building Industry Disputes Panel. Clause 10.2(g) provided that within 14 days of the Panel’s decision either party could refer the decision to the Australian Industrial Relations Commission (“AIRC”) for review and the AIRC may “exercise its conciliation and/or arbitration powers in such review”. Following the repeal of the WR Act, the references to the AIRC in the agreement should be understood as references to FWA.

The jurisdiction of the AIRC and of FWA

14    Section 709(1) of the WR Act gave a person the right to apply to the AIRC to have a dispute resolution process conducted by the AIRC under Division 5 of the WR Act. It provided that:

A person may apply to the Commission to have a dispute resolution process conducted by the Commission under this Division in relation to a matter or matters in dispute if:

(a)    the dispute is one that, under the terms of a workplace agreement, may be resolved using a dispute resolution process conducted by the Commission; and

(b)    any steps that, under the terms of agreement, must be taken before the matter is referred to the Commission have been taken.

15    The functions and powers of the AIRC in conducting the dispute resolution process were those given to it under the enterprise agreement or as otherwise agreed by the parties: WR Act, s 711(1). It had no power to make orders: WR Act, s 711(2). With the repeal of the WR Act, the functions and powers of the AIRC could be exercised by FWA and references to the AIRC in the WR Act were taken to be references to FWA: Transitional Act, Sch 19 cls 2(1) and 2(2).

16    The appeal to the Full Bench was brought under s 604 of the FW Act, which entitled a person aggrieved by a decision of FWA to appeal the decision with the permission of FWA. Section 604(2) obliges FWA to grant permission where (as here) it is satisfied that it is in the public interest to do so. The Full Bench was entitled to confirm, quash or vary the Commissioner’s decision and make a further decision in relation to the matter that was the subject of the appeal: FW Act, s 607(3). A reference to a decision of FWA includes “any decision … however described”: FW Act, s 598(1).

The competing decisions

17    We referred earlier to the reasons for decision of the Commissioner and the recommendation of the Panel. The Panel did not state an opinion about the legal operation of the agreement, although the Commissioner did. The Panel referred to the origin and features of the Policy. It emphasised the collaborative approach contemplated by the Policy and recommended that compulsory testing of employees covered by the agreement cease. The Commissioner held, in substance, that the agreement did not authorise or permit random drug or alcohol testing because the agreement made no reference to such testing. That finding expressed an opinion about the legal operation and effect of the agreement. At least arguably, it did not involve the exercise of any power of conciliation or arbitration.

18    The Full Bench said that the Commissioner’s conclusion was “without proper foundation” and also expressed its disagreement with the conclusion and recommendation of the Panel. The Full Bench expressed its own opinion that none of the provisions of the agreement prevented or prohibited Wagstaff from requiring an employee to submit to drug and alcohol testing. Its reasons were encapsulated in two paragraphs:

[34]    We do not consider clause 48 operates to limit drug and alcohol testing, or for that matter, other safety initiatives. Appendix I and the Policy clearly endorse a cooperative and collective approach to the management of drug and alcohol issues but cannot be read as prohibiting mandatory drug and alcohol testing. Indeed testing of this nature was not as common an issue at the time of the inception of the Policy in 1993 as it is now. Other provisions of the Wagstaff agreement recognise the need for continuous change and improvement and the obligations on Wagstaff to advance workplace safety. The risks to employee safety posed by drug and alcohol use have long been recognised by this Tribunal and compulsory drug and alcohol testing is, of itself, not so extraordinary that it could not be argued to be a reasonable employer instruction or that it could be regarded as an extra claim for the purposes of clause 50 of the Wagstaff agreement.

[35]    We therefore uphold the appeal and determine that the Commissioner’s conclusion was without proper foundation. It follows that we disagree with the conclusion and recommendation of the Panel.

19    On one view, the Full Bench did no more than correct the erroneous opinion of the Commissioner about the operation and effect of the agreement, although in substance it also set aside the recommendation of the Panel. The second step may be seen as an exercise of a power of conciliation or arbitration – i.e. a step to deal with the industrial merits of the dispute.

Did the Full Bench fall into jurisdictional error?

20    One difficulty in this case arises from the question which the Commissioner was asked to consider. It was, as finally formulated:

Does the Wagstaff Agreement, in particular clause 48 when read with Appendix I prevent Wagstaff from requiring (directly or indirectly via Thiess) a Wagstaff employee on the Project to submit to a drug and alcohol test if randomly selected for the test as part of the announced drug and alcohol testing procedures in the FFW Policy [Thiess’ Fitness for Work Policy]?

21    The issue between the parties which required attention was an industrial one, arising in connection with an industrial dispute. The question formulated for the attention of the Commissioner was, perhaps, capable of raising an issue appropriate for the exercise of its conciliation and/or arbitration power as cl 10 of the agreement contemplated, even though it may have required the Commissioner to form his own view about the legal meaning and effect of the agreement. Although FWA cannot exercise the judicial power of the Commonwealth, it is well established that a federal industrial tribunal, exercising powers of conciliation and arbitration, may legitimately form and act upon opinions about legal rights and obligations as a step in the exercise of its own functions and powers (see Re Cram; Ex parte The Newcastle Wallsend Coal Company Pty Ltd (1987) 163 CLR 140 at 149).

22    However, the decision of the Commissioner did not observe this fundamental distinction. The Commissioner expressed an opinion about a legal matter, but did not do so for the purpose of taking some further step within his own power. We agree with the Full Bench that the Commissioner’s opinion was erroneous, a matter we address in more detail later. As a result, it is not surprising that the Full Bench first corrected that error. With its reference to disagreeing with the recommendation of the Panel the Full Bench then seems to have moved appropriately back into the area of its own jurisdiction, having formed its own opinion as a foundation for doing so, as it was permitted to do.

23    Finally, and consistently with a focus on the industrial aspects of the matter, the Full Bench said (at [38]):

We note that there might well be concerns over the implementation or means of implementation of such compulsory drug and alcohol testing and we would expect that any dispute about such matters will be addressed through the Wagstaff agreement dispute settlement process.

24    The CFMEU argued that the Full Bench made a legal error in the formulation of its own opinion (which we do not accept) and that it committed jurisdictional error when it did so, because it only had jurisdiction to reach a conclusion which did not involve such an error of law.

25    It has not traditionally been thought that the valid exercise of the functions and powers of a federal industrial tribunal depends upon reaching legally correct opinions. The position was graphically illustrated in Re Brack; Ex parte Operative Painters and Decorators Union of Australia (1984) 58 ALJR 125; 51 ALR 731. In that case a member of this Court had given a legally binding interpretation of an award. Commissioner Brack, a very experienced member of the Conciliation and Arbitration Commission (the statutory predecessor to the AIRC) came to the view that the interpretation did not give effect to the actual intention of the award and varied the award to accord with his own view of that intention. It might be argued that, in the circumstances, the opinion upon which Commissioner Brack proceeded was legally “incorrect”. The High Court said:

It seems that the Commissioner did not agree with all the views which were expressed by Morling J in the course of arriving at his interpretation of the clause. He took a different view of the history of the award and he regarded the conduct of the parties under the award as relevant, at least to the ascertainment of their actual intention.

26    The High Court also said:

The manner in which Commissioner Brack’s decision is expressed reflects a regrettable and surprising reluctance to accept the authority of a judicial interpretation of the award.

27    Nevertheless, the High Court’s view was that:

What he did was to accept the Federal Court’s interpretation and determine that the operation of the award provision, so interpreted, was unsatisfactory, having regard to the circumstances already mentioned.

28    It is clear that the High Court regarded the formation of a legal opinion and the exercise of a power of arbitration as being in different realms, at least in the circumstances of that case.

29    What of the present case? At the time the agreement was made the WR Act permitted the AIRC to participate in dispute settling procedures. That was an arrangement which was, generally speaking, constitutionally effective. In Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission (2001) 203 CLR 645 (“the Gordonstone Coal Case”) the High Court said (at [29]):

    … it is incidental to the conciliation and arbitration power for the Parliament to permit parties to an industrial situation to agree on the terms on which they will settle the matters in issue between them conditional upon their agreement having the same legal effect as an award. So, too, it is incidental to that power for the Parliament to give legal effect to agreed procedures for maintaining a settlement of that kind and, also, for it to authorise the Commission to participate in those procedures.

30    However the High Court went on to make the following important observations (at [31] and [34]):

31    Where parties agree to submit their differences for decision by a third party, the decision maker does not exercise judicial power, but a power of private arbitration. Of its nature, judicial power is a power that is exercised independently of the consent of the person against whom the proceedings are brought and results in a judgment or order that is binding of its own force. In the case of private arbitration, however, the arbitrator's powers depend on the agreement of the parties, usually embodied in a contract, and the arbitrator's award is not binding of its own force. Rather, its effect, if any, depends on the law which operates with respect to it.

…

34    The parties to an industrial situation are free to agree between themselves as to the terms on which they will conduct their affairs. Their agreement has effect according to the general law. If their agreement is certified, it also has effect as an award. To the extent that an agreement provides in a manner that exceeds what is permitted either by the Constitution or by the legislation which gives the agreement effect as an award, it cannot operate with that effect. But the underlying agreement remains and the validity of that agreement depends on the general law, not the legislative provisions which give it effect as an award.

31    Parties to an industrial arrangement of the kind represented by the agreement could not make it a condition of the valid participation of FWA (or the AIRC before it) in a dispute settling mechanism that any opinion reached or stated be a legally correct opinion. Moreover, clause 10 of the agreement identified the contribution to be made by the AIRC (later FWA) as one involving the exercise of its “conciliation and/or arbitration powers”, immediately removing any idea that the AIRC (and later FWA) might contribute a binding declaration on any legal issue. In the Gordonstone Coal Case at [26], the High Court made it plain that even an arbitrated dispute resolution procedure could not validly purport to confer judicial power, saying:

    … an arbitrated dispute resolution provision will be invalid to the extent that it purports to confer judicial power on the Commission or any one else. For present purposes, it is sufficient to note that a power to make a binding determination as to legal rights and liabilities arising under an award or agreement is, of its nature, judicial power.

32    In those circumstances, the statutory authority in the WR Act for the AIRC to participate in a dispute settling procedure such as that set out in clause 10 of the agreement did not carry with it the consequence that the AIRC would make a jurisdictional error if it expressed an incorrect opinion about any matter arising under the agreement. Nor would it have failed to understand, exceeded, or failed to exercise its jurisdiction if it did so (cf. Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 (“Coal and Allied”) at [31]). If in forming that opinion it fell into error, it did not thereby exceed its jurisdiction.

33    Had the Commissioner used his own opinion about the legal effect of the agreement to suggest that mandatory drug and alcohol testing should stop, he would not have exceeded his jurisdiction even though, in our view, his opinion was incorrect. Similarly, the Full Bench did not exceed its jurisdiction when it came (correctly we think) to a different view.

34    In its written submissions the CFMEU argued that the Full Bench took into account irrelevant considerations and failed to take into account relevant considerations and therefore fell into jurisdictional error. The allegedly irrelevant considerations were whether or not mandatory drug and alcohol testing was not as common in 1993 as it is now and whether or not an instruction to submit to compulsory testing would otherwise be a reasonable direction for an employer to issue. The relevant consideration said to have been ignored was cl 11 of the agreement, which, according to the CFMEU, provided for the involvement of all parties in formulating any change to the drugs and alcohol policy.

35    The argument was said to be based on what the High Court said in Craig v The State of South Australia (1995) 184 CLR 163 at 179. There are a number of difficulties with the argument.

36    In Craig the Court observed:

If … an administrative tribunal falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal’s exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it.

37    In other words, for an error of law by an administrative tribunal to be a jurisdictional error, the error of law in question must lead the tribunal to apply itself incorrectly to the matter before it, rather than the reverse. Secondly, the erroneous approach to its task which thereby arises must affect the exercise of its power so that it may be seen that it has, in all the circumstances, exceeded its authority or powers. Thirdly, the discussion in Craig concerned the correction of jurisdictional error made by an inferior court. Reference to administrative tribunals was made to draw out some points of distinction. Fourthly, the position of federal industrial tribunals is addressed much more directly in the later case of Coal and Allied, which remains the authoritative statement by the High Court in that area.

38    At times during its argument the CFMEU appeared to advance the proposition that any error of law on the part of an administrative tribunal will go to jurisdiction. Although this is the position in England, it is not the law in Australia: Kirk v Industrial Court of New South Wales (2010) 239 CLR 531 at [65] and the authorities referred to in the footnote to that paragraph. See, too, the cases referred to in Coal and Allied Mining Services v Lawler (2011) 192 FCR 78 at [55]-[58] so far as the position of federal industrial tribunals is concerned.

39    In Kirk the High Court approved the following statement by Hayne J in Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at [163]:

    In deciding whether writs of prohibition and certiorari (and analogous forms of relief) should be granted, a distinction is drawn between jurisdictional error and error within jurisdiction. This Court has not accepted that this distinction should be discarded. As was noted in Craig v South Australia, that distinction may be difficult to draw. The difficulty of drawing a bright line between jurisdictional error and error in the exercise of jurisdiction should not be permitted, however, to obscure the difference that is illustrated by considering clear cases of each species of error. There is a jurisdictional error if the decision maker makes a decision outside the limits of the functions and powers conferred on him or her, or does something which he or she lacks power to do. By contrast, incorrectly deciding something which the decision maker is authorised to decide is an error within jurisdiction. (This is sometimes described as authority to go wrong, that is, to decide matters within jurisdiction incorrectly.) The former kind of error concerns departures from limits upon the exercise of power. The latter does not.

(Emphasis added)

40    If it was open to FWA to express an opinion about the question submitted to it under cl 10 of the agreement, it was within FWA’s jurisdiction to err in the formation of that opinion. Put differently, if it is accepted that FWA can give a legal opinion, it cannot be said that the Full Bench exceeded the limits of its authority by expressing a legally incorrect opinion.

41    There is another way of looking at this issue from a procedural perspective. If it was open to the Commissioner and the Full Bench of FWA to do no more than express an opinion about the proper construction of the agreement, as the parties seemed to accept (although we have considerable reservations about that, in light of the reference in clause 10 to the exercise of conciliation and/or arbitration powers), the better view is that any opinion given on that question had no legal effect of any kind and hence no jurisdictional consequence either. Rather, the parties had agreed to submit that question to the AIRC (later FWA) for its opinion. The procedure was in the nature of a private arbitration. If the agreement entitled the parties to seek a legal opinion from the AIRC (later FWA) then, subject to any right of appeal, they committed themselves to the possibility that any such opinion might be wrong. In short, the participation by FWA in the dispute resolution process erected by the agreement was not open to any challenge of the kind mounted in the present proceeding. No constitutional writ could issue. FWA did not make an order based on its opinion either at first instance or on appeal. It could not be subjected to an order from this Court requiring it to state a correct opinion.

42    The CFMEU also argued that the Full Bench determined that mandatory drug and alcohol testing was not prohibited in that it might properly be described as “continuous change and improvement” as part of Wagstaff’s obligations to advance workplace safety. It submitted that there was no material before the Full Bench that would enable it to conclude that mandatory testing was an improvement on what went before it. In the absence of evidence, it contended, there was no basis for the finding and therefore the Full Bench failed to exercise its jurisdiction.

43    These arguments must also be rejected. First, the Full Bench did not make such a determination. It merely observed that the agreement recognised the need for continuous change and improvement and the obligations of Wagstaff to advance workplace safety. That observation was relevant because it showed that the agreement was not static or immutable, as the CFMEU had contended in order to resist the imposition of mandatory testing. Secondly, it seems clear enough that mandatory testing is a surer method of determining who is affected by alcohol and therefore who is at risk (of injuring himself or others) than relying on self-identification or the inclination of one worker to inform on another. Thirdly, for the reasons we have already given, even if, as the CFMEU contended, such a determination was made and there was no basis for it, the Full Bench would not have failed to have exercised its jurisdiction.

44    None of the matters the CFMEU raised affected the exercise or purported exercise of the power of FWA.

Did the Full Bench err in its interpretation of the agreement?

45    In any event, we are not satisfied that the Full Bench misconstrued the agreement. The agreement did not expressly prevent mandatory random drug and alcohol testing. Nor did it do so implicitly. It provided no mechanism for objectively ascertaining whether a worker was affected by drugs or alcohol. While the Policy may have emphasised the benefits of self-motivation and cooperation, it did not exclude coercive measures where necessary or desirable in the interests of safety. The Commissioner’s approach treated the content of Appendix I as both legally determinative (which it is clearly not) and an exclusive or exhaustive statement of the powers and discretions available to Wagstaff to manage drug and alcohol issues in the workplace (which it also is clearly not).

46    Cl 48 and Appendix I must be construed in the context of the agreement as a whole and in the relevant statutory context. These provisions had effect subject to the Occupational Health and Safety Act 2004 (Vic) (“OH&S Act”): WR Act, s 17(2). Indeed, the enterprise agreement itself stipulated in cl 16 that:

Nothing in this Agreement shall take precedence over the Occupational Health & Safety Act 2004 (as amended).

47    Section 21 of the OH&S Act imposes a duty on an employer, “so far as is reasonably practicable”, to provide and maintain for employees of the employer a working environment that is “safe and without risks to health”. An employer who contravenes s 21 risks a penalty of 1800 penalty units (almost $220,000) if the employer is a natural person and 9000 penalty units (or almost $1.1m) if it is a corporation. Section 25 imposes duties on employees, one of which is a duty to cooperate with the employer with respect to any action taken by the employer to comply with a requirement of the Act or regulations. A contravention of such a duty is an indictable offence punishable by 1800 penalty units (almost $220,000). Every employer also owes a duty of care to its employees to take reasonable care for their safety. The Policy acknowledged the risks to safety posed by employees affected by drugs or alcohol at a building site. In those circumstances, at least, an employer who took the precaution of first ascertaining whether drugs or alcohol have been imbibed as a step towards protecting the safety of employees at the workplace may be seen to be attending to its own obligations. Not only did the agreement not detract from its duty to do so, it recognised the paramount force of the statutes which confirm such obligations.

48    The CFMEU nonetheless relied on cl 50 of the agreement to support the contention that mandatory testing is excluded “by necessary implication”.

49    Cl 50 is in the following terms:

50. NO EXTRA CLAIMS

This Agreement is intended to deal comprehensively with all the matters which pertain to the employment relationship between the Company and its employees. The parties acknowledge and agree that the Agreement is in full and final settlement of all matters, claims and demands however described whether or not any matter, claim or demand is specifically addressed within the Agreement

The parties must not, during the term of this Agreement, pursue any further claims about any matter which pertains to the employment relationship. The parties further undertake to not, during the life of this Agreement, initiate any campaigns of direct industrial action intended to secure new and improved rates and conditions during the term of this agreement or at the end of this Agreement.

50    The problem with the CFMEU argument is that, despite cl 50, the agreement should not be construed as dealing comprehensively with all matters relating to the employment relationship (Ansett Transport Industries (Operations) Pty Ltd v Wardley (1980) 142 CLR 237 at 287-288). Statutory instruments (such as awards and the agreement) operate concurrently with contracts of employment, but they do not entirely supplant them (Byrne v Australian Airlines Limited (1995) 185 CLR 410 at 418-421, 456). Most importantly, it was not the intention of the agreement to inhibit either party taking steps to improve safety at the workplace. Cl 50 is to be read subject to cl 16.

Conclusion

51    The reasons given by the Full Bench for disagreeing with the Commissioner’s position and the recommendation of the Panel do not involve error in the interpretation of the workplace agreement, let alone jurisdictional error. Consequently, the application must be dismissed. Wagstaff made no application for costs and so no occasion arises to consider whether costs should or could be awarded in its favour.

Associate:

Dated:    14 June 2012

Flick J

52    The facts giving rise to the present Application are within a narrow compass.

53    The First Respondent to the Application, Wagstaff Piling Pty Ltd (“Wagstaff”) was a subcontractor to the Second Respondent, Thiess Pty Ltd (“Thiess”). Wagstaff had been contracted by Thiess to undertake piling work in respect to the substantial widening and construction work on a freeway.

54    Thiess has a comprehensive Fitness for Work policy, which includes requirements for drug and alcohol testing for its employees. Monthly drug and alcohol testing was undertaken on the project from January 2010 until March 2011. In May 2011 the Construction, Forestry, Mining and Energy Union (“the CFMEU”) and at least one other union advised that employees of Wagstaff and other subcontractors involved in the project would not cooperate with the announced testing to be undertaken that month.

55    The central question sought to be resolved – ultimately in this Court – is the correct construction of cl 48 of a Union Collective Agreement (“the Agreement”) between Wagstaff and “the CFMEU”. That clause provides as follows (without alteration):

DRUGS & ALCOHOL POLICY

The parties acknowledge the affect that employees with drug and/or alcohol problems can cause in the workplace. Any employee with such a problem can lead to a loss in productivity, an unsafe workplace and loss of morale amongst the company. To this end the parties encourage such persons with a problem to seek help.

To that end the parties agree to apply the Drug & Alcohol policy as contained in Appendix I.

Wagstaff had sought to implement a policy of compulsory drug and alcohol testing; the CFMEU sought to resist such compulsory testing.

56    The present proceeding has its origins in a dispute filed by the CFMEU with the Victorian Industry Disputes Panel against Wagstaff. The CFMEU claimed that the dispute related to (without alteration) “… an alleged breach of the applicable Drugs and Alcohol Policy”. No further clarification was then provided. But that, perhaps, matters not. The Panel handed down its decision on 9 June 2011. It concluded that “… the employees of the employers party to this dispute should not be subjected to involuntary random testing”.

57    Thereafter, Wagstaff applied pursuant to s 709 of the Workplace Relations Act 1996 (Cth) to have a dispute resolution process conducted by Fair Work Australia. Clause 10 of the Agreement provided for a “Disputes Resolution Procedure”. On 9 August 2011 a Commissioner resolved that application and concluded that Wagstaff could not “… impose a regime of drug and alcohol testing either on a voluntary or involuntary basis”. A “recommendation” was made that random testing of employees was to cease.

58    Wagstaff appealed pursuant to s 604 of the Fair Work Act 2009 (Cth). It sought review of the “recommendation”. When that appeal came before a Full Bench of Fair Work Australia it was apparently common ground that the question which had previously been put to the Commissioner for determination was the following (without alteration):

“Does the Wagstaff Agreement, in particular clause 48 when read with Appendix I prevent Wagstaff from requiring (directly or indirectly via Thiess) a Wagstaff employee on the Project to submit to a drug and alcohol test if randomly selected for the test as part of the announced drug and alcohol testing procedures in the FFW Policy?”

Clearly enough, the Commissioner did not resolve this question. The Full Bench handed down its decision on 7 October 2011. Contrary to the result reached by the Commissioner, the Full Bench concluded that cl 48 did not operate “… to limit drug and alcohol testing, or for that matter, other safety initiatives.” It did “not consider that any provisions of the Wagstaff agreement, including clauses 48, 50 and Appendix 1, prevent or prohibit Wagstaff from requiring an employee to submit to drug and alcohol testing.” The Full Bench “… disagree[d] with the conclusion and recommendation of the Panel”.

59    CFMEU sought to challenge this conclusion. The Originating Application filed in this Court on 9 November 2011 sought a writ of certiorari “quashing the decision of Fair Work Australia made 7 October 2011…” Mandamus was also sought.

60    The submissions advanced, both in writing and orally, before this Court canvassed a number of issues, including whether:

    the interpretation of cl 48 given by the Full Bench was intended to be legally conclusive or determinative of the rights of the parties;

    the decision of the Full Bench was one which was susceptible to review by means of certiorari or mandamus; and

    even if the decision was reviewable, whether jurisdictional error on the part of the Full Bench was made out.

Some reservation is expressed as to why any of these issues need necessarily be resolved.

Interpretation of Clause 10

61    Clause 10 relevantly provides in part as follows (without alteration):

10.2     In the event of any work related grievance arising between the Company and an employee or employees, the matter shall be dealt with in the following manner:

…

f.     Should the matter remain unresolved either of the parties or their representative shall refer the dispute at first instance to the Victorian Building Industry Disputes Panel (which shall deal with the dispute in accordance with the Panel Charter.

g.     Either party may, within 14 days of a decision of the Panel, refer that decision to the Australian Industrial Relations Commission (AIRC) for review. The AIRC may exercise its conciliation and/or arbitration powers in such review.

The reference to the Australian Industrial Relations Commission is now to be understood as a reference to Fair Work Australia: Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) Schedule 19. The reference in cl 10.2(g) to the exercise of “conciliation and/or arbitration powers” is a recognition of the fact that “[w]here parties agree to submit their differences for decision by a third party, the decision maker does not exercise judicial power, but a power of private arbitration”: Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission [2001] HCA 16 at [31], 203 CLR 645 at 658 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ. The parties to the present industrial dispute could thus not be understood to be seeking a conclusive or legally binding determination of the correct meaning to be ascribed to cl 48.

62    The manner in which the question for resolution was put to the Full Bench may have suggested otherwise. But construed as but a question forming a part of a broader industrial dispute – and as a question to be answered as but a step in the process of resolving that dispute – no difficulty arises. Properly characterised, it is considered that the Full Bench was doing no more than answering the question put to it as but a “step” in resolving the more broadly expressed dispute between the parties. The mere fact that the Full Bench was asked to resolve the question put to it – and in isolation from such other matters as may have formed part of an industrial dispute – did not propel the Full Bench into an exercise of anything other than its conciliation and arbitration powers. No submission was advanced by any of the parties, nor could it have been, that the Full Bench was exceeding its jurisdiction by even purporting to answer the question. To have made such a submission would have been tantamount to the parties inviting the Full Bench to answer a question which they did not believe it had the jurisdiction to answer.

63    It is not considered that the Full Bench purported to give any legally binding interpretation of cl 48. It was simply providing its opinion, within the constraints imposed by cl 10.2(g), of a question which had arisen in – and which was at the heart of – an industrial dispute. None of the parties to the application suggested that the question did not arise as part of an “industrial dispute”.

64    Irrespective of whether the Commissioner impermissibly trespassed beyond the true constraints on his power by making a “recommendation”, the Full Bench did not intrude into what may otherwise be regarded as a “judicial” function.

65    There is no impediment to the Full Bench expressing its own view as to the proper interpretation of cl 48. In Re Cram; Ex parte The Newcastle Wallsend Coal Company Proprietary Limited (1987) 163 CLR 140 at 148-149, for example, Mason CJ, Brennan, Deane, Dawson and Toohey JJ observed:

The result is that the Authority had no jurisdiction to determine or enforce a legal right to payment of wages on the part of employees in respect of a past period during which they had been stood down or refused work or to enforce the provisions of an award regulating the right to payment of wages of employees for such a period …

What this principle relevantly denies to the Authority is the power of judicial determination which includes, to use the words of Kitto J. in Aberdare Collieries [(1963) 37 ALJR at 43]: “the giving of decisions in the nature of adjudications upon disputes as to rights or obligations arising from the operation of the law upon past events or conduct. “ The making of a binding declaration of right is an instance of the exercise of judicial power. It stands outside the arbitral function. But there is no substance in the suggestion that an industrial tribunal cannot interpret laws, awards and other legal instruments. A tribunal could not discharge its arbitral functions if it were unable to form an opinion on a matter of interpretation. The formation of views and opinions on matters of interpretation in arbitral proceedings does not in itself amount to a usurpation of judicial power: … Indeed, a tribunal may find it necessary to form an opinion as to the existing legal rights of the parties as a step in arriving at the ultimate conclusions on which the tribunal bases the making of an award intended to regulate the future rights of the parties: Aberdare Collieries [at 44]. Of course, the formation of such an opinion does not bind the parties and cannot operate as a binding declaration of rights.

Relying on this passage, Gray J observed in Miller v University of New South Wales [2003] FCAFC 180 at [17], 132 FCR 147 at 155 that “… any finding the Commission may make as to the contractual rights of the parties, the meaning of any award or other collective instrument, and the entitlement or otherwise of the employer to exercise a right to terminate the employment, by notice or by summary dismissal, is merely an opinion as to such rights and obligations, as a step to the determination of future rights”. See also: Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 360-361 per Gaudron J (Deane J agreeing); Murray v Registrar of the National Native Title Tribunal [2002] FCA 1598 at [95], 77 ALD 96 at 117 per Marshall J.

66    Similarly, in Re Ranger Uranium Mines Proprietary Limited; Ex parte Federated Miscellaneous Workers’ Union of Australia (1987) 163 CLR 656 at 666 Mason CJ, Wilson, Brennan, Deane, Dawson, Toohey and Gaudron JJ observed:

The power of inquiry and determination is a power which properly takes its legal character from the purpose for which it is undertaken. Thus inquiry into and determination of matters in issue is a judicial function if its object is the ascertainment of legal rights and obligations. But if its object is to ascertain what rights and obligations should exist, it is properly characterized as an arbitral function when performed by a body charged with the resolution of disputes by arbitration.

See also: Precision Data Holdings Limited v Willis (1991) 173 CLR 167 at 189 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ; Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 257-258 per Mason CJ, Brennan and Toohey JJ.

67    That which is Constitutionally impermissible is an attempt to confer judicial power on the Commission (and now Fair Work Australia) “or any one else”: Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission (supra). Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ there concluded:

[26] So far as concerns arbitrated provisions with respect to dispute resolution procedures, it should be noted that a dispute as to the powers the Commission should, but does not have, is not an industrial dispute and will not ground an award by which the Commission gives itself power to do that which it is not otherwise authorised to do. Moreover, an arbitrated dispute resolution provision will be invalid to the extent that it purports to confer judicial power on the Commission or any one else. For present purposes, it is sufficient to note that a power to make a binding determination as to legal rights and liabilities arising under an award or agreement is, of its nature, judicial power.

The Availability of Constitutional Writs

68    Nor is it self-evident that any error on the part of Fair Work Australia – assuming there to be error – would attract either certiorari or mandamus. Certiorari “… is a process by which a superior court, in the exercise of its original jurisdiction, supervises the acts of an inferior court or other tribunal”: Craig v South Australia (1995) 184 CLR 163 at 175-176 per Brennan, Deane, Toohey, Gaudron and McHugh JJ. The “… principal grounds for grant of relief in the nature of certiorari are usually described as ‘error of law on the face of the record’ and ‘jurisdictional error’”: Kirk v Industrial Court of New South Wales [2010] HCA 1 at [56]; 239 CLR 531 at 567 per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ. And mandamus “… will issue to compel the performance of a public duty when there has been a refusal or failure to perform that duty”: Re The Australian Bank Employees Union; Ex parte Citicorp Australia Limited (1989) 167 CLR 513 at 515 per Mason CJ, Deane, Dawson, Gaudron and McHugh JJ. “Mandamus and prohibition are remedies which are granted in cases of jurisdictional error – refusal to exercise jurisdiction, in the case of mandamus, and excess of jurisdiction, in the case of prohibition”: Darling Casino Limited v New South Wales Casino Control Authority (1997) 191 CLR 602 at 633 per Gaudron and Gummow JJ. Even if it be assumed in favour of the CFMEU that the Full Bench were in error, it is not at all apparent that mandamus would issue to compel the performance by the Full Bench of any “duty”. On the facts presented, the Full Bench has done that which it was requested to do – it has answered the question posed for consideration and it has done so according to law. It is difficult to see what duty Fair Work Australia “fail[ed] to perform”.

69    How, moreover, “jurisdictional error” is said to be committed by the Full Bench by resolving the very question jointly entrusted to it for resolution was not satisfactorily explained. Any error on the part of the Full Bench could well be characterised – not as jurisdictional error – but rather as an error within jurisdiction. Not every error, or even every error of law, constitutes jurisdictional error: cf Craig v South Australia at 177-180 per Brennan, Deane, Toohey, Gaudron, and McHugh JJ. Although it may be accepted that jurisdictional error may separately be exposed by failing to take into account a relevant consideration (cf. WAFP v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 319 at [21] per Lee, Carr and Tamberlin JJ; VAAD v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCAFC 117 at [69]-[71]) or by taking into account an irrelevant consideration (Craig at 175-176) no such error was made by the Full Bench in the present case.

70    None of these issues, however, need be further pursued.

Conclusions

71    For the reasons given by Buchanan and Katzmann JJ at paras [45] to [50], it is not considered that the Full Bench erred in its construction of cl 48. Nothing in that clause – or the Agreement as a whole – expressly prevents Wagstaff from applying a drug and alcohol testing regime. Nor is any such constraint to be implied. In entertaining and expressing a view as to the correct construction of cl 48 the Full Bench was not exercising judicial power. It was not suggested by any party that the Full Bench did not have jurisdiction to express its view on that question – being one which it was jointly agreed could be considered by the Full Bench. And in considering that question the Full Bench did not otherwise commit jurisdictional error by taking into account any irrelevant consideration.

72    The Application should be dismissed. No error, let alone jurisdictional error, has been made out.

73    Concurrence is expressed with the orders proposed by Buchanan and Katzmann JJ.

Associate:

Dated:    14 June 2012