FEDERAL COURT OF AUSTRALIA

Australian Workers’ Union v Leighton Contractors Pty Limited [2013] FCAFC 4

THE COURT ORDERS THAT:

1.    The application be dismissed.

2.    Any party wishing to apply for costs make application in writing within seven days, supported by written submissions, and any party opposing such an application respond in writing within seven days of receipt of those submissions.

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

REASONS FOR JUDGMENT

DOWSETT J:

1    I have read the reasons prepared by Katzmann J and concur in the orders which her Honour proposes.

THE PRESENT APPLICATION

2    The applicant seeks the issue of writs in the nature of mandamus and certiorari, setting aside a decision of the Full Bench of Fair Work Australia (the “Full Bench”). By the decision in question, the Full Bench refused the applicant permission to appeal from a decision of a Senior Deputy President. Section 604(1) of the Fair Work Act 2009 (Cth) (the “Fair Work Act”) provides that such an appeal may be brought only with the permission of the Full Bench. Section 604(2) provides:

Without limiting when [the Full Bench] may grant permission, [the Full Bench] must grant permission if [it] is satisfied that it is in the public interest to do so.

3    Clearly, the Full Bench has a discretion to grant or refuse permission. This Court will grant relief of the kind sought only if it be shown that in exercising its discretion, the Full Bench made some form of jurisdictional error.

PROCEEDINGS BEFORE THE SENIOR DEPUTY PRESIDENT

4    The first and second respondents, Leighton Contractors Pty Ltd (“Leighton”) and Bechtel Australia Pty Ltd (“Bechtel”) have individually contracted to carry out construction work at mine sites in Queensland. Leighton’s project is described as the “Broadmeadow mine site”. Bechtel’s projects are described as the “South Walker Creek mine site”, the “Broadmeadow mine site” and the “Daunia, Poitrel and Millenium mine site”. Both companies have entered into an enterprise agreement with the other three respondents for each relevant mine site. There are four agreements in all, one involving Leighton and three involving Bechtel. Leighton and Bechtel applied to Fair Work Australia (“FWA”) for approval of their respective agreements pursuant to s 185 of the Fair Work Act. The agreements were “greenfields” agreements as defined in s 172. In effect a greenfields agreement is one which relates to an enterprise in respect of which a potential employer has not previously employed any of the persons who will be employed in the performance of it.

5    If a proposed enterprise agreement is not a greenfields agreement, Div 3 of Pt 2.4 of the Fair Work Act sets out a complex system regulating negotiations between the relevant employer and affected employees. A greenfields agreement is to be negotiated between an employer and relevant employee organizations there being, by definition, no employees with whom to negotiate. Section 122 provides that the term “relevant employee organization”:

… in relation to a greenfields agreement, means an employee organization that is entitled to represent the industrial interests of one or more of the employees who will be covered by the agreement, in relation to work to be performed under the agreement.

6    An enterprise agreement need not be made with all relevant employee organizations, but it must be made with all relevant employee organizations which are to be covered by such agreement.

7    The fifth respondent was formed by the amalgamation of various smaller trade unions, covering employees who pursued various callings in divers industries. Many, perhaps all of those unions had state branches. The structure of the fifth respondent reflects both the various callings and industries previously covered by the former unions and their state branch structures. Members of the fifth respondent are assigned to divisions according to their respective callings and/or industries. Members who work at the various mine sites during construction activities will be assigned to the Construction and General Division. Both the fifth respondent and its Construction and General Division have state branches. In the latter case the Queensland branch is called the Construction, Forestry, Mining and Energy Union Construction and General Division Queensland Construction Workers Divisional Branch (the “Queensland Divisional Branch”). In the agreements, the Queensland Divisional Branch is identified as a party. A Mr Peter Close signed each agreement, purportedly on behalf of the Queensland Divisional Branch. However it is common ground that the intended party was the fifth respondent. The point in this appeal is not whether Mr Close was authorized to sign the agreements on behalf of the fifth respondent, but rather whether it was competent for the fifth respondent so to authorize him.

8    The present applicant is also a trade union, having a long history of involvement in the labour movement. I understand that potentially, it may cover employees who may also be covered by the fifth respondent. In other words, the applicant and the fifth respondent may, from time to time, be in competition for members. Before the Senior Deputy President, the applicant was heard in opposition to the proposed approval of the four agreements. Its submissions focussed on r 30 of the fifth respondent’s rules which provides:

(a)    Subject to these Rules, any agreement may be executed by a National Secretary and either a National President, the National Assistant Secretary or a National Vice-President.

(b)    Any agreement which directly affects the employment or conditions of employment of members of only one Division shall be executed by that Division in accordance with its rules.

(c)    Any agreement which directly affects the employment or conditions of employment of members of only one Divisional Branch may be executed by the Divisional Branch in accordance with its rules.

(d)    Any agreement which directly affects the employment of members of only one Branch may be executed by the Branch in accordance with its rules.

9    Rule 20 of the Rules of the Construction and General Division (the “Construction Division Rules”) provide:

Industrial agreements and other instruments that may be needed by or on behalf of the Division shall be made as follows:-

An Industrial Agreement and any instrument not required by law to be under seal may be executed by the Divisional President or one of the Vice-Presidents and the Divisional Secretary.

Any instrument required by law to be under seal may be executed under the common seal of the Union, in the presence of the National President or one of the Vice-Presidents and the National Secretary.

10    Divisional branch rules are contained in rr 28-40 of the Construction Division Rules. Pursuant to r 19, divisional branches may also make by-laws not inconsistent with the National Rules or the Construction Division Rules. However there appear to be no relevant by-laws.

11    At [8]-[17] the Senior Deputy President summarized the applicant’s submissions as follows:

8    There appeared to be no contest between the parties that the Rules of the CFMEU Construction and General Division and the [Divisional Branch] provide that a Branch official in Mr Close’s specific capacity (as opposed to an official of the Division) can execute an agreement when the agreement directly affects the members of one Divisional Branch of the [fifth respondent]. That is, this particular issue was not a cause of agitation between the parties or a ground for objection of the application.

9    That aside, the [applicant] went on to contend that it was not possible for such an authorisation to be given for reason that the elemental precondition for the authorisation had not been satisfied. That is, the Agreement was not one that could be made with one Division of the [fifth respondent] for reason it only directly affected the members of that Division exclusively.

10    The reason for this was that the evidence of the [fifth respondent] in the proceedings suggested that there might be a possibility that members of the Mining and Energy Division of the [fifth respondent] might be recruited by the employer to perform duties under the classifications provided for in the agreement.

11    This prospect arose because the project to which the Agreement relates is intended to be carried out on a mining lease. Rule 3 of the [fifth respondent’s] Mining and Energy Division rules provides that:

The Division shall consist of an unlimited number of employees, otherwise eligible for membership of the Union who –

(A)    are engaged in or in connection with the Coal and Shale Industries.

[…]

12    Consequently, the [applicant] argued that it was impossible to guarantee, in effect, that members of the [fifth respondent’s] Mining and Energy Division would not be employed in classifications under the Agreement, and because of this, it was not possible for Mr Close from the Construction and General Division to be authorised to execute the Agreement (and by so doing make the Agreement with the employer for the purposes of s. 182(3) of the Act).

13    It made no difference, the [applicant] asserted, that there were procedures provided under the [fifth respondent’s] rules for reallocating members who should more appropriately be in one Division (such as the Construction and General Division) rather than another (such as the Mining and Energy Division). The [applicant] claimed that this process was not capable of determining to finality the ultimate Divisional membership of a member of the [fifth respondent] and in any event, was an internal administrative process that was carried out after the Agreement had been made and executed.

14    In respect of this final point, the [applicant] claimed that the authorisation under the [fifth respondent’s] rules must be exercised on the facts known at the time the Agreement was made; not on the basis of how Divisional membership issues might be resolved (if they could ultimately be resolved) at a future point in time.

15    It was not enough, the [applicant] added, for the authorisation under the [fifth respondent’s] rules to be exercised on the basis of what the [fifth respondent] simply believed the facts might be (in relation to Divisional coverage of the employees to be employed under the Agreement).

16    The issue of the inability of Mr Close to execute the Agreement and make the Agreement with the employer could not be cured, it was further argued, by FWA exercising its power under s.586 of the Act to amend an irregularity or otherwise in relation to an application.

17    This was because there was no valid application (based on an existing agreement that had been made) as such, and the procedural power – intended to be exercised in relation to minor or technical defects and deficiencies in documents – would be exercised to fundamentally alter the statutory foundation of the document (or agreement in this case).

…

12    Thus it seems that the only ground relied upon by the applicant before the Senior Deputy President was the assertion that the enterprise agreements were not agreements to which r 30(b) applied, and that therefore the fifth respondent could not authorize Mr Close to execute them. Hence there were no agreements capable of being approved pursuant to s 185.

THE APPLICANT’S STANDING

13    It is, perhaps, curious that the applicant should have been permitted to complain that putative agreements, to which it was not a party, had no contractual effect. It is even more curious that the applicant should have been heard to assert that there had been a failure to comply with the fifth respondent’s rules, it not being a member of that organization. The only possible basis for allowing the applicant to be heard on these matters is that it may have now, or in the future, members who might be employed in construction work on one or other of the mine sites. That is a tenuous basis for being heard to submit that apparent contractual relationships amongst others do not constitute contracts. Further, in allowing the applicant to intervene in the contractual relationships of others, FWA created a quite artificial context in which to address the question of whether there was an agreement for the purposes of s 185. In particular, it isolated the question of “authority” to make the agreement from the broader question of whether the parties are bound by their arrangements. There is much to be said for the view expressed by Gummow J in Australian Capital Television Pty Ltd v Minister for Transport and Communications (1989) 86 ALR 119 at 157-8 that:

In a case such as the present, where the question propounded by the applicant is whether a legislative requirement had been satisfied at a particular date by what was put forward as the act of a company, and where the point is taken against the company and the party dealing with the company by a third party in proceedings to which all of them are joined, in my view the company and the party dealing with it may, in those proceedings, claim the benefit of the rule in Turquand’s case to support their case that what took place did comply with the relevant legislative requirement. This is so irrespective of what consequences might flow from a purported ratification by the company after the occurrence of events relied upon for the making of decisions as to statutory rights and duties.

THE PRESENT APPLICATION

14    The applicant submits that the fifth respondent and other parties to the agreements rely on r 30(c) as the basis for Mr Close’s claimed authority to sign those agreements. Although that rule is a primary focus in the case, Leighton and Bechtel also rely on Mr Close’s ostensible authority and on the rule in Turquand’s case (Royal British Bank v Turquand (1856) 6 E&B 327).

15    With one exception r 30 does not purport to prescribe exclusive mechanisms for signing agreements. Rule 30(a) authorizes certain designated persons to do so. Rule 30(c) provides that agreements affecting members in only one divisional branch may be executed by that divisional branch in accordance with its rules. Rule 30(d) makes similar provision where only one branch is affected. Only r 30(b) prescribes an exclusive method of signing. However the applicant points out that pursuant to s 141(b)(v) of the Fair Work (Registered Organisations) Act 2009 (Cth) the rules of such an organization must provide for the manner in which documents may be executed by or on behalf of the organization, suggesting that the rule should be construed as prescribing the only ways in which agreements may be executed.

16    The fifth respondent’s rules identify the division, branch and/or divisional branch to which any particular member should belong. The terms “division”, “branch” and “divisional branch” are defined in r 5 as follows:

“DIVISION” shall mean a division of the Union established under these Rules or by the National Executive or National Conference and shall, as far as practicable, be on industry or occupational lines.

“BRANCH” shall mean a Branch of the Union established in accordance with these rules or by the National Conference or National Executive of the Union and shall cover a geographic area.

“DIVISIONAL BRANCH” shall mean a geographic branch established under Divisional Rules by a Division established in accordance with these rules. Provided that some such divisional branches may be on occupational and geographic bases.

17    Rule 27 of those rules provides for the establishment of divisions. Rule 42 deals with divisional membership. The Construction and General Division is dealt with in r 42(iii)(c) where its membership is said to be:

… all members of the union employed in or in connection with the Construction industry (including shopfitting) and all other members of the Union not referred to in sub-rules iii(a), (b) and (d) herein.

Subrule (d) has been deleted.

18    Rule 28 establishes state branches of the fifth respondent. Such branches are to co-ordinate divisional branches at a state or territory level. Pursuant to r 27(vi) divisions are also to have branches “along a geographical, occupational or area basis”. Such branches are to be called “Divisional Branches”. Rule 18 of the Construction Division Rules provides for divisional branches in each of the states. Rules 18, 19 and 28-69 of those rules deal with divisional branches. Rule 29 provides that members or persons applying for membership of the Construction and General Division residing in a state or territory shall “be and remain” members of “the Divisional Branch or Divisional Branches” within that state or territory. There can be more than one divisional branch in a state or territory (see r 18). Despite the wording of r 29 it seems unlikely that the intention was that a member of the Construction and General Division should be a member of more than one divisional branch. It also seems unlikely that an applicant for membership of that division should be, in that capacity, a member of any divisional branch. Rule 44 of the fifth respondent’s rules provides that all members of all divisional branches within a state or territory are to be members of the relevant branch, with the same status of membership as is held in their respective divisional branches.

19    Membership is dealt with in r 7 of the fifth respondent’s rules. Pursuant to s 7(i) an application for membership is to be made to:

    the National Secretary; or

    the division covering the potential member’s occupation or industry; or

    the branch covering the area in which he or she works or resides; or

    the divisional branch covering his or her occupation and the area in which he or she resides or is employed.

20    The relevant geographical branch or divisional branch may be determined by either place of employment or place of residence. The inclusion of place of residence as an alternative criterion may have been intended to cover the situation of an unemployed person who applies for membership, a possibility which is expressly contemplated by the rules.

21    Rule 7(iv) provides that a member is to be attached to the division covering his or her industry or employment. I note that allocation to a division is to be notified to the employee. Hence it is not a matter of individual choice. The reference to classification presumably includes branch and/or divisional branch allocation. It is also not a matter of choice.

22    Rule 7(v)(b) recognizes the possibility that a member may be attached to the wrong division, branch or divisional branch and provides that such irregularity will not invalidate membership of the fifth respondent. Rule 7(viii) provides for the correction of irregularities. Rule 10 provides for transfers. Clearly, the rules require that a member be attached to the appropriate division, branch and divisional branch, having regard to his or her employment and geographical circumstances.

23    Rule 30 must be construed in this context. The rule does not purport to limit a divisional branch in what it can do for, or to its own members. The limitation is that there must be no direct effect upon the employment or conditions of employment of others. Much may depend upon the identity of the persons whose employment and conditions may be affected and those whose employment and conditions must not be affected. Rule 30(c) relates only to an agreement which directly affects the employment or conditions of employment of members of the relevant divisional branch. The enterprise agreements purport to regulate the employment of categories of employees, regardless of whether they are members of the fifth respondent, the Construction and General Division or the Queensland Divisional Branch. In that broad sense, it is arguable that the agreements may directly affect the conditions of employment of future employees other than members of the Queensland Divisional Branch. On the other hand, it is arguable that the agreements do not affect any person’s employment or conditions of employment because there are presently no employees. Either reading of the rules produces an unsatisfactory outcome.

24    Although I do so with some trepidation, I note that cl 4 identifies the objects of the fifth respondent. Objects 1, 2 and 12 are:

1.    To uphold the right of combination of labour, and to improve, protect, and foster the best interests of the Union and its members, and to assist them to obtain their rights under industrial and social legislation.

2.    To regulate the conditions under which all members, of the Union may be employed.

…

12.    To enter into contracts and agreements for the purpose of furthering directly or indirectly any one or more of these objects.

25    Although some of the other objectives suggest broader interests, the objects focus on the employment conditions and welfare of members. It is likely that the agreements contemplated by object 12 include agreements regulating such matters. It is also likely that rr 30(b), (c) and (d) are concerned only with the effect of an agreement on members of the fifth respondent, so that r 30(c) should be read as requiring that any agreement made by a divisional branch on behalf of the fifth respondent must not affect the employment or conditions of employment of members other than members of that divisional branch. In the end, I understand all parties to have taken that approach.

26    The applicant’s point before the Senior Deputy President was that members of the fifth respondent’s Mining and Energy Division might somehow come to be employed at one or other of relevant sites because that division covers employees “engaged in or in connection with the Coal and Shale Industries”. The applicant now submits that:

    at the time the agreements were made, they did not affect the employment or conditions of employment of any person, and so it was not possible to determine whether the agreements would directly affect the employment or conditions of employment of members of other divisional branches;

    alternatively, if predicted effect is to be considered, it was not possible to identify “the Divisional Branch to which the [fifth respondent’s] members affected by the agreements may belong”, so that it could not be said which group of members would be affected by them; or

    alternatively, a member of the Mining and Energy Division might be employed at one of the construction sites and would then be affected by the agreements (the point addressed by the Senior Deputy President).

27    It is a little difficult to understand these points or the subtle differences in approach upon which they depend. However, in my view, the first point can be readily dismissed. Taken to its logical conclusion, r 30(c) would have no application to any agreement which would affect the basis on which future employees might be engaged. An agreement affecting employment or conditions of employment will always have an ongoing operation. Employees come and go. It is most unlikely that the fifth respondent, or those who drafted its rules, would have expected that any agreement affecting the conditions of employment of its members would relate only to persons actually employed in a particular situation, and at a particular point in time. Further, such an approach would, in effect, prevent the fifth respondent from negotiating greenfields agreements.

28    The wording of r 30 does not compel such an approach, particularly when one reads the rule in the context of the rules as a whole. One should also keep in mind that there is a mechanism for identifying the division, branch or divisional branch to which a member should be assigned, the ongoing nature of a contract of employment and the likelihood that at most work places, employees will come and go from time to time. In that context, the words “directly affects the employment or conditions of employment of members” can readily be construed as including the future effects on future members. Indeed, any other meaning tends towards the absurd.

29    This reasoning also disposes of the second point. Because the rule should be construed as applying to future employment and conditions of employment, certain assumptions are implicit in it, in particular that the project will go on, that there will be employees of a particular kind and that at least one of them will join the fifth respondent and be assigned to the Queensland Divisional Branch. The applicant says that one cannot say with certainty that no member of the fifth respondent will ever be employed under the agreements unless he or she has been assigned to the Queensland Divisional Branch. However, pursuant to its rules that is how the fifth respondent proposes to deal with members who are, in the future, so employed. The nature and location of the member’s employment, or future employment will dictate that he or she belong to the Queensland Divisional Branch. Once again I point out that r 30 must be read as part of the rules as a whole. Rule 7 contemplates the possibility of errors in allocation and their rectification. If the language of construction must be used to justify my conclusion that r 30 operates in the manner which I have suggested, then I am content to hold that the rule should be construed as operating in an environment in which errors occur and are rectified. The mere possibility of error does not justify an artificial narrowing of the plain meaning of the rule. This reasoning also disposes of the applicant’s third point.

30    In those circumstances it is not necessary to consider questions of actual authority apart from r 30(c), ostensible authority or ratification. Nor is it necessary to consider the operation of the indoor management rule. However, were it necessary, I would adopt the observations made by Gummow J in Australian Capital Television and order accordingly.

31    For these reasons I concur in the orders proposed by Katzmann J.

Associate:

Dated:    29 January 2013

REASONS FOR JUDGMENT

MCKERRACHER J:

32    I have had the advantage of reading the reasons in draft form of both Justices Dowsett and Katzmann.

33    Dowsett J has addressed the first point raised in the application, namely, whether the signature by the signing officer of the CFMEU was authorised. For the reasons expressed by his Honour, I consider that the authorisation was within power. I also agree with his Honour that as the authority was within power, that conclusion is sufficient to dispose of the appeal.

34    The reasons of Katzmann J address the balance of the oral and written arguments which I understood to be raised on the application as an alternative to the first argument. But for one incidental matter on which I have some reservation, for the reasons expressed by her Honour, I agree with the conclusions reached and the orders made.

35    That matter concerns the indoor management rule. Each of their Honours has touched upon the indoor management rule argument. That argument did not require resolution to determine the application. Dowsett J has expressed a preference (had it been necessary) for the rule to be available in the present circumstances, consistently with the discussion by Gummow J in Australian Capital Television Pty Ltd v Minister for Transport and Communication (1989) 86 ALR 119 at 157-8. Katzmann J had doubts as to the rule’s availability but thought it was unnecessary to rely on it any event. In my respectful view, notwithstanding that the rule usually arises in a context where a company seeks to deny the efficacy of an action or transaction, the reasoning of Gummow J for its broader availability in an appropriate situation (here for the benefit of the contracting parties against a third party) is persuasive.

36    As indicated, I also agree with the orders proposed by Katzmann J.

Associate:

Dated:    29 January 2013

REASONS FOR JUDGMENT

KATZMANN j

37    This application is concerned with a challenge to the exercise of the jurisdiction of Fair Work Australia (“FWA”) to approve a number of enterprise agreements relating to construction work to be carried out on mine sites in Queensland. The challenge comes from a stranger to the agreements over the opposition of all the parties to them.

38    The agreements in question are the Leighton Contractors Broadmeadow Sustaining Operations Project Union Greenfields Agreement, which was signed on 11 April 2011 and approved on 15 August 2011, the Bechtel Daunia Project Union Greenfields Agreement, the Bechtel South Walker Creek Project Union Greenfields Agreement and the Bechtel Broadmeadow Sustaining Operations Project Union Greenfields Agreement, all three of which were signed on 11 April 2011 and approved on 30 August 2011. Each agreement relates to construction work on projects in the Bowen Basin in southwest Queensland. Greenfields agreements are agreements made between employers and employee organisations that relate to genuine new enterprises where the employees to be covered by the agreements have not yet been employed.

39    The parties to the agreements were the employers (Bechtel Australia Pty Limited (“Bechtel”) and Leighton Contractors Pty Limited (“Leighton”)) and three trade unions. They were the Construction, Forestry, Mining and Energy Union (“CFMEU”), the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union known as the Australian Manufacturing Workers’ Union (“AMWU”) and the Communications, Electrical, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (“CEPU”).

40    All four agreements were signed on behalf of the CFMEU by Peter Close, the Assistant State Secretary of the CFMEU Construction and General Division, Queensland Construction Workers Divisional Branch.

41    Over the objection of the employers, the Australian Workers’ Union (“AWU”) was granted leave to appear before Senior Deputy President Richards of FWA to contend that the agreements should not be approved because Mr Close was not authorised by the CFMEU’s rules to do so.

42    The Senior Deputy President rejected the AWU’s arguments. He took a robust approach. In his decision in the Leighton application, which was the basis for his decisions in the three Bechtel applications, he said there was nothing on the face of the material to show that Mr Close, in his capacity as Assistant State Secretary of the CFMEU’s Construction and General Division, did not have the authority to make the agreements and saw no need to look beyond the signature “provided by the CFMEU” on the agreement. In coming to that conclusion he had regard to the following circumstances. The project concerned construction work. It was defined in the agreement as “on-site construction work”. It expressly excluded any mining work, including the use of mining contractors on shutdowns, haul roads, mine water and services. The agreement was expressed to cover employees of the employer who will perform “on-site construction work” within the employer’s scope of work during the performance of the project. The classifications of employees under the agreement aligned with those under the Building and Construction General On-site Award 2010. (The Bechtel agreements included clauses to the same effect.) The Senior Deputy President said that these circumstances provided him with “sufficient and reasonable grounds to assume regularity in respect of the person authorised to make the Agreement with the employer”.

43    The AWU applied to the Full Bench of FWA for permission to appeal the decisions to approve the agreements. Permission was denied. Pursuant to s 39B of the Judiciary Act 1903 (Cth) the AWU now applies for writs of certiorari and mandamus to quash the decision of the Full Bench and to direct FWA to hear and determine the matters according to law.

44    All the respondents (with the exception of the FWA, which entered a submitting appearance) opposed the AWU’s application and defended the decision of the Full Bench.

45    To succeed it is not enough that the AWU show error in fact or law on the part of the Full Bench. It must establish that the error is jurisdictional, going to the exercise by the Full Bench of the powers conferred on it by the Fair Work Act 2009 (Cth) (“FW Act”). See Commissioner of Taxation v Futuris Corporation Limited (2008) 237 CLR 146. For the reasons that follow, I am not satisfied that the decision of the Full Bench was affected by jurisdictional error, nor, indeed, that it was wrong in any of the conclusions it reached.

Making and approval of enterprise agreements

46    Part 2-4 of the FW Act deals with enterprise agreements. Its objects are set out in s 171. They include the provision of “a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level” for productivity benefits and to enable FWA to facilitate good faith bargaining and the making of enterprise agreements.

47    Enterprise agreements may be made about one of more of a number of “permitted matters” (s 172). The definition of greenfields agreement summarised above appears in s 172(4).

48    A single-enterprise non-greenfields agreement is made when the majority of the employees who will be covered by the agreement cast a valid vote to approve it: FW Act, s 182(1). A multiple-enterprise non-greenfields agreement that has been approved by a majority of the employees of at least one of the employers who will be covered by the agreement is made immediately after the end of the voting process: s 182(2). Subsection 182(3) deals with greenfields agreements. It provides that:

A greenfields agreement is made when it has been signed by each employer and relevant employee organisation that the agreement is expressed to cover (which need not be all of the relevant employee organisations for the agreement).

[Original emphasis.]

49    Section 794 provides that, for the purposes of the FW Act, a document may be signed on behalf of a body corporate by an authorised officer of the body and need not be made under the body’s seal. The CFMEU, as an organisation registered under the Fair Work (Registered Organisations) Act 2009 (Cth) (“the Organisations Act”), is a body corporate (Organisations Act, s 27(a)). Section 141(b)(v) of the Organisations Act requires that the rules of a registered organisation provide for the manner in which documents may be executed by or on the organisation’s behalf.

50    “Relevant employee organisation” in relation to a greenfields agreement is defined in s 12 of the FW Act to mean an employee organisation that is entitled to represent the industrial interests of one or more of the employees who will be covered by the agreement in relation to work to be performed under the agreement. There is no dispute that the CFMEU was a relevant employee organisation. It appears that the AWU was, too. But it is plain from the terms of s 182(3) that the employer may choose the relevant employee organisations with which to negotiate and may strike an agreement with some or all of them.

51    The process for FWA approval of enterprise agreements is contained in Division 4 of Pt 2–4. In the case of a greenfields agreement, the application can only be made by an employer or relevant employee organisation covered by the agreement (s 185(1A)) and must be made within 14 days after the agreement is made (s 185(4)).

52    Section 186(1) provides that if an application for approval is made under s 185, FWA must approve the agreement if the requirements set out in ss 186 and 187 are met. There was no issue in this case that the relevant requirements were met.

Did the Full Bench fall into jurisdictional error?

53    On this question the submissions of all parties were directed to whether there was jurisdictional error in the decision to approve the agreements. The AWU’s argument, simply put, was that the necessary precondition for the exercise of the jurisdiction of FWA was not established because an enterprise agreement had not been made within the meaning of s 182(3). The first to fifth respondents countered with the argument that it was s 172 that defined how an enterprise agreement is made; s 182(3) is merely concerned with when it is made. Its evident purpose, as the Explanatory Memorandum to the Fair Work Bill 2008 (Cth) indicates (see para 751), is to ensure that the time at which a greenfields agreement is made is certain.

54    It is not necessary to resolve this controversy because the issue before this Court is not whether FWA’s decisions to approve the agreements were affected by jurisdictional error. The application is to set aside the decision of the Full Bench, not the decisions of the Senior Deputy President. So the focus must be on the jurisdiction the Full Bench was exercising. Even if the Senior Deputy President did not have jurisdiction to approve the agreements, that would not deprive the Full Bench of jurisdiction to hear and determine the AWU’s application for permission to appeal (cf. Calvin v Carr [1980] AC 574).

55    The jurisdiction of the Full Bench is conferred by ss 604 and 613 of the FW Act. If (as appears to have been accepted) the AWU was a person aggrieved by the decision of FWA, it was entitled to appeal, but only if it received the permission of FWA: s 604(1). Section 613 relevantly provides that FWA must decide whether to grant permission to appeal and, if so, to hear the appeal in accordance with s 607. Section 604(2) provides:

Without limiting when FWA may grant permission, FWA must grant permission if FWA is satisfied that it is in the public interest to do so.

56    The Act does not prescribe the considerations that are to inform the satisfaction of the Full Bench.

57    The originating application seeks a writ of certiorari to quash the decision of the Full Bench “insofar as that decision refused [the AWU] permission to appeal and dismissed the [AWU’s] appeals.” But the Full Bench did not dismiss the appeals. The Full Bench stated that because the grounds for granting permission to appeal and the grounds of appeal themselves overlapped, it would consider the questions together. Having done so, it concluded that the AWU had not established a basis for permission to appeal being granted. It explained:

The appeal does raise issues as to the validity of agreements but the contentions in the appeal relating to internal authorisation of the CFMEU to sign the agreements are not matters of public interest. Nor is the appeal sufficiently arguable to warrant permission being granted. In any event we have found that the agreements were validly made by the CFMEU and were validly approved by the Senior Deputy President.

[Emphasis added.]

58    The AWU did not suggest that it was bound to hold that it was in the public interest to grant permission to appeal. The decision of the Full Bench was a discretionary one. In Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194 at [19] Gleeson CJ, Gaudron and Hayne JJ observed that the task involved under a similar provision of the Workplace Relations Act 1996 (Cth) (“WR Act”) was a decision-making process in which no one consideration and no combination of considerations is necessarily decisive. As a decision-maker charged with making a discretionary decision has some latitude as to the decision to be made, their Honours held that the correctness of the decision can only be challenged by showing error in the decision-making process. In Coal and Allied Boulton J had made an order that bargaining periods for an agreement be terminated. The Australian Industrial Relations Commission had a discretion under the WR Act to suspend or terminate a bargaining period if and only if it was satisfied as to one of certain prescribed circumstances. The company applied for leave to appeal from the decision of Boulton J to a Full Bench of the Commission, who granted leave, upheld the appeal and set aside the order. The union applied for relief under s 75(v) of the Constitution. Its application was remitted to this Court and was successful, the Court holding that the Full Bench had fallen into jurisdictional error, but Coal and Allied won its appeal. At [31] Gleeson, Gaudron and Hayne JJ explained:

There would only have been jurisdictional error on the part of the Full Bench if it had misconceived its role or if, in terms used by Jordan CJ in Ex parte Hebburn Ltd; Re Kearsley Shire Council, it "misunder[stood] the nature of [its] jurisdiction ... or "misconceive[d] its duty" or "[failed] to apply itself to the question which [s 45 of the Act] prescribes" ... or "[misunderstood] the nature of the opinion which it [was] to form"".

[Citations omitted.]

59    The High Court held that the Full Bench had done none of these things. And so it is here. Indeed, the AWU did not submit that it did. While the categories of jurisdictional error are not closed, if the Full Bench of FWA did fall into error, the error was within jurisdiction.

60    This is sufficient to dispose of the appeal. In any event, for the reasons that follow I do not consider that the conclusions the Full Bench reached were wrong and I am satisfied that FWA had jurisdiction to approve the agreements.

Were the agreements made within the meaning of the Act?

61    The AWU argued that the CFMEU’s rules did not authorise Mr Close to sign the agreements; that meant that the agreements were not made under s 182(3); and that therefore the agreements the employers asked the Senior Deputy President to approve were not agreements within the meaning of the FW Act.

62    It was common ground that the question of whether Mr Close was entitled to execute the agreements depended on whether he was so authorised by the CFMEU’s rules.

63    The CFMEU’s National Rules (“the National Rules”) provide for the devolution of responsibility through Divisions and Branches. Candidates for membership of the union can apply to the National Secretary, the Division covering the occupation or industry in which the person is employed, the Branch covering the area in which the person resides or is employed, or the Divisional Branch covering the industry or occupation in which the person is employed, usually employed or desirous of being employed and the area in which the person resides or is employed (r 7(i)). There are currently (and were at the relevant time) three Divisions: the Construction and General Division; the Forestry, Furnishing, Building Products and Manufacturing Division; and the Mining and Energy Division. The Rules of the Construction and General Division and its Branches (“the Division and Branch Rules”) provide for Branches in each State and the Australian Capital Territory (r 28).

64    Rule 30 of the National Rules provides:

Agreements.

(a)    Subject to these Rules, any agreement may be executed by a National Secretary and either a National President, the National Assistant Secretary or a National Vice-President.

(b)    Any agreement which directly affects the employment or conditions of employment of members of only one Division shall be executed by that Division in accordance with its Rules.

(c)    Any agreement which directly affects the employment or conditions of employment of members of only one Divisional Branch may be executed by that Divisional Branch in accordance with its rules.

(d)    Any agreement which directly affects the employment of members of only one Branch may be executed by the Branch in accordance with its rules.

[Emphasis added.]

65    There was no dispute that at the relevant time Mr Close was authorised by the CFMEU to sign agreements on behalf of the Queensland Divisional Branch of the Construction and General Division if those agreements directly affected the employment or conditions of employment of members of only that Branch. The dispute turned on whether the agreements answered that description. There were two limbs to the AWU’s argument. The first was that when a greenfields agreement is made, by definition there are no employees who will be covered by the agreement, so it was impossible to determine as a matter of fact and to what extent the agreements would directly affect the employment or conditions of employment of any member of any Divisional Branch. The second was that the agreements directly affected the employment or conditions of employment of members of two Divisional Branches – the Queensland Divisional Branch of the Construction and General Division and the Queensland Divisional Branch of the Mining and Energy Union – and for this reason Mr Close was not authorised by the rules to sign them.

66    The relevant passages of the decision of the Full Bench appear at [42]–[46] of the reasons:

[42]    We do not accept that sub-rules 30 (b)(c) and (d) have no application to greenfields agreements or that they can only apply where employees are engaged under the agreement. Such an interpretation is overly narrow. In our view the intention of the rules is that the authorities provided for apply to all types of agreement. In our view Rule 30 needs to be applied to these circumstances primarily by reference to the class of employees to be engaged in the future rather than by reference to any particular members or groups of members.

[43]    The Agreements are expressed in clause 3 to apply to on-site construction work. They are expressed not to apply to any operations activity, any commissioning activities, any work done outside of the scope of the employer’s construction project and any mining work. The classifications of employees in the agreement align with those in the Building and Construction Award 2010.

[44]    In our view the Agreements relate to construction workers and within the scheme of the CFMEU rules this involves members of the Construction Workers Divisional Branch.

[45]    We do not consider that in the context of a greenfields agreement Rule 30 requires speculation of the existing branch membership of prospective employees who may be engaged on the project. The scheme of the CFMEU rules involves representation through the division or branch relevant to the area of employment of the member. For a construction employee the Construction Workers Divisional Branch is the relevant branch, notwithstanding that the work in question involves construction of a coal mine. Clearly persons who are employed under these agreements would be engaged on construction work and would be represented by the Construction Workers Divisional Branch. We note the provisions of the rules for the transfer of members from one branch to another so that they are members of the appropriate branch that covers the work in question and provides representation for them.

[46]    In our view the officers of the union were entitled to look to the terms of the agreement and determine which branch or divisions would be affected by the agreement. In this case it was clear from the nature of the project and the scope of the agreement that the Construction Workers Divisional Branch was the only appropriate branch. It follows that Mr Close was authorised to sign the agreement on behalf of the union.

67    The AWU alleged that the Full Bench erred by holding that r 30 applied to the instant case by reference to the class of employees to be engaged in the future rather than by reference to any particular member and by deciding that the CFMEU could look to the terms of an agreement to see which Divisional Branch would be affected by it. The AWU argued that this was not the test prescribed by the rules.

68    Like the Full Bench, I think that the AWU’s approach was unduly narrow. If the AWU were right, then greenfields agreements could only be executed by the union’s most senior office-bearers. I very much doubt that this was the intention of the rules. Greenfields agreements have been a feature of the industrial landscape for many years now. Although there were no employees at the relevant time, the CFMEU had members whose prospective employment or conditions of employment were directly affected by the agreement. Mr Herbert, who appeared for the AWU, accepted that it would not unduly strain the language of r 30(c) to apply it to such a case. I do not consider that the Full Bench erred in regarding the terms of para (c) as broad enough to encompass future employees. It is difficult to understand what is wrong with the conclusion that the union was entitled to look to the terms of the agreement and determine which branch or divisions would be affected by it. How else could r 30(c) operate?

69    If (as Mr Herbert appeared to accept) the subrule applies to an agreement which directly affects the prospective employment or conditions of employment of members of only one Divisional Branch, the question remains whether the Full Bench erred because the prospective employees could belong to one of two Divisional Branches – the Mining Branch as well as the Queensland Construction Workers Divisional Branch. In those circumstances, the AWU argued, the rule was obviously not satisfied. I reject the argument.

70    The AWU’s argument was predicated on the notion that construction workers engaged on work involving the construction of a coal mine and ancillary facilities were allocated by the rules to the Mining and Energy Division. In fact that is not so. Rule 2 of the National Rules lists by occupation the employees who are eligible to be members of the union. Many readily answer the description of construction worker. Broadly speaking they are caught by sub-rules (A), (B), (E) and (N). Sub-rule (D) captures employees “engaged in or in connection with the coal and shale industries”. Whist in theory this could include construction workers, the evidence before FWA indicated otherwise.

71    Rule 7(iv) of the National Rules provides that:

A member shall be attached to the Division of the Union covering the industry or employment of the member and shall be in only one such Division. Each member shall be notified of the Division to which such member is attached or any other classification relevant to the Rules of Union and such Division or classification shall be entered on the record of the Union in relation to that member which record shall be conclusive proof of the Division and/or classification to which that member is assigned.

[Emphasis added.]

72    Rule 29 of the Division and Divisional Branch Rules provides that all persons who are members of or apply for membership in the Construction and General Division of the union residing or employed in the State or Territory concerned shall be and remain members of the Divisional Branch or Branches within that State or Territory.

73    The National Rules provide for transfers of members who have been assigned to the wrong Division or Divisional Branch. See r 7(viii).

74    Tom Roberts, a legal officer employed by the CFMEU’s Construction and General Division, explained in an affidavit read in FWA that the CFMEU was formed in 1992 as a result of the amalgamation of a number of unions, one of which was the United Mineworkers Federation of Australia. Members of that union then became members of the Mining and Energy Division of the CFMEU. Evidence was also given before FWA that there is a well established practice within the CFMEU that a person who is involved in the construction work being undertaken on a coalmine is assigned to the Construction and General Division and a person whose employment is involved in the commissioning or operation of a coal mine is assigned to the Mining and Energy Division. There was no issue that the work covered by the agreements was not work in the commissioning or operation of a coal mine but construction work undertaken on a coal mine. Jade Ingham, who gave this evidence, was the CFMEU’s Major Projects Coordinator for the Queensland Construction Workers’ Divisional Branch, and was responsible for organising its members employed in construction projects on coal mines. Mr Roberts conceded that it was possible that a member of the Mining and Energy Division would be employed to work on the project in question. But Mr Ingham said that if, during any construction project on a coal mine, he came across a member of the union working on the project who, by reason of his previous employment in the coal mining industry was a member of the Mining and Energy Division, he would take steps to have the member transferred to the Construction and General Division and that once in the Construction and General Division, those employees would be assigned to the Queensland Branch of that Division. He explained that the transfer could be effected regardless of the member’s wishes. This evidence was not undermined in cross-examination and was plainly accepted by FWA. The AWU, however, took the position that Mr Close’s authority was undermined by the possibility that a member of the Mining and Energy Division might be recruited by the employer to work under the classifications for which the agreements provided.

75    In substance, the conclusion reached by FWA was that a member who worked for Leighton or Bechtel on the projects the subject of the agreements and who would be covered by them could only belong to the Construction and General Division. If the member was not, then steps would be taken to effect a transfer to that Division. The result was that the agreements directly affected only members of the Construction and General Division. That conclusion was reasonably available on the evidence. This was a sensible and practical approach to take to the operation of the CFMEU’s rules which, as the Full Bench observed, is the proper approach to the construction of union rules. It is the approach Sundberg J endorsed in Conquo v Jackson [2009] FCA 45 at [22]. And it is a principle of longstanding. Isaacs J in Amalgamated Society of Engineers v Smith (1913) 16 CLR 537 at 559 countenanced “a very broad interpretation”, holding that union rules were “intended (subject to the presumptive intendment of legality) to be understood apart from technical rules of interpretation”. In Kucks v CSR Ltd (1996) 66 IR 182 at 184 Madgwick J took the same approach to the interpretation of an award, observing that it was “trite” that narrow or pedantic approaches were misplaced. In Kucks his Honour explained:

The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for.

[Emphasis added.]

76    Notwithstanding the AWU’s argument to the contrary, I am of the view that his Honour’s remarks apply with equal force to the construction of union rules. The meaning given to r 30(c) by the Full Bench (and the Senior Deputy President) was a meaning that avoided inconvenience. I am not persuaded that the Full Bench erred in its interpretation of the rule.

Does the indoor management rule apply?

77    The first to fifth respondents submitted that the rule in Turquand’s case (Royal British Bank v Turquand (1856) 6 E1 & B1 327; 119 ER 886) (commonly referred to as the indoor management rule) protects the validity of the agreements.

78    The Full Bench expressed serious doubts about whether the indoor management rule applied to this case. I share those doubts. As Lord Simonds observed in Morris v Kanssen [1945] AC 459 (cited by Mason CJ in Northside Developments), “[i]t is a rule designed for the protection of those who are entitled to assume, just because they cannot know, that the person with whom they deal has the authority which he claims.” It would preclude the CFMEU from walking away from the agreement. Whether it does anything more is another question.

79    The respondents drew attention to the following remarks of Gummow J in Australian Capital Television Pty Ltd v Minister for Transport and Communications (1989) 86 ALR 119 (“ACTV”) at 157–8:

In a case such as the present, where the question propounded by the applicant is whether a legislative requirement had been satisfied at a particular date by what was put forward as the act of a company, and where the point is taken against the company and the party dealing with the company by a third party in proceedings to which all of them are joined, in my view the company and the party dealing with it may, in those proceedings, claim the benefit of the rule in Turquand's case to support their case that what took place did comply with the relevant legislative requirement.”

80    But ACTV (like Turquand itself) was a case where the relevant documents were signed under the company’s common seal. In Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 (“Northside Developments”) the High Court re-examined the rule in Turquand’s case, again in circumstances where the instrument in question was signed under the company’s common seal. Views differed about the rationale behind the rule. Dawson and Toohey JJ appeared to consider that it was an application of the principles of agency, Brennan and Gaudron JJ that it had its genesis in notions of estoppel. Mason CJ emphasised the importance of the seal as a signal to others of the company’s assent. Relevantly, however, in a case such as this where the common seal was not applied to the document, there would appear to be little doubt that, even if the rule in Turquand’s case is relevant, it does not assist where it cannot be shown that the agent was acting on behalf of the company and the agent’s act was within his or her actual or ostensible authority.

81    I now turn to consider these principles in the context of the remaining issue.

Does s 793 apply?

82    I agree with the Full Bench that, even if Mr Close did not have the authority to sign the agreements on the CFMEU’s behalf, s 793 of the FW Act would entitle the employers and the FWA to regard the signing of the agreements by Mr Close as the execution of the agreements by the CFMEU.

83    Section 793 relevantly provides that any conduct engaged in on behalf of a body corporate by an officer, employee or agent is taken, for the purposes of the FW Act, to have been engaged in also by the body where the conduct is within the person’s actual or apparent authority. In full the section reads as follows:

793    LIABILITY OF BODIES CORPORATE

Conduct of a body corporate

(1)    Any conduct engaged in on behalf of a body corporate:

(a)    by an officer, employee or agent (an official) of the body within the scope of his or her actual or apparent authority; or

(b)    by any other person at the direction or with the consent or agreement (whether express or implied) of an official of the body, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the official;

is taken, for the purposes of this Act and the procedural rules, to have been engaged in also by the body.

State of mind of a body corporate

(2)    If, for the purposes of this Act or the procedural rules, it is necessary to establish the state of mind of a body corporate in relation to particular conduct, it is enough to show:

(a)    that the conduct was engaged in by a person referred to in paragraph (1)(a) or (b); and

(b)    that the person had that state of mind.

Meaning of state of mind

(3)    The state of mind of a person includes:

(a)    the knowledge, intention, opinion, belief or purpose of the person; and

(b)    the person’s reasons for the intention, opinion, belief or purpose.

Disapplication of Part 2.5 of the Criminal Code

(4)    Part 2.5 of Chapter 2 of the Criminal Code does not apply to an offence against this Act.

Note: Part 2.5 of the Criminal Code deals with corporate criminal responsibility.

(5)    In this section, employee has its ordinary meaning.

[Original emphasis.]

84    The AWU submitted that s 793 did not apply for a number of reasons.

85    First, it argued that the section was only concerned with making a body corporate vicariously liable for the conduct of its officers, employees or agents (presumably in the context of civil penalty or other proceedings arising out of contraventions of the FW Act).

86    This submission must be rejected. In Trade Practices Commission v Tubemakers of Australia Ltd (1983) 76 FLR 455 at 475 Toohey J said of s 84(2) of the Trade Practices Act 1974 (Cth) (now the Competition and Consumer Act 2010 (Cth)) (which was in similar terms to s 793) that it did not seek to make a corporation vicariously responsible. Rather, its effect is to attribute to the corporation the conduct of the individuals referred to in the section. It is true that s 84(2) provides that the conduct shall be deemed (as opposed to “taken”) for the purposes of the Act to have been engaged in also by the body corporate. But that is a distinction without a difference. The words mean the same thing. Indeed, in Hanley v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2000) 100 FCR 530 (“Hanley”) the Full Court said at [58] that s 349(2) of the WR Act (which is relevantly identical to s 793(1)) “in substance, deems conduct engaged in by the prescribed persons on behalf of the body corporate to be conduct also engaged in by the body corporate”.

87    The starting point of construction must be the words of the section: K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 (“K & S”) at 321. The text of s 793 suggests a broad operation. So does its textual context. It appears in Part 6–5 of the Act which is entitled “Miscellaneous”. Moreover, there is nothing in the legislative history to point to a narrow application. The predecessor of s 793 was s 826 of the WR Act (and s 349 before the Work Choices reforms). It was in substantially the same form, although the order of the subsections differed. The heading to s 826 (and s 349) was “Conduct by officers, directors, employees or agents”. There was no express reference to the liability of the body corporate and there were no subheadings. The legislative history does not suggest that the heading to s 793 was inserted with the intention of narrowing the scope of the section. In any event, in its ordinary meaning “liability for conduct” merely means the condition of being answerable for or bound by the conduct. Liability may be assumed or attributed. Indeed, that is what the law of agency is all about. Had Parliament intended to confine the operation of the section to cases involving contraventions of the FW Act, it could easily have said so.

88    There is no doubt that Mr Close signed the agreements on the union’s behalf as he did so in the course of the affairs or activities of the CFMEU (see Walplan Pty Ltd v Wallace (1985) 8 FCR 27 at 37). Although he purportedly signed them on behalf of the Divisional Branch, the evidence was that this was an error and the AWU appears to have accepted that. The negotiations were conducted on the CFMEU’s behalf. Mr Close’s signature was placed on the agreements to signify its consent, not (or not only) the consent of the Divisional Branch.

89    But the AWU argued that s 793 does not operate to permit FWA to regard the signature of Mr Close as a signature on behalf of the union because the section contemplates that both the natural person and the corporation are taken to have engaged in the conduct as distinct from one being the act of another. There are two answers to this submission. In the first place, the section does nothing of the kind. Its factual premise is that the natural person has engaged in certain conduct. It then moves from that premise to attribute or assign liability to the body corporate in certain prescribed circumstances. The effect of the section is that Mr Close’s signature is also the signature of the CFMEU, provided, of course, that in signing the document Mr Close was acting within the scope of his actual or apparent authority. In the second place, the proposition is a non sequitur.

90    The AWU also argued that, because s 794 speaks of the signature of an authorised officer and because the Organisation Act requires that the CFMEU make provision in its rules as to who that officer might be, s 793 cannot be interpreted in such a way as to “sweep away” the effect of those provisions by permitting an unauthorised person to be deemed to be authorised by the mere act of signing a document. But s 793 does not operate in this way. It is not merely the conduct that enlivens the operation of the section. There are three preconditions. First, the conduct must be engaged in on behalf of the body corporate. Secondly, the conduct must be engaged in by an officer, employee or agent of the body corporate. Thirdly, the officer, employee or agent must have been acting within the scope of his or her apparent authority.

91    The AWU further submitted that the Full Bench erred in concluding that Mr Close had actual or apparent authority because the material presented by the AWU gave it “clear notice and knowledge of the absence of any authority, actual or apparent, before exercising any of its functions”. Even if it be accepted that Mr Close was not authorised by the CFMEU’s rules to sign the agreements, it does not follow that he lacked apparent authority. It is no answer to the proposition that he had apparent authority to show that he had no actual authority. Moreover, the relevant time for determining whether Mr Close had the authority was when he signed the agreements, not when the AWU raised the issue. At that time no-one had notice of the issue, certainly not the other parties to the agreement.

92    I accept that for Mr Close to have had apparent authority it is not enough that he held himself out as having authority (J Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers – Western Australian Branch (1992) 111 ALR 502 at 533–4 per French J). There must at least have been circumstances justifying a belief on the part of those who dealt with him that he was acting with authority: Hanley at [79]. The relevant legal principles are largely contained in the reasons of Diplock LJ in Freeman & Lockyer (A Firm) v Buckhurst Park Properties (Magnal) Ltd [1964] 2 QB 480 at 502–9, which were approved by the High Court in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72 at 79. Diplock LJ (at 506) summarised the four conditions necessary to entitle a contractor to enforce against a company a contract entered into on the company’s behalf by an agent with no actual authority to do so. They are:

(1)    that a representation that the agent had authority to enter on behalf of the company into a contract of the kind sought to be enforced was made to the contractor;

(2)    that such representation was made by a person or persons who had “actual” authority to manage the business of the company either generally or in respect of those matters to which the company relates;

(3)    that he (the contractor) was induced by such representation to enter into the contract, that is, that he in fact relied upon it; and

(4)    that under the memorandum or articles of association the company was not deprived of the capacity either to enter into a contract of the kind sought to be enforced or to delegate authority to enter into a contact of that kind to the agent.

93    In my view it was open to the Full Bench to find that Mr Close’s conduct justified a belief on the part of the employers and the other unions that he was acting with the union’s authority. Mr Ingham said he supplied Mr Close’s name to the employers for inclusion in the agreement in the absence of Michael Ravbar, the Secretary of the Queensland Branch of the Construction and General Division. That amounted to a representation that Mr Close had authority to enter into the agreements. Mr Ingham conducted the negotiations for the agreement on behalf of the CFMEU. The AWU did not question Mr Ingham’s authority to do so. The evidence suggests that the deal was also struck with Mr Ingham on the CFMEU’s behalf and the signing of the agreement was a formality. Each of the employers’ representatives in the negotiations said that he knew from previous dealings that Mr Ingham represented the CFMEU. Each of those representatives also stated that he typed Mr Close’s name on the agreements because he was told that Mr Ravbar, the “CFMEU Queensland State Secretary” would not be available to sign the agreement and that Mr Close would be doing so “on the CFMEU’s behalf” instead. The inference is that Mr Ingham was the person who told them. The rules of the CFMEU entitled the union to enter into enterprise agreements and r 30 of the National Rules permitted certain national office bearers to do so without any of the restrictions applying to the divisional branches.

94    Mr Roberts gave evidence (which I do not understand to have been disputed) that the negotiation by the Branch of the Leighton agreement was consistent with longstanding custom and practice within the union that agreements covering construction work on coal mine construction sites are negotiated and entered into by the relevant branch of the Construction and General Division. On the other hand, agreements that cover coal mining operations, he said, are and have historically been negotiated and entered into by the Mining and Energy Division.

95    The two employers plainly proceeded on the basis that Mr Close had the necessary authority. It was they who applied to FWA for approval and, in the case of the Leighton Broadmeadow project, there was evidence that by 1 August 2011 nearly 100 employees had been hired with up to 250 more to follow.

96    In any event, the CFMEU should be taken to have ratified the conduct of Mr Close. Any principal may ratify the unauthorised act of its agent. While there is no evidence of express ratification, for example by a resolution of the CFMEU’s National Executive, ratification may be implied by conduct. Conduct will be effective to ratify an unauthorised act where it is in terms sufficiently unqualified as to justify the inference that the principal intended to take responsibility for whatever transaction the agent entered on the principal’s behalf, such as where the principal commences proceedings to enforce the contract effected by the agent: Halsbury’s Laws of Australia [15-150]. Ratification can occur by the position taken in litigation: Bowstead and Reynolds on Agency (19th ed, 2010) (“Bowstead”) [2-073]. The examples given in Bowstead include a letter before action and the bringing of proceedings. See, too Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1987) 8 NSWLR 270 at 282 per McHugh JA; Scott v Bagshaw (1999) 92 FCR 424; Alexander Ward & Co Ltd v Samyang Navigation Co Ltd [1975] 1 WLR 673 (“Alexander Ward”).

97    Rule 31 of the National Rules entitled the National Secretary, the National President or National Assistant Secretary (or their delegates) to bring and defend proceedings on behalf of the union. These are the very office bearers who are authorised by r 30 to execute any agreement without qualification. The CFMEU appeared both in FWA and in this Court to maintain the validity of the agreement and to support the conduct of Mr Close. If, contrary to the opinions I have expressed and the conclusions reached below, he did not have authority to sign the agreements, the positions taken by the CFMEU in the litigation relating to the approval of the agreements and in this proceeding operated to ratify his acts. The effect of ratification is that the agreements are valid ab initio: Alexander Ward at 678, 683. The agreements were therefore made on the days they were signed and there can be no question that the Senior Deputy President had jurisdiction to approve them. In Re Construction, Forestry Mining Energy Union, Ex parte WJ Deane & Sons Pty Limited (1994) 181 CLR 539 the Full Court of the High Court explained:

There is authority for the proposition that, where an act is done in the name of or on behalf of another (“the principal”) by a person who has no authority to do that act, the principal, by ratifying the act, may make it as valid and effectual as if it had been originally done with the principal’s authority, whether the person doing the act was exceeding his or her authority or had no authority at all. Central to the proposition is the retrospective or retroactive effect of the ratification; the act done is put in the same position as if it had been authorized antecedently.

[Citations omitted.]

98    As the authors of Bowstead put it (at [2-048]), ratification should be regarded as providing a normal case of agency but one in which the intention of the parties is given effect to retrospectively. Ratification must occur within a time that is reasonable in all the circumstances. Here, it appears the AWU’s position was made known to the parties within a couple of weeks of the signing of the agreements and ever since the CFMEU has stood by them.

Conclusion

99    It follows that the application should be dismissed. I would add that, even if I were persuaded that the decision of the Full Bench was affected by jurisdictional error, in circumstances where the only defect said to exist concerns a matter of the internal management of one of four parties to the agreements where all the parties to those agreements seek to uphold them, as a matter of discretion I would refuse relief.

100    No application was made for costs. I would propose that if any party wished to apply for costs, it should do so in writing within seven days, supported by written submissions. Any party opposing such an application should respond in writing within seven days of receipt of those submissions. The Court would then determine the application on the papers.

Associate:

Dated:    29 January 2013