FEDERAL COURT OF AUSTRALIA

Kaizen Hospitals (Essendon) Pty Ltd v Australian Nursing and Midwifery Federation [2014] FCA 428

THE COURT ORDERS THAT:

1.    The parties are to bring in Short Minutes of Orders to give effect to these reasons within 14 days.

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

REASONS FOR JUDGMENT

1    On 20 December 2012 a Deputy President of the Fair Work Commission approved an application for three enterprise agreements applying to Kaizen Hospitals (Essendon) Pty Ltd, Kaizen Hospitals (Malvern) Pty Ltd and Kaizen Hospitals (Mount District) Pty Ltd (“Kaizen Hospitals”): Re Australian Nursing Federation [2012] FWA 9905, (2012) 277 IR 303.

2    Kaizen Hospitals sought to appeal that decision of the Deputy President but a Full Bench of the Fair Work Commission on 26 March 2013 denied permission to appeal: Re Kaizen Hospitals (Malvern) Pty Ltd [2013] FWCFB 1846.

3    Now before the Court is an Originating Application for relief under s 39B of Judiciary Act 1903 (Cth). In summary form, orders are sought:

    declaring that there were no agreements capable of approval for the purposes of s 186 of the Fair Work Act 2009 (Cth) (“Fair Work Act”);

    an order quashing the decisions of the Deputy President approving the agreements;

and, in the alternative:

    an order compelling the Full Bench of the Fair Work Commission “to hear and determine according to law” the appeals from the decisions of the Deputy President.

4    In seeking such relief, Kaizen Hospitals recognise that the task entrusted to this Court when reviewing the decision of the Full Bench is confined. When refusing permission to appeal, the Full Bench was exercising the discretionary power conferred by s 604 of the Fair Work Act. This Court can only grant the relief sought if jurisdictional error on the part of the Full Bench is made out: Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission [2000] HCA 47, (2000) 203 CLR 194. Gleeson CJ, Gaudron and Hayne JJ there relevantly identified the character of the jurisdictional error required as follows:

[31]    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 [(1947) 47 SR (NSW) 416 at 420], 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’. The Full Bench did none of those things: (2000) 203 CLR 208 – 209.

See also: Linfox Australia Pty Ltd v Fair Work Commission [2013] FCAFC 157 at [42] per Dowsett, Flick and Griffiths JJ; Dafallah v Fair Work Commission [2014] FCA 328 at [28] per Mortimer J.

5    It was common ground in the present proceeding that in the absence of their being any “agreement” between Kaizen Hospitals and the employees there was no “jurisdiction” vested in the Deputy President to grant any “approval”.

6    Of central relevance, accordingly, is whether or not there ever was an “agreement” which was capable of being “made” as between the employees and each of the three Applicants. Those employees had voted in July 2012 to accept the terms and conditions being offered. But, in issue, is whether the three Applicants were either themselves the “bargaining representative” for the purposes of the Fair Work Act or whether an individual, Mr Subramanian, had “apparent or ostensible authority” to enter into the “agreements”. Each of the Applicants is owned by the Independent Private Hospitals of Australia Pty Ltd (“IPHOA”). Mr Subramanian was employed by Flagtail Pty Ltd. In April 2011 the IPHOA had contracted Flagtail Pty Ltd such that Mr Subramanian was to provide his services to each of the Applicants as their “Corporate Manager” and was to co-ordinate management functions in the IPHOA owned hospitals in Victoria. In February 2012 Mr Subramanian engaged Service Industry Advisory Group Pty Ltd (“SIAG”) to assist with industrial relations matters.

7    It is concluded that there was no “agreement” susceptible of approval by the Deputy President. No “agreement” had been entered into by the three Applicants and, contrary to the conclusion of the Deputy President, Mr Subramanian had no “apparent or ostensible authority” to bind any of the three Applicants. It is further concluded that the Deputy President erred in granting approval to the agreements and that the Full Bench erred in not granting permission to appeal.

The Fair Work Act

8    The making and approval of enterprise agreements is regulated by Part 2 - 4 of the Fair Work Act.

9    Within that Part, s 172 provides for the making of an enterprise agreement, including both a “Single-Enterprise Agreement” (including a “Greenfields Agreement”) and a “Multi-Enterprise Agreement”. Section 173 provides for the giving of notice to employees proposed to be covered by an agreement (other than a Greenfields Agreement).

10    Section 176 provides for the appointment of “bargaining representatives” for a proposed enterprise agreement. Of present relevance is s 176(1) which provides as follows:

The following paragraphs set out the persons who are bargaining representatives for a proposed enterprise agreement that is not a greenfields agreement:

(a)    an employer that will be covered by the agreement is a bargaining representative for the agreement;

(b)    an employee organisation is a bargaining representative of an employee who will be covered by the agreement if:

(i)    the employee is a member of the organisation; and

(ii)    in the case where the agreement is a multi-enterprise agreement in relation to which a low-paid authorisation is in operation – the organisation applied for the authorisation;

unless the employee has appointed another person under paragraph (c) as his or her bargaining representative for the agreement, or has revoked the status of the organisation as his or her bargaining representative for the agreement under subsection 178A(2); or

(c)    a person is a bargaining representative of an employee who will be covered by the agreement if the employee appoints, in writing, the person as his or her bargaining representative for the agreement;

(d)    a person is a bargaining representative of an employer that will be covered by the agreement if the employer appoints, in writing, the person as his or her bargaining representative for the agreement.

Section 176 enables either an employer or an employee to appoint himself as the bargaining representative: Klein v Metropolitan Fire and Emergency Services Board [2012] FCA 1402 at [163], (2012) 208 FCR 178, 218 per Gordon J. Section 178 provides for the time when the appointment of a “bargaining representative” comes into force and the giving of a copy of an instrument of appointment. Section 178A provides for the revocation of the appointment of a “bargaining representative”.

11    Within Part 2 - 4, Division 4 provides for the “Approval of enterprise agreements”. Within that Division, s 180 provides for employees to be given a copy of a proposed enterprise agreement. Section 181 allows an employer to request employees approve a proposed agreement by voting for it. Section 182 provides for the time when an enterprise agreement is made and provides as follows:

When an enterprise agreement is made

Single-enterprise agreement that is not a greenfields agreement

(1)    If the employees of the employer, or each employer, that will be covered by a proposed single-enterprise agreement that is not a greenfields agreement have been asked to approve the agreement under subsection 181(1), the agreement is made when a majority of those employees who cast a valid vote approve the agreement.

Multi-enterprise agreement that is not a greenfields agreement

(2)    If:

(a)    a proposed enterprise agreement is a multi-enterprise agreement; and

(b)    the employees of each of the employers that will be covered by the agreement have been asked to approve the agreement under subsection 181(1); and

(c)    those employees have voted on whether or not to approve the agreement; and

(d)    a majority of the employees of at least one of those employers who cast a valid vote have approved the agreement;

the agreement is made immediately after the end of the voting process referred to in subsection 181(1).

Greenfields agreement

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

12    Section 185 provides that a bargaining representative must apply for the Fair Work Commission’s approval of an enterprise agreement that has been “made”. That section provides as follows:

Application for approval

(1)    If an enterprise agreement is made, a bargaining representative for the agreement must apply to the FWC for approval of the agreement.

(1A)    Despite subsection (1), if the agreement is a greenfields agreement, the application must be made by:

(a)    an employer covered by the agreement; or

(b)    a relevant employee organisation that is covered by the agreement.

Material to accompany the application

(2)    The application must be accompanied by:

(a)    a signed copy of the agreement; and

(b)    any declarations that are required by the procedural rules to accompany the application.

When the application must be made

(3)    If the agreement is not a greenfields agreement, the application must be made:

(a)    within 14 days after the agreement is made; or

(b)    if in all the circumstances the FWC considers it fair to extend that period – within such further period as the FWC allows.

(4)    If the agreement is a greenfields agreement, the application must be made within 14 days after the agreement is made.

Signature requirements

(5)    The regulations may prescribe requirements relating to the signing of enterprise agreements.

Further to s 185(2)(a), reg 2.06A(2) of the Fair Work Regulations 2009 (Cth) provides as follows:

For paragraph 185(2)(a) of the Act, a copy of an enterprise agreement is a signed copy only if:

(a)    it is signed by:

(i)    the employer covered by the agreement; and

(ii)    at least 1 representative of the employees covered by the agreement; and

(b)    it includes:

(i)    the full name and address of each person who signs the agreement; and

(ii)    an explanation of the person's authority to sign the agreement.

For the purposes of s 185(2)(b), the “declaration” there referred to is to be found in Form F17 titled: “Employer’s Declaration in Support of Application for Approval of Enterprise Agreement”. The importance placed upon Form F17 being before the Fair Work Commission when it is entertaining an approval application is exposed by the matters covered. Form F17 is divided into numbered paragraphs, including “Part 2: Requirements for approval”. Thereafter paras [2.2] and [2.3] direct attention to the “Scope of the Agreement (s.186(3) and (3A))” and paras [2.4] to [2.9] direct attention to “Agreement Genuinely Approved – (s.186(2)(a), s.188, s.180(2), (3) and (5), s.181)”. Section 186 sets forth the “general requirements” to be satisfied before an approval may be granted. Section 186(1) sets forth the “basic rule” as follows:

If an application for the approval of an enterprise agreement is made under section 185, the FWC must approve the agreement under this section if the requirements set out in this section and section 187 are met.

Section 186(2) provides in part as follows:

The FWC must be satisfied that:

(a)    if the agreement is not a greenfields agreement – the agreement has been genuinely agreed to by the employees covered by the agreement; and

(b)    …..

(c)    the terms of the agreement do not contravene section 55…; and

(d)    the agreement passes the better off overall test.

Section 186(4) provides that the Commission must also be “satisfied that the agreement does not include any unlawful terms…”. Error on the part of the Commission in reaching a state of satisfaction for the purposes of s 186(4), it has been concluded, would not constitute jurisdictional error: Australian Industry Group v Fair Work Australia [2012] FCAFC 108 at [37] - [50], (2012) 205 FCR 339, 359 - 362 per North, McKerracher and Reeves JJ. Section 188 provides for when an “enterprise agreement has been genuinely agreed to by the employees…”. Section 187 provides for “additional requirements”. Section 187 provides (in part) as follows:

Requirement that approval not be inconsistent with good faith bargaining etc.

(2)    The FWC must be satisfied that approving the agreement would not be inconsistent with or undermine good faith bargaining by one or more bargaining representatives for a proposed enterprise agreement, or an enterprise agreement, in relation to which a scope order is in operation.

The content of “good faith bargaining requirements” are set forth in s 228.

13    A provision also relied upon by the Australian Nursing Federation is s 793 found within Part 6 - 5, the “Miscellaneous” Part of the Fair Work Act. That section provides (in part) as follows:

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.

The terms of this section:

    operate to attribute to a body corporate the conduct of the individuals referred to; and

    suggest “a broad operation”: Australian Workers’ Union v Leighton Contractors Pty Ltd [2013] FCAFC 4 at [87], (2013) 209 FCR 191, 210 - 211 per Katzmann J.

An issue there under consideration was the authority of a representative of the Queensland Branch of the CFMEU’s Construction and General division, Mr Close. The Australian Workers’ Union claimed that an enterprise agreement had not been validly made pursuant to s 182(3) of the Fair Work Act 2009 (Cth) because Mr Close was only authorised to sign agreements on behalf of his divisional branch if they directly affected the employment or conditions of employment of members of only that branch. The agreement as signed extended beyond this limitation. Katzmann J said of this provision:

[87]    The starting point of construction must be the words of the section…The text of s 793 suggests a broad operation. So does its textual context.

Her Honour continued:

[92]    I accept that for Mr Close to have had apparent authority it is not enough that he held himself out as having authority... 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... 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 502–509, 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.

McKerracher J agreed with Katzmann J.

The background facts & the approvals previously given

14    The facts giving rise to the present dispute may be traced back to November 2011 and to an earlier flawed application approval process.

15    The 26 March 2013 decision of the Full Bench presently under consideration had been preceded by earlier applications to the Deputy President for approval of the three enterprise agreements in August 2012; [2012] FWAA 7066, [2012] FWAA 7068, [2012] FWAA 7071.

16    Each of the three earlier applications for approval in August 2012 had been made in the name of the employing companies. Each application stated that the Applicant companies had appointed SIAG as its bargaining representative. But, as the facts later unfolded it became apparent that SIAG had never been validly appointed.

17    On 8 August 2012 applications for approval of the enterprise agreements were filed with Fair Work Australia. The Deputy President held “Hearings on the Papers in Chambers”. On 17 August 2012 the Deputy President issued decisions approving each of the agreements. But these decisions were set aside by the Full Bench: Kaizen Hospitals (Essendon) Pty Ltd v Australian Nursing Federation [2012] FWAFB 8866, (2012) 224 IR 400. In granting permission to appeal and in setting aside the decisions approving the enterprise agreements, the Full Bench explained its reasons (in part) as follows:

[10]    In the appeal proceedings we were taken to the applications before the Deputy President and the supporting material. It is clear that the negotiations for the Agreements and the applications for the approval by FWA proceeded on the basis that SIAG was the employer bargaining representative. It is now clear that SIAG was not appointed by the Companies as the employer bargaining representative in accordance with the relevant provisions of the Act.

The Full Bench then set forth the terms of s 176 and 178 of the Fair Work Act and continued:

[13]    Having regard to the abovementioned provisions, it is clear that the Act adopts prescriptive and formal requirements for the appointment of bargaining representatives and that the power of a bargaining representative to represent the employer in negotiations for an enterprise agreement arises from the instrument of appointment. It is fundamental to the exercise of power by a bargaining representative that the appointment has been validly made.

[14]    In the present appeals, it is evident that SIAG was not appointed as a bargaining representative for the Companies in accordance with the Act. There was no instrument of appointment or other written document or any other evidence produced in the appeal proceedings to show that SIAG had been appointed as the employer bargaining representative for the Agreements. It must therefore be concluded that SIAG was not a duly appointed bargaining representative of the Companies.

The Full Bench then set forth the terms of s 185 and concluded:

[16]    In relation to the applications for approval, it would be open to conclude on the material before us either that the applications were made by the Companies concerned or that they were made by a person purporting to act as the employer bargaining representative. Whichever view is taken, we do not consider that valid applications were before the Deputy President.

[17]    If the applications were made by an employer bargaining representative, then they were made by a bargaining representative who was not validly appointed as such. This is the case whether the application was signed by Ms Cook in the capacity as the employer bargaining representative or on behalf of SIAG. Neither Ms Cook nor SIAG had been so appointed as the employer bargaining representative in accordance with the Act. In the alternative, if the view is taken that the applications for approval were made by the employing companies, the applications were filed with FWA and signed by a bargaining representative who was not duly appointed. In such circumstances, it cannot be concluded that the applications were made by the employing companies as required by s 185(1) of the Act. The mere lodgement of an application in the name of an employing entity but without authorisation to do so is not sufficient to meet the requirements of s 185.

[18]    In neither of the scenarios posited above do we consider that valid applications for the approval of the Agreements were made.

[19]    In these circumstances, we consider that there were no valid applications for the approval of the Agreements before the Deputy President. The approval procedure and the decisions made to approve the Agreements were tainted by this defect.

The subsequent applications for approval – the decisions now under review

18    On 18 October 2012 the Australian Nursing Federation again applied for approval of the same three enterprise agreements. On 20 December 2012 the Deputy President again granted approval. In doing so, the earlier flawed approval process was set forth: Re Australian Nursing Federation [2012] FWA 9905, (2012) 227 IR 303. This time the Australian Nursing Federation argued that the employer was the bargaining representative for the agreements pursuant to s 176(1)(a). It submitted that Mr Subramanian “had acted as an employee within the scope of his actual or apparent authority”: [2012] FWA 9905 at [8], (2012) 227 IR 303, at 309. The Deputy President summarised the involvement of Mr Subramanian (in part) as follows:

The involvement of Mr.Subramanian in Negotiations and Signing the Agreement

[28]    Mr.Subramanian was directly involved in negotiations leading to the agreement. He agreed to meet with the ANF to discuss the agreements on 26 March 2012. He was said to be attending a negotiation meeting with the ANF on 4 June 2012. He commented on the content of negotiations at a negotiation meeting by email sent on 19 June 2012. He was copied in to the email from SIAG to the ANF commenting on a shift allowance issue in the draft agreements. He signed the three agreements on behalf of Kaizen on 1 August 2012, claimed that he had authority to sign, and cited his formal title and corporate position with Kaizen. The ANF wrote to him on 28 August 2012 stating that, the agreements were negotiated ‘in good faith and in accordance with Fair Work legislation’, and no contradiction was made by Kaizen other than to say that authority to act was not present.

[29]    Dr.Wenkart gave evidence that Mr.Subramanian ‘engaged SIAG to assist him with industrial relations matters from about February 2012’, although not as bargaining representatives. SIAG undertook most of the direct negotiations with the ANF, but did so by way of assisting Mr.Subramanian, and with his involvement and direction. This is the only plausible explanation of the sequence of events.

The Deputy President continued:

[31]    On the evidence before me, Mr.Subramanian acted with the assistance of SIAG to negotiate and sign the three Kaizen agreements, and he must have been ultimately responsible for all the actions taken in developing and approving the agreements. Section 793 of the Act enables a body corporate to engage in conduct by an officer, employee or agent within the scope of his ‘apparent authority’.

[32]    I note that Mr.Subramanian has subsequently made a statement that he did not have the authority to take the actions that he did. This does not however alter the fact that during the negotiation and signing of the agreements he acted as though he did have authority.

The Deputy President concluded:

[53]    On the evidence before me, pursuant to s.793(1)(a) of the Act, Mr.Subramanian and others acted with apparent or ostensible authority on behalf of the operating companies and employers. The operating companies and employers negotiated and signed the three agreements.

Permission to appeal from that decision was refused on 26 March 2013: Re Kaizen Hospitals (Malvern) Pty Ltd [2013] FWCFB 1846. In refusing permission to appeal, the Full Bench concluded:

Conclusion

[60]    An appeal under s.604 of the Act may only proceed with the permission of the Fair Work Commission. This would normally require an appellant to demonstrate an arguable case of appealable error and refer to other considerations which would justify the granting of permission to appeal. Subsection 604(2) requires the Fair Work Commission to grant permission to appeal if it is satisfied that it is in the public interest to do so.

[61]    We are not satisfied that the appellants have established a basis for permission to appeal to be granted. We see no error in the decision of Deputy President Hamilton. The issues which arise in the appeal in reality concern the internal control processes of the IPHOA and are not matters of public interest. We deny permission to appeal. The application for permission to appeal is dismissed.

It is the subsequent decisions of the Deputy President and the Full Bench which are now the subject of the current application for review. It is respectfully concluded that each of the decisions of the Deputy President and the Full Bench was vitiated by jurisdictional error.

Jurisdictional fact – the making of an agreement?

19    The primary manner in which Kaizen Hospitals advanced its claims to relief in this Court was simply that there was no “agreement” which was capable of constituting an “agreement” for the purposes of ss 185 and 186 of the Fair Work Act. Further submissions relied upon by Kaizen Hospitals were that:

    “on the proper construction of s 185(2), there is a legislative requirement that both the enterprise agreement be signed in accordance with the Regulations and the declarations required by the procedural rules to accompany the application, in this case, Form 17”; and

    for the purposes of s 187(2), “it would be impossible to conclude other than that the agreement was an agreement which undermined good faith bargaining”.

In advancing each of these submissions, it was necessary on the case advanced on behalf of Kaizen Hospitals to examine in some degree of detail the exchange of correspondence leading up to the approval on the part of the employees on 26 July 2012 to the terms and conditions which had been placed before them for consideration. But one fact of central importance was that Mr Subramanian had forwarded on an e-mail to Mr Barry Megennis on 23 August 2012 acknowledging that in signing the agreements he had “acted without the approval of IPHoA and the Board and did not have authority to do so”. Mr Megennis is an Industrial Officer employed by the Australian Nursing Federation. That acknowledgment, of course, came after the vote of the employees; whatever may have been the role played by Mr Subramanian and whatever “authority” he may have been clothed with prior to July 2012 remained.

20    In resisting these submissions, Counsel for the Australian Nursing Federation quite properly acknowledged that there was no evidence that:

    other than Messrs Cook and Subramanian, any officer of Kaizen Hospitals had any knowledge as to the content of the terms and conditions of the agreement as at the time of the approval of the employees.

No case was advanced on behalf of the Australian Nursing Federation that:

    either Messrs Cook of Subramanian had any actual authority to enter an agreement on behalf of Kaizen Hospitals;

    any authority could be conferred upon either Mr Cook or Mr Subramanian by reason of their own conduct; and

    if Mr Subramanian did not have authority to bind Kaizen Hospitals, any absence of authority could be found in such authority as was conferred upon Mr Cook.

The case that was advanced on behalf of the Australian Nursing Federation was either that:

    Kaizen Hospitals had itself entered into an agreement with the employees;

or, in the alternative, that

    Mr Subramanian had “apparent or ostensible” authority to enter into the enterprise agreements.

Neither of these arguments prevail.

21    It was common ground between Kaizen Hospitals and the Australian Nursing Federation that neither the Deputy President nor the Full Bench had any jurisdiction to grant “approval” in the absence of any “agreement”. The existence of an “agreement”, it was common ground, was a “jurisdictional fact” upon which the power to grant “approval” depended.

Kaizen Hospitals as the bargaining agent

22    The submission that it was Kaizen Hospitals that had itself negotiated the agreement with its employees was founded upon:

    the “summary” of information provided by Mr Subramanian in his Statutory Declaration completed in August 2012, namely the Form F17 “Employer’s Declaration in Support of Application for Approval of Enterprise Agreement”;

together with:

    the initial service on 2 November 2011 by Mr Megennis upon the “Chief Executive Officer” of “Independent Private Hospitals of Australia P/L” of the log of claims at the registered office of each of the three Applicants; and

    the provision by “Independent Private Hospitals of Australia” of a “Memorandum” to “Nursing Staff” on 21 March 2012, notifying “Nursing Staff” of a “meeting to begin negotiation for a Nursing Staff Enterprise Agreement” to take place on 29 March 2012. That Memorandum was sent to nursing staff by Ms Val Davie, the Manager Clinical Services of IPHOA. It notified nursing staff of the negotiation of an enterprise agreement and “employee rights to representation”.

These facts, it was submitted on behalf of the Australian Nursing Federation, evidenced the fact that it was Kaizen Hospitals that had notified the employees of a meeting “to begin negotiation for a Nursing Staff Enterprise Agreement” in March 2012 and thereafter an agreement on the part of Kaizen Hospitals to the terms and conditions of the agreements as approved by the employees.

23    This argument is rejected.

24    The initiation of the negotiation process may be seen as commencing with the service of the log of claims on 2 November 2011. The service of the log of claims was unquestionably upon the Chief Executive Officer of the Applicants. But it was no more than that. It was simply bringing the log of claims to the attention of the Chief Executive Officer. How the negotiation of that log of claims was to proceed on behalf of Kaizen Hospitals, and who was to have authority to carry out negotiations and authority to enter into any resultant agreement, were obviously matters for the future. Nor does the provision of the Memorandum to the Nursing Staff on 21 March 2012 take the matter further. That Memorandum was on the letterhead of “Independent Private Hospitals of Australia” and was signed by Ms Davie. But that is all.

25    And the Form F17 Employers Declaration also takes the present argument no further. That declaration was completed by Mr Subramanian in August 2012. Part of the information then provided was paragraph [2.5] which provided as follows:

Please specify the steps taken by the employer to ensure that the relevant employees were given, or had access to, the written text of the Agreement and any other material incorporated by reference into the Agreement during the 7 day period ending immediately before the start of the voting process (s.180(2)(a)):

o    Copies of the proposed Agreement were distributed and made available to staff.

o    Explanatory memos were sent to every staff member advising of the ballot process and the availability of copies of the Agreement.

o    Staff asked to direct any queries about the Agreement to Management or Union Representative.

But that Employer’s Declaration says nothing more than (for example) that copies of the proposed agreement and explanatory “memos” had been distributed. It says nothing as to the Applicants retaining the position of “bargaining representative” and says nothing of itself as to the authority of the entity who could enter an agreement with the employees.

26    Other than the content of the Memorandum forwarded by Ms Davie, there was – for example – no evidence that any other officer of Kaizen Hospitals had any knowledge of the contents of the “proposed agreement” or the “explanatory memos…”.

27    Short of any “apparent or ostensible” authority of Mr Subramanian to act on behalf of Kaizen Hospitals, no conclusion is open that it was the employer who had negotiated or effected the agreement with its employees, when there is an absence of any evidence of any knowledge on the part of the employer as to the content of the ultimate agreement said to have been reached.

28    In advancing the argument that it was Kaizen Hospitals itself that was the “bargaining representative”, reliance was also placed upon:

    the position in fact occupied by Mr Subramanian;

    knowledge on the part of Mr Megennis that Mr Subramanian had “been appointed by IPHOA to the positions of Corporate Manager – Victoria and Hospital Director – Essendon Private Hospital at sometime between 2009 and 2011”; and

    the knowledge of Mr Megennis as to the manner in which Kaizen Hospitals negotiated agreements with employees on other occasions and on the present occasion.

But these matters, it is considered, assume greater relevance when attention is directed to the alternative submission advanced on behalf of the Australian Nursing Federation as to Mr Subramanian being the agent for Kaizen Hospitals rather than Kaizen Hospitals themselves being the “bargaining agent”.

Mr Subramanian – the absence of any apparent or ostensible authority

29    The better argument advanced on behalf of the Australian Nursing Federation that there was in fact an “agreement”, is its argument that an agreement had been reached which bound Kaizen Hospitals because of the position held by Mr Subramanian and his role in negotiating an agreement.

30    The holding out by a company as to the authority of an individual to act on its behalf and reliance upon a representation as to the individual’s authority may bind the company: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35 at [36], (2004) 218 CLR 451, 466 - 467. Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ there observed:

[36]    … Where an officer is held out by a company as having authority, and the third party relies on that apparent authority, and there is nothing in the company's constitution to the contrary, the company is bound by its representation of authority. "The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract.” It is not enough that the representation should come from the officer alone. Whether the representation is general, or related specifically to the particular transaction, it must come from the principal, the company. That does not mean that the conduct of the officer is irrelevant to the representation, but the company's conduct must be the source of the representation. In many cases the representational conduct commonly takes the form of the setting up of an organisational structure consistent with the company's constitution. That structure presents to outsiders a complex of appearances as to authority. The assurance with which outsiders deal with a company is more often than not based, not upon inquiry, or positive statement, but upon an assumption that company officers have the authority that people in their respective positions would ordinarily be expected to have. In the ordinary case, however, it is necessary, in order to decide whether there has been a holding out by a principal, to consider the principal's conduct as a whole.

31    But this argument, too, is to be rejected.

32    When making his decision in December 2012, it is respectfully concluded that the Deputy President was in error either because:

    the conclusion that as at 27 or 28 July 2012 Mr Subramanian had “apparent or ostensible authority” to act on behalf of Kaizen Hospitals was a finding contrary to and not supported by the evidence; and/or

    it was an erroneous exercise of the power conferred by s 186 to “approve” the agreements in circumstances where as at the time of exercising that power it was known that Mr Subramanian had no authority whatsoever and had “acted without the approval of IPHOA and the Board”.

33    As to the former of these two conclusions, the absence of any “apparent or ostensible authority” on the part of Mr Subramanian as at 27 or 28 July 2012 follows from:

    a review of the chronology of events which serves to expose the limited participation and authority of Mr Subramanian and the retention of any authority that may have been conferred by Kaizen Hospitals being authority conferred upon Mr Cook.

Other than Mr Subramanian occupying the position of “Corporate Manager”, it is concluded that Kaizen Hospitals made no representation as to the “authority” of Mr Subramanian to enter into any of the three enterprise agreements presently in issue. Nor did the manner in which Mr Subramanian participated in the negotiation process provide any sufficiently certain basis for concluding that he had authority to enter into the three agreements.

34    The relevant chronology of events again starts with the service of the log of claims upon the Chief Executive Officer of Kaizen Hospitals in November 2011.

35    If attention is initially confined to the chronology of events and the finding that Mr Subramanian had authority, an exchange of e-mails occurred in March 2012 between Mr Megennis and Mr Subramanian. Indeed, on 26 March 2012 Mr Megennis e-mailed to Mr Subramanian stating that he “would like to meet with you or alternatively your representative to discuss ANF’s Log of Claims that was lodged with you organisation last year”. But thereafter the exchange of e-mails occurs between Mr Megennis and Mr Cook. Thus, on 3 May 2012 Mr Megennis e-mailed Mr Cook expressing his understanding “that SIAG is representing each of the above facilities for negotiations for a new agreement”. On the following day Mr Cook e-mailed Mr Megennis stating that he was “in Sydney today meeting with NSWNA”. On 23 May 2012 it was Mr Cook who forwarded to Mr Megennis “a copy of the draft proposed agreement for your review”. Meetings were held between Mr Megennis and Mr Cook in June 2012.

36    Mr Subramanian, perhaps not surprisingly given the position he occupied, was not excluded from the negotiation process. Thus, for example, on 18 June 2012 Mr Megennis met with both Messrs Cook and Subramanian. The following day, Mr Subramanian forwarded to Mr Megennis (and “copied in” Mr Cook) “responses” to issues that had arisen from the meeting the previous day, being “responses” directed to “Change of Shift Allowance”, “Cancellations/Lost Hours” and “Overtime”. Mr Megennis replied by way of e-mail to Mr Cook and “copied in” Mr Subramanian. There was a further exchange of e-mails between Messrs Cook and Megennis. On 2 July 2012 Mr Cook wrote to Mr Megennis on SIAG letterhead “in regard to the final enterprise agreement for nursing staff” for “Malvern Private Hospital”.

37    As the vote of the employees approached, it was again Mr Cook who e-mailed Mr Megennis on 9 July 2012 expressing a “wish to have a scrutineer at the count of the ballot at each Hospital”. Mr Megennis was asked to “contact Sankar Subramanian in the first instance”. The vote took place between 23 July and 26 July 2012 and Mr Cook e-mailed Mr Megennis on 28 July 2012 stating that “the vote from the IPHOA hospitals was 45 in favour and 6 against”.

38    This chronology, it is respectfully concluded, does not expose Mr Subramanian as the person cloaked with authority to negotiate an enterprise agreement with the employees. Mr Subramanian could not “cloak” himself with authority by signing (for example) the Form F17 Declaration. The person who negotiated the agreement – and who had the day to day carriage of those negotiations – was Mr Cook. But no reliance is placed by the Australian Nursing Federation upon an agreement having been reached by reason of the role played by Mr Cook.

39    If this conclusion be correct, it would follow that there was simply no document which recorded the terms of any “agreement” as between Kaizen Hospitals and its employees. In the absence of Mr Subramanian being cloaked with either “apparent or ostensible” authority, Kaizen Hospitals cannot be seen as presenting to the employees any proposal with which it had expressed any “agreement”. There was simply no “agreement” which was capable of being either voted on by the employees or being approved by the Fair Work Commission.

40    Any finding of fact as to the “apparent or ostensible authority” of Mr Subramanian, it must nevertheless be recognised, is but an inference drawn from the facts preceding the vote of the employees. Although the contrary conclusion of the Deputy President is one which could have been drawn, it is – with respect – considered to be erroneous.

41    In recognition of the fact that different inferences may be drawn from the primary facts, it is prudent to further address the relevance to the exercise of the power conferred by s 186 of the Fair Work Act of the acknowledgment on the part of Mr Subramanian as to his absence of authority.

The acknowledged lack of authority – August 2012

42    The ballot of the employees in respect to the agreements took place between 23 and 26 July 2012. On 28 July 2012 Mr Cook advised Mr Megennis that the employees had approved the agreements. Applications for approval of those agreements were then lodged.

43    Mr Subramanian’s e-mail to Mr Megennis advising him of the absence of authority was forwarded on 23 August 2012.

44    The decisions of the Deputy President now in question were given on 20 December 2012; the decision of the Full Bench now in question was given on 26 March 2013. By both of those dates the absence of any authority on the part of Mr Subramanian was well known. The Deputy President proceeded upon the basis that he “must approve” the three agreements once the conclusion had been reached that Mr Subramanian had “apparent authority” to sign each of the agreements and it mattered not that any lack of authority thereafter became apparent.

45    Irrespective of any conclusion as to the absence of any “apparent or ostensible authority” on the part of Mr Subramanian, it is separately concluded that the Deputy President should not have “approved” the agreements and that the Full Bench was in error in not granting permission to appeal and thereafter allowing the appeal.

46    The task entrusted to the Fair Work Commission by s 186 is not confined to any state of knowledge as at 28 July 2012. Although all statutory decision-making processes must necessarily be made within any constraints imposed by the legislature, as a general proposition a decision-maker should have regard to the best and most up to date information which is available: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24. Mason J there observed at 44 - 45:

The second question, which lies at the heart of this appeal, is whether the Minister is also bound to take into account submissions made to him which correct, update or elucidate the Commissioner's comments on detriment. Once it is accepted that the subject-matter, scope and purpose of the Act indicate that the detriment that may be occasioned by a proposed land grant is a factor vital to the exercise of the Minister's discretion, it is but a short and logical step to conclude that a consideration of that factor must be based on the most recent and accurate information that the Minister has at hand. Considerable time may elapse between completion of the Commissioner's report and the date at which the Minister makes his decision; in the present case it was well over one and a half years. In that time there may be such a change of circumstances that the Commissioner's comments may no longer prove to be an accurate guide, there may be uncertainties or ambiguities in his comments that deserve clarification, or, as in the present case, even though there may have been no change of circumstances, interested parties may have become aware that the Commissioner's report omitted material matters on the subject of detriment. It would be a strange result indeed to hold that the Minister is entitled to ignore material of which he has actual or constructive knowledge and which may have a direct bearing on the justice of making the land grant, and to proceed instead on the basis of material that may be incomplete, inaccurate or misleading. In one sense this conclusion may be seen as an application of the general principle that an administrative decision-maker is required to make his decision on the basis of material available to him at the time the decision is made. But that principle is itself a reflection of the fact that there may be found in the subject-matter, scope and purpose of nearly every statute conferring power to make an administrative decision an implication that the decision is to be made on the basis of the most current material available to the decision-maker.

See also: Our Town FM Pty Ltd v Australian Broadcasting Tribunal (No 2) (1987) 77 ALR 601 at 605-606 per Wilcox J; Century Metals and Mining NL v Yeomans (1989) 40 FCR 564 at 600 per Fisher, Wilcox and Spender JJ; Tomson v Minister for Finance and Deregulation [2013] FCA 664 at [49], (2013) 136 ALD 610 at 624 per Rares J.

47    The statutory regime whereby an “enterprise agreement” may ultimately be approved does not stop at that point of time when an agreement is “made”, namely at that point of time “when a majority of those employees who cast a valid vote approve the agreement”: s 182(1). Thereafter, the statutory regime also requires:

    the making of an application for approval (s 185(1)); and

    the granting of “approval” by the Fair Work Commission (s 186(1)).

Both the statutory context whereby an “enterprise agreement” is ‘made” and “approved” and the general principle expressed by Mason J in Peko-Wallsend, supra, indicate that the power conferred by s 186 is to be exercised with reference to facts known as at the time when the statutory power is being exercised. If all that was required before approval “must” be given pursuant to s 186(1) was the vote of the employees and the application for approval, the requirements imposed by s 185(2) (for example) would be superfluous. The power imposed by s 186(1) is not a mere power to “rubber stamp” all that has gone before; the power has the hallmarks of a “final vetting process” to ensure that the enterprise agreement is one which is to be “approved”.

48    As at 20 December 2012, the Deputy President relevantly had before him for consideration:

    the application for approval made by the Australian Nursing Federation on 8 August 2012, as required by s 185(1);

    an application for approval being made by the Australian Nursing Federation in full knowledge of the fact that it was seeking approval for an agreement which had been signed by a person without authority;

    a “signed copy of the agreement(s)”, as required by s 185(2)(a); and

    the “Employer’s Declaration” being the Form F17 declaration signed by Mr Subramanian on 3 August 2012, as required by s 185(2)(b).

Even if it be assumed that the “agreement” which was presented for approval was otherwise an “agreement” by reason of the “apparent authority” of Mr Subramanian, as at 20 December 2012 the Deputy President knew that:

    Kaizen Hospitals were disputing the authority of Mr Subramanian to act as its agent; and that

    the Form F17 “Employer’s Declaration” had been signed without authority.

49    In such circumstances it is respectfully concluded for the purposes of s 186 that:

    there was no “application for approval” for the purposes of s 186(1) because the application as made was not “accompanied by” an Employer’s Declaration signed by somebody with authority to do so; and

    a “requirement” imposed by s 187(2) had not been “met”, namely that the granting of approval would “not be inconsistent with or undermine good faith bargaining …”.

The task of the Commission when granting approval for the purposes of s 186(1) is not so confined that it “must approve” an “agreement” which it is then known has been entered into by a person without authority. It was not open in the circumstances of the present case for the Deputy President to “waive” compliance with a “requirement” imposed by s 185(2)(b) pursuant to r 4 of the Fair Work Australia Rules 2010: [2012] FWA 9905 at [66], (2012) 227 IR 303, 321. Although Form F17 is a form prescribed in Schedule 2 to those Rules and would thus fall within the ambit of the discretionary power conferred by r 4, it was an erroneous exercise of the discretion to waive compliance where the requirement went to such a fundamental matter as to the consent in fact of the Applicants to the terms and conditions of an “agreement”. The waiving of compliance with s 185(2)(b) stripped the Deputy President of the need to consider whether an “essential condition” or prerequisite to the granting of approval – namely the existence of an “agreement” – was in fact satisfied: cf. Timbarra Protection Coalition Inc v Ross Mining NL [1999] NSWCA 8 at [94], (1999) 46 NSWLR 55 at 73 per Spigelman CJ. Whatever other irregularities may occur in respect to a Form F17 Declaration in other cases, the attempt to waive compliance with this rule in the present case had the effect that an agreement went forward for approval in circumstances where it was then known that there was no consent on the part of Kaizen Hospitals to the terms and conditions that had been voted on. Nor could any conclusion be open other than that approval of the three agreements would at least “undermine” good faith bargaining in circumstances where it is known that the bargaining which had taken place prior to 27 July 2012 had been undertaken by someone without authority.

50    These conclusions are sufficient to vitiate the decision of the Deputy President.

51    It is nevertheless further considered that the task of the Fair Work Commission entrusted to it by s 186 is not confined to a consideration or whether or not the facts presented would constitute a common law contract. Free of any consideration of relevant statutory provisions, an agreement may be an enforceable contract and binding as against a principal in those circumstances where an agent has acted within the apparent or ostensible authority of his principal even though as a matter of fact it is later realised the agent lacked any authority. To conclude otherwise would be to deny relevance to any consideration at all of the apparent or ostensible authority of the agent. But the requirements of Part 2 - 4 of the Fair Work Act are not satisfied – and there is no enterprise agreement which complies with the statutory regime – unless all of the requirements of that Part have been met. Although the circumstances may indeed be rare, it would be open to the Fair Work Commission to refuse to grant approval to an agreement which it is known was purportedly entered into on behalf of an employer by an agent acting without authority – or even possibly where there are reasonable grounds for believing that the employer had not in fact consented. Even though such a purported agreement may have been “made” at a point of time when the lack of authority of the agent was unknown – and even though such an agreement may otherwise have satisfied common law contractual principles of an agent acting within his “apparent or ostensible authority” – a purported “agreement” entered into in excess of authority need not necessarily be “approved” by the Commission. When granting “approval” under s 186(1), the Fair Work Commission is not constrained by common law contractual principles as to the “apparent or ostensible authority” of an agent as at the time at which an agreement may have been “made” for the purposes of s 182. When exercising the power conferred by s 186(1) it is concluded that the Fair Work Commission can look afresh – if necessary – as to the authority purportedly being exercised by an agent and can itself determine the authority in fact being exercised by an agent and by reference to the facts known as at the time when approval is being sought.

52    The Deputy President was in error in waiving compliance with the requirements to be met pursuant to s 185(2) and in error in granting approval.

53    The Deputy President, it is respectfully concluded, erred in the manner in which he exercised the power conferred by s 186 of the Fair Work Act. The Full Bench was in error in refusing leave to appeal and, in the circumstances of the present case, not allowing the appeal.

CONCLUSIONS

54    It is concluded that Mr Subramanian had no “apparent or ostensible authority” to negotiate any enterprise agreement with the employees prior to the decision of those employees to approve those terms and conditions. It follows that there never was any “agreement” which had been concluded with Kaizen Hospitals. Certainly, Kaizen Hospitals had never adopted the role of its own “bargaining representative” for the purposes of reaching any agreement.

55    It is further concluded that the Deputy President erred in granting approval to the agreements when it was then known that Mr Subramanian had in fact no authority and had “acted without the approval of IPHoA and the Board”.

56    It would follow that the decisions of the Deputy President and the Full Bench should be set aside.

THE ORDERS OF THE COURT ARE

1.    The parties are to bring in Short Minutes of Orders to give effect to these reasons within 14 days.

Associate:

Dated:    2 May 2014