Federal Court of Australia

Boulos v MRVL Investments Pty Ltd (No 2) [2021] FCA 309

ORDERS

THE COURT ORDERS THAT:

1.    The parties confer with a view to providing within 14 days a joint position articulating the appropriate answers to the separate question.

2.    No order as to costs.

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

REASONS FOR JUDGMENT

THAWLEY J:

1    On 27 August 2020, the Court ordered that the following question be heard separately from any other question in the proceedings:

The questions arising on paragraphs 3 to 12 of the Defence (other than paragraphs 10D and 10E) and paragraphs 1 to 6 of the Reply.

2    The underlying dispute concerns whether the Hospitality Industry (General) Award 2010 (the Award) or the collective agreement as lodged with the Workplace Authority Director (Director) on 21 December 2007 (the Merivale Agreement) and varied by an undertaking dated 11 June 2009 applied to the employment of the applicant and group members. The answers to the separate question will not resolve that issue definitively, because even if certain actions taken by the Director were without power, as the applicant contends, residual questions will remain concerning what the consequences are in terms of validity or effect of those actions, and what (if any) discretionary relief should be granted.

THE BACKGROUND FACTS AND THE ISSUES

3    On 21 December 2007, the Merivale Agreement was lodged with the Director. Under Div 5A of Pt 8 of the Workplace Relations Act 1996 (Cth) as it stood immediately before 28 March 2008 (“Pre-transition WR Act”), the Director was required to decide whether he or she was satisfied that the Merivale Agreement passed the “fairness test” prescribed by the Pre-transition WR Act under s 346M.

4    On 28 March 2008, before any step had apparently been taken by the Director in relation to the Merivale Agreement, the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 (Cth) (Transitional Act) came into force. The Transitional Act repealed and replaced Div 5A of Pt 8 of the Pre-transition WR Act, so as to replace the “fairness test” with a “no-disadvantage test”. Transitional arrangements were put in place for existing Australian workplace agreements (AWAs) (by Schedule 7A) and existing collective agreements or “pre-transition collective agreements” (by Schedule 7B). There was no dispute that the Merivale Agreement was a “pre-transition collective agreement”.

5    On 15 December 2008, the Director notified Merivale that the Merivale Agreement did not pass the fairness test (First Fairness Test Decision).

6    On 29 December 2008, Harmers (solicitors acting for Merivale) wrote to the Director, providing an undertaking to vary the Agreement.

7    The first issue in dispute between the parties on the separate question concerns the operation of the transitional arrangements and whether those arrangements were such that Merivale was too late to undertake to vary the agreement.

8    On 30 January 2009, the Director sent a letter to Merivale, notifying it that the Merivale Agreement lodged on 21 December 2007, as varied by the undertaking given on 29 December 2008, did not pass the fairness test (First Undertaking Decision).

9    In February and March 2009, Harmers wrote to the Director, among other things requesting a reassessment of the matter under the Director’s own internal processes. The Director had issued a fairness test policy guide which stated that the Director had the discretion to determine whether or not to reconsider a fairness test assessment, and which outlined the circumstances in which the Director would exercise that discretion.

10    In its letter dated 30 March 2009, Harmers asserted that the Director’s approach to the assessment of the Merivale Agreement gave rise to a number of difficulties, including that:

    it took the Director twelve months to come to a view as to whether or not the Merivale Agreement passed the fairness test;

    Merivale then had only eight business days to respond to the Director’s First Fairness Test Decision;

    the Director’s First Fairness Test Decision gave no explanation as to why the Merivale Agreement had not passed the fairness test, and as to how the proposed wage rates that would allow the Merivale Agreement to pass the fairness test had been calculated, such that Merivale could properly consider its options.

11    On 4 June 2009, the Acting Director wrote to Harmers purporting to rescind the First Fairness Test Decision (Rescission Decision). The letter included the statement:

Your request to review the assessment of the agreement as varied by undertaking has been finalised. The undertaking submitted on 29 December 2008 was not sufficient for the [Merivale] Agreement to pass the fairness test. However, you outline significant administrative issues experienced by your client and this provides grounds to rescind the original notice advising you that the [Merivale] Agreement does not pass the fairness test …

12    On 10 June 2009, the Director wrote to Harmers, stating that the collective agreement lodged by Merivale on 21 December 2007 did not meet the fairness test (Second Fairness Test Decision).

13    On 11 June 2009, Harmers provided a new undertaking to vary the Merivale Agreement.

14    On 12 June 2009, the Director wrote to Harmers, stating that the Merivale Agreement as amended by the undertaking of 11 June 2009 passed the fairness test (Second Undertaking Decision).

15    Merivale contends that the Rescission Decision validly revoked or rescinded the First Fairness Test Decision and that the subsequent steps culminating in the Second Undertaking Decision meant that the Merivale Agreement as amended by the undertaking on 11 June 2009 passed the fairness test.

16    The second issue in dispute between the parties is whether the Director had power to make the Rescission Decision to revoke the notice of 15 December 2008 or the First Fairness Test Decision which was thereby notified. Merivale’s position is that the notice and/or decision could be revoked with the consequence that, pursuant to the Second Undertaking Decision, the Merivale Agreement as varied by the undertaking lodged on 11 June 2009 applied to the employment of the applicant and group members.

17    The third issue is Merivale’s alternative contention that if the impugned decisions are affected by legal error or beyond power, they remain valid or should be treated as valid unless and until set aside by the Court in the exercise of its discretion. The issue of whether the Court should exercise its discretion is not raised by the separate question. That question would have involved substantial factual argument and discovery.

FIRST ISSUE

18    The first question that arises is whether the Merivale Agreement was capable of variation under the provisions of Div 5A of the Pre-transition WR Act, having regard to amendments to the Workplace Relations Act 1996 (Cth) (WR Act) after the Merivale Agreement was lodged with the Director.

19    At the time that the Merivale Agreement was lodged in December 2007, Div 5A of Pt 8 of the Pre-transition WR Act required the Director to decide whether the Merivale Agreement passed the “fairness test” prescribed by the WR Act. The scheme established under Div 5A was to the following effect:

    If an employer and employees approved a collective agreement in the appropriate manner (s 340), the collective agreement had to be lodged by the employer within 14 days after approval in accordance with s 344: s 342. (Section 347 in Div 6 had the effect that the collective agreement comes into operation on the day it was lodged.)

    The Director had to determine under s 346M whether certain collective agreements (of which the Merivale Agreement was one) passed the fairness test: s 346E(2).

    The Director had to give written notice of that fact to the employer: s 346J(1)(a).

    If the Director was not satisfied that an agreement passed the fairness test in s 346M, the Director was required to notify the employer, and provide advice as to how the agreement could be varied to pass the fairness test: s 346P.

    The employer could lodge a variation of the workplace agreement by giving to the Director a written undertaking in relation to the collective agreement: s 346R(2)(b).

    If that occurred, the Director was required to decide whether the agreement as varied passed the fairness test: s 346U.

    If the agreement (as varied) passed the fairness test, then it continued in operation: s 346X. If the agreement (as varied) did not pass the fairness test, then it ceased to operate and the employees were entitled to compensation: s 346W. An employee was entitled to compensation in respect of periods that a workplace agreement that did not pass the fairness test was in operation: ss 346X, 346W and 346ZD(1).

    An employer who received a notice under ss 346J, 346P or 346U had to take reasonable steps to ensure that all persons whose employment was subject to the collective agreement receive a copy of the notice.

20    When the Transitional Act came into force on 28 March 2008, transitional arrangements were put into place with respect to existing agreements. In summary, Merivale submitted that, pursuant to the transitional arrangements made by the Transitional Act, the provisions of Div 5A of Pt 8 of the Pre-transition WR Act applied to the Merivale Agreement and it was capable of variation by undertaking pursuant to Div 5A. The applicant submitted that cl 3 of Sch 7B prevented the variation of an agreement by undertaking pursuant to Div 5A.

21    Schedule 7B of the Transitional Act included:

Schedule 7B—Transitional arrangements for existing collective agreements

1     Definitions

In this Schedule:

fairness test means the test set out in section 346M of the pre-transition Act.

pre-transition Act means this Act as in force immediately before the commencement of this Schedule.

pre-transition collective agreement means a collective agreement made before the commencement of this Schedule that:

(a)    was lodged with the Workplace Authority Director before that commencement; or

(b)     is lodged, in accordance with section 344 of the pre-transition Act, within 14 days after that commencement;

but does not include a collective agreement made after that commencement.

2    Continuing operation of fairness test and protected award conditions to pre-transition collective agreements

(1)    Subject to this Schedule, the following provisions of the pre-transition Act continue to apply in relation to a pre-transition collective agreement, despite the repeals and amendments made by the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008:

(a)    paragraph 150B(1)(f);

(b)    subsection 164A(7);

(c)    Division 5A of Part 8;

(ca)    subsections 347(1) and (2);

(d)    paragraphs 347(4)(ba) and (bb);

(e)    subsections 347(8A) and (9A);

(f)    section 354;

(g)    section 355;

(h)    paragraph 367(2)(aa);

(i)    paragraphs 407(2)(jb) to (jd);

(j)    sections 416 to 418;

(k)    subsection 506(5);

(l)    any other provision relating to the operation of the provisions mentioned in the preceding paragraphs.

(2)    Regulations made under the pre-transition Act, to the extent that they relate to the provisions mentioned in subclause (1), continue to apply in relation to a pre-transition collective agreement.

(3)    To the extent that provisions of the pre-transition Act, and the regulations made under the pre-transition Act, continue to apply in relation to a pre-transition collective agreement, the corresponding provisions of this Act do not apply to the agreement.

(4)    The provisions of this Act (other than the corresponding provisions referred to in subclause (3)) apply in relation to a pre-transition collective agreement as if references in those provisions to the no-disadvantage test were references to the fairness test.

22    Paragraph 150B(1)(f) – which is referred to in cl 2(1)(a) – provided:

150B Functions of Workplace Authority Director

(1)    The functions of the Workplace Authority Director are as follows:

…

(f)    to decide under Division 5A of Part 8 whether workplace agreements pass the fairness test; …

23    Merivale submitted that, reading cl 2(1)(a) in combination with cl 2(1)(c), one should conclude that the legislature had intended to keep the whole fairness test regime alive for pre-transition collective agreements.

24    Clause 3 of Schedule 7B provided:

3    Application of this Schedule to variations of pre-transition collective agreements

Clause 2 of this Schedule does not apply in relation to a variation of a pre-transition collective agreement unless the variation:

(a)    was lodged with the Workplace Authority Director before the commencement of this Schedule; or

(b)    is made before that commencement and is lodged, in accordance with section 377 of the pre-transition Act, within 14 days after that commencement.

25    Merivale submitted that the effect of cll 2 and 3 was that all of the provisions of Div 5A applied to the process of assessment of the Merivale Agreement by the Director, including the provisions relating to variation by undertaking. Merivale submitted that cl 3 does not apply to the variation of an agreement pursuant to Div 5A (namely under s 346R(2)(b)); rather, it was directed to variations under Div 8 (entitled “Varying a workplace agreement”).

26    The applicant submitted that cl 3 was directed to any variations, whether they be variations under Div 8 or variations under s 346R(2)(b) (variations by way of undertakings to vary).

27    For the reasons given below, Sch 7B should be understood as preserving the whole fairness test regime for pre-transition collective agreements. Clause 3 was not intended to switch off that part of Div 5A which allowed for variation by undertakings to vary provided that the relevant collective agreement was a pre-transition collective agreement or that there was a Div 8 variation which had been lodged before 28 March 2008 or made before that time and lodged within 14 days after 28 March 2008.

28    It is clear from the heading of cl 2 that it was directed to “continuing” the operation of the fairness test (Div 5A) and protected award conditions (Div 7) to pre-transition collective agreements. The only mechanism by which Div 5A authorised a collective agreement to be varied to meet a decision that an agreement did not pass the fairness test was by written undertaking to vary under s 346R(2)(b). The procedure under Div 8 was only open for AWAs, not collective agreements. Section 346R(2) provided:

(2)     The employer who is bound by the workplace agreement may:

(a)     in the case of an AWA—lodge a variation of the AWA with the Workplace Authority Director; or

(b)     in the case of an AWA or a collective agreement—lodge a variation of the workplace agreement by giving to the Workplace Authority Director a written undertaking in relation to the AWA or collective agreement.

29    It is s 346(2)(b) which is relevant in the present case, because paragraph (a) applied only to an AWA. Paragraph (b) permits an employer to “lodge a variation … by giving … a written undertaking in relation to the … collective agreement”. Such a variation comes into operation when the undertaking is given to the Director in accordance with s 346S: s 346T(2).

30    Section 346R(6) provided:

(6)     For the purposes of paragraph (2)(b), Division 8 does not apply to an undertaking given to the Workplace Authority Director in relation to an AWA or a collective agreement.

31    Clause 3 recognises that there is a possibility that there was, quite separately to any existing fairness test issue relevant to a pre-existing collective agreement, a Div 8 variation to such a collective agreement which variation had been lodged with the Director before 28 March 2008 or made before that time. If there was, the collective agreement as varied might need to be tested for fairness by reason of s 346F(2). Clause 3 was intended to achieve the result that Div 5A only continued to operate with respect to such a variation (a Div 8 variation) if it was lodged before 28 March 2008 or it was made before that day and lodged within 14 days after 28 March 2008. This would prevent a Div 8 variation made after 28 March 2008 being able to take advantage of the pre-existing regime even if it were lodged within 14 days after 28 March 2008.

32    The proper construction of Sch 7B must take account of the whole statutory context, in particular that furnished by Div 5A, Div 8 and Sch 7A. It is reasonably clear from an examination of the whole of those – although it has to be acknowledged that it could have been clearer – that it was intended that, for pre-transition workplace agreements, the fairness test process should continue. This is was achieved, so far as concerned AWAs, by Sch 7A of the Transitional Act, which included:

Schedule 7A—Transitional arrangements for existing AWAs

1    Definitions

(1)    In this Schedule:

AWA has the meaning that was given by sections 4 and 326 of the pre-transition Act, but does not include:

(a)    an agreement made after the commencement of this Schedule; or

(b)    a pre-reform AWA within the meaning of Schedule 7.

pre-transition Act means this Act as in force immediately before the commencement of this Schedule.

(2)    For the purposes of this Schedule, an agreement ceases to be an AWA unless:

(a)    it was lodged with the Workplace Authority Director before the commencement of this Schedule; or

(b)    it is lodged, in accordance with section 344 of the pre-transition Act, within 14 days after that commencement.

(3)    Paragraph 333(a) and subsection 340(1) of the pre-transition Act apply to working out, for the purposes of the definition of AWA in subclause (1), when an agreement was made.

2    Continuing operation of AWAs

(1)    Subject to this Schedule, the pre-transition Act continues to apply in relation to an AWA despite the repeals and amendments made by the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008.

(2)    However, subclause (1) does not apply in relation to the following provisions of the pre-transition Act:

(a)    the definition of Australian workplace agreement, or the definition of AWA, in subsection 4(1);

(c)    section 467;

(d)    section 399;

(e)    Part 11;

(f)    Schedule 6;

(g)    Schedule 7;

(h)    Schedule 8;

(i)    Schedule 9;

(j)    any other provision to the extent that it relates to the operation of the provisions mentioned in the preceding paragraphs.

Note:     The application of Schedules 6, 7, 8 and 9 to AWAs is dealt with in those Schedules.

(3)    Regulations made under the pre-transition Act continue to apply in relation to an AWA, except to the extent that they relate to the provisions mentioned in subclause (2).

(4)    To avoid doubt, nothing in this Schedule permits an agreement made after the commencement of this Schedule to be treated as an AWA.

…

5    Restriction on varying AWAs

(1)    Despite Division 8 of Part 8 of the pre-transition Act, a variation of an AWA cannot be made after the commencement of this Schedule.

Note:     Under section 368 of the pre-transition Act, a variation of an AWA was made when it was approved in accordance with section 373 of the pre-transition Act.

(2)    Despite subsection 380(2) of the pre-transition Act, a variation of an AWA comes into operation only if:

(a)    it was lodged with the Workplace Authority Director before the commencement of this Schedule; or

(b)    it is lodged, in accordance with section 377 of the pre-transition Act, within 14 days after the commencement of this Schedule.

  (3)    However, this clause does not prevent:

(a)    variation of an AWA in circumstances referred to in paragraph 367(2)(aa), (b), (c) or (d) of the pre-transition Act; or

(b)    the application of subsection 380(2) of the pre-transition Act in relation to a variation of an AWA in any of those circumstances.

33    The effect of cll 5(1) and (3) of Sch 7A, read with the various provisions to which those clauses refer, including s 367(2)(aa), is that Sch 7A prevented the making of Div 8 variations after 28 March 2008 unless the Div 8 variation was a variation made under s 346R(2)(a), namely a variation provided in order to seek to pass the fairness test. The provisions do not operate to require such a variation to have been made or lodged before or within 14 days after 28 March 2008.

34    There is no good reason why a variation under Div 8 would be permitted to meet a decision that an existing AWA did not pass the fairness test (s 346R(2)(a)), but that a Div 5A undertaking to vary a workplace agreement to meet a decision that the agreement did not pass the fairness test would not be permitted after 28 March 2008 (or within 14 days after): s 346R(2)(b).

35    Irrespective of the terms of Sch 7A, I would have reached the same conclusion as to the proper construction of cl 3 of Sch 7B. The applicant’s construction, if correct, would mean that parts of Div 5A continued to operate, but other parts did not. For example, by [9] of his Amended Statement of Claim, the applicant contends that the Merivale Agreement ceased to operate by reason of s 346R(3)(a): Merivale did not lodge a variation under s 346R(2)(b) within time because it had to lodge a variation by 28 March 2008 (or within 14 days after), which it could not have done because it had not been notified by the Director that it had failed the fairness test. As Merivale submitted, it is unlikely that the legislature intended Div 5A to continue to operate in this fractured way, with some provisions operating and others not.

36    Further, the applicant’s construction, if correct, would mean that – where the Director was assessing whether a collective agreement lodged at any time before 28 March 2008 passed the fairness test but had not reached a decision by that time – the relevant employer could never pass a failed fairness test because the employer could never rely upon a variation made within time. The Director would still have to notify the employer of the Director’s decision that the fairness test had not been passed and the notification would have to contain advice about how the test could be passed: s 346P(2) and (3)(a). On the applicant’s construction it could not be passed. This construction is unlikely and would not readily be imputed to the legislature.

SECOND ISSUE

37    The second issue is whether the Director had power to rescind or revoke the decision that the Merivale Agreement did not pass the fairness test. As noted above, the letter from the Acting Director dated 4 June 2009 in fact informed Merivale that a decision had been made to revoke the original notice that the fairness test had not been passed. That was the notice dated 15 December 2008.

38    Merivale submitted that, under s 33(3), or alternatively s 33(1), of the Acts Interpretation Act 1901 (Cth) (AI Act), the Director had power to revoke and remake the earlier decision that the Merivale Agreement did not meet the fairness test or the notice to that effect. Sections 2, 33(1) and (3) of the AI Act (as they stood at the time of the Rescission Decision) provided:

2     Application of Act

(1)    Except so far as the contrary intention appears, this Act applies to all Acts, including this Act.

(2)    This Act shall bind the Crown.

…

33    Exercise of powers and duties

(1)    Where an Act confers a power or imposes a duty, then, unless the contrary intention appears, the power may be exercised and the duty shall be performed from time to time as occasion requires.

…

(3)    Where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws) the power shall, unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

39    Merivale submitted that:

(1)    the Acting Director validly revoked the First Fairness Test Decision by the Rescission Decision on 4 June 2009;

(2)    the effect of the Rescission Decision was that the Merivale Agreement as lodged commenced to operate again, but only prospectively, as from the date of the Rescission Decision;

(3)    it remained to be determined whether the Merivale Agreement as lodged passed the fairness test: s 346E(2) and s 346M;

(4)    by the Second Fairness Test Decision, the Director provided notification that the Merivale Agreement did not meet the fairness test: s 346P;

(5)    Merivale was then entitled to lodge a variation of the Merivale Agreement by undertaking, pursuant to s 346R(2)(b), as it did on 11 June 2009;

(6)    that undertaking came into effect when it was lodged: s 346T(2);

(7)    the Director was required to decide whether the Merivale Agreement, as varied on 11 June 2009, passed the fairness test: s 346U(1));

(8)    by the Second Undertaking Decision, the Director decided that the Merivale Agreement, as varied on 11 June 2009, passed the fairness test: s 346U(2);

(9)    the effect of that decision was that the agreement as varied continued in operation: s 346X(a).

40    The applicant submitted that s 346ZB of the Pre-transition WR Act prevented the Merivale Agreement from operating, once it ceased to operate and that s 346ZB prevented what might otherwise be the operation of s 33 of the AI Act because it evidenced a contrary intention for the purposes of s 2(1) of the AI Act. Section 346ZB provided:

346ZB Operation of workplace agreements

A workplace agreement that has ceased to operate because it does not pass the fairness test can never operate again.

41    It is convenient to address the applicant’s position first given that, if it is correct, it would not matter what otherwise might be the operation of s 33(1) or (3): s 2(1) of the AI Act.

42    Section 346ZB has not been the subject of any judicial consideration. Merivale submitted that s 346ZB has nothing to say about the operation of an agreement in circumstances where the decision that the agreement does not pass the fairness test is revoked. Merivale submits that, if s 346ZB were read literally, a workplace agreement could never operate again even if the decision that the agreement did not pass the fairness test were set aside by a court. According to Merivale, that plainly cannot be the case and, once it is accepted that s 346ZB does not prevent an agreement from operating, where a decision that the agreement did not pass the fairness test is set aside by a court, it follows that it also does not prevent an agreement from operating again where a decision that the agreement did not pass the fairness test is otherwise revoked. Section 346ZB no longer applies in those circumstances because the agreement is no longer an agreement that does not pass the fairness test.

43    Merivale submitted that, having regard to its context, s 346ZB has a narrower operation than at first appears from the ordinary meaning of the words. Merivale submitted that the provisions which precede s 346ZB (namely ss 346Y to 346ZA) deal with the employment arrangements that apply if a workplace agreement ceases to operate because it does not pass the fairness test and that, in general terms, the effect of those provisions is that the employer and employee become bound by the instrument or instruments that would have applied, but for the agreement that has now been found not to pass the fairness test (see ss 346Y(2) and 346YA(2)). In some circumstances, that has the effect that an agreement that has ceased to operate will revive. Section 346ZB is directed towards whether an agreement that does not pass the fairness test can operate again in that specific context. Merivale contended that this construction is further supported by the fact that there are express exceptions to the operation of s 346ZB contained in those provisions – see: ss 346Y(3) and 346YA(4).

44    Merivale also submitted that there is no good reason to treat the statutory scheme as having been intended to be entirely inflexible, admitting no possibility of mistakes.

45    I do not accept this argument. The concept of a workplace agreement ‘ceasing to operate’ is central to the operation of Div 5A and, more specifically, to the operation of Subdivision D entitled “Consequences if a workplace agreement does not pass the fairness test”. The concept is one used throughout the Subdivision. Section 346ZB is in Div 5A, Subdivision D. It provides the consequence if “a workplace agreement ceases to operate”. Section 346R(3), for example, provides:

(3)     If the employer does not take the action referred to in subsection (2) within the relevant period in relation to the workplace agreement, then at the end of that period:

(a)     the workplace agreement ceases to operate; and

(b)     the employee or employees whose employment was at any time subject to the workplace agreement are, after the end of the relevant period in relation to the workplace agreement, entitled to any compensation payable to the employee or employees under section 346ZD.

46    As can be seen, once “the workplace agreement ceases to operate”, s 346R(3)(b) provides that an employee whose employment was subject to the workplace agreement will be entitled to compensation. It is plain that s 346ZB was intended to state the consequences if a “workplace agreement ceases to operate” by reason of s 346R(3)(a). The fact that, upon the workplace ceasing to operate, employees became entitled to compensation also tells against a power to rescind. It is not a complete answer to this fact that, because a decision to revoke is only prospective in operation (see Minister for Indigenous Affairs v MJD Foundation Ltd (2017) 250 FCR 31 at [42]-[47] (Perram J)), the employee remains entitled to compensation.

47    Another example – perhaps closer to the applicant’s heart – is s 346W, which provided:

346W Effect if varied agreement does not pass fairness test—agreement in operation

If the Workplace Authority Director decides under subsection 346U(1) that a workplace agreement as varied does not pass the fairness test:

(a)    the workplace agreement ceases to operate on the date of issue specified in the notice under that section in respect of the workplace agreement; and

(b)    the employee or employees whose employment was at any time subject to the workplace agreement are, on and from the date of issue specified in the notice under section 346U in relation to the workplace agreement, entitled to any compensation payable to the employee or employees under section 346ZD.

48    Again, it is plain that s 346ZB was intended to state the consequences if “a workplace agreement ceases to operate” by reason of s 346W(a).

49    The operation of s 346ZB would not have prevented the coming into existence of a new workplace agreement. But it does prevent the one which had been lodged from ever operating again. There is nothing about the statutory scheme or the structure of the provisions which suggests that s 346ZB should not be read in accordance with its ordinary meaning. Section 346ZB supplies the consequences if a workplace agreement “ceases to operate”. The provision should be given its natural and ordinary meaning.

50    Further, in highly regulated statutory schemes such as this, it is usual to see the consequences of particular events, and the methods (if any) by which those events can be reviewed or undone, fully set out. If it were intended that fairness test decisions could be revoked and remade one would expect that to have been dealt with expressly in the legislation given the highly regulated structure shown in Div 5A. Merivale submitted that s 33 of the AI Act works hand in hand with the statute and supplies the missing power. I accept that would be the case if Div 5A had not indicated that it was not intended that there be a power to revoke or rescind a fairness test decision.

51    In my view, Div 5A of the Pre-transition WR Act, read in context, indicates that the legislature should be taken to have intended that:

(1)    If an employer did not take action under s 346R(2), within the relevant 14 day period (s 346R(7)), then – at the end of the period – the workplace agreement “ceases to operate” and “can never operate again”: s 346R(3)(a); s 346ZB;

(2)    once a decision was made under s 346U that an agreement varied under s 346R(2)(b) did not meet the fairness test, then the varied agreement “ceases to operate” and “can never operate again”: s 346W(a); s 346ZB.

52    This reveals an intention that there not be power on the part of the Director to rescind a decision that a workplace agreement does not pass the fairness test.

53    It follows that it is not necessary to consider whether, if the contrary intention had not appeared in the Pre-transition WR Act, s 33(3) or (1) would have operated such that the Director could revoke and remake a fairness test decision under Div 5A of the Pre-transition WR Act.

54    Nevertheless, I will state my views briefly in relation to s 33(3). In relation to s 33(1), Mortimer J (with whom Perry J agreed) expressed an obiter view in MJD which would have the result that Merivale’s argument should be rejected. Perram J expressed a view about the operation of s 33(1), embraced by Merivale, which would have the result that Merivale’s argument should be accepted. Given that I have concluded that there is a contrary indication such that s 33(1) of the AI Act cannot apply (by reason of s 2(1) of the AI Act), and that both sides of the argument are fully set out in MJD, I prefer to express a view about that issue in a case where it is necessary to be decided.

55    Merivale submitted that the relevant power for the purposes of s 33(3) was one furnished by a combination of ss 346E(2), 346M and 346P. This power was, in Merivale’s submission, a power to issue an instrument, namely a notice under s 346P. In my view, the better construction of the provisions is that the relevant power is to make a decision about whether a collective agreement passes the fairness test: s 346E(2). The Director must notify the decision reached by reason of s 346P, and that notification has a series of consequences, including setting the time for the purposes of s 346R(2)(b) for lodging a variation by way of undertaking to vary: s 346P(3), (5); s 346R(7). The fact that the notification has legal consequences does not, of itself, imply that the notification is to be regarded as part of the relevant power. The power here is to determine whether the fairness test was passed. Once exercised there was an obligation to notify the result - cf: Flaherty v Secretary, Department of Health and Ageing (2010) 184 FCR 564 at [58]-[63]. This case is distinguishable from one in which, for example, the power is to grant a licence which pursuant to the power conferred will create legal rights and liabilities.

56    Merivale also submitted that s 33(3) furnished power to revoke the notice under s 346P, as opposed to the decision under s 346E(2). The problem with this submission is that, assuming that were correct, that would leave in place the decision under s 346E(2). The Director was under a statutory obligation to notify that decision: s 346P(2). It would be a nonsense to conclude that there is a power to revoke a notification of a decision which cannot itself be revoked and which the statute expressly requires be notified.

57    It follows that the Rescission Decision and the subsequent decisions were not authorised and were beyond power.

THIRD ISSUE

58    Merivale submitted that, even if the Director did not have power to revoke and remake a decision, the decisions should nevertheless be taken to have operative effect unless and until set aside by a court. The Merivale Agreement as varied by undertaking lodged on 11 June 2009 should therefore be considered to have applied to the employment of the applicant and group members unless and until the Director’s decisions are set aside.

59    Merivale’s first argument is that a decision affected by jurisdictional error is not necessarily to be considered a nullity for all purposes. A “decision made outside jurisdiction is not necessarily to be regarded as a ‘nullity’, in that it remains a decision in fact which may yet have some status in law”: Hossain v Minister for Immigration and Border Protection (2018) 264 CLR 123 at [24] per Kiefel CJ, Gageler and Keane JJ. The factual and legal consequences of a decision affected by jurisdictional error depend on the statute in question: Jadwan Pty Ltd v Secretary, Department of Health and Aged Care (2003) 145 FCR 1 at [42].

60    Merivale referred to NSW v Kable (2013) 252 CLR 118 at [21] and [22] (French CJ, Hayne, Crennan, Kiefel, Bell and Keane JJ) (footnotes omitted):

It is necessary to exercise great care in using words like “void”, “voidable”, “irregularity” and “nullity” in connection with the issues that arise in this matter ... More often than not, each word was used in a way which expressly or impliedly sought to convey a meaning identified by its opposition to another word (void versus voidable, nullity versus irregularity). Used in that way, each of the words, void, voidable, nullity and irregularity, suggests that the whole of the relevant universe can be divided between two realms whose borders are sharply defined and completely closed. None is used in a way which admits (or readily appears to admit) of the possibility that the legal effect to be given to an act affected by some want of power may require a more elaborate description which takes account not only of who may complain about the want of power, but also of what remedy may be given in response to the complaint.

The difficulties associated with using words like “void” and “voidable” in connection with administrative actions have long been recognised. Writing in 1967, H W R Wade said that:

“[T]here is no such thing as voidness in an absolute sense, for the whole question is, void against whom? It makes no sense to speak of an act being void unless there is some person to whom the law gives a remedy. If and when that remedy is taken away, what was void must be treated as valid, being now by law unchallengeable. It is fallacious to suppose that an act can be effective in law only if it has always had some element of validity from the beginning. However destitute of legitimacy at its birth, it is legitimated when the law refuses to assist anyone who wants to bastardise it. What cannot be disputed has to be accepted.”

61    Merivale submitted that a number of features of the scheme in Div 5A indicate that decisions of the Director should not be considered automatically to be a nullity, even if affected by jurisdictional error. The subject matter of the statutory scheme (that is, employee entitlements) is one that has significant financial implications, and therefore requires certainty for employers and employees. It follows that employers and employees must be able to rely on the decisions of the Director having effect in arranging their affairs. This point was said to be reinforced by the importance placed in the statutory scheme on notification. The Director was required to give notification to an employer as to whether a collective agreement passed the fairness test. Significantly, a notice under s 346P in respect of an initial decision as to whether an agreement passed the fairness test was required to state that compensation may be payable by the employer to employees (s 346P(3)(b)) and a notice under s 346U in respect of whether an agreement passed the fairness test after having been varied by undertaking was expressly required to state either that the agreement continued in operation (if it passed the fairness test: see s 346U(4)(b)) or that it ceased to operate (if it still did not pass the fairness test: see s 346U(4)(c)). The purpose of those provisions was to ensure notification not only of the Director’s decisions, but also of the effect of those decisions. On Merivale’s submission, that notification regime would be defeated if those notices were found to be incorrect because a decision of the Director affected by jurisdictional error was considered to be a nullity.

62    Merivale also noted that the employer was required to give a copy of such a notice received from the Director to all persons whose employment was subject to that agreement: s 346ZE. Merivale submitted that it was clearly intended that both employers and employees were to be able to rely on those notices in their dealings with each other. If a decision of the Director was a nullity and those notices were no longer correct, that would depart from the common understanding between employers and employees pursuant to those notices.

63    Merivale’s second argument was that, even if the Second Undertaking Decision was beyond power and of no legal effect, that does not mean that the applicant is necessarily able to obtain relief from this Court based on that premise. Merivale noted that the remedies in judicial review proceedings are discretionary and that the remedial discretion also applies in proceedings that involve a collateral challenge to the validity of administrative action. The reason for such an approach is to promote coherence between administrative law doctrines and the imposition of monetary compensation: Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority trading as Seqwater (No 22) [2019] NSWSC 1657 at Chapter 5 [71] (Beech-Jones J), citing Precision Products (NSW) Pty Limited v Hawkesbury City Council (2008) 74 NSWLR 102 at [119] (Allsop P). Were it otherwise, Merivale submitted, governmental decisions would be rendered contingently infirm for so long as some person could make some legal claim relating to another’s actions, which actions were premised on a governmental decision.

64    Merivale submitted that, in determining whether the Award or the Merivale Agreement applied to the applicant and group members’ employment, it is necessary for the Court to consider the validity of the Rescission Decision, Second Fairness Test Decision and Second Undertaking Decision. Insofar as the present proceedings involve a collateral challenge to the validity of those decisions, the Court’s remedial discretion therefore applies.

65    Merivale submitted that the two argument lead to slightly different conclusions but to the same net position:

(1)    On the first argument: even if the Director’s decisions were affected by error, they are not a nullity without any legal effect. They remain valid unless and until set aside. Whether they should be set aside raises discretionary considerations.

(2)    On the second argument: even if the impugned decisions were nullities, that does not mean the applicant is now entitled to any relief based on that premise. Whether or not any such relief should be granted raises discretionary considerations.

66    Merivale submitted, and the applicant agreed, that the question whether the Court should exercise its discretion to grant relief is outside the scope of the separate question. Merivale’s point was that the answer to the separate question must take account of the two arguments to which reference has just been made: the applicant is not entitled to an unqualified answer which finds that the impugned decisions were invalid and nullities with no legal effect, or that it is the Award rather than the Merivale Agreement which should now be taken to have governed the employment relationship in issue.

67    In my view, the Rescission Decision, the Second Fairness Test Decision and the Second Undertaking Decision were beyond power. The consequences of that in terms of whether the Merivale Agreement or the Award applied and the relief this Court would grant at a final hearing, in particular having regard to the matters raised in paragraphs 10D and 10E of the Defence, remain to be determined.

CONCLUSION

68    The parties should confer with a view to providing a joint position articulating the appropriate answers to the separate question.

Associate:

Dated:    30 March 2021