Comalco Aluminium (Bell Bay) Limited v The Honourable Deidre O'Connor, President; The Honourable John MacBean and the Honourable Colin Polites, Senior Deputy Presidents; The Honourable Simon Williams, Deputy President and Mr Robert Merriman, Commissioner, Members of the Australian Industrial Relations Commission - First Respondents and The Australian Workers Union - Federation of Industrial, Manufacturing and Engineering Employees Amalgamated Union; Automotive, Food, Metals and Engineering Union and Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union

Original Word Document (138 KB)

CatchwordsINDUSTRIAL LAW - Industrial disputes - Arbitration - Interim paid rates - Whether Commission was entitled to exercise arbitration powers - award made - Provisions of Act concerning paid rates awards - Meaning of "paid rates award" - Whether Act required any award made in settlement of disputes to be a paid rates award - Constitutional validity of ss.170UB and 170UC of the Industrial Relations Act - Whether wages and conditions of employees in the industry "have customarily been determined by a paid rates award" - Whether earlier award was a paid rates award - Effect of Commission's error as to classification of award - Jurisdictional error - Effect of privative section in Act.

Industrial Relations Act 1988, ss.4, 5, 90AA, 102, 103, 104, 105, 107, 108, 111, 113, 126, 143, 150, 170QH, 170SA, 170TA, 170UA, 170UB, 170UC, 170UD, 170UE, 412 and 470.

Judiciary Act 1903, ss.44 and 78B.

COMALCO ALUMINIUM (BELL BAY) LIMITED v. THE HONOURABLE DEIDRE O'CONNOR, PRESIDENT; THE HONOURABLE JOHN MacBEAN AND THE HONOURABLE COLIN POLITES, SENIOR DEPUTY PRESIDENTS; THE HONOURABLE SIMON WILLIAMS, DEPUTY PRESIDENT and MR ROBERT MERRIMAN, COMMISSIONER, MEMBERS OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION - First Respondents

and

THE AUSTRALIAN WORKERS UNION - FEDERATION OF INDUSTRIAL, MANUFACTURING AND ENGINEERING EMPLOYEES AMALGAMATED UNION; AUTOMOTIVE, FOOD, METALS AND ENGINEERING UNION AND COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION - Second Respondents

NO. VI.1213 of 1995

CORAM: WILCOX CJ, KEELY J & MOORE J

PLACE: MELBOURNE

DATE: 27 SEPTEMBER 1995

Orders

IN THE INDUSTRIAL RELATIONS COURT)

OF AUSTRALIA ) No. VI.1213 of 1995

VICTORIAN DISTRICT REGISTRY )

ON REMITTAL FROM THE HIGH COURT OF AUSTRALIA

BETWEEN: COMALCO ALUMINIUM (BELL BAY) LIMITED

Applicant

AND: THE HONOURABLE DEIDRE O'CONNOR, PRESIDENT; THE HONOURABLE JOHN MacBEAN AND THE HONOURABLE COLIN POLITES, SENIOR DEPUTY PRESIDENTS; THE HONOURABLE SIMON WILLIAMS, DEPUTY PRESIDENT and MR ROBERT MERRIMAN, COMMISSIONER, MEMBERS OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

First Respondents

and

Second Respondents

CORAM: WILCOX CJ, KEELY J & MOORE J

PLACE: MELBOURNE

DATE: 27 SEPTEMBER 1995

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The following writs be issued directed to the following members of the Australian Industrial Relations Commission, the Honourable Deidre O'Connor, President, the Honourable John MacBean and the Honourable Colin Polites, Senior Deputy Presidents, the Honourable Simon Williams, Deputy President, and Mr Robert Merriman, Commissioner:

(a) a writ of prohibition prohibiting the said members from any further proceedings in relation to the Aluminium Industry (Comalco Bell Bay Companies) Interim Award 1994;

(b) a writ of certiorari requiring the record of proceedings in matters C Nos. 21820 of 1990, 21662 of 1991 and 20076 of 1994 to be brought in and the interim award made on 22 December 1994 quashed; and

(c) a writ of mandamus requiring the said members of the Australian Industrial Relations Commission to hear and determine according to law the application by Automotive, Food, Metals and Engineering Union, The Australian Workers Union - Federation of Industrial, Manufacturing and Engineering Employees Amalgamated Union and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia for an interim paid rates award covering certain employees at the Bell Bay aluminium smelter of Comalco Aluminium (Bell Bay) Limited and the application by Comalco Aluminium (Bell Bay) Limited for conversion to a minimum rates award of the Aluminium Industry (Comalco Bell Bay Companies) Award 1991.

Note: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.

Reasons

IN THE INDUSTRIAL RELATIONS COURT)

OF AUSTRALIA ) No. VI.1213 of 1995

VICTORIAN DISTRICT REGISTRY )

ON REMITTAL FROM THE HIGH COURT OF AUSTRALIA

BETWEEN: COMALCO ALUMINIUM (BELL BAY) LIMITED

Applicant

First Respondents

and

Second Respondents

CORAM: WILCOX CJ, KEELY J & MOORE J

PLACE: MELBOURNE

DATE: 27 SEPTEMBER 1995

REASONS FOR JUDGMENT

WILCOX CJ and KEELY J: A controversy concerning individual contracts occurred in the aluminium industry in 1994. The Australian Industrial Relations Commission ("the Commission") responded by making an interim award. The award was stated to be a "paid rates award". This case concerns the validity of that award, the constitutional validity of two sections of the Industrial Relations Act 1988 on which the Commission relied in deciding to make the award; and the relief available if the award is held invalid.

The course of proceedings

On 10 January 1995, Comalco Aluminium (Bell Bay) Limited ("Comalco") filed in the High Court of Australia a notice of motion seeking an order that stated respondents show cause why writs of prohibition, mandamus and certiorari should not issue against them. There were two sets of respondents. The first respondents were five members of the Commission, the President, Justice O'Connor, Senior Deputy Presidents MacBean and Polites, Deputy President Williams and Commissioner Merriman. They constituted a Full Bench in a hearing involving Comalco and made the interim award. The second respondents named in the notice of motion were three employee organisations registered under the Industrial Relations Act: The Australian Workers Union - Federation of Industrial, Manufacturing and Engineering Employees Amalgamated Union ("AWU-FIME"); Automotive, Food, Metals and Engineering Union ("AFMEU"); and Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union ("CEPU").

Comalco asked that its application be remitted to this Court for hearing. On 20 January 1995, Dawson J so ordered: see s.44 of the Judiciary Act 1903 and s.412(2) and (3) of the Industrial Relations Act. On 1 February 1995, Comalco filed a notice of motion in this Court seeking prohibition, mandamus and certiorari on grounds stated in an affidavit of its solicitor, Mr P D Burns, dated 10 January 1995.

Comalco also applied for an interim order staying the operation of the Commission's award. That application was heard by a Full Court consisting of Northrop, Ryan and Moore JJ. On 15 February, they ordered that, insofar as it applied to the period 26 May 1994 to 22 December 1994, the award be stayed until the hearing and determination of the application or further order. No stay order was made in respect of the period after 22 December 1994.

The motion for final relief came before us for hearing on 5 June 1995 when Dr C N Jessup QC, Mr A Cavanagh and Mr M McDonald appeared for the applicant, Comalco, and Mr R Merkel QC, Mr K H Bell and Mr M Walton for the second respondents, the three unions. There was no appearance for the first respondents, the Commission members. They submitted to the order of the Court. Mr R J Buchanan QC and Mr P M Kite sought leave to intervene in the proceedings on behalf of Comalco Aluminium Limited, trading as Comalco Minerals and Aluminium. As its name suggests, this company is related to the present applicant but it is not directly concerned with events at Bell Bay. We understand it carries out bauxite and kaolin mining operations at Weipa in Queensland. According to Mr Buchanan, that company had a dispute with the second respondents similar to that underlying the present proceeding. He argued that, in a practical sense, Comalco Aluminium Limited would probably be affected by our decision in the present case, so we should hear its submissions.

Dr Jessup did not oppose Mr Buchanan's application to intervene, but Mr Merkel did. He argued that, if Mr Buchanan's argument would simply repeat that of Dr Jessup, the intervention would represent an unnecessary waste of court time; if it added new material, it was oppressive to his clients to be asked to meet submissions put by someone who had no interest in the case and which the employer directly concerned did not choose to put.

After consideration of the matter, we refused the application for leave to intervene. Our reasons were basically those advanced by Mr Merkel. There may be force in the contention that our decision in this case will affect the course of the dispute between the second respondents and Mr Buchanan's client. However, it is not uncommon for people to be affected, in a practical sense, by litigation to which they are not a party. Yet they do not normally seek to intervene. While we think the Court should exercise liberally its power to permit intervention (see s.470 of the Industrial Relations Act), it seemed unnecessary and burdensome to have submissions by a company related to a party to the proceeding which was represented by experienced counsel. We felt we could rely on those counsel to put all relevant arguments, including any that might be suggested to them by Mr Buchanan and Mr Kite.

After disposal of the intervention application, the hearing proceeded. During the course of the first day, it emerged that the applicant wished to dispute the constitutional validity of ss.170UB and 17UC of the Industrial Relations Act. The invalidity of these provisions had not been suggested in Mr Burns' affidavit. It was not a ground upon which prerogative relief was sought. Had the question emerged earlier, it would have been apparent that the case was one to which s.78B of the Judiciary Act applied. The Court would have directed that notice be given to the Attorneys-General of the Commonwealth and the States in accordance with that section. Section 78B provides that, where a pending cause "involves a matter arising under the Constitution or involving its interpretation, it is the duty of the Court not to proceed" until notice is given and a reasonable time has elapsed. Subsection (5) qualifies this duty, but only in relation to urgent interlocutory relief.

These matters were discussed with Dr Jessup. We indicated that, if his client wished to take a constitutional point, it should do so in a clear way so that appropriate notice could be given. As a result of this discussion, on the second day of the hearing, Dr Jessup brought in a notice of motion for an order granting his client leave to amend its notice of motion of 1 February 1995 by adding the following ground:

"that each of ss 170UB and 170UC of the Industrial Relations Act 1988 is invalid as being beyond the power conferred on the Parliament by s 51(xxxv) of the Constitution in that it does not provide for the prevention or settlement of industrial disputes by conciliation or arbitration but rather directs the Australian Industrial Relations Commission to settle certain kinds of industrial disputes by fixing wages and conditions of employment according to a particular principle or formula."

We did not deal immediately with this application. Although it seemed proper to permit whatever amendments were necessary to dispose of all the issues between the parties, we were conscious of the fact that, if we permitted the applicant to add this ground, we would have to adjourn the proceeding forthwith. We were reluctant to take this course until it was clear that it would be essential to determine the constitutional question. By the afternoon of the third day, this was clear. We allowed the amendment and adjourned the further hearing of the matter until 23 August 1995. We directed the applicant's solicitors to give appropriate notices to the Attorneys-Generals. They did so. On 23 August 1995, the Commonwealth Attorney-General appeared by counsel, Dr G Griffith QC and M Walton, to support the validity of the two sections. No State Attorney-General appeared.

The background facts

Comalco operates an aluminium smelter at Bell Bay in northern Tasmania. It has done so since 1955. Prior to 1978 the wages and conditions of employment of union members employed by the company at Bell Bay were regulated by agreements made between the company and relevant unions. On 28 February 1978, the Commission's predecessor, the Australian Conciliation and Arbitration Commission, made an award known as the Aluminium Industry (Comalco Bell Bay Companies) Award 1977 ("the 1977 Award"). That award bound Comalco and a related company, Comalco Aluminium Powder Pty Limited, in relation to employment of members of 11 named registered employee organisations. It was replaced in 1983 by a consolidated award known as Aluminium Industry (Comalco Bell Bay Companies) Award 1983. This award was amended from time to time, most recently in 1991 when it was retitled the Aluminium Industry (Comalco Bell Bay Companies) Award 1991. It is convenient to follow the Full Bench in referring to it as "the 1991 Award". The 1991 Award binds the same two companies as its predecessor but only in relation to members of three named registered organisations. However, this is not as limited as it may seem. We gather that, as a result of various amalgamations, by 1991 these three organisations covered all employees on the site.

It is not necessary to refer to all the provisions of the 1991 Award but we mention clauses 7, 8 and 9. Clause 7 dealt with job restructuring and the multi-skilling of employees. Clause 8 opened with this statement:

"(a)An adult employee of a classification specified herein shall be paid the wage rate hereunder assigned to that classification. The allocation of pay level shall be made on the basis of skill and competency as defined in the appropriate training matrix in recognition of the higher value of the work performed. The base rate specified below for Smelter Tradespeople includes an amount of $8.50 for the provision of tools."

Then followed a table setting out five weekly pay rates for smelter operators and smelter tradespersons. An additional payment was provided for tradespersons who held an A grade electrical mechanics wiring licence. Clause 9 related to unapprenticed junior employees. It provided "minimum weekly rates of wages", being stipulated percentages (first year, 55.6%; second year 67.0%) of the lowest smelter operator rate.

On 5 October 1990, Amalgamated Metal Workers Union ("AMWU"), the predecessor of AFMEU, served a log of claims on Comalco. Amongst other things, the log sought that all employees be paid a minimum weekly wage of $2,500. Comalco did not accede to the log and AMWU notified the Commission of a dispute. The Commission numbered the matter C No. 21820 of 1990. On 15 October 1990, the Commission found the existence of a dispute. AMWU requested that the matter be listed for hearing at the same time as matter C No. 21779 of 1990. This proceeding was an application by AWMU to vary an award governing Queensland Aluminium Ltd that was listed for hearing on 25 October 1990. The evidence does not disclose whether this was done or what further action was taken concerning this dispute.

On 21 August 1991, the Federation of Industrial, Manufacturing and Engineering Employees ("FIMEE"), a predecessor of AWU-FIME, served a demand on seven employers in the aluminium industry, including Comalco. The log contained a demand for a minimum wage of $1,500. Comalco did not accede to the claim. FIMEE notified the dispute and the Commission numbered the matter C No. 21662 of 1991. A dispute was found on 6 September 1991. In reliance on this finding, FIMEE subsequently applied for a variation of the 1991 Award to extend its coverage to non-union members. The application was rejected by Commissioner Connell. An appeal to a Full Bench was heard on 16 February 1993; but no decision had been given when Mr Burns swore his affidavit on 10 January 1995.

On 10 January 1994, the Electrical, Electronic, Plumbing and Allied Workers Union of Australia ("EPU"), a predecessor of CEPU, served a log of claims on Comalco. It sought "minimum weekly wages" at various rates for various types of employees. Comalco did not accede to the demands. EPU notified a dispute. The Commission numbered the matter C No. 20076 of 1994 and found a dispute on 8 March 1994. There was no subsequent action in this matter until the events described hereunder.

The proceedings before the Commission

On 19 May 1994, Comalco took the first step in the controversy that gave rise to this proceeding. It offered all employees covered by the 1991 Award the opportunity to accept staff positions. This was done by a General Manager's Bulletin followed by a series of section meetings and individual letters to, and discussions with, each employee. The offer involved a new salary structure at rates exceeding those payable under the 1991 Award. It also included provisions that the respondent unions thought unsatisfactory. The terms of employment were capable of unilateral variation by the employer. The letter stated that the terms and conditions of the appointment to staff -

"are provided in accordance with Company policy which may be varied from time to time. The terms and conditions are set out in this letter and include consideration for the work of your role and for all entitlements you may have under this contract or any award or agreement that may apply."

The location of the appointment was to be Bell Bay but employees were told -

"it must be clearly understood that your continued employment with the CRA Group of Companies may at some time require that you accept another position and that you work and reside at some other location of the Group's operations."

The employee's salary was to "be reviewed each year and adjusted to reflect economic conditions and your individual work performance". Employees were told they would "on occasions, be required to work in excess of, or outside" normal hours but their salary "takes account of this and no additional payment will be made in respect of such extra duty". Employees were to have access to the company's Grievance Procedure, details of which are not in evidence.

On 25 May 1994, AWU-FIME filed in the Commission a notification under s.170QH of the Industrial Relations Act "of an industrial situation wherein it wants to negotiate with a party an agreement under Division 2 of Part VIB of the Act for preventing the situation from giving rise to an industrial dispute between them". The party was identified as Comalco and the situation as "the proposal of the company to offer individual contracts of employment to award-covered employees at its Bell Bay smelter". The notice stated that the company's offer "has the possibility of undermining the award system and the role of Unions in representing employees" and that the Commission "should consider issuing interim orders to ensure maintenance of the status quo, and to avoid the development of a situation where hearing of this matter would be unnecessarily made difficult".

On 30 May 1994, C A Sciacca and Associates, solicitors, wrote to Senior Deputy President Keogh of the Commission on behalf of the three unions. They headed their letter with references to seven Commission proceedings, including C No. 21820 of 1990 and C No.20076 of 1994, but not C No. 21662 of 1991. The solicitors referred to the 1991 Bell Bay Award and also an award relating to Weipa. They sought interim award protection for employees at both sites in the form of "paid rates" awards, a draft of which they enclosed. The solicitors asked Senior Deputy President Keogh to refer the disputes to the Vice-President of the Bargaining Division, on the basis that s.170TB of the Act applied to them, and that the matter be heard by a Full Bench in the first instance.

On 3 June 1994, all the matters mentioned in the solicitors' letter were listed before Commissioner Laing. There were appearances for the three unions and the two respondent companies and for the Australian Council of Trade Unions ("ACTU"). There was discussion about the nature of the proceedings. The Commissioner requested clarification. Three days later, on 6 June, C A Sciacca and Associates wrote a letter to Commissioner Laing advising that four disputes (the three Bell Bay disputes mentioned above and one relating to Weipa) "found to exist in the aluminium industry, relate to the current matter".

There was correspondence with Commissioner Laing on the question whether the matters should be referred to a Full Bench of the Commission. On 16 June 1994, the President considered that possibility but directed that Commissioner Laing continue to hear the matter until the issue of the dispute finding was determined.

On 5 July 1994, Comalco filed with the Commission an application for a variation of the 1991 Award so as to delete the table in clause 8 setting out pay rates and to substitute a table that set out, for each of the five classifications of smelter operator and smelter tradesperson, a "minimum classification" weekly rate, a "supplementary" weekly rate and a "base rate", being the sum of the first two rates. The "base rate" figures proposed were lower than the rates in the 1991 Award but the company proposed additional payments called "Minimum Rate Adjustment - Excess Rate" that would take the total of each rate above the award rate.

The matters again came before Commissioner Laing on 6 July when it was clarified that the matters sought to be referred to a Full Bench were the four cases in respect of which dispute findings had been made; three at Bell Bay, one at Weipa. After further written submissions, on 20 July, the President directed that a Full Bench be constituted to hear the four matters. At no stage was there a conciliation hearing, so designated.

The matters came before a Full Bench, constituted by the five first respondents, on 26 August 1994. Shortly before that day, AWU-FIME decided not to press for an interim order in relation to Weipa. So the Full Bench hearing was confined to Bell Bay. In accordance with a direction of the Full Bench, the solicitors for the applicant organisations filed a document setting out the relief they sought. They asked for an interim paid rates award; alternatively a variation, on an interim basis, of the existing award. They proposed that, however it was structured, the order have three features. First, it should bind the company and the three unions in relation to the employment of all Comalco employees engaged in relevant operations, whether members of one of the applicant unions or not. Second, under the heading "Elimination of Discrimination in Pay and Conditions", the draft stated:

"Each employee of the company performing work of a kind to which a particular classification in the existing award applies shall in addition to the rates and conditions set forth in the existing award be afforded terms and conditions of employment that are equal or equivalent to the terms and conditions of employment being afforded to any other employee who is performing work to which that classification also applies."

Many of the Bell Bay workers had accepted the company's offer of individual contracts at higher salaries. So the effect of this clause would be to bring to the same levels the salaries of those who had not done so; but without loss of their award benefits. Third, the draft proposed a different Grievance Procedure to that suggested in the employer's letter to employees. Under the draft interim award, the employee could elect to have a shop steward, union delegate or union official present at any stage of discussion of a problem or complaint.

At the time of submitting their draft interim award, the solicitors for the three unions did not provide a draft of their proposed s.170QK order. They did so later.

On 2 September 1994, the members of the Full Bench inspected the plant at Bell Bay. After some preliminary skirmishing between the parties over documents, the Full Bench hearing got under way on 19 September 1994. It proceeded discontinuously over nine sitting days, finishing on 13 October. The Minister for Industrial Relations intervened under s.44 of the Act. The Full Bench allowed intervention by the ACTU, Comalco Aluminium Limited, the Australian Chamber of Commerce and Industry and the Business Council of Australia. All interveners put submissions.

The Full Bench handed down its decision on 8 December. It deputed Commissioner Merriman to settle the interim award. He did so. The award was made on 22 December 1994. It was entitled "the Aluminium Industry (Comalco Bell Bay Companies) Interim Award 1994". It described itself as "a paid rates award" and was stated to operate as from 26 May 1994.

The decision of 8 December is the decision challenged in this proceeding. We must analyse it in some detail.

The Full Bench decision

The Full Bench noted that three applications were before it: the unions' application for an interim paid rates award, their application for an order under s.170QK of the Industrial Relations Act and Comalco's application for conversion of the 1991 Award to a minimum rates award. The Full Bench set out the history of award regulation at Bell Bay. Noting that the 1991 Award was a "members only" award, the Full Bench commented that this "had little practical effect on membership of the unions at Bell Bay". There was an agreement under which the company made payroll deductions of union dues and the company provided each new employee with a union membership application form. These practices ceased in 1991 and 1992.

The Full Bench referred to enterprise bargaining negotiations that occurred in 1992 and 1993. The initial approach was made by site union delegates in early 1992. There were a number of meetings but they came to nothing. The company insisted that negotiations should be undertaken by working parties consisting of representatives of management and the employees, not including union officials. The unions accepted this but insisted that the employee representatives on the working parties be union members. Apparently, Comalco would not accept this and eventually decided against having working parties. It developed a unilateral proposal which was submitted to a secret ballot in July 1993. Seventy percent of the employees voted; 83% of the voters rejected the proposal. Notwithstanding this, there were hearings in the Commission in November 1993 and early 1994 concerning enterprise bargaining. The Full Bench commented:

"Throughout these hearings, the company and unions remained in dispute over the processes to be put in place to facilitate enterprise bargaining. The company restated its position that any enterprise bargaining must involve a process of 'working directly with employees' and that unions should have no direct role in enterprise bargaining processes."

In April 1994, Comalco advised the unions of its intention to seek an Enterprise Flexibility Agreement with its employees. The unions responded by presenting Comalco with a draft enterprise agreement and asked it to commence negotiations with them. Comalco rejected this approach and, in the words of the Full Bench, "stated that any enterprise agreement must provide an opportunity for employees to move to staff. They said this condition was non-negotiable". Although there was one meeting in May, no progress was made. The Full Bench said:

"... in our view, the failure to reach either an enterprise agreement or an enterprise flexibility agreement was a direct result of the attitude of the company to the role of unions at the smelter and their objective of seeking an all-staff workforce."

The Full Bench referred to evidence of Katherine Gould, Comalco's Principal Personnel Adviser, that, by late April 1994, rather than proceeding towards an enterprise agreement, the company "had begun to formulate a policy position of going outside the award through an offer to all employees to enter into staff contracts". She spoke of the decision to offer contracts being "the culmination of our efforts over two years of moving towards an all-staff workplace". She had recommended the establishment of a workplace agreement, certified by the Commission but containing a provision allowing employees to opt out of the paid rates award and take up staff contracts. This recommendation was rejected by the General Manager, Dr Tony Filmer. He preferred to accept an option that Ms Gould had described in this way: "Offer staff contracts of employment to operators and tradespeople in the hope that large numbers of them would accept and then apply to have the award converted to minimum rates". She said this "would create a situation where we clearly are in breach of the paid rates award, but where there is a ground swell of employee support". Under those circumstances, the Commission might be asked to convert to minimum rates.

Dr Filmer made his decision by 9 May 1994. Between that day and 19 May, when the offer was made, he held meetings with superintendents and supervisors regarding the form of the proposed individual contracts including the intended increase in wages.

The Full Bench summarised the submissions made to it on behalf of the unions, the company, the Minister and the interveners. To a large extent these submissions are reflected in the Commission's reasons for decision, to which we will come. We need not separately deal with them.

After analysing the form of the contracts offered by the company, the Full Bench set out its reasoning and conclusions. It will assist comprehension of that reasoning if we immediately refer to some amendments to the Industrial Relations Act made by the Industrial Relations Reform Act 1993. That Act introduced into the Industrial Relations Act a new Part, Part VIC, dealing with paid rates awards. It also introduced into the Act (in s.4) a definition of "paid rates award": "an award specifying actual entitlements, rather than minimum entitlements, in respect of wages and conditions of employment".

Division 1 of Part VIC contains only one section, s.170SA. This section states that the objects of the Part are:

"to ensure that:

(a) in appropriate cases, employees are protected by paid rates awards that set fair and enforceable wages and conditions of employment that are maintained at a relevant level; and

(b) paid rates awards are suited to the efficient performance of work according to the needs of particular industries and enterprises, while employees' interests are also properly taken into account."

Division 2 concerns the role of the Bargaining Division of the Commission. Broadly speaking, the Bargaining Division is to perform and exercise the Commission's functions and powers in relation to paid rates awards (s.170TA). Sections 170TB and 170TC are machinery provisions concerned with intra-Commission references to and from the Bargaining Division.

Division 3 should be set out in full. It lies at the heart of most of the applicant's submissions. The Division is entitled "Making, varying and cancelling paid rates awards". It consists of five sections, as follows:

"170UA The Commission must not make an award in relation to a paid rates dispute unless satisfied that:

(a) it is more appropriate to make the award than for the matters that would be dealt with by the award to be dealt with by an agreement under Part VIB; or

(b) there is no reasonable prospect of those matters being dealt with by such an agreement.

170UB(1)This section applies if:

(a) the Commission proposes to make a new award covering, or to vary an existing award so as to cover, employees of a particular kind in an industry carried on by employers; and

(b) the wages and conditions of employees of that kind in that industry, in so far as they have customarily been determined by an award or a State award, have customarily been determined by a paid rates award or a State award in the nature of a paid rates award.

(2) The Commission must make the new award as a paid rates award, or must vary the existing award so as to be a paid rates award, in so far as it determines wages and conditions of employment, of employees of that kind in that industry, that have customarily been determined by a paid rates award or a State award in the nature of a paid rates award.

(3) However, the Commission need not do so in so far as:

(a) the Commission is satisfied that it would be against the public interest; or

(b) each of the parties to the proposed award, or to the award as proposed to be varied, has consented to the award not being a paid rates award.

170UC(1)The Commission must maintain existing paid rates awards, and vary them from time to time, as appropriate having regard to the objects of this Part and the Commission's duty under subsection 90AA(2). However, the Commission need not do so in so far as the Commission is satisfied that it is against the public interest.

(2) Paragraph 90AA(2)(a) does not require the Commission to ensure that paid rates awards are consistent with awards that are not paid rates awards.

170UD The Commission may:

(a) cancel a paid rates award and replace it with an award that is not a paid rates award; or

(b) vary a paid rates award so that it stops being a paid rates award;

if the Commission is satisfied, after giving the parties to the award an opportunity to be heard, that such a party has acted in a way that is so inconsistent with the award as to make it inappropriate for the award to continue as a paid rates award.

170UE(1)The Commission must include in a new paid rates award a statement that the award is a paid rates award.

(2)If the Commission:

(a) varies an existing paid rates award; or

(b) varies an existing award so that it becomes a paid rates award;

the Commission must include in the varied award a statement that the award is a paid rates award, unless the award already contains such a statement.

(3)If the Commission varies an award so that it stops being a paid rates award, the Commission must remove from the award the statement included under subsection (1) or (2).

(4)This section does not affect the validity of an award or variation."

It will be noted that s.170UB applies in a case where the Commission proposes to make a new award covering employees of a particular kind in an industry, in respect of which kind wages and conditions of employees "have customarily been determined by a paid rates award": see subs.(1). Where the section applies, but subject to the discretion conferred by subs.(3), the "Commission must make the new award as a paid rates award ... in so far as it determines wages and conditions of employment, of employees" of a kind that, in the industry, have customarily been determined by a paid rates award. Section 170UC requires the Commission to "maintain existing paid rates awards" and vary them from time to time according to specified criteria. It is the supposed inflexibility of these provisions that gives rise to Comalco's submission that ss.170UB and 170UC are constitutionally invalid.

The first issue the Full Bench addressed was whether the Bell Bay smelter was "customarily regulated by paid rates awards prior to the inclusion of a definition of a paid rates award in the ... Act". That question was relevant because of the condition expressed in s.170UB(1)(b) of the Act. The Full Bench held that, from the time it was made, the 1977 Award was a paid rates award. It referred to the fact that the rates applicable to a fitter under this award exceeded that for a fitter in Tasmania under the Metal Industry Award 1971 and to a statement by Commissioner Stanton, who made the 1977 award, that the awards he was about to make would be paid rates awards. The Full Bench added references to later conduct, by Comalco and relevant unions, that indicated an understanding that the 1977 Award, and later the 1991 Award, was a paid rates award. There seems to be no doubt whatever that, until the 1994 Full Bench hearing, everybody concerned with either award regarded them as paid rates awards. The Full Bench summarised the effect of this evidence by saying:

"On the evidence there seems to be no issue that the Bell Bay Award was a paid rates award and in 1989 statutory declarations to that effect were filed in the Commission by the company.

In our view no issue can arise in relation to the Bell Bay Award until 1991 where it appears common ground that payments over and above the payments prescribed in the award were made. These payments relate to the so called overtime incentive scheme (an incentive to discourage employees from working overtime) and a production bonus scheme referred to in the proceedings before the Full Bench in February 1991 in respect of which the relevant extracts from the transcript have already been cited in this decision.

Clearly the payments referred to and which continued to apply in May 1994 were of a character inconsistent with the notion of a paid rates award. What is equally apparent however, is that neither the parties nor the Commission took any steps to restructure the award as a minimum rates award.

Dr Jessup referred to the fact that the wording of the wages clause of the Bell Bay Award was in similar terms to the Metal Industry Award, notoriously a minimum rates award and accordingly, submitted that the Commission should construe the Bell Bay Award as a minimum rates award on that basis. We cannot accept that argument. Clearly Commissioner Stanton, in directing the parties to settle the award, indicated that he intended it to be a paid rates award. Moreover, until the recent past, no party has contended that the Bell Bay Award is not a paid rates award.

In our view, at the time of the enactment of the statutory definition of a paid rates award the Bell Bay Award remained a paid rates award, although the parties were behaving inconsistently with its status as a paid rates award under the Commission's principles."

The Full Bench then turned to the definition of "paid rates award", inserted into the Act in 1993. It referred to a submission by Dr Jessup, on behalf of Comalco, "that the Bell Bay Award was not, on 25 May 1994, and is not now, a paid rates award". He contended that a "paid rates award requires either a matching of the actual rates or being able to locate within the award something which makes the rates in it legally the maximum which may be paid and granted". The Full Bench said:

"We are unable to accept Dr Jessup's submissions in this regard. In our view, the Bell Bay Award is a paid rates award as defined in the Reform Act. As the material tendered by Dr Jessup makes clear the ordinary meaning of 'paid rates awards' means an award where the intention of its maker is to specify the entitlements actually received by an employee by comparison with a 'minimum rates' award which is intended only to specify an entitlement below which the employee cannot be paid in respect of either wages or conditions of employment. In our view, there is no need to construe the definition in the Act more narrowly as is contended for by Dr Jessup. In particular we do not think there is any basis for construing the definition as applying only to awards which prescribe by reason of their expressed provisions all of the actual terms and conditions of employment to be received by an employee.

We note that this was not the approach taken to the definition of paid rates awards in the review of wage fixing principles case. Moreover, we consider that one cannot look at the insertion into the Act of a definition of paid rates awards in isolation from the fact that the term has a long history in the industrial jurisprudence of this country."

The Full Bench then referred to several cases, commencing with the Engineering Oil Industry Case in 1970, where the Conciliation and Arbitration Commission made an award specifying the "actual wage" to be paid to particular employees. In one case, Re Building Industry, Justice Elizabeth Evatt said "Paid rates awards means the rates prescribed by this award are maximum rates and that the employers bound by the award shall not pay more than the rate so prescribed". The Full Bench went on:

"There does not, however, appear to have been any definitive form of words used in the various awards to denote their paid rates character. The distinction between actual or paid rates awards and minimum rates awards became important during the first period of wage indexation between 1975 and 1981 because of the question of the indexation of overaward payments. The review of Wage Fixing Principles Case in 1978 expressly referred to the term 'paid rates awards'. Indeed, in 1978 aluminium companies (of which Comalco Bell Bay was one) were referred to as being regulated by paid rates awards and the term 'paid rates awards' continued to be used in decisions throughout the whole of the periods of wage indexation. We would only add this, from approximately 1987 on there seems to have been increasing concern in the Commission about the behaviour of parties to some paid rates awards. For example in the 1983 National Wage Case the Commission included the following passage ...

'We would further encourage the conversion into a minimum rates award of a paid rates award which failed to maintain itself as a true paid rates award. The conversion of a lapsed paid rates award back into a minimum rates award would of course involve valuation of the classifications in it by comparison with similar classifications in other minimum rates awards.'

Against that background we have no difficulty concluding that, when an award predates enactment of the Reform Act, for that award to comply with the statutory definition of paid rates awards, it is not necessary that it provide in its terms that it is a paid rates award.

Based on the history of the fixation of paid rates generally and the Bell Bay Award in particular, we are of the view that the award is a paid rates award within the meaning of the IR Act. We have expressed our view that the statutory definition should be construed in the context of the ordinary meaning of the expression 'paid rates awards' and 'wages fixation' developed by the Commission since these awards first emerged. There is in our view a remarkable similarity between the wording of the statutory definitions and the first expressions of 'paid or actual rates' used in the decisions of the Australian Industrial Relations Commission and its predecessor. Finally, we add that it has never been the case that a paid rates award either in the public sector or in the private sector has sought to cover every specific term and condition of employment. This was recognised by the Commission in the Review of Wage Fixing Principles decision in which the Commission stated that a 'paid rates award does not need to embrace all actual entitlements in respect of wages and conditions of employment'. It is sufficient that paid rates awards generally cover all important aspects of the employment relationship considered appropriate for award regulation. There can be no doubt that the Bell Bay Award complies with that description and we find that this award is a paid rates award. That conclusion gives rise to specific obligations under Part VIC of the IR Act."

After setting out the terms of Part VIC of the Act, the Full Bench addressed the question whether it should "grant interim relief to maintain the paid rates award". It said that ss.170UB and 170UC "require the Commission to maintain and vary as appropriate an existing paid rates award unless either:

. it is appropriate that the matters be dealt with by agreement under Part VIB and there is a reasonable prospect of that being the case (s.170UA);

. to make the award as a paid rates award would be against the public interest (s.170UB(3) and s.170UC(1));

. each of the parties has consented to the award not being a paid rates award 170UB(3)."

The members of the Full Bench commented that the last alternative was clearly inapplicable and it was not possible on the material before them to conclude that there was any prospect of the parties reaching agreement on the claims or that the unions would agree to "the replacement of the paid rates award by a minimum rates award". "In these circumstances", they said, "we consider that the legislation requires us to maintain the paid rates award and if necessary to make an interim award having that effect unless we are satisfied that it would not be in the public interest to do so".

The Full Bench discussed public interest considerations at length, concluding that it would not be in the public interest "to refuse to maintain the paid rates nature of the Bell Bay Award". Critical to the Full Bench's reasoning was the central role of unions under the existing Commonwealth industrial relations system. The Full Bench explained:

"The recent amendments made in the Reform Act have as a central plank a framework for collective bargaining between parties to an industrial dispute. This framework is underpinned by an award system acting as a safety net providing 'secure, relevant and consistent wages and conditions of employment'. The amendments allow, inter alia, employers to negotiate directly with their employees for the purpose of reaching agreement on terms and conditions of employment and, subject to meeting the requirements of the IR Act, the agreement must be certified as an Enterprise Flexibility Agreement. The present IR Act would have allowed the company all the flexibility necessary to reach an agreement with its employees. This, in fact, was the course recommended by Ms Gould in her position paper ... but rejected by Dr Filmer.

However, what took place in May and June 1994 was not a case of the company entering into negotiations with its work-force. It was a case of the company deciding what it considered to be in the best interests of its employees and the company and then making a non-negotiable offer on terms which precluded any role for the unions or the Commission. It did this in circumstances where acceptance would be regarded as the only real way to obtain any increase in remuneration and perhaps any form of secure employment even in the short to medium term.

The contracts being offered ... contained extensive contractual arrangements of a substantive nature in which the right to alter any or all of them was at the complete discretion of the company. The power to alter the terms and conditions of employment under the contract was a power which could be exercised without the need for consultation or agreement of the individual employee and without any interference from the unions or the Commission in circumstances where the contract excluded any role for the unions or the Commission.

The establishment of conditions of employment at an enterprise level through a system of individual contracts between a company and each of its employees is one at variance with our system of industrial relations, a system which, since its inception, has been based upon collective processes as the means of providing terms and conditions of employment at the workplace. The present IR Act is based on a system of collective regulation in which registered organisations of employers and employees acting as parties principle are an integral part of the collective processes which operate under the Act.

The company's actions in deliberately seeking to eliminate the role of the unions at the workplace through the establishment of individual staff contracts, is inconsistent with the central role that registered organisations are given under the IR Act, in the prevention and settlement of industrial disputes. The Commission has a statutory obligation to encourage registered organisations [s.3(e)]."

The Full Bench then announced its orders:

"We refuse the company's application to convert the Bell Bay Award to a minimum rates award. We have decided to make an interim award in the terms set out in Appendix A to this decision, the award is to operate on and from 26 May 1994 and remain in force for a period of twelve months. This interim award addresses in particular grievance procedures and the prospect of unilateral alteration of conditions of employment. It does, however, by specifying a range of rates allow the company to maintain its performance appraisal schemes and allows the maintenance of the status quo in relation to wages. It will, in our view, minimise the economic impact of our decision.

The interim award we have now determined will cover those employees identified in clause 3(b). In accordance with this clause, the award is to extend to non-members. Whilst the various awards which have operated at the Bell Bay smelter have not extended to non-members, the practice effect until 1991 was that the award applied to almost all the classes of employees, the subject of these applications, due to the agreement between the company and the unions concerning union membership (referred to earlier in our decision). In the present circumstances the decision will ensure that all employees will have the protection provided by our interim award including access to this Commission on any grievance in accordance with 'clause 6 - Settlement of Grievances'. The coverage by the award of non-members will therefore establish, on an interim basis, a level playing field for all concerned".

The Full Bench said it had decided not to grant the unions' application for a s.170QK order at this stage but, rather, to direct the parties to confer on the future regulation of conditions of employment in the smelter.

The submissions of counsel

In challenging the Full Bench decision, counsel for Comalco put submissions concerning eight points:

(i) the availability to the Full Bench of arbitration powers, there having been no conciliation hearing;

(ii) the meaning and operation of Part VIC of the Act;

(iii) the constitutional validity of ss.170UB and 170UC of the Act;

(iv) whether the Full Bench was entitled to find that employment at Bell Bay had "customarily been determined by a paid rates award";

(v) whether it was open to the Full Bench to regard the use of individual contracts as inconsistent with the Australian system of industrial relations;

(vi) the place of organisations in the statutory scheme of conciliation and arbitration;

(vii) whether the award was beyond the ambit of any relevant dispute; and

(viii) whether the Commission erred in making the award operate from a date before it was made.

We indicate immediately that we do not propose to deal with points (v), (vi), (vii) or (viii). This is not an appeal against the Full Bench's decision. It is an application for prerogative relief. In order to succeed, the applicant must show that the Full Bench fell into jurisdictional error. It would not be enough for it to establish a fault in the Commission's reasoning that indicated that it had erred in the exercise of its jurisdiction, as distinct from failing to exercise its jurisdiction or acting outside jurisdiction. In our opinion, if they were made good, points (v), (vi) and (viii) would do no more than establish error in the exercise of jurisdiction. Point (vii) might go to jurisdiction but the material before us is insufficient to allow that point to be properly considered.

We will deal separately with each of the first four points. We will also deal with a point raised by counsel for the second respondents: that s.150(1) of the Act renders the award immune from challenge, whatever errors attended its making.

The availability of arbitration powers

Counsel for Comalco commence their submissions on this issue by referring to s.103(1) of the Act. That subsection specifies that a conciliation proceeding before a member of the Commission shall be regarded as completed when:

"(a) the parties have reached agreement for the settlement of the whole of the industrial dispute and the agreement has been certified under Division 2 of Part VIB; or

(b) whether or not the parties have reached agreement for the settlement of part of the industrial dispute:

(i) the member of the Commission is satisfied that there is no likelihood that within a reasonable period, conciliation, or further conciliation, will result in agreement, or further agreement, by the parties on terms for the settlement of the industrial dispute or any matter in dispute; or

(ii)the parties to the industrial dispute have informed the member that there is no likelihood of agreement, or further agreement, on matters in dispute and the member does not have a substantial reason to refuse to regard the conciliation proceeding as completed."

Counsel say none of these events occurred before the Full Bench commenced its hearing in this case; accordingly, the proceeding before the Full Bench was a proceeding by way of conciliation, not arbitration. It follows, they say, that the Full Bench misconceived its function; the Act makes a clear distinction between the process of conciliation and the process of arbitration. There are other difficulties as well, say counsel. If the proceeding before the Full Bench ended up as an arbitration proceeding this must be because the Full Bench, acting as conciliators, made an unannounced finding under s.103(1)(b)(i); but such a finding could not be made without first considering the likelihood of an agreement under s.103(1)(a) and taking into account the unions' s.170QK application. Moreover, on that hypothesis, the members of the Full Bench infringed s.104(4) in disclosing what was said and done in the conciliation part of the hearing. If it ended up as an arbitration proceeding, the members of the Full Bench infringed s.105(1) in taking part in it, they having been involved in the conciliation and having failed to give the parties an opportunity to object to their participation.

We do not accept any of these submissions. The Full Bench did not announce a finding under s.103(1)(b)(i). Under those circumstances, it would not be proper to attribute to it a view that there was no likelihood that conciliation would result in an agreement for settlement of the dispute. There is no reason to think the members of the Full Bench ever considered whether a conciliation proceeding in this case should be regarded as complete. They never said they were embarking on a conciliation hearing, so it would not have been natural for them to think about its completion.

In our opinion, at every stage of the proceeding, the Full Bench was exercising arbitration, not conciliation, powers. As already mentioned, the Full Bench was constituted by the President under s.107 of the Act. That section relevantly provides:

"107(1) A reference in this section to a part of an industrial dispute includes a reference to:

(a) an industrial dispute so far as it relates to a matter in dispute; or

(b) a question arising in relation to an industrial dispute.

(2) Where a proceeding in relation to an industrial dispute or an alleged industrial dispute is before a member of the Commission, a party to the proceeding or the Minister may apply to the member:

(a) in the case of a proceeding in relation to an alleged industrial dispute - to have the proceeding dealt with by a Full Bench because the subject-matter of the proceeding is of such importance that, in the public interest, the proceeding should be dealt with by a Full Bench; or

(b) in the case of a proceeding by way of conciliation or arbitration - to have the industrial dispute or a part of the industrial dispute dealt with by a Full Bench because the industrial dispute or the part of the industrial dispute is of such importance that, in the public interest, it should be dealt with by a Full Bench.

(3) An application under paragraph (2)(a) may be accompanied by an application under paragraph (2)(b), to be dealt with if the application under paragraph (2)(a) is granted and there is a finding that there is an industrial dispute.

(4) ...

(5) ...

(6) If the President is of the opinion:

(a) in the case of an application under paragraph (2)(a) - that the subject-matter of the proceeding is of such importance that, in the public interest, the proceeding should be dealt with by a Full Bench; or

(b) in the case of an application under paragraph (2)(b) - that the industrial dispute or the part of the industrial dispute is of such importance that, in the public interest, it should be dealt with by a Full Bench;

the President shall grant the application.

(7) Where the President grants an application under paragraph (2)(a);

(a) the Full Bench shall, if it considers that there is an industrial dispute, record findings under section 101; and

(b) if the application was accompanied by an application under paragraph (2)(b) that was granted - the Full Bench shall, subject to subsection (9), hear and determine the industrial dispute or the part of the industrial dispute.

(8) Where the President grants an application under paragraph (2) (b), the Full Bench shall, subject to subsection (9), hear and determine the industrial dispute or the part of the industrial dispute and, in the hearing, may have regard to any evidence given, and any arguments adduced, in arbitration proceedings in relation to the industrial dispute, or the part of the industrial dispute, before the Full Bench commenced the hearing.

(9) Where the President grants an application under paragraph (2)(b) in relation to an industrial dispute:

(a) the Full Bench may refer a part of the industrial dispute to a member of the Commission to hear and determine; and

(b) the Full Bench shall hear and determine the rest of the industrial dispute.

(10)...

(11)...

(12)..."

It will be noted that the section contemplates two circumstances in which a proceeding may, by decision of the President, be dealt with by a Full Bench. The first is where the proceeding relates to an alleged industrial dispute: see s.107(2)(a). The second is where the proceeding is by way of conciliation or arbitration: see s.107(2)(b).

There is provision for a composite application: see s.107(3). The situation that applies if that application is granted, and the Full Bench makes a dispute finding, is set out in s.107(7)(b). Those provisions do not apply to this case. In this case, dispute findings were made before the President referred the matter to the Full Bench. The Full Bench was concerned only with an application under s.107(2)(b). Its duty, subject to subs.(9), was to "hear and determine the industrial dispute": see s.107(8). Comalco's submission requires consideration of the nature of that duty.

In determining the nature of the s.107(8) duty, it is necessary to consider the statutory context. Section 107(2)(b) speaks of an application for a reference in "a proceeding by way of conciliation or arbitration." It is clear this provision permits a party to make a referral application to a member of the Commission exercising conciliation powers. Does the grant of such an application bring the conciliation process to an end, because s.107 authorises the Full Bench to exercise only arbitration powers? Or is the hearing before the Full Bench a conciliation proceeding, at least initially?

We think the first alternative states the true position. Section 107(8) gives a Full Bench an unqualified right, when exercising the power to "hear and determine", to have regard to evidence given, and submissions made, in earlier arbitration proceedings. It would be incongruous to permit the use in conciliation proceedings of evidence and submissions in earlier arbitration proceedings. It is unlikely that Parliament intended to authorise this. On the other hand, there would be no incongruity in allowing a Full Bench conducting an arbitration proceeding to have regard to material concerning an earlier arbitration proceeding. This material would have originated in proceedings of the same character. To allow it to be used might save considerable time and expense.

The following section, s.108, deals with a similar subject matter. It provides a mechanism by which the President may assume responsibility for an industrial dispute and, in specified circumstances, refer it to a Full Bench. Under this section, the President may take the initiative in referring a matter to a Full Bench. There is no need for an application by a party, as under s.107. Section 108(3) provides:

"(3)If the President decides to deal with the proceeding, then, unless the President considers that the proceeding does not relate to an industrial dispute:

(a) the President shall make such findings (if any) in relation to the proceeding as are required to be made by section 101 and have not already been made by another member of the Commission; and

(b) the President shall:

(i) if the President is of the opinion that it would assist the settlement of the industrial dispute or a part of the industrial dispute - endeavour to settle the industrial dispute or the part of the industrial dispute by conciliation; and

(ii)if the President is not of that opinion, or has not been able to settle the industrial dispute or a part of the industrial dispute by conciliation:

(A) hear and determine the industrial dispute or the part of the industrial dispute; or

(B) refer the industrial dispute or the part of the industrial dispute to a Full Bench."

If a reference is made under s.108(3)(b)(ii)(B), the duty of the Full Bench is to "hear and determine the industrial dispute": see s.108(4). Section 108(5) authorises the use of evidence and submissions in such a case. Its terms are essentially the same as those of s.107(8).

It is plain from the provisions of s.108(3)(b) that the duty of the President, in relation to an industrial dispute, is to endeavour to settle it by conciliation, if he or she forms the opinion that this would assist. If not, or if conciliation is unsuccessful, the President must hear and determine the industrial dispute or refer it to a Full Bench for that purpose. Section 108(3) creates a clear dichotomy between conciliation and arbitration. Any conciliation is to be undertaken by the President: see s.108(3)(b)(i). Thereafter, arbitration powers are to exercised by either the President, under s.108(3)(b)(ii)(A), or the Full Bench under s.108(3)(b)(ii)(B) and (4). In both cases, the arbitration function is described by the words "hear and determine".

There are other instances in the Act where the expression "hear and determine", or variants of it, appear. For examples, see ss.5(2)(a), 45(9), 109(6), 110(2), 111(1)(d), 111(1)(g), 111(1)(h), 111(1)(s), 111(1)(t) and 126. In some instances, the context does not clearly indicate whether or not the words refer only to the exercise of arbitration powers. However, in s.126, which concerns stand down orders, the expression is plainly a reference to the exercise of powers of arbitration.

Section 5(2)(a) provides particular assistance as to the meaning of "hear and determine". This is a general provision concerned with the additional operation of the Act. It provides that the Act has effect as if:

"(a)each reference in this Act to preventing or settling industrial disputes, by conciliation or arbitration, included a reference to settling by conciliation, or hearing and determining, industrial issues."

The juxtaposition of the expression "hearing and determining" with the expression "settling by conciliation" is telling. Plainly, they are different concepts.

There are occasions where the Act uses the expression "hear and determine", and its variants, in conjunction with other terms designed to confer additional powers. For example, s.110(2) is widened by the expression "or in any other proceedings". The application of s.111(1) is widened by the provisions of s.111(2). The reference to "hearing" and "determining" the industrial dispute in s.111(1)(g) is widened by the expression "dismiss a matter or part of a matter". But none of these examples is inconsistent with the expression "hear and determine", or its variants, being used as a reference only to the exercise of arbitration powers.

The meaning of the expression "hear and determine" in the legislative predecessor of s.107, s.34 of the Conciliation and Arbitration Act 1904, was considered by the High Court in The Queen v Heffernan: ex parte Leo Burnett Pty Ltd (1978) 22 ALR 40. An application was made to Commissioner Heffernan under s.34 while he was engaged in conciliation. He refused to refer the s.34 application to the President. The High Court declined to grant prerogative relief compelling the Commissioner to refer the s.34 application because he was not then exercising arbitration powers. Section 34 was construed as authorising the making of an application for reference to a Full Bench only during arbitration proceedings. The leading judgment was that of Aickin J; the other members of the Court agreed with him. At 45 his Honour said:

"Sub-section (6) makes clear what the Commission is to do when a dispute or part of a dispute is referred to a Full Bench. That sub-section provides that the Commission is to 'Hear and determine the industrial dispute or the part of the industrial dispute'. That function is the function of arbitration and can only occur after the procedure for conciliation has come to an end."

Section 34 was amended shortly after this case: see s.7 of the Conciliation and Arbitration Amendment Act 1979. The effect of the amendment was to substitute provisions much like those in s.107 of the present Act. The material in the old subsection (6) was placed in the new subsection (7). This subsection retained the words "hear and determine the industrial dispute". At the same time, a new s.34A was added. This subsection was the predecessor of s.108 of the present Act. Like s.108 it provided for a reference on the President's own motion, the duty of a Full Bench being to "hear and determine the industrial dispute".

In support of its submission that a Full Bench to which a matter had been referred under s.107 may exercise conciliation powers, Comalco relied on the nature of the 1979 amendments and the parliamentary debate concerning them. The events leading to the amendments are discussed in Creighton, Ford and Mitchell: Labour Law - Materials and Commentary (1983) at 36. Those events were, in part, mentioned by the then Minister for Industrial Relations in his Second Reading speech. It is unnecessary to set them out. It is plain that the Minister contemplated that the amended s.34 would enable a reference to a Full Bench, even if the proceeding before the single member of the Commission was a conciliation proceeding. But he did not address the question whether the nature of the proceeding would change, by virtue of the reference, into an arbitration proceeding. There was no need for him to do so. The mischief to which the 1979 amendments were directed was the difficulty in having an industrial dispute referred to a Full Bench while it was still under conciliation. The amendments remedied that difficulty.

Counsel for Comalco point to a statement made during the course of debate by the Member for Cowper, that one consequence of the proposed amendment to s.34 would be to enable an industrial dispute to be referred to a Full Bench for conciliation. However, there is nothing to indicate this belief was shared by the Minister. In any case, parliamentary comments cannot derogate from the language used in the statute. The significance of the amendment, in our opinion, is that, shortly after an authoritative determination that the expression was descriptive only of the exercise of arbitration powers, Parliament chose to use in the amended s.34 the expression "hear and determine". See Pearce and Geddes: Statutory Interpretation, 3rd edition, pars 3.33 to 3.37. Parliament did the same thing at the same time in s.34A. As is the case with s.108 of the present Act, the words "hear and determine" were plainly intended to be a reference to the exercise of arbitration powers.

Having regard to the language of ss.107 and 108 and their legislative history, we think that a reference under s.107 leads to the exercise by the Full Bench only of arbitration powers. A reference automatically brings to an end any incomplete conciliation. The duty of the Full Bench is to arbitrate the industrial dispute.

It follows that Comalco's submissions on this point are misconceived. It was not necessary for one of the events mentioned by s.103 to occur before the Full Bench was entitled to arbitrate. The President's reference both entitled and obliged the Full Bench to arbitrate. The Full Bench did not err in regarding itself as being involved, from the beginning, in a process of arbitration and empowered to make an award; that was the true position. As the Full Bench was engaged only in arbitration, never in conciliation, it did not transgress s.104(4) when it revealed what had happened at the proceeding it conducted. As no member of the Full Bench was involved in conciliation proceedings in respect of these disputes, there was no infringement of s.105(1).

The unions persisted before the Full Bench with an application under s.170QK. This application could not alter the character of the proceeding that arose from the reference of the industrial disputes to the Full Bench. If the application under s.170QK required the exercise of conciliation powers before it could be determined, there may be a question about the validity of the Full Bench's decision to refuse it. However, this could not affect the nature of the powers exercised by the Full Bench in conducting the hearing that culminated in the interim award.

The meaning and operation of Part VIC of the Act

Part VIC of the Act is at the heart of this case. We have already summarised its terms. We should add a reference to s.90AA. It will be recalled that s.170UC requires the Commission (subject to the public interest) to maintain and vary paid rates awards "as appropriate having regard to the objects of this Part", contained in s.170SA and already quoted, "and the Commission's duty under subsection 90AA(2)". Section 90AA provides:

"s.90AA (1) The Commission must perform its functions under this Part and Part VIC in a way that furthers the objects of this Act and, in particular, the objects of this Part and Part VIC.

(2) In performing those functions, the Commission must:

(a) ensure, so far as it can, that the system of awards provides for secure, relevant and consistent wages and conditions of employment; and

(b) have proper regard to the interests of the parties immediately concerned and of the Australian community as a whole.

(3) Changes that are needed to maintain wages and conditions of employment at a relevant level:

(a) may be implemented in stages, so that consistency is achieved over a period; and

(b) may be made subject to compliance by relevant parties with principles established by the Commission.

(4)Subsection (3) is enacted to avoid doubt."

Part VIC is not easy to construe, largely because of the drafter's practice of imposing seemingly mandatory obligations on the Commission and then adding indeterminate qualifications. Comprehension is not assisted by the fact that Parliament nowhere indicates the intended or assumed effect of an award being a paid rates award. The Act says nothing about the rights and obligations of parties to a paid rates award. An award that contained a clause prohibiting entitlements in excess of those provided by it might satisfy the s.4 definition of "paid rates award". Justice Elizabeth Evatt inserted such a clause in the National Building Industry Trades Construction Award 1975. We need not consider whether there are statutory or constitutional fetters on the Commission making an award in this form. The following passage from the judgment of Aickin J in The Queen v Moore; Ex parte Australian Telephone and Phonogram Officers' Association (1982) 148 CLR 600 at 633 perhaps supports the view that such an award could be made, at least under the Conciliation and Arbitration Act:

"It appears to be clearly within the Full Bench's constitutional and statutory power to make awards settling disputes by granting increases in wages of a particular kind (whether by reference to specific sums of money or by reference to specified calculations) upon grounds related to national economy but embodying a prohibition upon other increases save in specified exceptional cases, during the operation of them particular award." [Emphasis added].

It is not clear, however, whether this was a reference to a prohibition on future increases that would be reflected in the award or increases external to it; that is, overaward payments. There is nothing in the case, or in the Building Industry case, to suggest that a prohibition on overaward payments was considered an essential feature of a paid rates award.

In making an award specifying "actual entitlements", rather than "minimum entitlements", the Commission manifests an expectation as to the parties' future conduct, this being reflected in the statement required by s.170UE. However, s.170UD confirms that the statutory concept of "paid rates award" does not necessarily involve a prohibition on overaward payments. Section 170UD contemplates situations where parties to a paid rates award act so inconsistently with it as to make inappropriate its continuance as a paid rates award. In speaking of a party acting in a way that is "inconsistent with the award", Parliament apparently had in mind a situation where an employer provides, and employees receive, entitlements in excess of those prescribed by the award. By doing this, the parties act inconsistently with the award's intended character, even if not inconsistently with its terms.

The circumstances that s.170UD contemplates inconsistent behaviour, but speaks of it as behaviour "inconsistent with the award" rather than "in breach of the award", and provides only the sanction of the Commission cancelling the status of the award as a paid rates award, suggest that the mere fact that an award was created, and is perpetuated, as a paid rates award does not prohibit an employer providing additional entitlements. The position might be different if a prohibition was embodied in the award itself; although it is not clear how, or by whom, such a prohibition could be enforced.

Two other general comments are appropriate. First, the Full Bench placed reliance on the intention of the maker of the original award, Commissioner Stanton, in determining whether the 1991 Award was a paid rates award. It is difficult to see how evidence of subjective intention can assist. Either an award meets the requirements of the definition or it does not. If it does, it is a paid rates award whatever the intention of its maker. If it does not, any intention to make a paid rates award has miscarried. Regardless of the maker's intention, the award is not a paid rates award.

Secondly, Dr Jessup submitted that the Full Bench's finding that payments in excess of those prescribed by the award had been made in recent years "necessarily produced the result that that award was not a paid rates award and had not customarily been so". This submission cannot be accepted. Whether or not a particular award is a paid rates award is a question to be answered by considering its terms in light of the statutory definition. If it is, it does not lose its status as a paid rates award just because the parties have engaged in overaward benefits. The status of the award will be affected only if, as a result of that behaviour, the Commission decides under s.170UD to cancel the award as a paid rates award.

Although the legislative policy underlying Part VIC is to support the use and maintenance of paid rates awards, they are not preferred to Part VIB certified agreements or enterprise flexibility agreements. Section 170UA prohibits the making of an award in relation to a paid rates dispute unless the Commission is satisfied that this is more appropriate than dealing with the dispute by a Part VIB agreement or there is no reasonable prospect of such an agreement. If that threshold is passed, the Commission reaches s.170UB. There it finds that, subject to some qualifications, it appears to be obliged to make a paid rates award if it proposes to make a new award applying to employees of a kind in respect of which, in the relevant industry, it has been customary for employees' wages and conditions to be regulated by a paid rates award. Similarly, and again subject to qualifications, the Commission appears to be obliged by s.170UC to maintain paid rates awards, and vary them from time to time, as appropriate having regard to the objects set out in s.170SA (protection of employees by providing fair and enforceable wages and conditions and efficient work performance in industry) and s.90AA. And, as mentioned, the Part seeks to uphold the integrity of such paid rates awards as are made and maintained by permitting the cancellation or variation of an award, as a paid rates award, if the Commission is satisfied that a party has acted inconsistently with it.

The constitutional validity of ss.170UB and 170UC

Counsel for Comalco argue that ss.170UB and 170UC are invalid. They say these provisions direct the Commission concerning the exercise of its arbitration powers and that such a direction exceeds the legislative power conferred on Parliament by s.51(xxxv) of the Constitution. There are statements in a number of cases to the effect that a person or body invested with the power to settle disputes by conciliation and arbitration cannot, consistently with the limits arising out of s.51(xxxv), be directed by Parliament to exercise its arbitration powers so as to produce a specified result. Perhaps the plainest expression of that view was in The Queen v Commonwealth Conciliation and Arbitration Commission; Ex parte Amalgamated Engineering Union (Australian Section) (1967) 118 CLR 219. That case concerned the operation of s.33(1)(b) of the Conciliation and Arbitration Act which required the power to alter the basic wage for adult males to be exercised by a Full Bench. In considering the proper construction of s.33(1)(b), both Barwick CJ and Windeyer J considered whether Parliament could direct the Commission to determine a basic wage. Barwick CJ said at 242:

"If, as I think, the system or practice of determining the basic wage and a margin for each classification of work is not the only method of settling a dispute as to wages, could the Parliament have chosen it as one of the possible methods of such settlement and have directed the Commission to adopt it to the exclusion of all others in exercising its powers and performing its duties under s32?

The constitutional power in this area is to make laws with respect to the settlement of industrial disputes extending beyond the limits of one State by a specific means, namely, by conciliation and arbitration. The Parliament is unable itself to legislate the level of wages to be paid. Nor has it power to direct the arbitrator as to the level of wages he shall prescribe in the settlement of the dispute as to wages. The constitutional power requires that settlement of the dispute be left to the arbitrator. His award will be valid if it remains within the ambit of the dispute, and its terms are relevant to that dispute and to its settlement, the dispute, of course, itself falling within the constitutional limitation.

Therefore, in my opinion, the Parliament could not have seized upon one method of determining a wage in settlement of a dispute as to wages and have directed the Commission to follow that method and none other. To have done so would, in my opinion, have transcended the constitutional power."

Windeyer J spoke to similar effect at 269:

"Secondly - and most importantly - I think that it would be beyond the power of the Commonwealth Parliament to insist that the Commission must determine and declare a basic wage. The Commission exercises a far-reaching authority over the national economy. But the Parliament has no power under the Constitution to direct that it go about its task of settling industrial disputes by fixing wages according to some particular principle or formula. It must be given a discretion as to means having regard to the end, the prevention and settlement of industrial disputes by conciliation and arbitration. If the Act commanded that the Commission fix wages by reference to a basic wage it would, I consider, be invalid. But the Act is not invalid if it be read as assuming that it may do so and enacting that, if it does, matters relating to the basic wage must be determined in a Presidential Session."

Barwick CJ's observations were cited by Mason J in The Queen v Sweeney; Ex parte Northwest Exports Pty Ltd (1981) 147 CLR 259 at 271-272.

We do not think the limitation on power identified in the AEU case invalidates s.170UB or s.170UC. The duty to deal with, or create, a paid rates award in the way provided by s.170UB or s.170UC only arises if, for either of the reasons identified in s.170UA, an agreement is not to be made under Part VIB. The combined effect of the definition of award in s.4 and the provisions of s.143, is that an order varying an award is itself an award. Thus the expression "make an award" in s.170UA comprehends not only the making of a paid rates award but also its variation. Section 170UA is intended to create a condition precedent to the exercise of all powers referred to in the remainder of Division 3 that involve making or varying a paid rates award. In satisfying this condition precedent, it will ordinarily be appropriate for the Commission to exercise its conciliation powers. Nothing in Part VIC prevents this. Indeed, the effect of s.170UA is to promote the conciliation role.

Turning to the Commission's arbitration role, it is true that the powers referred to in s.170UB and s.170UC to make or vary a paid rates award are expressed in language that indicates the manner in which the power must be exercised. As we have observed, this is a feature of the drafting technique used in Part VIC. If these provisions were unqualified, Parliament would have transgressed the principles stated in the AEU case. The two sections would be invalid. However, the mandatory provisions are qualified. They must be read subject to the relevant qualifications, the question being whether, at the end of the day, the Commission is left free to make whatever award it thinks appropriate for the resolution of the dispute in connection with which it is exercising its arbitration powers.

Considering the matter in this way, we conclude that both sections are valid. Neither the duty in s.170UB to make a paid rates award nor the duty in s.170UC to maintain and vary paid rates awards need be exercised if the Commission is satisfied that to do so is against the public interest: see s.170UB(3)(a) and s.170UC(1). The power to avoid the duty qualifies the duty itself. It renders it substantially nugatory, except as an expression of legislative preference. We say this because the power is to be exercised by reference to an extremely wide criterion: the public interest.

The expression "in the public interest" was considered by a majority of the High Court in O'Sullivan v Farrer (1989) 168 CLR 210, though in a different statutory context. In their joint judgment at 216, Mason CJ, Brennan J, Dawson J and Gaudron J said:

"Where a power to decide is conferred by statute, a general discretion, confined only by the scope and purposes of the legislation, will ordinarily be implied if the context (including the subject-matter to be decided) provides no positive indication of the considerations by reference to which a decision is to be made. ...

The public interest considerations which may ground an objection under s 45(1)(c) are, in terms, confined to considerations 'other than the grounds specified in paragraphs (a) and (b) and subsections (2) and (3)'. But, these limits aside, the Act provides no positive indication of the considerations by reference to which a decision is to be made as to whether the grant of an application would or would not be in the public interest. Indeed, the expression 'in the public interest', when used in a statute, classically imports a discretionary value judgment to be made by reference to undefined factual matters, confined only 'in so far as the subject matter and the scope and purpose of the statutory enactments may enable... given reasons to be [pronounced] definitely extraneous to any objects the legislature could have had in view': Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505, per Dixon J."

The expression "in the public interest",as it appeared in s.41(1)(d) of the Conciliation and Arbitration Act, was considered by the High Court in The Queen v Ludeke; Ex parte Electrical Trades Union of Australia (1987) 61 ALJR 393. Mason CJ, Wilson J and Dawson J said at 395:

"Ascertainment in any particular case of where the public interest lies will often depend on a balancing of interests, including competing public interests, and be very much a question of fact and degree."

There is nothing in either of these cases, or in s.170UB or s.170UC, to commend a narrow interpretation of the expression "public interest" or to suggest that, as submitted by Comalco, consideration of the public interest may not include consideration of the interests of the parties to the relevant industrial dispute. On the contrary, the resolution of industrial disputes being a primary purpose of the Act, the disposal of a dispute in a manner that takes account of the interests of the disputants is plainly within the scope and purpose of the legislation. The purpose of the reference to "public interest" is to ensure that private interests are not the only matters taken into account; to make clear that the interests of the whole community are matters for the Commission's consideration. The effect of the reference is to amplify the "scope and purpose" of the legislation. But the statute does not direct the Commission as to the weight to be given to the various factors or as to the decision it should make.

Plainly the Commission may decide not to deal with a paid rates dispute in the manner indicated by the relevant qualified duty found in s.170UB or s.170UC. If it did so, the Commission would be free to use the unqualified arbitration powers conferred on it elsewhere in the Act: s.111(1)(b) and s.113.

Neither s.170UB nor s.170UC, properly construed, directs the Commission as to the manner in which it should exercise its arbitration powers in relation to paid rates disputes. In our opinion, s.170UB and s.170UC are valid laws of the Commonwealth.

Whether wages and conditions at Bell Bay have been customarily determined by a paid rates award

As will be apparent from our account of the Full Bench's decision, the parties debated this issue by reference to the status of the 1977 and 1991 Award; in particular the 1991 Award. It appears to have been common ground that the 1991 Award was critical. If it was a "paid rates award", the condition of s.170UB(1)(b) was satisfied; if it was not, the condition was not satisfied and s.170UB did not apply. The question whether the 1991 Award was a part rates award was also directly relevant to the application of s.170UC.

In concluding that the 1991 Award was a paid rates award, the Full Bench referred to the history of that award and earlier awards applying at Bell Bay and statements about their character made by the Commission and parties to them. Those statements were made before the 1993 amendments that introduced into the Act Part VIC and the definition of "paid rates award". The people who made them did not necessarily use the term "paid rates award" in the sense of the definition later inserted into the Act. Further, and as a matter of fundamental principle, whatever was the intention of the maker of any award, or the understanding of the parties or the Commission, about its nature, the Full Bench's task was to determine whether the 1991 Award fell within the statutory definition of that term.

The s.4 definition of "paid rates award" contains a number of elements. The first, self evidently, is that there is an award. "Award" is relevantly defined in s.4 as "an award or order that has been reduced to writing under sub-section 143(1)". It does not matter whether the reference in the definition to s.143(1) qualifies only "order", or both "award" and "order"; s.143(1) applies, by its own terms, to awards. Section 143, which is found in Division 6 ("Awards of the Commission") of Part VI, states the steps to be taken by the Commission when making a decision that is an award. The Commission is obliged to reduce it to writing (see s.143(1)(a)) and sign it (see s.143(1)(a)(ii)). It is to be dated (see s.143(1)(a)(iii)). Section 143 is directed to the creation of an entire instrument. Related sections in Division 6 concern the form of an award (see s.144), its date (see s.145), commencement (see s.146), and term (see s.147). These sections, and s.148 (continuation of an award) and s.149 (persons bound by an award), all treat an award as the entire instrument created pursuant to s.143. Once made, it may be set aside in whole (see s.113(1)) or part (see s.113(1)) or varied (see s.113(2)). It is significant, we think, that the references to a variation are framed on the basis that they may be exercised in relation to the entire instrument created by s.143 or parts of it. A part of an award is not, itself, an award. If it were, there would be no need to deal separately with variation of a part of an award. It follows that, for the purposes of considering the character of the 1991 Award, it is necessary to look at the entire instrument.

The second element in the s.4 definition is that the award specifies actual entitlements, rather than minimum entitlements, in relation to wages and conditions. As we have indicated, there is a question about the meaning of the expression "specifying actual entitlements". For the reasons we have stated, we do not think this expression requires that the award be one that, in terms, prohibits the provision of additional entitlements; so that, if additional entitlements were provided, one or both parties would be in breach of the award and exposed to a penalty under s.178 of the Act. We think the expression refers to an award that specifies the entitlements intended to be actually provided. If an employer bound by the award provided less than these entitlements, that would, no doubt, be a breach of the Act attracting orders under s.178. If the employer provided more, the only sanction would be cancellation of the award, as a paid rates award, under s.170UD and any industrial consequences that might ensue from that.

The definition of "paid rates award" draws a clear distinction between "specifying actual entitlements" and "(specifying) minimum entitlements". When minimum entitlements are specified in an award, there is not necessarily an expectation on anybody's part that these will accord with the entitlements actually provided to employees. It is commonplace, in many industries, for employers to provide over-award benefits. Because there is no necessary expectation of a correlation between specified minimum entitlements and actual entitlements, it is clear that an award that specifies minimum entitlements is not a paid rates award. As we have pointed out, the Act uses the term "award" to refer to a complete instrument, not part of it. It seems to us that, unless the whole award meets the test of specifying actual entitlements rather than minimum entitlements, it is not a paid rates award. It is not enough that it specifies some actual entitlements, if it specifies only minimum standards in relation to others.

There was an issue whether the language used to specify adult wage rates in the 1991 Award was intended to specify minimum rates or actual rates. It will be recalled that adult rates are dealt with by clause 8 which opens with the sentence:

"An adult employee of a classification specified herein shall be paid the wage rate hereunder assigned to that classification."

Having regard to that wording, it seems to us that clause 8 can properly be described as specifying actual adult wage rates, not minimum rates.

However, clause 9 is differently framed. It specifies "minimum weekly rates of wages" for unapprenticed junior employees. Having regard to the use of the word "minimum", it is not possible to see clause 9 as a specification of actual rates. Although this clause is probably only of limited practical importance, its effect is to take the award out of the statutory definition. The award is one that specifies actual entitlements in relation to some employees but minimum entitlements in relation to others. An award cannot be segmented for the purposes of the application of the definition to Part VIC. The prescription of minimum rates for unapprenticed junior employees gives the award a character inconsistent with the defined character of a paid rates award.

We appreciate that this conclusion is at odds with the characterisation of the award and its predecessors by the parties and the Commission. But that characterisation was not only made before the formulation of the statutory definition, it was made for a different purpose, namely the Commission's wage fixing principles. Even so, it is doubtful whether it was ever correct to call the award a paid rates award. The Commission recognised the distinction between a paid rates award and a hybrid award, as is evident from this extract from its February 1989 Review of Wage Fixing Principles:

"There has been a clear distinction, at least in theory, between minimum rates and paid rates awards. The former have prescribed rates recognised as being legal minima in addition to which supplementary payments might be awarded and over award payments reflecting the market might exist; the latter have prescribed rates which were intended to be actual rates of pay.

On recent experience there are grounds for doubting the wisdom of attempting to maintain paid rates awards in the private sector. ...

A paid rates award must, as the name implies, prescribe all of the rates and conditions which actually apply; for it to do otherwise must modify its status to that of a hybrid for which no provision is made in the principles." (emphasis added)

The nature of the Commission's error and s.150(1)

The circumstance that the 1991 Award was not a "paid rates award", within the definition of that term, does not mean that the Full Bench lacked power to make an interim paid rates award. The Full Bench possessed the general power to make an award that is conferred on the Commission by s.111(1)(b) of the Act. Subject only to its being satisfied of the matters stipulated by s.170UA, which it was, the Full Bench was free to exercise that power by making a paid rates award, rather than any other award, if it thought this to be the appropriate course. In making the award it did, the Full Bench did not exceed its jurisdiction. However, it clearly proceeded on a misapprehension of its jurisdiction. The Full Bench did not decide to make an award, then consider whether it would be more appropriate for this to be a paid rates award or some other type of award and make a discretionary choice in favour of the former course. The Full Bench's decision to make the interim award was based solely on what it perceived to be the duty cast upon it by Division 3 of Part VIC. This duty arose only if s.170UB(1)(b) was satisfied, that is, if the 1991 Award was a "paid rates award", or under s.170UC.

As we have mentioned, after holding that the 1991 Award was a paid rates award, the Full Bench turned to the question whether it should "grant interim relief to maintain the paid rates award". After summarising some of the provisions of Part VIC and a description of the relief sought by the unions, the Full Bench noted that there was no prospect that the unions would agree to replacing the paid rates award and said:

"In these circumstances, we consider that the legislation requires us to maintain the paid rates award and if necessary to make an interim award having that effect unless we are satisfied that it would not be in the public interest to do so."

The Full Bench went on to consider the question of public interest. It concluded with the statement:

"In all of the circumstances, for the reasons set out, we do not believe it can be said that it is in the public interest to refuse to maintain the paid rates nature of the Bell Bay Award. Nor we think, can such a course of action be consistent with the objects of the IR Act and hence our statutory duty. Accordingly, we believe we are obliged to grant such relief as is necessary to maintain, at the very least on an interim basis, the paid rates nature of the award."

Observations to the same effect were made on the following page of their reasons:

"In deciding that the legislation imposes a statutory requirement upon us to make an interim paid rates award and the other reasons set out, we have not found it necessary to consider the unions' submissions which relied upon a number of international conventions to support their applications and the submissions which were put in opposition."

Once it is accepted that the 1991 Award was not a paid rates award, it becomes clear from these passages that the Full Bench's decision to make the interim award proceeded on a fundamental misapprehension of the nature of its jurisdiction. In considering whether to make the interim award, the Full Bench should not have thought itself constrained by any of the duties found in s.170UB or s.170UC.

The making of a decision that is within jurisdiction, but pursuant to a fundamental misapprehension of the nature of the jurisdiction that is being exercised, constitutes jurisdictional error amenable to correction by the granting of prerogative relief: see the cases discussed by Wilcox CJ in Re Keely; Ex parte Kingham (1995) 129 ALR 255 at 273-278. In one of them, Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147, two members of the House of Lords gave pertinent examples of jurisdictional error. Lord Reid referred at 171 to a tribunal having "in perfect good faith ... misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it". Lord Pearce at 195 included, as an instance of "lack of jurisdiction", "the tribunal ... may ask itself the wrong questions".

Of the cases discussed in Re Keely, perhaps that which is of the greatest present assistance is Public Service Association of South Australia v Federated Clerks' Union of Australia, South Australian Branch ("PSA") (1991) 173 CLR 132. We say this for two reasons. First, in PSA there was an error much like that committed by the Full Bench in this case, the South Australian Full Industrial Commission misunderstood the nature of the question it had to determine. This was held to be a jurisdictional error. Second, the High Court had to deal with the effect of a privative section that immunised the Industrial Commission's decision from challenge "except on the ground of excess or want of jurisdiction". The High Court held the exception applied and upheld a decision of the South Australian Supreme Court setting aside the Industrial Commission's decision and remitting the case for rehearing.

In the present case, also, there is a privative provision. It is s.150(1) of the Industrial Relations Act. The subsection reads:

"150.(1) Subject to this Act, an award (including an award made on appeal):

(a) is final and conclusive;

(b) shall not be challenged, appealed against, reviewed, quashed or called in question in any court; and

(c) is not subject to prohibition, mandamus or injunction in any court on any account."

The operation of this subsection, and its predecessors, has been considered on many occasions by the High Court. An illuminating history of the legislation and the High Court decisions was set out in a chapter headed "Parliament v High Court" in Whitfield and Aronson "Administrative Law" (1987). The history highlighted the important role of the judgment of Dixon J in The King v Hickman; Ex parte Fox (1945) 70 CLR 598. As Whitfield and Aronson put it at 696, Dixon J there drew together the threads of the previous authorities by propounding "a compromise interpretation of those ouster clauses which are apparently aimed at preventing jurisdictional review, whether those clauses are of federal or State origin". Dealing with a privative clause in National Security regulations, Dixon J said at 615:

"Such a clause is interpreted as meaning that no decision which is in fact given by the body concerned shall be invalidated on the ground that it has not conformed to the requirements governing its proceedings or the exercise of its authority or has not confined its acts within the limits laid down by the instrument giving it authority, provided always that its decision is a bona fide attempt to exercise its power, that it relates to the subject matter of the legislation, and that it is reasonably capable of reference to the power given to the body."

Whitfield and Aronson commented at 696-697:

"this interpretation of ouster clauses amounted to reading such provisions as indirect grants of jurisdiction to the tribunal concerned, rather than direct ousters. So a conflict with s.75(v) of the Constitution was avoided. Of course, his Honour's formula was subject to the overriding consideration that the ouster clause was never to be construed as a grant of power to transgress the Constitution."

They noted that, in subsequent cases, Dixon J added another proviso: his "Hickman formula was not to be taken as validating a decision made in breach of specific statutory limitations on the tribunal's power which it was reasonable to suppose the legislature had intended to be supreme". Having regard to the subsequent cases, they offered this restatement of the Hickman formula:

"An ouster clause which is obviously designed to restrict jurisdictional review amounts (subject to any constitutional restraints) to permission for the tribunal to stray outside its jurisdictional boundary lines, provided -

(a) the tribunal's decision was a bona fide attempt to exercise its power;

(b) the decision relates to the subject matter of the legislation;

(c) the decision is reasonably capable of reference to the power given to the tribunal;

(d) the decision does not on its face display a jurisdictional error; and,

(e) the decision did not breach a statutory constraint regarded as being so important as to be unprotected in any way by the operation of the clause." [original emphasis]

The High Court continues to regard Hickman as good law: see O'Toole v Charles David Proprietary Limited (1991) 171 CLR 232 at 248-249, 274-275, 286-287 and 304 and Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 127 ALR 21 at 25-26, 36-37, 50, 59, 68 and 73.

There is a question in our minds as to whether Whitfield and Aronson were correct in including condition (d) in their list. It does not appear to be supported by the references they cite. For present purposes, this does not matter. It seems to us that the decision under challenge in this case cannot be said to be reasonably capable of reference to the power given to the Full Bench of the Commission. The Full Bench had a general discretionary power, under s.111(1)(b) of the Act, to make whatever award was appropriate to resolve the disputes between the parties. It did not exercise that power. Instead, wrongly thinking that the 1991 Award was a paid rates award and, therefore, that s.107UB(1)(b) was satisfied, it gave effect to what it wrongly thought was the duty imposed on it by s.170UB(2) to make a particular type of award. Although the actual decision of the Full Bench, an interim paid rates award in a particular form, is a decision that could have been made in the exercise of the Commission's general arbitration power, this particular decision is not capable of reference to that power. It follows that s.150(1) does not exclude a challenge to the award or preclude the grant of prerogative relief.

The applicant is entitled to the relief sought: a writ of prohibition directed to the first respondents prohibiting them from any further proceedings in relation to the interim award made by the Full Bench, a writ of certiorari directed to them requiring the record of proceedings in the matters before them to be brought in and the interim award quashed and a writ of mandamus requiring them to hear and determine according to law the unions' applications for an interim award and Comalco's application for a minimum rates award.

I certify that this and the preceding sixty-eight (68) pages are a true copy of the Reasons for Judgment of the Honourable Chief Justice Wilcox and Justice Keely.

Associate:

Dated: 27 September 1995

APPEARANCES

Counsel for Comalco Aluminium

(Bell Bay) Limited: C Jessup QC, A Cavanagh, M McDonald

Solicitor for the Comalco: Freehill Hollingdale & Page

Counsel for the second

respondents: R Merkel QC, K Bell and

M Walton

Solicitor for the second

respondents: McClellands

Counsel for the Commonwealth: G Griffith QC and M Walton

Solicitor for the Commonwealth: Australian Government Solicitor

Dates of hearing: 5, 6, 7, 8 and 9 June 1995 and 23 August 1995

IN THE INDUSTRIAL RELATIONS )

)

COURT OF AUSTRALIA ) No. VI 1213 of 1995

)

NEW SOUTH WALES DISTRICT REGISTRY)

BETWEEN: COMALCO ALUMINIUM

(BELL BAY) LIMITED

Applicant

AND: THE HONOURABLE DEIRDRE O'CONNOR,

PRESIDENT; THE HONOURABLE JOHN

MacBEAN AND THE HONOURABLE COLIN

POLITES, SENIOR DEPUTY PRESIDENTS;

THE HONOURABLE SIMON WILLIAMS,

DEPUTY PRESIDENT AND MR ROBERT

MERRIMAN, COMMISSIONER, MEMBERS

OF THE AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

First Respondents

THE AUSTRALIAN WORKERS UNION

- FEDERATION OF INDUSTRIAL,

MANUFACTURING AND ENGINEERING

EMPLOYEES AMALGAMATED UNION;

AUTOMOTIVE, FOOD, METALS AND

ENGINEERING UNION AND COMMUNICATIONS,

ELECTRICAL, ELECTRONIC, ENERGY,

INFORMATION, POSTAL, PLUMBING AND

ALLIED SERVICES UNION

Second Respondents

JUDGE: Moore J

PLACE: Melbourne

DATE: 27 September 1995

REASONS FOR JUDGMENT

I have read the reasons for judgment of the Chief Justice and Justice Keely in a draft form. I generally agree with them. I agree with the conclusions they reached and the orders they propose. I add a few observations of my own.

Notwithstanding what may have been the prior understanding of the parties to the 1991 Bell Bay Award and its predecessors and the members of the Australian Industrial Relations Commission about what was a paid rates award for the purposes of wage fixing principles and whether the 1991 Bell Bay Award and its predecessors were awards of that character prior to the enactment of Part VIC, the present task is to construe and apply the Industrial Relations Act 1988. The yardstick by reference to which the 1991 Bell Bay Award is to be measured for present purposes are the words, properly construed, chosen by parliament to define "paid rates award" which identify the scope of the operation of Part VIC. Part VIC was one of a number of legislative measures introduced by the Industrial Relations Reform Act 1993 ("the Reform Act") identifying what the Commission might do in relation to matters that the Commission, to that point, had done by dint of its own principles of wage fixation in which this notion of a paid rates award had assumed some prominence. The comparative flexibility the Commission had in determining the contents of its principles of wage fixation and how they might be applied, modified or even abandoned to accommodate changing industrial and economic circumstances, must yield to any prescription by the Commonwealth legislature made within Constitutional limits. It is the words adopted by the legislative that are pre-eminent.

What is a paid rates award is defined in s4:

"paid rates award" means an award specifying actual entitlements, rather than minimum entitlements, in respect of wages and conditions of employment.

The expression "specifying actual entitlements" reflects a concept that is, in some respects, illusory. If it does not mean an award which, in terms, prohibits the provision of additional entitlements which if breached, would expose a party to a penalty: see s178, it must mean an award that specifies entitlements that both limit and define the entitlements to be provided with the benefit of compliance and the sanction for non compliance being those found in Division 3 of Part VIC itself.

An award which in whole or in part specified minimum entitlements would not be an award that satisfies the definition.

I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore.

Associate: ......................

Dated: 27 September 1995.

APPEARANCES

Counsel for the Applicant:

Solicitor for the Applicant:

Counsel for the Respondent:

Solicitor for the Respondent:

Dates of Hearing:

Written Submissions Complete:

IN THE INDUSTRIAL RELATIONS )

)

COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY) No. VI 1213 of 1995

BETWEEN:

COMALCO ALUMINIUM

(BELL BAY) LIMITED

Applicant

AND:

THE HONOURABLE DEIRDRE O'CONNOR,

PRESIDENT; THE HONOURABLE JOHN MacBEAN

AND THE HONOURABLE COLIN POLITES,

SENIOR DEPUTY PRESENTS; THE HONOURABLE

SIMON WILLLIAMS, DEPUTY PRESIDENT AND

MR ROBERT MERRIMAN, COMMISSIONER,

MEMBERS OF THE AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

First Respondent

THE AUSTRALIAN WORKERS UNION - FEDERATION

OF INDUSTRIAL, MANUFACTURING AND ENGINEERING

EMPLOYEES AMALGAMATED UNION; AUTOMOTIVE,

FOOD, METALS AND ENGINEERING UNION AND

COMMUNICATIONS, ELECTRICAL, ELECTRONIC,

ENERGY, INFORMATION, POSTAL, PLUMBING,

AND ALLIED SERVICES UNION

Second Respondents

JUDGE: Moore J

PLACE: Sydney

DATE: 14 December 1995

CORRIGENDUM

The following amendments are made to his Honour's judgment of 22 September 1995:

1. On page 2, line 22 replace the word "legislative" with "legislature".

Associate: .............................

Date: .....................

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