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TRANSCRIPT OF PROCEEDINGS
Fair Work Act 2009 1033680-1
VICE PRESIDENT WATSON
AM2012/40
s.158 - Application to vary or revoke a modern award
s.160 - Application to vary a modern award to remove ambiguity or uncertainty or correct error
Application by FCL Pty Ltd as trustee for the FCL Practice Unit Trust
(AM2012/40)
Legal Services Award 2010
(ODN AM2008/86)
[MA000116 Print PR991083]]
Sydney
10.06AM, THURSDAY, 17 MAY 2012
THE FOLLOWING PROCEEDINGS WERE CONDUCTED VIA VIDEO CONFERENCE AND RECORDED IN SYDNEY
PN1
THE VICE PRESIDENT: Can I have the appearances, please, commencing in Brisbane?
PN2
MR M. OSBORNE: Thank you, your Honour. With leave of the tribunal, Osborne, initial M, from Norton Rose Australia. I seek leave to appear on behalf of the applicant and also Law Employees Superannuation Fund.
PN3
THE VICE PRESIDENT: Mr Osborne. And in Melbourne?
PN4
MR J. NUCIFORA: If your Honour pleases, I appear for the Australian Services Union, Nucifora, initial J. If I'm able to remain seated, your Honour, that's the preference through the proceedings.
PN5
THE VICE PRESIDENT: Yes, you can both remain seated because I can see you both probably better when you're sitting there. Any objection to Mr Osborne's application for permission to appear?
PN6
MR NUCIFORA: Your Honour, not in relation to the applicant FCL Pty Ltd. But we do oppose Mr Osborne seeking leave to appear for the fund.
PN7
THE VICE PRESIDENT: So it's not in his capacity as a lawyer but you object to the fund being involved in the proceedings, do you?
PN8
MR NUCIFORA: Yes, there is a question about that we've raised in terms of standing of the fund as an applicant. But we're not disputing that FCL is in fact of course an employer covered by the award in question: the Legal Services Award.
PN9
THE VICE PRESIDENT: Okay. Well, Mr Osborne, I'll hear you in relation to the standing or the right to hear from LESF.
PN10
MR OSBORNE: Thank you, your Honour. Your Honour, I don't know if it's a significant issue, having regard to the fact that the fund doesn't propose to put any additional material before the tribunal and is seeking to appear essentially just to put in submissions which adopt the submissions of the applicant and the material of the applicant. I agree with Mr Nucifora that the fund doesn't have standing to bring its own application. The fund couldn't have initiated an application pursuant to section 160 or section 158 of the Fair Work Act. However, the applicant, having that standing to bring an application, I don't believe there to be any impediment in the Act to the tribunal exercising its powers, including the power pursuant to section 590, to inform itself as it sees fit, to permit submission to be made by the fund, even though the fund couldn't itself have brought the application.
PN11
In fact, your Honour, that is how applications of this nature - of which there have been a few - have been proceeding. Employers have brought applications because under section 158 or 160 they're one of the limited parties that can bring an application and then other interested parties have put submissions in even though those parties themselves couldn't have initiated an application. I'd submit that this isn't the case, that some stranger passing in the street has decided to appear and put matters before the tribunal which would be wasteful of its time and resources. To the contrary, obviously the fund has an interest in the outcome of this application. It will determine whether it is or is not named as a default fund in the Legal Services Award. That has significant consequences for the fund and it has an interest in the outcome.
PN12
Similarly, it's not seeking to unduly prolong or protract the proceedings. It essentially is seeking to just put submissions in support of the submissions of the applicant employer. That's all I have to say on the matter, your Honour.
PN13
THE VICE PRESIDENT: Yes, so it's really in the nature of an application to intervene and make a short submission supporting the employer's submission.
PN14
MR OSBORNE: That is correct, your Honour.
PN15
THE VICE PRESIDENT: Yes. Mr Nucifora?
PN16
MR NUCIFORA: Your Honour, the question of standing and whose interests are being promoted and I guess protected, your Honour, is one of these issues that we raised in our opposition to this application and we understand that through the award modernisation process the commission full bench - Award Modernisation Full Bench - could call on parties such as the fund here. But we're not talking about the award modernisation process. We're now talking of course post-1 January 2010 and we're talking about variations to a modern award. Your Honour, we do say that when you look at some of the submissions that were lodged last night it does seem to us that we're really not looking at the applicant's interests here but the interests of the fund. When you look at the application, it seems to be - in paragraphs 45, 46 - to be talking about the interests of the fund.
PN17
If we look at the interests of the applicant here - FCL - they are covered by the award. All of their existing employees, including new employees after the date set in the award - that is 12 September 2008, that's at clause 23.4(g) - all of their employees can be members of the FCL fund. What we're talking about is really the interests of the LESF fund and new employers after that date. It's our reading of that clause and in fact there should be no disadvantage to FCL or any of its employees. So we raise that essential question, that if we are really talking about the interests of the fund, then we really should be looking at evidence that goes to who might be disadvantaged, because the fund is not listed as an express default fund. So we'd be talking about potential new employers in the industry, particularly in Queensland, who are new employers who may have been established after the date in the award, of course 12 September 2008.
PN18
So they're the employers and potentially their employees who may be disadvantaged. That’s the sort of issue that we would have been, if you like, seeking to be raised before you before we would have considered whether this fund ought be a default fund. So, your Honour, we say what is the question? Are we really talking about the interests of LESF or are we talking about the interests of employees of FCL as the applicant?
PN19
THE VICE PRESIDENT: In relation to this preliminary point as to whether LESF should be heard, I'm satisfied that it may have a relevant interest and I'll grant LESF leave to intervene. That says nothing about the matters you've raised, Mr Nucifora, as to the relevance or significance of any submissions they may make and you're free to reinforce those matters in due course. Yes, Mr Osborne? How do you wish to proceed?
PN20
MR OSBORNE: Thank you, your Honour. Your Honour, I may first just inform yourself and Mr Nucifora that there is construction work being undertaken in the premises of the tribunal here in Brisbane. So immediately outside the hearing room, although the door is closed, there is a drill operating at the moment. So if you hear any background noise that's what it will be. Please if any of my points are not heard as a consequence, let me know and I'll be happy to repeat them. Your Honour, the matter before the tribunal is an application pursuant to section 158 and under that section, section 157 and in the alternative section 160. There's foreshadowed in the outline of submissions which were filed with the tribunal via email to your chambers last night, your Honour - the applicant is no longer pursuing the application pursuant to section 158.
PN21
We have made that decision not by way of concession but because, whilst we thought there were arguments available pursuant to section 158, section 160 seemed to clearly apply in the situation at hand. So we've decided that rather than waste everybody's time and effort dealing with arguments about section 158, we will no longer pursue that ground. The application before you is by an employer who employs people covered by the Legal Services Award. I'll elaborate upon that but perhaps to simplify matters, it may be easiest if I tender some documents, your Honour, all of which are with your chambers and with Mr Nucifora. That includes two affidavits. Mr Nucifora has informed me this morning that neither of those deponents are required for cross-examination. So the simplest process - I think I'll just tender those documents in order and then perhaps we could proceed from there, if that pleases you, your Honour.
PN22
THE VICE PRESIDENT: Yes.
PN23
MR OSBORNE: The first document I'd like to tender, your Honour, is Application to Vary a Modern Award, dated (indistinct) March 2012 by FCL Pty Ltd as trustee for the FCL Practice Unit Trust.
PN24
THE VICE PRESIDENT: That's the application that is on the file in this matter.
PN25
MR OSBORNE: It is, your Honour.
PN26
THE VICE PRESIDENT: Yes, well, I won't mark that separately. But that is the application that will be considered.
PN27
MR OSBORNE: Thank you, your Honour. The next document, your Honour, is an affidavit of Tracy Lee Elliott, affirmed on 16 May 2012 and which was emailed to your chambers and to Mr Nucifora late yesterday.
PN28
THE VICE PRESIDENT: I'll mark that affidavit Exhibit 01 in these proceedings.
EXHIBIT #O1 AFFIDAVIT OF TRACY LEE ELLIOTT DATED 16 MAY 2012
MR OSBORNE: Thank you, your Honour. The next document, your Honour, is an affidavit of Peter John Short, also affirmed on 16 May 2012 and forwarded to your chambers and to Mr Nucifora yesterday afternoon.
PN30
THE VICE PRESIDENT: And that contains a number of attachments?
PN31
MR OSBORNE: It contains one annexure, your Honour.
PN32
THE VICE PRESIDENT: Yes, being the annual report.
PN33
MR OSBORNE: Correct, your Honour.
PN34
THE VICE PRESIDENT: That affidavit will be Exhibit 02.
EXHIBIT #O2 AFFIDAVIT OF PETER JOHN SHORT DATED 16 MAY 2012
MR OSBORNE: Thank you, your Honour. The next document, your Honour, is the applicant's outline of submissions dated 16 May 2012, which were forwarded to your chambers and Mr Nucifora last night.
PN36
THE VICE PRESIDENT: Exhibit 03.
EXHIBIT #O3 APPLICANT'S OUTLINE OF SUBMISSIONS DATED 16 MAY 2012
MR OSBORNE: Thank you, your Honour. The final document, your Honour - at this stage, in any event - a document which is Law Employees Superannuation Fund outline of submissions dated 16 May 2012, which was also forwarded to your chambers and Mr Nucifora last night.
PN38
THE VICE PRESIDENT: Exhibit 04.
EXHIBIT #O4 LAW EMPLOYEES SUPERANNUATION FUND OUTLINE OF SUBMISSIONS DATED 16 MAY 2012
MR OSBORNE: Thank you. Your Honour, the applicant in the matter is a company as trustees for a trust which employs people covered by the Legal Services Award 2010, being a modern award created by the Australian Industrial Relations Commission. It employs people who come within - well, I'll take you, I should say, to clause 4 of that award, which is the coverage provision, which provides in 4.1 that:
PN40
This industry award covers employers throughout Australia in the legal services industry and their employees in the classifications listed in clause 14, minimum wages -
PN41
and then there are some exclusions but none of which are relevant to this application. Clause 14 lists a number of different levels of legal, clerical and administrative employee classifications plus two additional classifications, being law graduate and law clerk. Clause 3 of that award in turn defines the legal services industry, legal, clerical and administrative employee, law graduate and law clerk. I can put more fulsome submissions in relation to those definitions if necessary but I anticipate that none of this is contentious so I won't at this stage.
PN42
If I can take you to the affidavit of Tracy Elliott, which is marked exhibit 01, your Honour, in paragraphs 5 and 6 - I should actually introduce Ms Elliott first; my apologies. In paragraph 1 she explains that she is the office manager for FCL Pty Ltd. And then in paragraphs 5 and 6 Ms Elliott gives evidence that the applicant is the legal entity that employs administration support services personnel for the law firm Ferguson Cannon Lawyers. Ms Elliott further gives evidence in paragraph 6 that the legal staff for that particular law firm are employed by another company called Ferguson Cannon Pty Ltd and that in her role as office manager employed by the applicant she also undertakes administrative functions in relation to Ferguson Cannon Pty Ltd.
PN43
Ms Elliott also gives evidence in paragraph 8 that the applicant is primarily engaged in or conducts business activities that are primarily in the legal services industry, in particular legal and support services, and that it employs employees who are covered by the Legal Services Award, none of which I would have thought on its face would be contentious at all. Further, Ms Elliott gives evidence in paragraph 14 of her affidavit that both the applicant and Ferguson Cannon Pty Ltd have been contributing superannuation on behalf of employees to the Law Employees Superannuation Fund since 2007, which obviously predates 12 September 2008 and that they continue to make contributions to that fund.
PN44
If I can take you now, your Honour, to the Notional Agreement Preserving a State Award for the Clerical Employees Award State 2002, which was the Queensland Clerical Employees Award. Clause 1.4 of that award provides that it applies to persons employed wholly or principally as a clerk, with the exception in clause 1.4.1(b) of employees under articles to solicitors. In clause 1.6, that NAPSA defined "clerk". Again, I won't go through the definition but the evidence of Ms Elliott - and I submit the conclusion on any reading of the Legal Services Award and the NAPSA - is that administrative support people employed by the applicant covered by the Legal Services Award were previously covered by the NAPSA. I don't think that's controversial.
PN45
Law graduates, who are also covered by the Legal Services Award, are not employed by the applicant. They are employed by Ferguson Cannon Pty Ltd. The situation in Queensland prior to the creation of the Legal Services Award was that legal graduates, historically known as articled clerks, were non-award. As I've said, however, the evidence of Ms Elliott is that in respect of both administrative support people and law graduates the applicant and the entity Ferguson Cannon Pty Ltd have been contributing to the Law Employees Superannuation Fund since 2007. Your Honour, the Law Employees Superannuation Fund is not named as a default fund in clause 5.8 of the Legal Services Award.
PN46
It was named as a default fund, or a fund to which contributions could be made, in - sorry, that was clause 23.4 of the Legal Services Award. It was named as a fund to which contributions could be made in clause 5.8 of the NAPSA, reflecting the Clerical Employees Award. As part of the award modernisation process, your Honour, the fund known as LESF was not included in the Legal Services Award as a default fund. If I can take you, your Honour, to the affidavit of Peter Short, which is marked exhibit 02 - particularly paragraphs 32 to 42. In those paragraphs Mr Short explains that the failure of the fund to take positive steps to seek to be included as a default fund was based on a lack of understanding or a lack of being informed by the fund administrator that that in fact was necessary. In short, the fund did not know that it needed to take positive steps to insure that it was named as a default fund by the Australian Industrial Relations Commission full bench.
PN47
Mr Short also gives evidence in paragraph 42 that if he and the other directors had been aware of that fact then they in fact would have taken steps to insure that LESF was named as a default fund in the Legal Services Award. The Award Modernisation Full Bench decision of 2 September 2009 makes it clear in paragraphs 65 to 67 that - and I've quoted the relevant paragraphs in my outline of submissions, your Honour - firstly by referencing the decision of the Australian Industrial Relations Commission of 19 December 2008 that the Commission had decided to allow as a default fund any fund to which the employer was making contributions to the benefit of employees on 12 September 2008. At a later point the full bench says:
PN48
A number of funds have since made applications to be included as named default funds on the basis that the fund that was nominated as a default fund in an award-based transitional instrument relevant to the coverage of the modern award or on the basis that the representatives of the main parties covered by the award consent. In our view either basis would constitute a good reason for the fund being specified as a default fund in a modern award.
PN49
Obviously, your Honour, we don’t have consent. It is clear however, on the evidence, that LESF was a default fund in an award-based transitional instrument relevant to the coverage of the Legal Services Award. If that had been brought to the attention of the Australian Industrial Relations Commission at the time of the creation of the Legal Services Award it would, based on the full bench decision, as a matter of course been included in that award as a default fund. Your Honour, I've referenced a number of decisions in my submissions which deal with similar applications to the one before you, where funds which were omitted during the award modernisation process have applied to be included as default funds. I won't take you through all of those at the moment but I would refer you to two.
PN50
In particular I'd refer you to the AustSafe Super Pty Ltd decision of Commissioner Lewin on 18 May 2010 where he dealt with an application by AustSafe Super to be included in the Aquaculture Industry Award 2010. Relevantly, I refer you to paragraph 4, where Commissioner Lewin said:
PN51
The relevant considerations for determining whether or not AustSafe Super is eligible to be included as a default fund under the Aquaculture Industry Award 2010 are whether or not the fund was a fund specified in the superannuation clause as a default fund under an award or NAPSA or alternatively, any fund to which an employer was making contributions for the benefit of employees on 12 September 2008.
PN52
I'd also take you, your Honour, to your own decision on 20 August 2010 in a matter involving the AMWU, being AM2010/85, which related to the General Retail Industry Award. I'll take you to paragraph 7 of that decision where your Honour said:
PN53
I am satisfied that some employees subject to the coverage of this modern award were previously covered by an award-based transitional instrument that recognised or permitted contributions to be made to the MTAA Superannuation Fund. In my view, if this had been pointed out to the Award Modernisation Full Bench, the fund would have been listed as a default fund. I am satisfied that the error should be remedied by making the variation sought. A determination to this effect will be issued with this decision with an operative date of 1 January 2010.
PN54
That application was pursuant to section 160, your Honour, and I would submit that that decision and the application before you are extremely similar. Section 160 gives Fair Work Australia the power to make the determination varying a modern award to remove an ambiguity or uncertainty or to correct an error; correcting an error being the ground relied upon in this application. The evidence and an obvious reading of both the NAPSA and the Legal Services Award, your Honour, is that if LESF had been brought to the attention of the Australian Industrial Relations full bench at the time of the creation of the Legal Services Award, it should have and would have been included as a default fund.
PN55
Now, it wasn't brought to the attention of the Australian Industrial Relations Commission. As a consequence there was an error, in that the fund was not included as a default fund of the Legal Services Award. It's that error which the applicant asks your Honour to remedy pursuant to section 160. In respect of the law graduates, who were non-award, the evidence before your Honour is that contributions were being made prior to 12 September 2008 for law graduates. Now, obviously LESF can't have been named as a default fund, your Honour, in a pre-existing award-based transitional instrument for law graduates because in Queensland in particular those employees were non-award.
PN56
However, consistent with the decision of the commission on 19 December 2008, which was quoted by the full bench in its decision of 2 September 2009, I'd submit that the omission of LESF for law graduates was also an error. I'd also make a comment that by far the majority coverage of the Legal Services Award is clerical and administrative employees, not law graduates. Your Honour, I have had the benefit of receiving the ASU's submissions prior to lodging my submissions. I think, however, whilst I could deal with them now it's probably more appropriate to wait for Mr Nucifora to actually make those submissions to you. One matter he has made though a comment upon already, which was raised in the context of LESF seeking to appear before you, was that the applicant has no interest in the outcome of this application and that in fact those with the interest are LESF and new employers.
PN57
I agree that LESF and new employers - when I say new employers, employers who weren't contributing to LESF prior to 12 September 2008, even if those employers existed at that time - obviously have an interest in being able to contribute to LESF as a default fund. I don't resile from that at all. But I would submit that the applicant also has an interest, your Honour, as do other employers who are currently contributing to LESF as a default fund and do the members - so the employees of those employers - of LESF. As you'd appreciate, your Honour, a superannuation fund achieves certain economies of scale based on the numbers of funds under management.
PN58
Now over time, if the fund is effectively closed as a default fund to new employers, then over time the funds in the superannuation fund will be eroded and at some point that will have an adverse impact on the benefits available to existing members of the fund. So it's not true to say that the applicant does not have an interest. The applicant has an interest. It's interest is insuring that the fund as a default fund has the capacity to receive contributions on new employers because due to the very nature of funds like this there need to be new employers coming in as old employers cease to contribute and as members leave the fund. Otherwise, your Honour, I'll wait until I've had the benefit of hearing Mr Nucifora's verbal submissions and then I'll respond to them. Thank you.
PN59
THE VICE PRESIDENT: Mr Osborne, the nature of the variation you're seeking is the addition of the name Law Employees Superannuation Fund in clause 23.4 of the Legal Services Award?
PN60
MR OSBORNE: That is correct, your Honour.
PN61
THE VICE PRESIDENT: What operative date do you seek for that variation?
PN62
MR OSBORNE: Your Honour, ideally we would seek the operative date from 1 January on the basis that we are remedying an error that occurred when the Legal Services Award was created.
PN63
THE VICE PRESIDENT: 1 January 2010?
PN64
MR OSBORNE: 2010, sorry. My apologies, your Honour; I spoke over you.
PN65
THE VICE PRESIDENT: No, that's okay. I'm just clarifying the year you were talking about.
PN66
MR OSBORNE: The vagaries of video conferencing unfortunately, your Honour.
PN67
THE VICE PRESIDENT: Yes.
PN68
MR OSBORNE: Yes, ideally, your Honour, from 1 January 2010 and whilst that obviously might be argued to have a retrospective effect, the reality is that we are remedying an error so there is no retrospective operation. It is going back to when the error occurred and the error occurred when the Legal Services Award was created and LESF was not named as a fund. Having said that, your Honour, if you were to make it effective from today that would obviously be a preferred position to what is the case at the moment, which is that it's not named at all.
PN69
THE VICE PRESIDENT: Is there any consequence on the different operative dates?
PN70
MR OSBORNE: Well, I'm not aware of any employers contributing to the fund who should not, your Honour, which I think is where the difference would occur. So I would have to answer to that: not to my knowledge.
PN71
THE VICE PRESIDENT: Yes, thank you. Thank you, Mr Osborne. Mr Nucifora.
PN72
MR NUCIFORA: Thank you, your Honour. Mr Osborne has referred to submission that the ASU had lodged. I'm just wondering if that could be tendered as an exhibit? These are written submissions that were lodged on 16 May.
PN73
THE VICE PRESIDENT: Those submissions will be marked exhibit N1.
EXHIBIT #N1 ASU WRITTEN SUBMISSIONS
MR NUCIFORA: Thank you, your Honour. Your Honour, the ASU opposes - as we've indicated earlier - the application to vary the award to expressly refer to the LESF superannuation fund as a default fund in clause 23.4. We understand now that Mr Osborne has indicated on behalf of the applicant and certainly indicated in that way in written submissions sent through yesterday that they're now not seeking to prosecute it as a section 158A application but as a 160 application in relation to error. And, your Honour, we say that there must be some question about how long that particular provision can continue when most of the authorities that Mr Osborne was referring to were actually dealt with almost two years ago, straight after the event of the award modernisation process.
PN75
We say that there is no evidence before this tribunal in any of the documentation coming through that in fact any - either the applicant or any employee or any employer that might be associated with the applicant is at any disadvantage. We do know that potentially the fund is at a disadvantage in the long term because it cannot promote itself as a fund for new legal employers that set up in Queensland after 12 September 2008. We really are talking about the commercial interests of the fund. As an opponent to the application we are not seeking to otherwise challenge the legitimacy of the fund. It clearly has a history. It clearly was a default fund covered by the clerical NAPSA that applied in Queensland prior to 2007. We do say that it is not a preferred fund of the ASU.
PN76
It is largely Queensland-based, your Honour. That's been its history. It was established with, if you like, the supervision - for want of a better term - of the Queensland Law Society. But it's a fund that only covers predominantly Queensland members. As I understand it from paragraph 34, 93 per cent of members are based in Queensland with 3 per cent in New South Wales and 1 per cent or less in the other states. And the employer contributors - at paragraph 35 - are 83 per cent based in Queensland. So that gives some indication of why, as the ASU, we don't see it as a fund that ought be listed as a default fund in its own right in the award. This is not to say that the fund isn't otherwise covered by the award. It is and of course as we've mentioned already and it's certainly not contentious, that they are covered by clause 23.4(g).
PN77
Now we do know from the exhibits of the affidavits before you - in particular I'm referring to exhibit O2, Mr Peter Short - that there was concern with administration in terms of the advice that they were getting from Australian Administrative Services Pty Ltd and we know that from paragraph 34 to 38 at least. And we say that waiting two years later to have this dealt with raises some real questions about whether this is really about the interests of the future of this modern award. As you'd be aware, your Honour, the ASU and my predecessor Mr Keith Harvey in particular, toiled long and hard with other major parties with an interest in this award to insure that we begin an award that was going to be appropriate for legal industry employees.
PN78
Now if any of those major parties has raised the error straight after the award was made in 2010, like a number of the authorities that Mr Osborne takes you to, then we might argue that there is some legitimacy to that. Other than that, our union along with many unions and many parties that were involved in the award modernisation process - remembering that most parties didn't get all that they wanted through that process - if we thought that there were any gaps or errors then we were prepared to wait till the award review process. Now, your Honour, it was quite noticeable to the ASU that in fact the day the application was lodged was the day before the cut-off for the award review applications: that is, March 7 it was lodged - and of course the review applications, as I recall - all review applications were - the cut-off date was of course 8 March.
PN79
Now if they wanted to deal with - getting back to the earlier problem of advice they didn't get from AAS - then the award review process was what they should have followed and it would have been something that other major parties are - other major parties with a direct interest in this award, including ourselves of course. We have an application to vary this award through the award review on a number of issues where we believe there to be gaps, where there may be errors in drafting. That would have been the process and we would have said that's appropriate, given that we were one of the major parties through the award modernisation process. Remember the process went, your Honour, for a lengthy period; from 2008 right through to 2010 and that award was argued long and hard. Of course there were some omissions as a result of the process that we were working within at the time.
PN80
But that is the context of award modernisation: if there was a problem, then we would say any employer or employee that was covered by the award, all the major parties would have the opportunity through the award review - the first one being in 2012 - to in fact address that. LESF, although they're not covered directly by this award, in terms of their interests they may have been able to either have an employer contributor or even an employee member lodge an application to address this problem through the award review process and we would have understood that, your Honour. What we're saying, your Honour, is it wasn't fatal that in fact that there was a misunderstanding by LESF in terms of what they should do in terms of their award. But we say, your Honour, this is really an application about the interests of the fund, not the interests of employers or employees covered by the fund.
PN81
We don’t have any evidence before your Honour that in fact anyone is disadvantaged. LESF in terms of all the evidential material before you; we know that the applicant, all its employees and future employees can remain members of the LESF fund by virtue of clause 23.4(g). But if directly or indirectly the fund sought to promote its own commercial interests in the long term, in the interests of their members that they would save and their employer contributors, then they had the award review process that they could have followed and the timing of their application, as it turns out, would have been okay. But that's not as it is. They're now proceeding as an application between award reviews and we say that there is a higher test to be met and in fact while they're not now pursuing the application as a 158 application with higher bar requirements of meeting the modern award objective, they now rely on this question of error.
PN82
We say it's not necessary. We say that all employees of the applicant and indeed employees of the representative of the applicant are not disadvantaged. There is no evidence before the tribunal that in fact any new employer has been disadvantaged or any employee indeed that might have been (indistinct) clearing from any of the employers that were contributors prior to September 2008. However, that may have been evidentiary material that may have been relied on through the award review process. At this stage of course, your Honour, we've referred to at least conferences one year in relation to the award review but we don't know what the full context - if you like, legislative context will be for the award review process. But I don't believe it would have in any way disadvantaged the fund and the applicant.
PN83
Your Honour, it was mentioned earlier by Mr Osborne that this fund as a player meets one of the requirements provided by the full bench on default superannuation funds in that it was a default superannuation fund in the predecessor clerical NAPSA that applied in Queensland. As we understand the fund was inserted in the award in June 2004. We have been able to locate the decision but I'm unable to say whether it was by consent and so there's no evidence to indicate that it was by consent by our union. It may have been that we objected to it. In any case that would have been the Queensland branches of our union. It wasn't the position of the ASU nationally. Now all those other decisions, those authorities that Mr Osborne has referred you to, not only are they two years ago but most of them were by consent or at least some consent between the main parties.
PN84
Understandably one of them - I think the SDA - had opposed the AMWU's application to insert the MTAA fund. But at least there was some consent between some of the main parties. We don't have any of the other main parties here except ourselves, your Honour, and we as a main party are not consenting to the application. We know that in terms of the full bench decision that nominated default fund in the award-based transitional instrument that was the Queensland NAPSA Clerical Award, there's no evidence that in fact we consented to that - sorry, the ASU and any of its branches or certainly not nationally - consented to that fund being included in that old award.
PN85
THE VICE PRESIDENT: Mr Nucifora, has that ever been a consideration in the insertion of funds where there has been a history of coverage in a pre-existing instrument?
PN86
MR NUCIFORA: I'm not certain of that, your Honour; not that I've seen, that that question has arisen.
PN87
THE VICE PRESIDENT: Yes.
PN88
MR NUCIFORA: As I say, all we have, your Honour, is the decision of June 2004 and it was a decision handed down where that fund was inserted into the award. As we say, your Honour, that question alone isn't one that would necessarily prejudice their application if they were seeking to insert the default fund through the award review process. As there are other applications - we're aware there are applications as part of the award review applications where applicants are seeking to insert default superannuation funds into modern awards. Of course there has been some discussion between the major parties before the Vice President on how that should proceed and we refer to that in our outline of submission. Your Honour pleases.
PN89
THE VICE PRESIDENT: Thank you, Mr Nucifora. Mr Osborne?
PN90
MR OSBORNE: Thank you, your Honour. Your Honour, it is true: I have not put any evidence before the tribunal in relation to the manner in which LESF came to be named in the Clerical Employees Award that then became the Notional Agreement Preserving a State Award. I can tell you now it became involved because I acted for LESF in relation to it. I didn't put any evidence before the tribunal because frankly, I don't think it's relevant. It is, however, available on - in fact it's on the Queensland Industrial Relations Commission file. I can say that prior the application in June 2004 contributions were permissible to the LESF because there was an industrial agreement pursuant to which those contributions could be made, and the award itself - that's the Clerical Employees Award - permitted that through a provision in clause 5.8.4.
PN91
THE VICE PRESIDENT: Paragraph E.
PN92
MR OSBORNE: Yes, quite true, thank you, your Honour; paragraph E. I can recall because the industrial agreement was lost by the registry, not available on the files, so we had to hunt high and low until we found a copy and then in June 2004 we said, "Well, this isn't a satisfactory situation." And we went to the ASU and by consent varied the Clerical Employees Award to include LESF. But of course there's no evidence before you of any of that because it's not relevant. And it was with the state branch of the ASU because it was a Queensland Industrial Relations Commission award at that time.
PN93
Dealing with some of the other matters or all of the other matters raised by Mr Nucifora: it's not accurate to say that all of the other cases that have come before this tribunal to rectify errors by including funds have been by consent. In fact, one of the main ones I relied upon, which is the decision of yours, your Honour, in relation the General Retail Industry Award, in fact involved the SDA opposing the application to include the MTAA Superannuation Fund. So it's not accurate to say that they've all been by consent, although there is no doubt that at least some of them have been by consent. Mr Nucifora places significance on his submission that no-one is disadvantaged by the fund being omitted as a default fund from the Legal Services Award other than the fund other than the fund itself. I've already conceded, there's no doubt that the fund suffers a disadvantage if it's not included in the Legal Services Award. I think Mr Nucifora acknowledges that.
PN94
He says that is a commercial disadvantage for the fund which does not impact on existing employers or new employers. The reality is that a superannuation fund is a trust and anything that adversely impacts on the trust adversely impacts on the beneficiaries of the trust; namely, the members, the employees. Anything that adversely impacts on the employees I would have thought is of interest and potentially disadvantageous to the employer of those employees. So I think that having regard to the nature of superannuation and the fact that superannuation funds are trusts for the benefit of the members, it's artificial to suggest that this is purely of interest or potential disadvantage to the fund. Anything that adversely impacts on the fund adversely impacts on all existing members, potential new members and the employers of those members.
PN95
In any event, your Honour, there's no requirement in section 160 to establish that there's disadvantage. There was no requirement pursuant to the Australian Industrial Relations Commission full bench decision in 2009 that a fund had to establish that there would be disadvantage suffered by anybody, let alone anybody other than the fund in order to be named as a default fund in the modern award. If a fund had contributions made to it by employers in respect of employees who would be covered by the modern award prior to 12 September 2008 or if the fund was named in an existing award-based transitional instrument and as a matter of course it was included in the fund.
PN96
What Mr Nucifora's submissions attempt to do is go back and challenge the decision of the full bench in September 2009. And those principles are not open for challenge at this point in time. Those principles were set as part of the award modernisation process. There is no capacity now to add additional requirements such as that a fund seeking to rectify an error constituted by its omission as a default fund needs to now meet an additional requirement that it established that there's disadvantage by employers. Alternately, another way of putting it is there's no capacity to read in an additional requirement now that an applicant employer needs to establish any disadvantage being suffered by that employer.
PN97
As I've said, however, it's a matter of common sense and natural consequence. Clearly an employer contributing to the fund, such as the applicant, will suffer a disadvantage if the fund can no longer accept new employers. There's no need to put evidence before you of that. It is a natural consequence of the nature of superannuation funds. They are trusts which have funds under management which they invest and which then they use to accumulate wealth which will ultimately be distributed to their beneficiaries. It is a natural consequence of the nature of a trust. Mr Nucifora also is submitting that a further additional requirement should be now added, which is that if it's been more than 18 months or two years since the award modernisation decision, which is the time at which the error occurred - sorry, since the decision to create the particular modern award, which is the time at which the error occurred - then there should be a higher standard or test to be met.
PN98
But again there's no capacity to read that into section 160. 160 gives the tribunal the power to correct an error. Now, the error occurred at the time of the creation of the Legal Services Award. Who is at fault for that error is irrelevant. Whether it was through inadvertence, laziness or whatever, then that's irrelevant. An error occurred. That's clearly the approach that's been adopted by this tribunal in other decisions where applications have been brought pursuant to section 160. Perhaps the most telling submission of Mr Nucifora is that this fund is not a preferred fund of the ASU. Whilst that is somewhat disappointing the reality is that being a preferred fund of a union is also not a requirement to being named as a default fund in the Legal Services Award or any other modern award.
PN99
Similarly, there is no requirement to establish that you have a national presence, although the affidavit of Mr Peter Short includes significant detail showing that the fund does have contributing employers and member employees in other states outside Queensland. Similarly - and this wasn't one of Mr Nucifora's verbal submissions but it's in his written submissions - there's no need to establish a certain number of funds under management, although I submit that close to $80 million, as the fund has, is a significant sum. Mr Nucifora submits that this should have been more appropriately dealt with as part of the award review process and whilst it's true that this application was made at the same time that the award review process was occurring, that is a coincidence.
PN100
There is no intent or sinister purpose that can be read into that fact. For this matter to be dealt with as part of the award review process would expose the applicant and also LESF to significantly greater complexity, time and expense than would otherwise be the case. Your Honour, the award review process in respect of this award is going to have to deal with a number of significant matters as a consequence of applications made both by the ASU, who significantly extend the coverage the award, and applications made by employers to vary certain aspects of the award, all of which I suspect will be hotly contested by the respective opposing parties.
PN101
My client, the applicant and the fund, decided that frankly it didn’t want a bar of any of that as regards its application - its application being a much more discrete and simpler issue, having regard to the decisions of this tribunal and the provisions of the Act. Its strong preference was for the matter to be dealt with separate to the award review process. Now, Mr Nucifora also said there would be no disadvantage to the applicant or the fund if the matter was actually dealt with as part of the award review process. But the problem with that is that that is obviously not correct. They would be disadvantaged because my clients would then need to appear as part of a much more involved, lengthy, time-consuming and complex process where it's one relatively discrete issue could easily get caught up with issues of greater relevance and significance to the broader community and to people covered by this award.
PN102
In addition, in his submissions, Mr Nucifora says that the President of this tribunal has told the ACTU that in respect of the award review, applications in respect of superannuation fund clauses should be deferred until after the Productivity Commission report and that report is not due until October this year. Now, I'd say that's no evidence and in any event the President doesn't have the capacity to bind the tribunal. Whether superannuation clauses should be reviewed as part of the award review process is, I'm sure, going to be the matter of significant debate for the tribunal. But it's somewhat contradictory for Mr Nucifora to claim that there would be no disadvantage to my client if its application to be named as a default fund by way of rectification of error should be dealt with as part of the award review process whilst at the same time elsewhere in his submissions he's saying the President has told us that won't happen until after October 2012.
PN103
There's implicitly significantly delay and uncertainty inherent in that statement, which is obviously a disadvantage to both the applicant and the fund. The provisions of the Act, your Honour, create a right to bring an application to correct an error - the error having occurred at the time of the creation of the Legal Services Award. That right cannot be extinguished or otherwise circumvented by saying that it should be caught up with the award review process and effectively be put off until after a Productivity Commission inquiry report has been handed down, bearing in mind that that Productivity Commission inquiry report will have no legal status and may never become law. Regardless of the findings that the Productivity Commission inquiry reaches, they may not be accepted by the government of the day and even if they are accepted, having regard to the current situation in federal parliament, that's a far cry short of it becoming law.
PN104
The other matters raised by Mr Nucifora, if I can deal with them quickly: I don't believe standing is any longer an issue so I won't deal with that. But Mr Nucifora does raise in paragraphs 4 and 5 of his outline of submissions issues which go to disadvantage and also the modern award's objective. My submission is that - well, I've already made submissions as to the existence of disadvantage not just for the fund but for existing employers, existing members and also potential new employers and members. But can I say again I don't think it's relevant and that the applicant having decided to no longer pursue application pursuant to section 158, I don't consider paragraphs 4 or 5 to be relevant at all - particularly paragraph 5 of Mr Nucifora's submissions.
PN105
Paragraph 8 of the ASU's written submission deals with the alleged advice that the ACTU has relayed of a discussion it had with the President of this tribunal. I've explained why I don't consider that to provide any reason for the application not be granted and I've expanded upon that somewhat more fulsomely in my written submissions: in particular, your Honour, in - - -
PN106
THE VICE PRESIDENT: Paragraph 50?
PN107
MR OSBORNE: That would be correct, your Honour, thank you - and also paragraph 51. Yes, in paragraphs 50 to 51 and again as I've said, I don't consider it to be relevant in any event. Similarly, paragraph 9 of the ASU's written submissions I think becomes by the by with the applicant having informed the tribunal that it no longer pursues the application under section 158. Thank you, your Honour.
PN108
THE VICE PRESIDENT: Mr Osborne, I wonder whether I could just ask you a question about what you have referred to in paragraph 46 of your submissions and again, it may not be a matter that’s relevant to the question before me but you say that if the LESF is not named as a default fund it will be closed to new employers. Can you explain for me why that is the case?
PN109
MR OSBORNE: At the moment, contributions to the fund for employees covered by the Legal Services Award would only be permissible if an employee exercised choice of fund to select the fund or alternately the employer of that employee was making contributions prior to 12 September 2008. So when I say "new employers", your Honour, I'm referring to employers who were not making contributions to the fund as at 12 September 2008 and whose employees have not exercised choice to select LESF as the fund to which they would like their contributions made.
PN110
THE VICE PRESIDENT: So if employees do exercise choice for a new employer, then the fund can be utilised?
PN111
MR OSBORNE: Correct but that wouldn't be as a default fund, your Honour; that would be as a chosen fund.
PN112
THE VICE PRESIDENT: Yes, as a chosen fund.
PN113
MR OSBORNE: And it seems to be a commonly accepted fact that very few employees exercise choice.
PN114
THE VICE PRESIDENT: Yes, I've never really understood the reasons for that but I understand that what you say is correct. Yes, thank you, Mr Osborne. I'm in a position to indicate my decision in this matter. The application before the tribunal is an application by FCL Pty Ltd to vary the Legal Services Award 2010 by inserting the Law Employees Superannuation Fund in the list of default funds in clause 23.4 of the Award. The background of the matter is not in dispute. The fund was not included in the list of funds as part of the award modernisation process. However, the fund was mentioned in the Notional Agreement Preserving a State Award known as the Queensland Clerical Employees Award - State 2002. It was included as an approved fund in clause 5.8.4 of that NAPSA.
PN115
No application during the award modernisation process or until this application was made for the inclusion of this fund in the list of default funds in the Legal Services Award. The Award Modernisation Full Bench established its approach to the insertion of default funds in its decision of 2 September 2009. It established a test to be applied which involved, amongst other bases whether a fund was utilised and named in a pre-existing industrial instrument prior to the commencement of the Award. There have been a number of decisions of this tribunal considering the insertion of new funds into modern awards which have relied on the section 160 of the Act on the basis that the failure to include a fund constituted an error in the sense that if the fund and its circumstances had been brought to the attention of the bench during the award modernisation process, then the fund would have been included in the list of default funds.
PN116
The application in this matter is made a significant period of time after the commencement of the Award and the ASU has indicated for that reason and for a number of other reasons its opposition to the application. It has also indicated that the application should be considered as part of the review of awards which has commenced pursuant to the Transitional and Consequential Provisions Act. In my view, the applicant is entitled to make the application under section 160 of the Act and if the application satisfies the relevant test, it is entitled to seek and attain a relevant determination. In my view, the failure to mention the Law Employees Superannuation Fund was an error in the same sense as decided in other cases, in that it satisfied the relevant tests at the time but the circumstances were not brought to the attention of the tribunal and the fund did not find its way into the list of funds in the Award.
PN117
I am therefore satisfied that the applicant in this matter has established a case that the award should be varied to correct the error that I have described and I will make a determination varying the award as sought in the application. As there does not appear to be any consequences from an earlier application of the variation, I will make the determination operative from today. These proceedings are now adjourned.
<ADJOURNED INDEFINITELY [11:15AM]
LIST OF WITNESSES, EXHIBITS AND MFIs
EXHIBIT #O1 AFFIDAVIT OF TRACY LEE ELLIOTT DATED 16 MAY 2012 PN29
EXHIBIT #O2 AFFIDAVIT OF PETER JOHN SHORT DATED 16 MAY 2012 PN35
EXHIBIT #O3 APPLICANT'S OUTLINE OF SUBMISSIONS DATED 16 MAY 2012 PN37
EXHIBIT #O4 LAW EMPLOYEES SUPERANNUATION FUND OUTLINE OF SUBMISSIONS DATED 16 MAY 2012 PN39
EXHIBIT #N1 ASU WRITTEN SUBMISSIONS PN74