Director General of The Ministry for Culture and The Arts v The Civil Service Association of Western Australia Incorporated & Ors [2000] WASCA 13 (4 February 2000) Last Updated: 7 June 2000 JURISDICTION : WESTERN AUSTRALIAN INDUSTRIAL APPEAL COURT CITATION : DIRECTOR GENERAL OF THE MINISTRY FOR CULTURE AND THE ARTS -v- THE CIVIL SERVICE ASSOCIATION OF WESTERN AUSTRALIA INCORPORATED & ORS [2000] WASCA 13 CORAM : KENNEDY J (Presiding Judge) ANDERSON J SCOTT J HEARD : 1 NOVEMBER 1999 DELIVERED : 4 FEBRUARY 2000 FILE NO/S : IAC 6 of 1999 BETWEEN : DIRECTOR GENERAL OF THE MINISTRY FOR CULTURE AND THE ARTS Appellant AND THE CIVIL SERVICE ASSOCIATION OF WESTERN AUSTRALIA INCORPORATED First Respondent THE AUSTRALIAN LIQUOR, HOSPITALITY AND MISCELLANEOUS WORKERS UNION, MISCELLANEOUS WORKERS DIVISION, WESTERN AUSTRALIAN BRANCH Second Respondent THE MEDIA, ENTERTAINMENT & ARTS ALLIANCE OF WESTERN AUSTRALIA (UNION OF EMPLOYEES) Third Respondent THE SHOP, DISTRIBUTIVE AND ALLIED EMPLOYEES' ASSOCIATION OF WA Fourth Respondent THE TRANSPORT WORKERS' UNION OF AUSTRALIA, INDUSTRIAL UNION OF WORKERS, WA BRANCH Fifth Respondent THE AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION OF WORKERS, WESTERN AUSTRALIAN BRANCH Sixth Respondent Catchwords: Industrial relations (WA) - Industrial agreements - Agreement providing that it should operate from date on which it was registered in the Industrial Relations Commission - No power in the Commission to order that pay increases under the agreement should commence from a date prior to that of registration Legislation: Industrial Relations Act 1979 s 39 , s 41 , s 43 , s 44 Result: Appeal allowed Representation: Counsel: Appellant : Mr G T W Tannin & Mr M G Lundberg First Respondent : Mr P L Harris Second Respondent : Mr P L Harris Third Respondent : Mr P L Harris Fourth Respondent : Mr P L Harris Fifth Respondent : Mr P L Harris Sixth Respondent : Mr P L Harris Solicitors: Appellant : State Crown Solicitor First Respondent : Ilbery Barblett Second Respondent : Ilbery Barblett Third Respondent : Ilbery Barblett Fourth Respondent : Ilbery Barblett Fifth Respondent : Ilbery Barblett Sixth Respondent : Ilbery Barblett Case(s) referred to in judgment(s): Case(s) also cited: House v the King [1936] HCA 40 ; (1936) 55 CLR 499 Norbis v Norbis [1986] HCA 17 ; (1986) 161 CLR 513 Robe River Iron Associates v Amalgamated Metal Workers and Shipwrights Union of Western Australia (1987) 67 WAIG 723 The Registrar v Amalgamated Metal Workers and Shipwrights Union of Western Australia (1989) 69 WAIG 1904 1 KENNEDY J (Presiding Judge) : I have had the benefit of reading in draft the reasons to be published by Anderson J. For the reasons which his Honour gives, I agree that this appeal must be allowed and the order of Commissioner S A Cawley dated 8 December 1998 quashed. 2 The Ministry for Culture and the Arts was created out of five existing Government agencies. Following its constitution, the Ministry entered into negotiations with the respondents with a view to concluding an industrial agreement. Those negotiations were protracted. Eventually, on 25 September 1998, the Ministry forwarded to the first respondent for its consideration what was described as the final draft of the agreement, and informed it that the Ministry's Chief Executives supported, in principle, "a date of effect which reflects agreement between the parties which occurs prior to the curial process, which includes consideration by both Treasury and the Department of Labour Relations of the levels of productivity and costs associated with the Agreement". 3 By letter dated 16 October 1998, the first respondent suggested an "implementation date" of 1 September 1998. The Ministry responded through its Manager for Human Resources by letter dated 22 October 1998, indicating that the "Executive Team have agreed in principle that, having endorsed the draft Agreement themselves, they would support a submission to the [Industrial Relations Commission] that the date of effect could be when the unions have signified agreement". This would in all probability, it was said, be advised after ballots or meetings of members. Upon registration of the agreement, the Manager wrote, he would amend the dates shown in the various pay rates to reflect the Commission's approved dates. On the same day, the first respondent rejected the Ministry's proposed implementation date, but the Ministry adhered to its proposal. By letter dated 5 November 1998 the Ministry advised the first respondent that, consistent with its previous advice, the Executive Team would support the proposition at the Industrial Relations Commission that the date of effect of the agreement should be no earlier than 4 November 1998. By letter dated 9 November 1998 the Ministry then indicated that it would be referring the agreement in its final form to the Cabinet Standing Committee for Labour Relations and to the Industrial Relations Commission. Under the heading of items to note, it included the "date of effect" of the agreement as being 4 November 1998, which was the date on which the first respondent advised the Ministry of the vote of its members in favour of the agreement. On 12 November 1998, the first respondent reluctantly accepted the date "as offered by the employer ie: 4 November 1998". 4 In the meantime, on 10 November 1998, the Ministry had forwarded the agreement to the Department of Productivity and Labour Relations, indicating that the duration of the agreement would be two years and that its Executive Team had endorsed in principle establishing the date of effect as the timing of the participating unions' notification of acceptance of the agreement following their own internal approval processes. 5 A labour relations adviser in the Department of Productivity and Labour Relations responded to the Ministry by letter dated 23 November 1998 confirming Cabinet's approval of the Cabinet Standing Committee on Labour Relations having endorsed the Ministry's proposed industrial agreement 1998 and the memorandum of understanding; but the agreement was said to be operative from the date of its registration by the Commission, and not from the date previously agreed by the Ministry. 6 The published Government Wages Policy and Workplace Bargaining Guidelines, in cl 39, indicated that no retrospectivity would be allowed in agreements, and that wage increases other than individual workplace agreements were to apply from the first pay period commencing on or after the date of registration, or from any later date provided for in the agreement. It is also to be noted that cl 51 of the Guidelines required wage increases to be approved by the Government before any formal offer was made to employees. The appellant, in the course of negotiations with the respondent, appears clearly to have had no regard to the Guidelines. 7 Clause 10(1) of the industrial agreement, as executed by each of the parties and subsequently registered, was consistent in its terms with the Guidelines. It provided as follows: "This agreement shall operate from the date on which it is registered in the WAIRC and shall remain in operation for a term of 24 months from the date of registration." 8 The Commissioner's order, dated 8 December 1998, which is the subject of these proceedings, provided: "That on registration of the enterprise agreement between the parties as expressed at 30 November 1998, the operative date for the purposes of calculating the first pay increases due employees shall be deemed to be the date of the commencement of the first pay period on or after the 4th day of November 1998." 9 Commissioner Cawley then made a second order purporting to direct that the agreement "shall be and is registered with effect on the 10th day of December 1998". That order is dated 12 January 1999. No issue has been raised regarding the terms of that order or as to any effect it might have on the terms of the agreement. 10 The terms of the first order are inconsistent with the provisions of the agreement as finally registered, and the intention was clearly to vary the terms of cl 10(1) of the agreement. The power of the Commission to vary the terms of an industrial agreement, however, is clearly circumscribed. Section 41(3) of the Industrial Relations Act 1979 to which Anderson J has referred is designed to ensure that the common intention of the parties is reflected in their executed agreement prior to its registration. There has been no suggestion that the Commissioner could have acted under s 41(3) of the Act. As Anderson J has indicated, there is no other power in the Commission to vary, or to require the parties to the agreement to vary, an industrial agreement. It has no power to impose an "agreement" on the parties. 11 ANDERSON J : This is an appeal from a decision of the Full Bench of the Western Australian Industrial Relations Commission dismissing an appeal from a decision of Commissioner S A Cawley of 8 December 1998 whereby she made the following order: "THAT on registration of the enterprise agreement between the parties as expressed at 30 November 1998, the operative date for the purposes of calculating the first pay increases due employees shall be deemed to be the date of the commencement of the first pay period on or after the 4th day of November 1998." 12 The background to the matter is as follows. In June 1997, the Civil Service Association of Western Australia Incorporated ("CSA") started discussions with the Director General of the Ministry for Culture and the Arts ("the Ministry") for a single enterprise agreement to replace a number of separate registered enterprise agreements which were all due to expire by December 1997. It was proposed that the single enterprise agreement should replace the various agreements which had been entered into by various agencies before the creation of the Ministry in June 1997. These various agencies included the Library and Information Services of Western Australia, the Western Australian Museum, the Perth Theatre Trust, the Art Gallery of Western Australia and others. The progress of negotiations towards a single enterprise agreement was slow, due mainly to complexities arising from the bringing together of the various agencies with their different structures and conditions. It was not until October 1998, approximately 16 months after discussions commenced, that negotiations produced a satisfactory proposal which the CSA could take to its members for consideration. The slow progress was itself a matter of discussion between the parties and the CSA had made a proposal that, in the event that any agreement was ultimately reached, it should have retrospective effect as to the operative date for the first pay increase. The proposal was that the operative date should be 1 September 1998. This proposal was rejected and the issue remained unresolved until all other terms and conditions for an enterprise agreement were agreed upon. The Ministry then suggested that the operative date for the first pay increase should be the date on which the Ministry received formal notification of the endorsement by CSA members of the enterprise agreement. 13 The CSA appeared to accept that proposal and proceeded to ballot its members with respect to the enterprise agreement and, on 4 November 1998, the Ministry was notified that the agreement had been endorsed. The following day, the Ministry confirmed that the date of notification was to be the operative date of the first agreed pay increase. 14 It seems that the bureaucratic arrangements in the public sector are such that once a public sector employer has reached an agreement with relevant unions on an enterprise bargain, the document is submitted to various government departments for checking (as to whether policy standards and financial cost standards and so on are met) and is then referred to a cabinet subcommittee for consideration and thence to cabinet. There was evidence that this process usually takes about two weeks and, in this case, cabinet approval was notified on 23 November 1998. The approval, however, was subject to a number of conditions recommended by the cabinet standing committee on labour relations. One of the conditions was that the agreement be "operative from the date of registration by the Western Australian Industrial Relations Commission". 15 This was tantamount to a rejection of the provision in the agreement that its operative date for the purposes of the first pay increase would be 4 November 1998. In its final form, as presented for registration, the agreement in cl 10(1) provided that the agreement "shall operate from the date on which it is registered in the WAIRC and shall remain in operation for a term of 24 months from the date of registration". 16 The parties agreed that they should invoke s 44 of the Industrial Relations Act with respect to the question whether the pay increases should be backdated to 4 November 1998 as originally agreed, or whether they should start from "another and prospective date from the date of this hearing (30 November 1998) based on whenever the parties' agreement is registered by the commission". Section 44 is, of course, the section which provides for compulsory conferences in the Commission to resolve disputes by conciliation and, if necessary, arbitration. Apparently, conciliation with respect to the matter was unsuccessful and arbitration was embarked upon. It was in this way that the matter came before Commissioner Cawley, sitting as a Public Service Arbitrator. On completion of the arbitration, Commissioner Cawley made the order set out above. The Ministry appealed to the Full Bench on a number of grounds, including that there were errors of fact in the Commissioner's reasoning, but mainly on the ground that the order of the Commissioner amounted to an impermissible variation of the industrial agreement. It was contended that an industrial agreement may only be varied by the Commission in accordance with the Industrial Relations Act and pursuant to that Act an industrial agreement may only be varied by the Commission for limited purposes, of which the purpose in question (settlement of a dispute as to the content of the agreement) was not one; and, further, that there was no power in the Commission to make an order having retrospective effect or, at any rate, to make a retrospective order having effect antecedently to the date on which the application for the order was lodged (in this case, 16 November 1998). 17 These contentions were rejected by the Full Bench. With respect to these points, the reasons of the Full Bench may be summarised as follows: (i) The order made by Commissioner Cawley on 8 December 1998 was not an order which varied the provisions of an industrial agreement. The parties were not yet in agreement as to the operative date of salary increases; and there was no industrial agreement because, insofar as there was an agreement between the parties, it had not yet been registered. (ii) The order did not have retrospective effect. There was a dispute between the parties as to whether the operative date of the salary increases to take effect under the terms of the agreement should be 4 November 1998 or some later date and all that the arbitrator did was to arbitrate that very issue. None of the other grounds of appeal succeeded and the appeal was dismissed. It is from that dismissal that the appeal to this Court is brought. 18 The same grounds that were argued before the Full Bench were argued before us. The grounds are expressed in the following way: "(A) the order purported to vary an industrial agreement otherwise than as permitted under the provisions of the Industrial Relations Act 1979 ('the Act '); and (B) further and in the alternative, the order purported to be given retrospective effect, which is not permitted under the provisions of the Act ; and (C) further and in the alternative, the order purported to be given retrospective effect prior to 16 November 1998 (the date upon which the Application leading to the making of the order was lodged in the Commission), which is not permitted under the provisions of the Act ." 19 Of course, the Ministry did not seek to appeal to this Court from the dismissal of so much of its appeal to the Full Bench as depended on findings of fact. Ground (A) 20 It must be accepted that the power of the Industrial Relations Commission to vary industrial agreements is limited and does not include a power to change the operative date of an agreement. The primary power of the Commission to vary an industrial agreement is contained in s 43 and that power is limited to varying an industrial agreement for the purpose of varying a stand-down provision. The Commission also has a power under s 44(6a) to vary the operation of an "existing award or industrial agreement" at or in relation to a compulsory conference under s 44 , which is not this case. There was no "existing industrial agreement" at the time of the making of the order. The proceedings that were before Commissioner Cawley were not a compulsory conference. They had progressed beyond compulsory conference to arbitration. 21 Pursuant to s 41(3) of the Act , the Commission may require the parties to an industrial agreement to effect "such variation as the Commission considers necessary or desirable for the purpose of giving clear expression to the true intention of the parties" before registering the agreement. This power is clearly limited to the express purpose of "giving clear expression to the true intention of the parties". Section 41(3) assumes that the parties have actually reached agreement and empowers the Commission to ensure that the agreement is expressed in language which gives expression to the agreement that has been reached. Clearly, that is not this case. 22 If, therefore, the order made by Commissioner Cawley constituted the variation of an industrial agreement, there was no power to make it. In my opinion, whatever may have been its intent, it was not, in effect, such an order. An industrial agreement is defined in s 7(1) as "an agreement registered by the Commission under this Act as an industrial agreement". There was no such instrument at the time of Commissioner Cawley's order, which I take to be the date upon which the order was deposited in the office of the Registrar, viz, 4 January 1999: McCorry v Como Investments Pty Ltd (1989) 69 WAIG 1000. The order is therefore not invalid on the ground that it was an impermissible variation of an industrial agreement. Ground (B) 23 This ground presents greater difficulty. There are two questions raised by it: (i) did the order in effect backdate the industrial agreement? (ii) if yes, was there power to do so? 24 As to the first question, unless Commissioner Cawley's order is regarded as having the effect that the contractual rights and obligations of the parties as to payment of salary are to commence from 4 November 1998, her order has no effect at all. It would be devoid of content. In substance and effect, the Commissioner's order means that important rights and obligations of the parties under the agreement are to commence from 4 November 1998 and that is to say no more and no less than that the agreement (or that part of it) was to be effective as from that date. 25 Mr Harris sought to argue on behalf of the unions that the terms of Commissioner Cawley's order did not purport to give retrospective operation to the industrial agreement, because that is not what the order says. 26 It is true that the Commissioner's order does not contain words to the effect that the agreement itself shall commence to operate from 4 November 1998, but that is no answer. To say that important rights and obligations under an agreement shall start from a certain date is, in substance, to say that the agreement shall commence to operate from that date. 27 Neither is it an answer to say that the Commissioner was arbitrating a dispute in accordance with the provisions of s 44(9) and, for that purpose, was exercising discretionary powers to resolve the dispute. That is how the matter got before the Commissioner, but the Commissioner did not have unlimited powers and if there is no power to order that an industrial agreement have retrospective effect, the making of an order having such an effect cannot be supported on the basis that it was made for the purposes of resolving an industrial dispute. 28 Mr Harris submitted that the order "was not part of the industrial agreement". Of course, this is true in one sense. As Mr Harris pointed out, no provision was introduced into the agreement prior to its registration which incorporated the order made by Commissioner Cawley. In the agreement as registered, there is no provision to the effect that "the operative date for the purposes of calculating the first pay increases due to employees shall be deemed to be the date of the commencement of the first pay period on or after the 4th day of November 1998". However, this does not mean that the order did not purport to give the agreement retrospective effect. The respondents to this appeal would have to say that the order stood as a discrete source of rights and obligations, separate and distinct from and not arising out of the industrial agreement. That, clearly, is not what was intended. 29 The plain fact of the matter is that the effect of the Commissioner's order was to backdate that part of the agreement providing for salary increases. 30 The second question, whether there is power to make an order backdating part of an industrial agreement, can be considered with the next ground of appeal. Ground (C) 31 In this ground of appeal the Ministry pleads, in effect, that if there is a power to make an order having retrospective effect, the power is limited: retrospectivity cannot extend beyond the date on which the application leading to the making of the order was lodged in the Commission. The submission is developed in the following way. 32 The Commission does have the power to make an award retrospective in whole or in part. This power is conferred by s 39(3). The section is in the following terms: "39(1) An award comes into operation on the day on which it is delivered or on such later date as the Commission determines and declares when delivering the award. (2) Subject to subsection (3) the provisions of an award have effect on such day or days as is or are, respectively, specified in the award. (3) The Commission may, by its award, give retrospective effect to the whole or any part of the award - (a) if and to the extent that the parties to the award so agree; or (b) if, in the opinion of the Commission, there are special circumstances which make it fair and right so to do, but in such a case to which paragraph (b) applies, not beyond the date upon which the application leading to the making of the award was lodged in the Commission." 33 Commissioner Cawley was not engaged in the process of issuing an award on a reference under s 29 and the provisions of s 39(3) were therefore not directly applicable. However, the Commissioner was engaged in s 44 proceedings and by s 44(13) it is provided in respect of such proceedings that: "Section 39 applies, with such modifications as are necessary, to an order made under this section." 34 This means that in the resolution of a matter under s 44 , including by way of arbitration, there is a power to make an order having retrospective effect. The power is limited in the same manner as the power to make retrospective awards is limited. The retrospectivity cannot extend beyond the date on which the proceedings were initiated. 35 The question is whether this provision is to be construed as conferring a power on the Commission to order that an industrial agreement have retrospective operation to a date earlier than the date of its registration. In my opinion, it does not. 36 It is settled that the Commission has no power to order that an industrial agreement which is being accepted for registration is to have effect from a date prior to its registration. That was laid down by this Court in Department of Community Services v Civil Service Association of Western Australia (1994) 74 WAIG 1709 in which Franklyn J said, at p 1712: "There is nothing in the Act which authorises or permits the Commission to order that an agreement registered as an industrial agreement have effect from a date earlier than the date of registration. By definition (see s 7) an agreement only becomes an 'industrial agreement' when registered as such. The Act gives effect only to the provisions of an 'industrial agreement'. To order that on registration it have effect from a date prior to its registration is to purport to give effect to it as an industrial agreement over a period of time when it was not in fact such. That in my opinion, is clearly contrary to the provisions of ss 7 and 41 . In my opinion, the industrial agreement took effect as such only from the date of its registration." 37 Mr Harris submitted that the case under consideration is to be distinguished from Department of Community Services v Civil Service Association because we are not here dealing with the registration of an agreement but with a dispute as to the operation of the agreement. That is true, and it is a distinction which was accepted as valid by the Full Bench, but, in my respectful opinion, it is not a real distinction. The ratio of Department of Community Services v Civil Service Association is that the Commission has no power to make an order that purports to give an industrial agreement any operative effect prior to the coming into existence of the agreement. 38 In this connection, of course, a distinction may be made between what the parties have agreed to and what the Commission may order. To say that the Commission has no power to order that an industrial agreement should commence from a date earlier than the date on which the agreement came into existence is not to say that an industrial agreement may not have any retroactivity. It might well be possible for parties to agree that certain entitlements are to begin from some earlier date. That agreement will not have effect until it is registered and then only from the date of registration and in that sense it does not commence to operate until registered; but, arguably, once it becomes effective, the parties are bound by its terms, including those terms which impose obligations and confer rights of a retrospective nature. I would not wish to be taken as deciding this point, but raise it only to say that it is not the issue in the case under consideration. We are not here concerned with giving effect to the terms of a consensual arrangement in which the parties have agreed that their rights and obligations are to begin from a date prior to the making of the agreement. We are concerned with whether the Commission can impose that state of affairs upon the parties. I am afraid I cannot see how it can do so. A general power to make retrospective orders in proceedings commenced by compulsory conference is not enough. It is one thing to say that there is power to make retrospective orders in settlement of industrial disputes under s 44. It is another thing to say that there is power, against the wishes of one party, to backdate part of an industrial agreement to a date anterior to the existence of that agreement. The proposition involves a profound conceptual difficulty. 39 The whole scheme of the Act in relation to industrial agreements is based upon the notion of consensus. The idea that terms of an industrial agreement can be arbitrated is at odds with the fundamental principle of consensus. Put simply, an arbitrated "agreement" is not an agreement. I cannot see how it falls within s 41(1). That section is in the following terms: "(1) An agreement with respect to any industrial matter or for the prevention or resolution under this Act of disputes, disagreements, or questions relating thereto may be made between an organization or association of employees and any employer or organization or association of employers." 40 There is nothing in s 7 , which is the definition of "industrial agreement", or s 41 which would support the notion that an industrial agreement can be created in whole or in part by coercive order of the Commission. The Commission has no power to order an organisation to become a party to an industrial agreement and, as has been pointed out, the powers of the Commission to vary industrial agreements are extremely limited. This is for the obvious reason that rights and obligations conferred and imposed by the coercive order of a tribunal are not agreements. In my opinion, it is this conception which underlies the decision in Department of Community Services v Civil Service Association . For the Commission to order that an agreement operate from a date earlier than the agreement, where the parties have not agreed that it have retrospective effect, is tantamount to conferring rights and imposing obligations which are not contained in the agreement. 41 In my opinion, that is the effect of the order in this case. It purports to extend the industrial agreement beyond the terms agreed upon. I can find nothing in the Industrial Relations Act which empowers the Commission to do that. 42 In my opinion, the appeal must be allowed. 43 SCOTT J : I have read the reasons to be published by Kennedy and Anderson JJ. I agree with those reasons and have nothing further to add.