WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

PARTIES LIQUOR HOSPITALITY AND MISCELLANEOUS UNION, WESTERN AUSTRALIAN BRANCH

CLAIMANT

-v-

The Minister for Health

RESPONDENT

CORAM INDUSTRIAL MAGISTRATE G. CICCHINI

HEARD Wednesday, 1 December 2010, Tuesday, 7 December 2010

DELIVERED Tuesday, 7 December 2010

CLAIM NO. M 117 OF 2010

CITATION NO. 2010 WAIRC 01210

CatchWords Alleged failure to comply with WA Health - LMWU - Support Workers Industrial Agreement 2007 (the Agreement) - Application for interim order preventing the contravention of or a failure to comply with the Agreement made under S83(7) of the Industrial Relations Act 1979 (the Act)  - Whether the Industrial Magistrates Court has power to make orders in the form of injunctive relief for prospective breaches.

Legislation Industrial Relations Act 1979, Section 81CA, Section 83(1), Section 83(2), Section 83(5) and Section 83(7),

WA Health – LHMU – Support Workers Industrial Agreement 2007 Clauses 3, 5.2(b), 5.2 (c) and 11.13

Cases Cited             Driscoll v Tomaichio [2010] WASC 157

Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57

Blue Sky v Australian Broadcasting Authority (1985) 194 CLR 355

BHP Billiton Iron Ore Pty Ltd v Automotive Food, Metals, Engineering and Kindred Industries Union of Workers (WA) Branch [2006] WASCA 124

Amcor Pty Ltd v CFMEU (2005) 222 CLR  241

United Grove Resources Pty Ltd v Calabro (No.2) [2010] FCA 71

United Grove Resources Pty Ltd v Calabro (No.3) [2010] FCA 115

CFMEU v Kavanagh [2008] WASC 146

Bailey v Matthews (2004) 84 WAIG 1392

Brown v President, Commonwealth State School Teachers Union (1989) 69 WAIG 1390

Civil Service Association of Western Australia Incorporated v Director General, Department of Consumer and Employment Protection (2002) 28 WAIG 458

Green v Daley (2002) 29 SR (WA) 101

Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASCA 110

Cases referred to      Bailey v Matthews (2004) 84 WAIG 1392

in decision 

Result Application Dismissed

Representation 

Claimant  Mr R L Hooker appeared for the Claimant

Respondent Mr G T W Tannin SC with Mr R Bathurst appeared for the Respondent

REASONS FOR DECISION

Background

1         The State of Western Australia (the State) is building a new hospital at Murdoch known as the Fiona Stanley Hospital (the Hospital).  Brookfield Multiplex won contracts to build the hospital and commenced construction in 2009.  Practical completion of the Hospital is due to occur in December 2013.  The actual commencement of hospital services is planned to start in May 2014.  Between December 2013 and May 2014, equipment that is not already installed by the builder will be moved into the Hospital and a program of testing facilities and staff training will occur with a view to commencing services in May 2014.

2         The State has decided to introduce a system whereby most of the facilities management services will be provided by an independent organisation.  Serco Australia Pty Ltd (Serco) has been appointed as the preferred proponent in the process, and contract negotiations between the State and Serco are currently occurring.  I am informed that if negotiations are successful a contract will be executed in January 2011.  It is envisaged that the contract will be for an initial term of 10 years with options for the State to extend the contract.

3         If Serco is awarded the contract it will have an immediate and significant role in the design and construction of the Hospital.  It will be required to provide advice in a number of areas relating to facilities management that will influence the final construction outcome.  By way of example kitchens and the sterilising service areas are being constructed as bare shells.  Serco will be required to provide advice to the builder concerning where to locate facilities such as power points, taps and steam supplies.  Further as part of its role Serco will design and implement various new technologies.  This process will involve liaising with the builder, as the implementation of new technologies will affect the building design.

4         The State is concerned that if there is a delay in signing of a contract with Serco the commencement of works will be impeded which will adversely impact the practical completion and opening dates for the Hospital.  The monetary cost of a delay in the opening of the Hospital has been estimated to be between $250,000 and $400,000 per day. 

5         The Liquor Hospitability and Miscellaneous Union, WA Branch (the Union) is very concerned that a significant number of its members will be seriously disadvantaged if the contract with Serco is signed.  The Union fears that if its members’ functions and duties are contracted out its members will lose coverage under the Western Australian industrial relations system resulting in a reduction of their industrial rights.  Further, as private sector employees they will not have access to the public sector service systems of appointment, discipline and support.  They will also be vulnerable to their employer going out of business.  The Union believes that industrial disharmony will likely result. Further it foreshadows difficulty in retaining staff which will result in a diminution in both the quality and numbers of staff.  It considers that the likely result will be the “immoral and downward pressure on wages”.

6         The Union believes that by entering into a contract with Serco the Minister for Health (the Minister) and the State will be doing something which was agreed would not be done.  It points out that it was agreed in the WA Health – LHMU – Support Workers Industrial Agreement 2007 (the Agreement) that the contracting out or privatisation of functions and duties of those workers falling within classifications specified in the Agreement would not occur.  It says that the Agreement was not restricted to a certain set of Hospitals. Rather it applies to all staff present and future within the life of the Agreement, which is still current.

7         The Union is of the view that by negotiating with Serco, the State and therefore the Minister, is contracting out or privatising the functions or duties of staff within the scope of the Agreement and therefore is in breach of the Agreement.  It believes that a further breach of the Agreement will be committed if the State signs the contract with Serco.  It is attempting to prevent the State and Serco from entering into the contract on the basis that it contravenes the Agreement.

Claim and Application

8         On 19 November 2010 the Union lodged its claim against the Minister alleging that he has contravened or failed to comply with the provisions of Clause 11.13 of the Agreement by contracting out, or privatising, functions and/or duties of directly employed workers employed by the Union.  The claim is made pursuant to Section 83(1) of the Industrial Relations Act 1979 (WA) (the Act) which provides:

83. Enforcement of certain instruments

(1) Subject to this Act, where a person contravenes or fails to comply with a provision of an instrument to which this section applies any of the following may apply in the prescribed manner to an industrial magistrate’s court for the enforcement of the provision —

 (a) the Registrar or a deputy registrar;

 (b) an industrial inspector;

(c) in the case of an award or industrial agreement, any organisation or association named as a party to it;

 (d) in the case of an award, industrial agreement or order, an employer bound by it;

 (e) any person on his or her own behalf who is a party to the instrument or to whom it applies;

(f) if an employee under an employer‑employee agreement is a represented person, a representative acting on his or her behalf.

9         There is no dispute about the fact that the Union and the Minister are covered and bound by the Agreement which is an instrument to which sub-section 83(1) of the Act applies. 

10      Of particular relevance to this claim is clause 11.13 of the Agreement which provides, inter alia:

 “11.13 Contracting Out and Privatisation

(a) The parties recognise the importance of promoting long term job security and career development for employees subject to this Agreement.

(b) With the exception of those contracts for services currently in existence, there will be no contracting out or privatisation of functions or duties performed by directly employed workers during the life of this Agreement.

11      The Union asserts that the meaning to be given to Clause 11.13 of the Agreement is that the Minister is precluded from contracting out or privatising the functions and/or duties of its employees covered by the Agreement, intended to be, or who may be employed, at the Hospital.         It alleges that by entering into negotiations with Serco the Minister has contravened, or has failed to comply, with the Agreement.  The Union asserts that the Minister is contracting out or privatising the same or substantially similar functions and/or duties of employees within the classifications of employees listed in the Agreement. 

12      The Union contends that contracting out or privatisation in contravention of the Agreement is now taking place as is evidenced by, the issuing invitations to tender for the contract and, by the announcement that Serco had been chosen as the preferred tenderer for the provision of non-clinical facilities management and support services at the Hospital. 

13      The State, subject to negotiations being successful, intends on the Union’s view to execute a contract with Serco either later this year or early next.  The Union contends that the actual execution of the contract will amount to a further breach of the Agreement. It accordingly seeks to restrain the Minister.  It seeks to do so by utilising sub-section 83(7) of the Act.

14      Relevantly sub-sections 83(5) to (7) of the Act provide:

 (5) If a contravention or failure to comply with a provision of an instrument to which this section applies is proved against a person as mentioned in subsection (4) the industrial magistrate’s court may, in addition to imposing a penalty under that subsection, make an order against the person for the purpose of preventing any further contravention or failure to comply with the provision.

 (6)   An order under subsection (5) —

(a) may be made subject to any terms and conditions the court thinks appropriate; and

  (b) may be revoked at any time.

(7)  An interim order may be made under subsection (5) pending final determination of an application under subsection (1).

15      By its interlocutory application lodged the same day as the claim the Union made an application pursuant to sub-sections 83(5) and 87(7) of the Act in which it sought the following order:

“.....that the Respondent be restrained from entering into any contract with Serco Australia Pty Ltd at or in relation to the Fiona Stanley Hospital pending the outcome of the substantive claim.” 

16      At the hearing of the interlocutory application for interim orders the Union modified what it is sought.  It now seeks the following order:

“The Respondent be restrained from taking any step to negotiate or facilitate any contracting out or privatisation of any function and/or duties of directly employed workers during the life of the Agreement whether by facilitating or negotiating the contract with Serco or others.”

Determination

17      Section 83(1) of the Act provides that an application to enforce an industrial instrument may be made to this Court in the prescribed manner where a person contravenes or fails to comply with the provisions of an instrument. 

18      Carolyn Smith, the Assistant Secretary of the Claimant in her affidavit sworn 19 November 2010 said in support of this application for an interim order;

“13. I verily believe that the respondent in now contracting out or privatising the functions or duties of staff within the scope of the Agreement, and has therefore demonstrably breached the Agreement.  It is my union’s very great concern that by announcing its intent to sign a contract with Serco Australia Pty Ltd, it will again be flagrantly breaching the Agreement.

14.   I verily believe that a further breach of the Agreement is imminent since the respondent has manifested its intent to sign a contract with Serco Australia Pty Ltd by the end of the year.

15.   Permitting the signing of any contract for privatisation with Serco Australia Pty Ltd would cause damage to the respondent above and beyond prosecution for breach of the Agreement.”

19      In paragraphs 3.7 and 3.8 of its statement of claim annexed to the originating claim the Union states:

3.7 “On 19 October 2010, the respondent, by announcing that Serco Australia Pty Ltd had been chosen as the preferred tenderer for the provision of non-clinical facilities management and support services at Fiona Stanley Hospital, engaged in contracting out or in the alternative privatising the functions and/or duties of employees covered by the Agreement intended to be employed at Fiona Stanley Hospital.

3.8   The respondent intends or proposes prior to 31 December 2010 to execute a contract with Serco Australia Pty Ltd (‘Serco’) for Serco to employ employees whose functions and/or duties are identical to, or substantially similar to, functions and or duties carried out by employees covered by the agreement, and it is thereby contracting out or privatising the functions and/or duties of employees covered by the Agreement.”

20      In view of the forgoing it seems to me that the Union suggests that by inviting tenders and announcing that Serco is the preferred tenderer that the Minister has contracted out or privatised the functions and/or duties performed by directly employed workers.  It therefore contends that a contravention or failure to comply with the Agreement has occurred or is occurring which enlivens the claim and application.

21      An enforcement of an industrial instrument pursuant to sub-section 83(1) of the Act requires an actual contravention or failure to comply.  The proper institution of proceedings under that provision is predicated on a contravention or failure to comply having occurred.  In my view, given the evidence before me and leaving aside the fact that it is the State and not the Minister which is negotiating with Serco, the act of negotiation to enter into a contract, of itself cannot constitute contracting out or privatisation.  A legally binding contract has not thus far been concluded.  It may never eventuate.  Currently, based on the evidentiary material before me there does not appear to be a breach of the Agreement.  If and when a contract is signed that might give rise to an allegation of contravention or failure to comply.  On a proper analysis of the Claimant’s case based on the evidentiary material before me it is plain that the real complaint is the allegation in Clause 3.8 of the statement of claim that the Minister intends to execute the contract with Serco.  Properly characterised the Union’s concern is with respect to a prospective breach of the Agreement.  In Bailey v Matthews (2004) 84 WAIG 1392 I held that a prospective breach is not actionable. I maintain that view. Section 83 of the Act requires an identifiable allegation of an actual breach. This Court does not have jurisdiction to deal with an alleged prospective breach of an industrial agreement. Without further evidence there does not appear to be a serious question to be tried in this application or claim.

22      Further and in any event there is real doubt as to whether the Union can establish that the conduct of the Minister is that of a party to the Agreement.  Section 41(4) of the Act provides that an industrial agreement relevantly extends and binds:

(a)  all employees who are employed in any calling mentioned in the industrial agreement in the      industry or industries to which industrial agreements applies by an employer who is party to the industrial agreement; and

(b)  employers who are party to the industrial agreements.

23      “Employer” is defined in clause 3 of the Agreement to mean any of the employers referred to in sub-clauses 5.2(b) and 5.3(c).  Those provisions provide that the Respondent is an employer party to the Agreement in his incorporated capacity as the boards of the hospitals formerly comprised in the Metropolitan Health Services Board, Peel Health Services Board and the WA Country Health Service (see paragraph 19 of the affidavit of Marshall Kingsley Warner sworn 29 November 2010).  It appears therefore, based on the evidentiary material before me that the Agreement does not apply to the Respondent other than in his capacity to which I have referred.

24      Further, and importantly, it is the case that the State and not the Minister will, if negotiations are successful, be entering into a contract with Serco. In his affidavit sworn 29 November 2010, Bradley Charles Sebbes said that if negotiations with Serco are successful the State of Western Australia will be a party to the contract.  The Union in this claim and application has referred to the State and the Minister interchangeably and as if they are one and the same persona.  Clearly they are not one and are distinct legal entities.

25      This Court does not have power to grant interim relief outside the bounds of the powers given to it by statute.  It therefore does not have the power to bind parties that are not before it.  It cannot possibly bind the State of Western Australia and/or Serco.  The proposed order sought cannot be made given that the evidence before me indicates the Minister will not be a party to the contract with Serco.

26      Finally the Minister has contended that this Court may not issue an interim order under sub-sections 83(5) and (7) of the Act unless a contravention or failure to comply is proved.  It was suggested that the purpose of sub-section 83(7) is limited to allowing an interim order to be made preventing further contravention or failure to comply only after such failure is proved but prior to final orders issuing.  With respect, I disagree.  To construe that provision in that way would make it ineffectual.  In my view the provision is to be construed as giving this Court the power to make interim orders where the evidence supports the allegation of an alleged contravention or failure in order to prevent further contravention or failure.  It follows that in an appropriate case this Court may exercise its power by making interim orders pursuant to sub-section 83(7). 

Conclusion

27      As the evidence stands the Union cannot demonstrate any contravention or failure to comply with the Agreement. What is in fact alleged is a prospective contravention or failure with respect to which this Court has no jurisdiction. Further, and in any event, it has not been demonstrated that the alleged contravention and/or failure was occasioned by the Minister in his capacity as a party to the Agreement. It follows for the reasons stated that the application for the interim order should be dismissed.

G CICCHINI

INDUSTRIAL MAGISTRATE