A STAY OF OPERATION OF THE ORDER IN MATTER NO. APPL 86 OF 2017 WHICH IS THE SUBJECT OF FBA 2 OF 2019 AND FBA 3 OF 2019

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

CITATION : 2019 WAIRC 00098

DELIVERED : THURSday, 28 February 2019

FILE NO. : PRES 1 OF 2019

Applicant

AND

The Shop, Distributive and Allied Employees' Association of Western Australia, Minister for Commerce and Industrial Relations, Samuel Gance (ABN 50 577 312 446) T/A Chemist Warehouse Perth

Respondents

FILE NO. : PRES 2 OF 2019

Applicant

AND

Shop, Distributive & Allied Employees Association of Western Australia, Pharmacy Guild of Western Australia, The Minister for Commerce and Industrial Relations

Respondents

Catchwords : Industrial Law (WA) – Application to stay operation of order – Declaration of scope of award – An appeal instituted – Special circumstances relating to employers’ incurring irrecoverable costs and changes to rosters, working arrangements, and back pay – Appeal grounds arguable – Balance of convenience

Legislation : Industrial Relations Act 1979 (WA)

Result : Order issued

Representation:

Counsel:

Case(s) referred to in reasons:

Freshwest Corporation Pty Ltd v Transport Workers’ Union, Industrial Union Of Workers, WA Branch (1991) 71 WAIG 1746

John Holland Group Pty Ltd v The Construction, Forestry, Mining And Energy Union Of Workers [2005] WAIRC 02983; (2005) 85 WAIG 3918

RJ Donovan And Associates Pty. Ltd. v Federated Clerks Union Of Australia Industrial Union Of Workers, W.A. Branch (1977) 57 WAIG 1317

Seacode Nominees Pty Ltd As Trustee For The Stonehouse Family Trust v Nigel Anthony Penfold (2005) 85 WAIG 3926

The Automotive, Food, Metals, Engineering, Printing And Kindred Industries Union Of Workers – Western Australian Branch And Another v Anodisers W.A. And Others [2001] WAIRC 03164; (2001) 81 WAIG 1598

Western Australian Carpenters And Joiners, Bricklayers And Stoneworkers Industrial Union Of Workers v Terry Glover Pty Ltd (1970) 50 WAIG 704

Reasons for Decision

1         These are applications made under s 49(11) of the Industrial Relations Act 1979 (the Act) seeking to stay the operation of the decision of the Commission in APPL 86 of 2017 ([2019] WAIRC 00015), pending the hearing and determination of appeals FBA 2 of 2019 and FBA 3 of 2019.

Background

2         The Shop, Distributive and Allied Employees’ Association of Western Australia (the SDA) and Samuel Gance (ABN 50 577 312 446) t/as Chemist Warehouse Perth (Chemist Warehouse) are in dispute about, in essence, whether the scope of the Shop and Warehouse (Wholesale and Retail Establishments) Award 1977 (the Award) covers the retail pharmacy industry.  The SDA sought an interpretation of the Award (APPL 86 of 2017) pursuant to s 46 of the Act.

3         The question posed in the interpretation application was:

‘Does the Shop and Warehouse Award, as varied, apply to workers employed in any calling or callings mentioned in the Award in the Retail pharmacy industry and to employers employing those workers?’

4         The Commission issued Reasons for Decision and a declaration that answered ‘yes’ to that question.

5         The Pharmacy Guild of Western Australia (Pharmacy Guild) was an intervenor in the proceedings before the Commission at first instance.  It appeals against the decision (FBA 2 of 2019).  Chemist Warehouse also appeals the decision (FBA 3 of 2019).  The appeals are in essence in identical terms and seek that the declaration be quashed. 

6         Both the Pharmacy Guild and Chemist Warehouse filed applications for a stay of the order of the Commission pending the outcome of the appeals (PRES 1 of 2019 and 2 of 2019, respectively).

7         Application PRES 1 of 2019 by the Pharmacy Guild sets out the following grounds for the stay of the order:

1. The errors identified in the Notice of Appeal are strongly arguable.

2. The Guild’s members have not applied the Shop Award in the past (this is the status quo).  If the status quo is not maintained pending the outcome of the appeal, the members of the Guild will suffer prejudice for the reasons outlined in the Statutory Declaration including that they will:

(a) have to bear the immediate cost and expense of adjusting the pay of its current employees and backpay to past and present employees; and

(b) need to take steps to ameliorate the consequences of such expenses including by inter alia making staff redundant or adjusting pharmacy operating hours.

8         The application attaches a Statutory Declaration by Anthony McAnuff, the Business Development Manager for the Pharmacy Guild of Australia (WA Branch) (PGAWA).  Through a service arrangement with the Pharmacy Guild, which is the applicant in this stay application, the PGAWA provides for members to obtain representation in the Western Australian Industrial Relations Commission.  Mr McAnuff’s Statutory Declaration indicates that in addition to the 13 members of the PGWA, there are approximately 280 PGAWA members who require representation from time to time in the Western Australian industrial relations system.

9         Mr McAnuff says that the Commission’s Decision is far reaching and has an impact on members who, in good faith, have proceeded on the basis that the Shop Award does not apply to the pharmacy industry.

10      Mr McAnuff also notes that the PGWA applied for a new award in application A 1 of 2014.  The Commission ordered that that application not proceed pending the outcome of the application for interpretation, APPL 86 of 2017, the matter the subject of the appeals to the Full Bench.

11      Mr McAnuff sets out the consequences he says will occur for pharmacy owners should the Decision not be stayed pending the appeal.  They will be immediately required to consider and take steps to effect:

1. Back pay for current and former employees; and
2. Review rates of pay for pharmacy assistants.

12      He says that ‘the financial and organisational structure impact of proceeding with these steps while the process of appealing the Decision will result in significant cost in terms of time and expense to many Pharmacies which cannot be undone once implemented’.

13      He also says that pharmacies may be forced to review their staffing levels, which may result in redundancies and job losses during the period in which the Decision is being appealed.

14      According to Mr McAnuff, pharmacies may be forced to reduce their opening hours and services provided to the community.

15      Mr McAnuff also says that these costs and adjustments, which may not be necessary if the appeal is successful, will then have been unnecessary and cannot be ‘recanted’.

16      Application PRES 2 of 2019 by Chemist Warehouse attaches a Statutory Declaration by Sunil Narula, a pharmacist who is the Western Australian State Manager of Chemist Warehouse brand including Chemist Warehouse Perth, and owns four Chemist Warehouse pharmacies in Western Australia.

17      Mr Narula says that there are 24 retail pharmacies in Western Australia which operate under the Chemist Warehouse brand.  Chemist Warehouse provides, amongst other things, employee relations support to the pharmacies under that brand.  He says that it has advised those pharmacies, in good faith, that the Award did not apply to the pharmacy industry. 

18      Mr Narula sets out the likely consequences for Chemist Warehouse pharmacies if the stay is not granted.  They are similar in nature and scope to those set out by Mr McAnuff.

19      The SDA answered the applications to stay the order saying that:

1. The grounds of the appeals lack merit;

2. The balance of convenience does not favour the granting of a stay because pending the hearing and determination of these 2 appeals, the SDA will not:

a) initiate or pursue any further Award enforcement proceedings against retail pharmacy employers in its own right or on behalf of its members, other than industrial magistrate’s court proceedings:

i) M 46 of 2018, in which decision is reserved to 9.30 am, 28 February 2019; and

ii) M 33 of 2018, which was lodged on 24 January 2019, prior to the lodgement of the Notices of Appeal in FBA 2 and FBA 3 of 2019;

b) make application to terminate application A 1 of 2014, in which the appellants in FBA 2 and FBA 3 of 2019 are applicant and a party respectively.

20      The SDA filed an affidavit sworn by Benjamin Alick Harris, the General Assistant Secretary of the SDA, in which he elaborates on the matters set out in the SDA’s answers. 

21      The Minister, an intervenor at first instance, does not object to the applications for a stay.

Decision at first instance

22      In her decision, the learned Commissioner noted that the parties agree that in the current version of the Award, there are no known respondents carrying on the retail pharmacy industry.  However, the parties disagree about whether clauses which make reference to chemist shops or pharmacies, such as cl 40 – Chemist Shops, can have an effect on the scope of the Award.

23      The controversy was the proper construction of clauses 3 – Scope; 28 – Wages; 40 – Chemist Shops; Schedule B, which explains what can be sold at a ‘special retail shop’, and Schedule C, which contains a list of respondents, and whether the scope of the award extends to the retail pharmacy industry.

24      The Commissioner considered evidence of the history of the Award.  She noted that the parties and intervenors agreed that the Award applied to retail pharmacy employees at the date the Award was made.  Only two retail pharmacies operating at that time, Boans Ltd of Murray Street, Perth, and Perth United Friendly Society Chemists (PUFSC) of 84 Beaufort Street, Perth, were named as respondents.  Both are no longer named in Schedule C.  PUFSC was the last of the known retail pharmacy respondents named in the schedule, and it was removed from Schedule C by the Commission of its own motion under s 47 of the Act on 5 April 1995.

25      The Commissioner went on to note that clause 3 – Scope, says that the Award applies ‘to all workers employed in any calling or callings herein mentioned in the industry or industries carried on by the Respondents named in Schedule C and to all employers employing those workers.’

26      Clause 40 – Chemist Shops says that ‘(a)ny worker employed in a chemist’s shop shall be subject to the terms of this Award up to the time he or she becomes indentured to the profession’.

27      The Commissioner described the scope clause as a ‘Glover’ scope clause, that is one which states that the Award applies to industries carried on by the respondents set out in the schedule to the Award, per the Western Australian Carpenters and Joiners, Bricklayers and Stoneworkers Industrial Union of Workers v Terry Glover Pty Ltd (1970) 50 WAIG 704 (Glover).  This is as opposed to a ‘Donovan’ scope clause which states that it applies to the employees of employers named and engaged in industries specified in the schedule to that Award, which also sets out the employers and industries in the schedule to that Award (RJ Donovan and Associates Pty. Ltd. v Federated Clerks Union of Australia Industrial Union of Workers, W.A. Branch (1977) 57 WAIG 1317 (Donovan).  The Commission noted that the parties agreed that the Award is a common rule award with a Glover scope clause, not a Donovan scope clause.

28      The Commissioner set out the parties’ and intervenors’ arguments regarding what the Commission could consider including an argument as to ambiguity.

29      The learned Commissioner did not agree that she was limited to considering the scope clause when considering the scope of an award, and said that it was appropriate to interpret the scope in light of all the clauses in the Award.

30      The approach required was to determine the objective intention of the parties as it is embodied in the words they have used.  The Commissioner said she had construed the award as a whole, giving its words, in particular those in cl 40, their ordinary meaning.  She concluded that the Shop Award is intended to cover the retail pharmacy industry.  She found ‘that in this case, interpreting the Shop Award is finally and not just primarily a matter of construction’.

31      The Commissioner then said that if she was:

‘wrong about that, then interpreting the Shop Award is only primarily a matter of construction.  A plain reading of cl 3 and schedule C does not reveal the industries covered by the Shop Award so, although the scope may not be impossible to determine, to do so it is necessary to find relevant facts as set out in Freshwest Corporation Pty Ltd v Transport Workers’ Union, Industrial Union of Workers, WA Branch (1991) 71 WAIG 1746 (Freshwest) and Glover. This means the Shop Award’s scope is inherently ambiguous and it is appropriate for the Commission to interpret it.’

32      In reference to Glover, the Commissioner noted that in awards of this type, the scope clause requires findings of fact as to the industry carried on by the named respondents as at the date of the award.  This establishes the limits of the industry.  This approach, she said, was reinforced in Freshwest Corporation Pty Ltd v Transport Workers’ Union, Industrial Union of Workers, WA Branch (1991) 71 WAIG 1746.

33      By reference to Glover, Freshwest and The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union of Workers – Western Australian Branch and Another v Anodisers W.A. and Others [2001] WAIRC 03164; (2001) 81 WAIG 1598, the learned Commissioner then found that, as at the date the award was made:

(a) Boans and PUFSC owned and operated retail pharmacy businesses;

(b) they carried on the retail pharmacy industry; and

(c) the Award applied to employees working in the retail pharmacy industry.

34      The Commissioner went on to say that a strict grammatical interpretation of cl 3 should not be adopted when interpreting the scope of the award and that the language used by the parties to the award is not the sole determinant of the Awards’ legal effect in relation to scope.

35      When the scope of an award is to be varied, the Commissioner noted, s 29A requires certain steps to be taken.  There was no evidence of those steps having occurred when Boans and PUFSC were removed as respondents to the Award.

36      She examined the Act as it relates to scope, under s 29A, varying awards under s 40 and the removal of listed respondents under s 47.  The learned Commissioner found that s 47 is a special power, and when the Commission removes a listed respondent no longer carrying on business in an industry to which the awards applies, it goes no further than removing the listed respondent, and ‘does not have the effect of removing an industry, thereby reducing the award’s scope’.  She found that this was supported by the limited notice provisions that apply to s 47.

37      She found that nothing in the application to remove PUFSC in 1995, the transcript or Reasons for Decision ‘suggest that the parties or the Commission intended or contemplated the removal of PUFSC to have the effect of removing the retail pharmacy industry from the Shop Award’s scope’. 

38      The learned Commissioner found that the 1995 order, made under s 47 of the Act, did no more than remove PUFSC as a named respondent because it no longer carried on business in an industry to which the shop award applied.  The retail pharmacy industry continued to be an industry to which the Award applied.

39      The learned Commissioner then dealt with the effects of the Labour Relations Reform Act 2002 (WA) in 2002.  She concluded that since 2002, the effect of adding an employer carrying on an industry to which the Award did not previously apply was to also add that new industry to the Award’s coverage.

40      The Commissioner concluded that ‘the Shop Award has always applied to the retail pharmacy industry and continues to apply to it’. She answered the question posed as ‘yes’, and made a declaration that the Shop Award ‘as varied applies to workers employed in any calling or callings mentioned in the award in the retail pharmacy industry and to employers employing those workers’.

The test for a stay

41      In John Holland Group Pty Ltd v The Construction, Forestry, Mining and Energy Union of Workers [2005] WAIRC 02983; (2005) 85 WAIG 3918 at [32] – [38], Ritter A/P set out the authorities in respect of the tests to be applied in an application for a stay in the case of an appeal to the Full Bench in the following way:

 [38] Accordingly, in my opinion, the primary focus is upon the consequences of a stay being granted or not granted.  Where, for example, the absence of a stay would render the appeal nugatory or futile, special circumstances warranting the grant of a stay may exist.  It will also be necessary to consider matters such as the arguability of the appeal and the balance of convenience.  The parties, in their submissions, emphasised that the Commission should consider whether there is a serious question to be tried and where the balance of convenience would lie.  In considering the latter consideration, the circumstances of the respondent or any other affected party, such as Mr Kavanagh, can be important.

Consideration

42      Section 49(11) of the Act provides that at any time after an appeal to the Full Bench has been instituted a person who has sufficient interest may apply to the Commission for an order that the operation of the decision appealed against be stayed pending the hearing and determination of the appeal.  There is no challenge that the applicants have sufficient interest, and that they have appealed to the Full Bench.

Special Circumstances

43      Special circumstances need to be demonstrated to justify the departure from the ordinary rule that a successful litigant is entitled to the fruits of judgment pending the appeal (see John Holland Group Pty Ltd v CFMEU and Seacode Nominees Pty Ltd as Trustee for the Stonehouse Family Trust v Nigel Anthony Penfold (2005) 85 WAIG 3926).  Special circumstances may include when an order needs to be made to preserve the integrity of the appeal so that the appeal is not rendered nugatory.

44      The applicants say that the effect of the order is to overturn their belief, held in good faith, and their acting on that belief, that the Award does not apply to the retail pharmacy industry. 

45      The SDA does not seriously challenge what the applicants say will be the effects of the stay not being granted, but says that, leaving to one side the proceedings in M 33 of 2019, it will not be taking action to enforce the Award against any retail pharmacies, pending the hearing and determination of the appeal.  Also, it says that the Minister does not oppose the granting of a stay suggests that the Minister’s Department, likewise, does not intend to take any such enforcement action.  The SDA says the applicants ‘are seeking a stay to prevent themselves from taking action against themselves’.

46      I note that while the SDA and the Minister may not intend to pursue enforcement, employees in their own right are able to seek to enforce an award.

47      I find that the applicants, now having a declaration that the Award applies to them and their employees, are obliged at law to apply the Award.  It is not optional.  Whether enforcement action will be taken pending the appeal does not alter their legal obligations.

48      I find that should the order not be stayed, pending the hearing and determination of the appeals, the applicants will be required to:

1. audit, consider and recalculate the rates of pay of employees for the future, and make any necessary payments of backpay for employees, past and present; and

2. reassess their operating hours, rosters and staffing generally.  This may have the effect of changing their opening hours, the number of employees they employ and rearranging those employees’ working hours.

49      These steps will have significant structural, financial and staffing consequences.  If the appeals are successful and the order is quashed, all of this work and change will have been disruptive, unnecessary, wasted and irrecoverable.  They will not be able to be restored substantially to their former position.

50      Secondly, in the circumstances of a finding that an award applies and has always applied to a business and its employees where the employer had, on advice, believed no award applied, a prudent business operator would take the actions the applicants say are necessary and not await the outcome of an appeal where a stay might prevent likely unnecessary, expensive and irrecoverable consequences, including the recovery of back pay to former employees.

51      I find these constitute special circumstances.

Prospects of success of the appeals

52      The applicants say that grounds 1 and 2 of the appeals identify that the learned Commissioner erred in going beyond the scope clause and respondency schedule to determine the scope of the Award.  They say that the Industrial Appeal Court decisions in Glover and Freshwest do not support the approach taken by the Commission.   The SDA says that the approach taken by the learned Commissioner was orthodox and according to the well-established principles.

53      The applicants say the reasons for decision do not disclose the Commission’s reasoning in considering clauses beyond the scope clause and respondency schedule.  While there may be some validity to this argument, it is likely that a proper analysis of the Reasons actually discloses the Commissioner’s reasons or they may be inferred.

54      In respect of grounds 3 and 4 of the appeals, the applicants say that the Commissioner’s conclusion regarding the effect of the provisions of the Act and the removal of the named respondents is in error.  The Commission’s approach is said to be contrary to the established principles and unprecedented.  This is a matter worthy of further elaboration.

55      The applicants also raise an issue relating to ground 5 of the appeals.  This is a ground in the alternative and asserts that the learned Commissioner erred in constructively failing to exercise jurisdiction by not dealing with the submission of the Pharmacy Guild as to the effect of an application by the SDA made under s 40 of the Act.  This application resulted in an order of the Commission in No. 423 of 1995, made subsequent to the order under s 47, to remove PUFSC from Schedule C, to replace the entire schedule of respondents.

56      The SDA did not specifically respond to this particular ground.

57      I conclude that the grounds of appeal identify arguable matters.  Grounds 1 and 2 relate to the proper application of the authorities.  Whether it is proper to consider clauses beyond those dealing directly with scope is significant in the proper interpretation of the Award, given the conclusion that it was a Glover scope provision.

58      The application of the provisions of the Act and the effect of the 2002 amendments are both arguable matters in relation to the reasons at first instance as raised in grounds 3 and 4.

59      The failure to address a relevant submission which relates to an amendment to the schedule of respondents which may affect the outcome, is a matter of substance and arguable.

The balance of convenience

60      The circumstances I have set out above in relation to special circumstances also demonstrate that the balance of convenience lies with the granting of a stay.  The SDA has not raised any issue of inconvenience or prejudice it may suffer from the stay being granted, whereas the matters of special circumstance demonstrate inconvenience and prejudice to the applicants.

Conclusion

61      In these circumstances, I intend to issue an order staying the operation of the order pending the hearing and determination of the appeals.