Anthony & Ors v Training Recognition Council & Anor [2002] QIRC 103 (2002) 170 QGIG 361

19 July, 2002 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 361 ########################################################################################################################### QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Training and Employment Act 2000 – s. 230 – appeal Kerry Roy Anthony, Robert Chandra, James Chandra, John Mizzi, Peter Proctor, Derek Scott, Randall Scovell, Diane Thompson, Robert McGown, Timothy Kershaw AND Training Recognition Council AND Murrays Australia Limited (Nos. AT13, AT14, AT15, AT16, AT17, AT18, AT19, AT20, AT21, AT22, AT23, AT24, AT25, AT26, AT27, AT28, AT29, AT30, AT31 and AT32 of 2002) COMMISSIONER BLOOMFIELD 8 July 2002 Appeals – Training and Employment Act 2000 – Cancellation of training contracts – Whether substantial change in employer’s circumstances – Training Recognition Council’s obligations under s. 63 of T&E Act – Date of cancellation of training contracts – Whether Council may cancel training contract retrospectively held no power under s. 63 to cancel retrospectively – Denial of natural justice – Further submissions invited on remedy. DECISION The Commission has before it 10 appeals (AT13-22 of 2002) under s. 230 of the Training and Employment Act 2000 (the T&E Act) by former trainees employed by Murrays Australia Limited (Murrays) against a decision of the Training Recognition Council (the Council) given on 8 February 2002 to cancel their training contracts with Murrays. In lieu of that decision the trainees request the Commission to reinstate the respective training contracts. The Commission also has before it 10 appeals (AT23-32 of 2002) under the same Act by Murrays against the decision of the Council to approve the cancellation of the 10 training contracts from 11 February 2002. In lieu of that decision Murrays requests the Commission to substitute a cancellation date of 7 November 2001 in respect of 9 of the trainees and 15 November 2001 in respect of the remaining trainee. The appeals were lodged out of time and Murrays also requests an extension of time within which to lodge them. Background On 7 November 2001 Murrays terminated the employment of a number of its employees, including 9 trainees. On 15 November 2001 it terminated a further trainee. Murrays said the decision was taken for economic reasons associated with a drastic downturn in business which occurred in the aftermath of the 11 September 2001 terrorist attacks in the United States, and the collapse of Ansett the following day. At the time of the terminations Murrays employed 44 trainees. Shortly after the terminations were effected Murrays established that it required the approval of the Training Recognition Council to terminate the training contracts. It approached the Council and made formal application to cancel the training contracts on 11 December 2001. A delegate of the Council wrote to each of the trainees on 14 December 2001 to seek their views on Murrays’ application. Each of the trainees wrote to the Council opposing Murrays’ application. The delegate of the Council considered Murrays’ applications and the trainees’ responses on 21 December 2001 and determined to refuse Murrays’ application. Information Notices (as required by s. 63(2) of the T&E Act) were sent to the parties on 21 December 2001 informing them of the delegate’s decision. Murrays lodged appeals (AT1–10 of 2002) against the delegate’s decision with the Queensland Industrial Relations Commission on 15 January 2002. It also entered into discussions with senior officers of the Department of Employment and Training about the matter. This culminated in Murrays making a further detailed submission to the Council on 30 January 2002. Murrays’ submission was then considered by the full Council in the form of a flying minute that was circulated to all members of the Council. The flying minute, which recommended that the Council approve Murrays’ application to cancel the 10 training contracts, was approved by a majority of members of the Council. An Information Notice advising Murrays and the trainees that Murrays’ application to cancel the training contracts had now been approved was forwarded to the parties on 8 February 2002. It informed all parties that the Council had determined to cancel each of the 10 training contracts as from 11 February 2002. In light of this decision Murrays withdrew appeals AT1-10 of 2002 on 14 February 2002. Each of the 10 trainees (on 4 March 2002) and Murrays (out of time on 21 March 2002) appealed the Council’s 8 February 2002 review decision. Application for an extension of time for the Murrays’ appeals The Council’s decision to cancel the training contracts was communicated to the parties on 8 February 2002 and took effect from 11 February 2002. Murrays’ appeal against the operative date of that decision was not lodged until 21 March 2002. The appeal is thus 17 days out of time. Murrays seeks an extension of time, pursuant to s. 230(3) of the T&E Act, within which to lodge the appeals. Mr J.E. Murdoch SC, who appeared with Ms C. Arnold of Counsel for Murrays, said this was not a case where a time period for appeal had passed by simply due to inactivity. Murrays first raised its concern regarding the effective date of the Council’s second decision by way of letter to the Council dated 18 February 2002. A reply had not been received until 7 March 2002. Murrays had considered its position in light of that response and prepared and lodged its appeal. It was submitted if the time period for the appeal were to run from the date of the Council’s reply the appeals would have been made in time. -- 1 of 9 -- 362 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 19 July, 2002 After considering the whole history of this case I have decided to exercise my discretion to grant the application for the extension of time within which to lodge the appeals. Generally, Murrays has acted expeditiously in lodging documents and responding to requests or directions from both the Council and this Commission. In particular, Murrays has met all of the timelines set out in the Commission’s directions orders. Further, the record of the proceedings before the Council contains ample references to Murrays’ frequent attempts to have the trainees’ training contracts cancelled from 7 and 15 November 2001, the putative termination of the trainees’ employment. As such, both the trainees and the Council have been on notice that Murrays would be seeking to have the effective date of the cancellation altered to such dates. Applications to amend appeals The trainees’ appeals, amended on 27 March 2002, set out the following grounds of appeal: “(a) the Council erred in determining that the Respondent cannot perform its obligations under the training contract with the Appellant; (b) the Council erred in determining that there had been a substantial change in the Respondent’s circumstances; (c) the Council erred in determining that any change in the Respondent’s circumstances affected its capacity to perform its obligations under the training contract with the Appellant; (d) the Council failed to observe the procedures required by law in making the determination; and (e) the Council failed to accord the Appellant natural justice.”. During the first day of the hearing Mr Reed sought leave to amend each of the 10 appeals by the trainees to include a ground to the effect that Murrays had adopted inappropriate selection processes and, in doing so, failed to allow the employees to have input into the selection process. Mr Reed submitted it was appropriate that such matter be aired in the present appeals because s. 72(1)(f) of the Industrial Relations Act 1999 prevented the trainees from pursuing any claim for unfair dismissal where inappropriate selection criteria would normally have been a relevant consideration. I ruled that I would not allow the appeals to be amended. My reasons for doing so were, firstly, the lateness in the proceedings and, secondly, because the grounds did not relate to a matter relevant to the Council’s consideration under s. 63 of the T&E Act. It was also not relevant that the trainees were apparently excluded from the unfair dismissal provisions of the Industrial Relations Act 1999. At the commencement of the second day of hearing Mr Reed made a further application to amend the appeal. The first part of the amendment asked the Commission to determine that Murrays had acted contrary to s. 235(b) of the T&E Act by purporting to cancel the training contracts in other than a way allowed under the Act. Mr Reed also sought to add the additional relief that the trainees be awarded compensation pursuant to s. 237 of the T&E Act and that the Commission make an order under s. 240. The application to amend was strongly opposed by Mr Murdoch SC on behalf of Murrays (see transcript pages 141 to 153). After considering the submissions I ruled to reject the application for a number of reasons. Firstly, the nature of the relief claimed would have made the case substantially different to that which the respondents had come to argue. Secondly, it was too late in the day for the appellant trainees to be given further latitude to amend given their demonstrated tardiness in complying with directions orders. Thirdly, the appeal was starting to become a moving feast as the appellant trainees identified new issues they wished to air or new remedies which they sought to obtain. However, having reflected on the matter since the ruling, I have now come to the view that the matters dealt with in Chapter 8, Part 2, Division 2 of the T&E Act are, in fact, relevant potential remedies in this case. I canvass the import of this at the conclusion of my decision. The nature of the appeals Section 232 of the T&E Act is in the following terms: “232.(1) An appeal to the industrial commission is by way of rehearing on the record. (2) However, the commission may hear evidence afresh, or hear additional evidence, if the commission considers it appropriate to effectively dispose of the appeal.”. Mr Murdoch SC said in an appeal by way of rehearing the powers of the appellate body are exercisable only where the appellant can demonstrate that, having regard to all the evidence now before the appellate body, the order that is the subject of the appeal is the result of some legal, factual or discretionary error (Allesch v Maunz [2000] HCA 40 per Gaudron, McHugh, Deane and Hayne JJ at para 23). Mr Murdoch SC said the record upon which the appeal should be determined was all of the correspondence and other material considered by the Training Recognition Council. This material had been provided to the Commission. Mr Murdoch SC strongly opposed the leading of fresh or additional evidence by the trainees. He said they did not meet the criteria outlined in Workers Compensation Board of Queensland v David Griffiths (1997) 155 QGIG 940 which identified the circumstances under which fresh evidence could be led. Mr C.J. Murdoch, Counsel on behalf of the Training Recognition Council, supported the submissions of Mr Murdoch SC in relation to the nature of the appeal. In doing so he also referred me to Allesch v Maunz. In addition, Mr C.J. Murdoch highlighted that “the record” was defined by rule 109(1) of the Industrial Relations (Tribunals) Rules 2000. He said that the record (as defined) had been filed with the Commission and served on the other parties and the matter should be determined on the basis of material contained within that record. Mr C.J. Murdoch also opposed leave being granted to the trainees to lead any fresh or additional evidence. Mr R. Reed of Counsel, who appeared for the 10 trainees, said it was not true that the words “rehearing on the record” automatically denoted an appeal of the type where only an appealable error could be identified or, in other words, an appeal of the type set out in House v The King (1936) 55 CLR 499. Mr Reed said the High Court had drawn such a distinction in Builders Licensing Board v Sperway Constructions (Syd) Pty Ltd (1976) 135 CLR 616 when it had determined that the nature of an appeal must be gleaned from an examination of the relevant legislative provisions (per Mason J at 621-2). -- 2 of 9 -- 19 July, 2002 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 363 Mr Reed said the nature of the distinction had been further discussed by the Queensland Court of Appeal in Aldrich v Ross [2001] 2 QdR 235. In that decision, Thomas JA (with whom Pincus JA and Muir J agreed) said: “[11] … The nature of the review in a situation like the present of course depends on such indications as appear in the relevant legislation … … [29] In the cases to which reference has been made in which the principles of House v The King have been held applicable, there seems to be an underlying assumption that examinable reasons exist for the decision, or that there exists a right to have reasons that can be scrutinised and to which due respect can be paid. Different principles may well be called for when that underlying assumption is absent. … [41] In the end, although there are countervailing factors, I consider that the Misconduct Tribunal is required to make its own decision on the available evidence rather than merely to determine the correctness of the original decision in the limited manner permitted by an appeal in the strict sense against the exercise of a discretion.”. Mr Reed urged me to adopt a similar approach to that taken by the Court of Appeal in Ross’ case and to determine the appeal by way of hearing de novo or, at the very least, by consideration of the record supplemented by additional evidence which the trainees sought to lead. In my view, the nature of the decision making process adopted by the Council does not lend itself to a review based upon the principles established by the High Court in House v The King (for example, the Council did not conduct any formal proceedings, did not keep any formal record and did not disclose formal reasons for its decision – although the Information Notice does contain a summary). Accordingly, some different approach is required. In Sperway Mason J said: “The nature of the proceeding before the administrative authority may be of such a character as to lead to the conclusion that it was not intended that the court was to be confined to the materials before the authority. There may be no provision for a hearing at first instance or for a record to be made of what takes place there. The authority may not be bound to apply the rules of evidence or the issues which arise may be non-justiciable. Again, the authority may not be required to furnish reasons for its decision. In all of these cases there may be ground for saying that an appeal calls for an exercise of original jurisdiction or for a hearing de novo. On the other hand the character of the function undertaken by the administrative authority in arriving at its decision may differ markedly from the instances already supposed. The authority may be required to determine justiciable issues formulated in advance; to conduct a hearing, at which the parties may be represented by barristers and solicitors, involving the giving of oral evidence on oath which is subject to cross-examination to keep a transcript record; to apply the rules of evidence, and to give reasons for its determination. In such a case a direction that the appeal is to be by way of rehearing may well assume a different significance. But in the end the answer will depend on an examination of the legislative provisions rather than upon an endeavour to classify the administrative authority as one which is entrusted with an executive or quasi-judicial function, classifications which are too general to be of decisive assistance. Primarily it is a question of elucidating the legislative intent. A question which in the circumstances of this case is not greatly illuminated by the Delphic utterance that the appeal is by way of rehearing. …”(at 621-2). It seems to me that this is the type of appeal discussed by Mason J above in Sperway and by the High Court in Coldham, re Ex parte Brideson [No 2] [1990] 170 CLR 267, which was distinguished in Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 74 ALJR 1348. In the latter decision the High Court said: “[15] The provision considered in Brideson [No 2] conferred power on the Commission to take further evidence, a provision which is indicative of an appeal by way of rehearing. It also required the Commission to ‘make such order as it [thought] fit’. The latter requirement indicated that the Commission’s appellate powers were not constrained by the need to identify error on the part of the primary decision-maker, but, rather, that the Commission was obliged to give its own decision on the evidence before it.”. Such an approach was endorsed by the Queensland Court of Appeal in Aldrich v Ross in its consideration of s. 23 of the Misconduct Tribunals Act 1997 which requires the Misconduct Tribunal, like this Commission, to determine an appeal by way of rehearing on the evidence. After considering the submissions of the parties, I decided to follow the approach revealed in the reasons of Thomas JA in Aldrich v Ross and to make my own decision based upon the evidence available to me rather than merely determine the correctness of the original decision made by the Council. Additional evidence Mr Reed submitted that I should admit fresh or additional evidence about the selection process by which Murrays came to choose the 10 trainees for termination. Further, he submitted that I should admit additional evidence from a number of current employees of Murrays about that selection process and about the hours of work being worked by Murrays’ employees both prior, and subsequent, to the termination of the trainees’ employment. After considering the submissions I ruled to set aside notices to appear which had been served on Ms Cathy Jones and Mr Matthew Stewart, both Operations Clerks employed by Murrays. Mr Reed could not inform me how their evidence might assist me to determine the appeal. It seemed that they were called as part of a fishing exercise in the hope that some evidence might fall which could assist the trainees’ appeal. I did not deem it appropriate to hear such evidence in order to effectively dispose of the appeals. I also ruled that I would not admit any evidence which went to the processes by which the various trainees were chosen for termination. In that regard it was common ground that Murrays had used a form of selection process to determine which employees (including trainees) it would terminate. I made such ruling because the appeals now before the Commission relate only to the Council’s decision made under s. 63 of the T&E Act. Relevantly, s. 63 of the T&E Act provides as follows: “63.(1) If a party to a training contract can not perform the party’s obligations under the contract on any of the following grounds, the party may apply to the council in writing to cancel the contract – (a) if the party is an employer – (i) if the employer has ceased business; or (ii) there has been a substantial change in the employer’s circumstances and the change has affected the employer’s capacity to perform the employer’s obligations under the contract; …”. -- 3 of 9 -- 364 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 19 July, 2002 It was not open to the Council to consider whether Murrays adopted appropriate selection processes. The Council was confined to a consideration of the narrow circumstances set out in s. 63 of the T&E Act. The section confined the Council to a consideration of whether Murrays was affected in its ability to perform its obligations under the training contract by a substantial change in its circumstances. For the same reasons, the appeals now before the Commission are similarly restricted to the matters set out in s. 63. In addition, Mr Reed urged me to admit evidence which would have the effect of allowing the trainees to comment on the material lodged with the Council by Murrays after the Council had rejected Murrays’ initial application for cancellation of the training contracts. In particular, Mr Reed said the trainees should be given the opportunity to comment on Murrays’ letter of 30 January 2002, which appeared to have been relied upon by the Council to found its ultimate decision to cancel the training contracts. Mr Reed said the Council’s failure to allow the trainees any input into the final decision making process constituted a denial of natural justice. He said natural justice would again be denied if the trainees were not given the opportunity to comment on Murrays’ supplementary material in the appeal hearing. Mr Murdoch SC, for Murrays, and Mr C.J. Murdoch, for the Training Recognition Council, opposed the introduction of such evidence. I agreed to allow the 10 appellant trainees to lead additional evidence in support of their respective appeals by allowing Mr Reed to require Mr Boulton, a supervisor of Murrays, to give evidence, and by allowing each of the 10 appellant trainees to give evidence on their own behalf but, in each case, limited to their employment and the matters relevant to s. 63 of the T&E Act. I considered that the appellant trainees should be provided with the opportunity to give relevant evidence about matters which occurred in the period between the Council’s initial deliberations in December 2001 and its final deliberations in early February 2002. In particular, I decided that the appellant trainees should be given the opportunity to comment on the documentary evidence prepared by Murrays after 21 December 2001 – including its letter to the council dated 30 January 2002. The opportunity to present additional material included the opportunity to examine Mr Boulton about any relevant matter, although as it turned out, Mr Boulton’s evidence did not shed much new light on the matter other than to indicate driver hours had taken a “dramatic dive” between November 2001 and February 2002. Each of the trainees was permitted to give evidence in the form of an affidavit prepared prior to the proceedings. The affidavits set out the respective appellants’ employment history with Murrays (the length of service ranged between 4 years 10 months and 12 years 7 months), how they came to enter into the traineeship in November 2000, and the circumstances under which they were advised that they had been made redundant. Each of them also gave evidence about their input into the Council’s initial deliberations in December 2001 and the fact that they had not been provided with an opportunity to make further submissions in respect of Murrays’ additional material in early 2002. In that regard, each of them said, through their affidavit, words to the effect: “I have since seen (Murrays’) further submissions and I (comment as follows): (a) Downturn in Tourism: The downturn in tourism affecting Murrays is cyclical and traditionally picks up toward the end of the first quarter of each year. (b) The selection of drivers was not conducted in a non discriminatory way. The assessment criteria are unfair and the assessments unreasonable. (c) There are other options available to the Company such as reducing hours and putting off newer drivers.”. (See, for example, the affidavit of Randall Scovell – Exhibit 2) The trainees evidence did not deal in any substantive way with Murrays’ assertions that there had been a substantial change in its circumstances which affected its ability to perform its obligations under the training contract. Rather, the trainees’ evidence concentrated on possible alternatives to their termination and criticisms of the selection process. In effect, the only evidence which the appellant trainees led to challenge Murrays’ claim was the comment in each affidavit that the downturn affecting Murrays was only cyclical because work traditionally picked up towards the end of the first quarter of each year. No figures were led to support this assertion. Further, the assertion was not put to Mr Boulton in any way. However, a number of the trainees did give evidence that Murrays had experienced a downturn in work in the months leading up to their termination in November 2001. The great majority of them also gave evidence that they had been requested to take their outstanding annual leave and long service leave entitlements. For example: Mr Anthony (Exhibit 1 – paragraph 13) said he had been told the company was going through a quiet period and was asked to take all of his leave entitlements; Mr Scovell (Exhibit 2 – paragraph 8) said he had been asked to take 30 days annual leave, which he did, and had returned to work about 2 weeks prior to his termination; Mr McGown (Exhibit 6 – paragraph 13) said he had taken 5 weeks long service leave and his remaining 1 week of annual leave; Ms Thompson (Exhibit 7 –paragraph 10) said she had taken 4 weeks annual leave and 4 weeks long service leave; Mr Proctor (Exhibit 10 – paragraph 10) said he had taken the small amount of leave which he was owed. Is there a requirement to consider options other than cancellation under s. 63? Mr Reed urged me to find that the Council was required to consider other options apart from cancellation of the trainees’ training contracts. In particular, he said the Council should have considered other ways of overcoming Murrays’ alleged training difficulties such as implementing a reduced hours scheme. Further, it was generally submitted that Murrays should have been required to terminate the employment of other members of its workforce – particularly recently engaged casuals – because Murrays had greater obligations to its formally contracted trainees than it did to other employees. Mr Murdoch SC submitted, correctly in my view, that the Council was not required to consider other options allegedly available to Murrays to manage its workforce. Murrays had made an application to the Council under s. 63(1)(a)(ii) to cancel the various training contracts on the basis that there had been a substantial change in its circumstances affecting its capacity to perform its training obligations. That was the only relevant enquiry as that is the only basis for fulfilment of the requirements of s. 63. Were the trainees denied natural justice in the Council’s decision making process? As this was a substantial limb of the trainees’ argument, I have dealt with it for completeness. -- 4 of 9 -- 19 July, 2002 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 365 Section 63 of the T&E Act requires the Council to determine any application for cancellation for the reasons set out therein by fair procedures prescribed under a regulation. Part 4 – Fair Procedures, of the Training and Employment Regulation 2000 (the Regulations), sets out the procedures to be followed by the Council or any of its delegates. Regulation 25 requires, inter alia, the Council or its delegate to inform an affected person of the action the Council or delegate proposes to take under the relevant section and also requires the affected person to be given an invitation to state, within a reasonable time, why the proposed action should not be taken. It is clear that this process was initially followed by the delegate before the making of the original decision on 21 December 2001. However, subsequent to making that decision Murrays sought to make further representations to the Council, and, in essence, to have the original decision of 21 December 2001 reviewed. (There is some question in my mind as to the legitimacy of this process altogether as nothing in the T&E Act or the Regulations provides the right to, or mechanism for, review of a s. 63 decision.) Nonetheless, whether viewed as a review, or, perhaps, a fresh s. 63 application, there is no question in my mind that, having received further submissions, and then being minded to determine the matter in completely the opposite way to that previously decided, the Council was bound to again go through the processes required by R.25 and R.26 of the Regulations, and give the trainees the opportunity to comment on the new materials submitted by Murrays, and the Council’s new intentions. With respect to the arguments of both Mr Murdoch SC and Mr C.J. Murdoch, I do not believe it is to the point that the trainees may not have been able to take issue with the fresh material put to the Council. Nor can I agree that R.27 and R.28 of the Regulations allowed the Council to act as it did without reference to the trainees. R.27 and R.28 (relevantly here) would empower the Council to inform itself of matters in ways considered appropriate and ask for additional evidence from parties involved in the application, but, on my reading of the Regulations, they must be construed as relating to further enquiries during the period in time before a decision is made, not after. They cannot be viewed as a mechanism for the introduction of further information on a subject, after the making of a decision, without reference to other parties. The clear scheme of the Regulations is to give all affected parties the opportunity to comment on an intended action (here of Council) and the facts and circumstances forming the basis or the grounds for the proposed action. In this case, in relation to the second decision of Council this was simply not done. The trainees were not even aware that the Council was reconsidering the delegate’s earlier decision (although there is evidence to suggest that one of the trainees found out about the review process on 6 February 2002 i.e. after the flying minute had been distributed). The Council made its second decision in the absence of any opportunity for the trainees to have any input. The Council did not follow the fair procedures set out in the Regulations. For the reasons above, in my view, the 10 appellant trainees were denied natural justice in the context of the Council’s overall decision making process. Murrays’ ability to meet its obligations under the training contracts Murrays’ initial application to the Council for cancellation of the training contracts was lodged on 11 December 2001. It said the application was made under s. 63(1)(a)(ii) of the T&E Act on a number of grounds, including: • the trainees are redundant and have ceased working for Murrays; • at the time of the redundancies Murrays was unaware of the requirement to have the training contracts cancelled prior to ceasing to employ the trainees; • the retrenchments were unavoidable and remain necessary to ensure the viability and survival of the business; • the current state of the tourism market and cost considerations mean that Murrays can no longer support the previous number of drivers; • all of the trainees were selected for retrenchment after applying fair selection criteria; • if the Council rejects the application Murrays would have to retrench other employees who would otherwise have been retained on merit. Murrays recorded its changed circumstances and the outlook for the future as follows: “The change in circumstances At the time of the commencement of the traineeships the tourism industry was experiencing all time highs in business confidence given that it was generally expected that a significant increase in business would occur as a result of the exposure Australia had achieved as a result of the Olympic Games. However with the combined events of September 11, 2001 and the collapse of Ansett there has been an unprecedented downturn in the tourism market. Reductions of 30% have been widely reported, with major hotel chains making staff redundant and closing floors in an effort to cope with the downturn in business. Murrays has suffered greatly as a result of these events. Murrays business from Japanese customers alone is down by some 50-60%. As a result, Murrays immediately endeavoured to manage its workforce via the use of leave entitlements in the hope that the downturn would be only a short term phenomenon. Unfortunately, this was not to be the case and it became apparent that a permanent reduction in our workforce was immediately needed if the depot was to be in any position to support its drivers through the historically slower months of December and January and the continuing difficulties that lay ahead. Accordingly the decision was made to terminate some 15% of the workforce (via redundancies) as soon as possible. To facilitate this process all drivers (including trainees) were assessed against a set of 16 fair criteria to identify which of our drivers were to be made redundant. Some of the drivers selected for retrenchment were trainees. The outlook for the future In addition to the redundancies outlined above Murrays continues to manage its remaining workforce on a weekly basis. Discussions with major customers suggest that there will be no recovery in the current market conditions until at least March 2002 and at this stage it is too early to predict whether such a recovery will indeed eventuate. As a result Murrays has recently approached all remaining drivers at the Gold Coast depot to implement a leave roster that will require 1/3 of our drivers to be on some form of leave (paid or unpaid) for each of the next 6 weeks.”. This submission did not satisfy the delegate of the Council and he determined to refuse Murrays’ application. -- 5 of 9 -- 366 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 19 July, 2002 Subsequent approaches to the Council, through officers of the Department of Employment and Training, culminated in Murrays being invited on 22 January 2002 (document 12 of the record) to provide additional information to facilitate a review of the original decision. Consequently, Murrays prepared and lodged a second submission to the Council by way of a letter dated 30 January 2002. In this letter Murrays stated there had been substantial changes to its operations which were not temporary. Rather, they were permanent. Murrays submitted it was “absolutely dependent” on inbound tourism and at the time the various traineeships commenced the tourism industry was experiencing all time highs in confidence. It said the events of 11 September, the collapse of Ansett and the extreme business conditions in Japan had led to an “unprecedented downturn” in Murrays’ business. The downturn was in no way cyclical and nor was it part of the general business cycle. Murrays said this combination of circumstances required it to make changes to its workforce involving the redundancy of some staff – including non driving staff. The letter emphasised that the “permanent or long term nature of the changed circumstances facing Murrays is supported by the fact that it is now over 2 months since the relevant trainees were retrenched and Murrays’ business remains seriously weakened….Murrays is still unable to fully utilise its remaining workforce…”. Murrays said staff were still being asked to take accrued leave or to take leave without pay on a rotational basis to try to avoid further retrenchments. The letter also included some graphs reflecting the impact of the changed circumstances on Murrays’ actual driver hours versus guaranteed hours, guaranteed charter hours and vehicle income [because of the commercial sensitivity of this material it is the subject of suppression orders under s. 679 of the Industrial Relations Act 1999 issued on 21 March and 17 April 2002]. The most telling of these graphs was the latter one. It showed that vehicle income on a monthly basis had fallen significantly in the period July to October 2001 with a further reduction in the 2 months to December 2001. Murrays’ letter went on to indicate that the outlook for the future was uncertain. Whilst Murrays was hopeful of an improvement in the business environment it stressed that any improvement was likely to be modest and slow to develop. The letter also stressed that the question facing Murrays was not whether any improvement would allow it to re-employ the terminated trainees but, rather, whether any improvement in business conditions would be sufficient to enable it to continue to employ all of its (then) existing workforce. Murrays also supplied some material from other parties to support is analysis of business conditions in the inbound tourism market and its forecast for the foreseeable future. This comprises a letter from the Gold Coast Tourism Bureau, a letter from the International Marketing Manager for Warner Village Theme Parks (the operator of 3 major tourist attractions on the Gold Coast) and a media release from the Australian Tourism Export Council dated 24 January 2002. ATEC’s media release mentioned that December had witnessed a decline in international arrivals for the 4th successive month but observed there were signs that “a modest recovery was starting to unfold”. The representative of Warner said anecdotal material from Tourism Qld and Brisbane Airports Corporation indicated a 40-50% downturn in business in the 4 months to the end of January 2002. Murrays’ letter to the Council concluded by requesting “that the original decision not to cancel the training contracts be reviewed and the training contracts be cancelled as originally requested”. By majority decision the full Council then acceded to Murrays’ request to cancel the training contracts. The Council determined the cancellation would operate from a prospective date viz 11 February 2002. Had there been a substantial change in Murrays’ circumstances? Mr Reed submitted that Murrays had an onus to show that, at the relevant time, it could not perform its obligations under each of the respective training contracts and that this failure was caused by a substantial change in its circumstances which had affected its capacity to perform its obligations under the contracts. Further, he submitted that Murrays must satisfy that onus in a substantial way given the serious consequences for the trainees, namely, the cancellation of their training contracts. Mr Reed submitted that Murrays had not satisfied the onus. He said the evidence which it had produced to support its contentions was inadequate - the statistical material was less than conclusive, and Murrays had not provided appropriate financial or employment records to convince the Council or the Commission of the veracity of its claim. He also submitted that the available material needed to be assessed in light of the facts as they stood in late January/early February 2002. Mr Murdoch SC said the Council’s power to cancel a training contract was enlivened once one of the grounds in subsection 63(1)(a) of the T&E Act had been established. He submitted that in the present case there was evidence before the Council upon which the Council could satisfy itself that subsection 63(1)(a)(ii) had been established. There was evidence capable of supporting a conclusion by the Council that there had been a substantial change in the employer’s circumstances and the change had affected the employer’s capacity to perform its obligations under the contracts. He said the Act required the change to circumstances to have been substantial but there was no stipulation as to the extent or magnitude of the effect on the employer’s capacity to perform their obligations. In support of his argument that there had been a substantial change in Murrays’ circumstances that affected its capacity to perform its obligations under the training contract Mr Murdoch SC referred me to a number of decisions which had considered the word “substantial” in various legislative settings, viz: Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees’ Union (1979) 42 FLR 331; Building Workers’ Industry Union of Australia v Odco Pty Ltd (1991) 29 FCR 104; J Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers Western Australia Branch & ors (1992) 111 ALR 502. In Tillmanns Bowen CJ said at 338: “The word ‘substantial’ would certainly seem to require loss or damage that is more than trivial or minimal. According to one meaning of the word the loss or damage would have to be considerable… however, the word is quantitatively imprecise; it cannot be said that it requires any specific level of loss or damage. No doubt in the context in which it appears the word imports a notion of relativity, that is to say, one needs to know something of the circumstances of the business affected before one can arrive at a conclusion whether the loss or damage in question should be regarded as substantial in relation to the business.” In Odco the Full Court accepted that the word “substantial” imported a notion of relativity and likened it to mean a major blow to the business. In J Corp French J generally referred to “substantial” as denoting non-trivial loss or damage in the context of a particular part of a business. -- 6 of 9 -- 19 July, 2002 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 367 Mr Murdoch SC submitted that these authorities, and in particular J Corp, supported Murrays’ submission that there was a clear and substantial change in its circumstances given the global and local downturn in the tourism market (highlighted above). It was sufficient if the “substantial change in circumstances” affected part of Murrays operations, being its Brisbane and Gold Coast depots. Mr Murdoch SC also highlighted that the Council’s decision was a quintessential exercise of its discretion. He submitted that the trainees had the burden of proving that the decision under appeal was wrong and said there was ample evidence available to the Council, and to the Commission, to support a finding there had been a substantial change in Murrays’ circumstances. Mr Murdoch SC particularly highlighted that none of the trainees expressly proffered the opinion to the Council, nor to the Commission, that there had not been a substantial change in Murrays’ circumstances, save the assertion that the business downturn was cyclical. The trainees’ appeals The trainees appealed against the Council’s decision to cancel their training contracts and sought in lieu that their training contracts be reinstated. In view of my findings above in relation to the denial of natural justice to the trainees by the Council, I allow the trainees’ appeals. I cannot, however, accede to their requested remedy. Having reviewed the evidence placed before the Council, and having heard further relevant evidence from the trainees as deemed appropriate bearing on the matters in s. 63 of the T&E Act, I am satisfied that the preconditions for cancellation of their training contracts have been adequately met. I find that: (i) there was a substantial change in Murrays’ circumstances; and (ii) that change affected Murrays’ capacity to perform its obligations under the training contracts. I base my conclusions on: • the evidence of a lack of available work before November 2001 which meant drivers (including trainees) were asked to take all outstanding annual leave and long service leave (e.g. Ms Thompson had been on 8 weeks’ leave); • the 30 January 2002 letter which demonstrates a drastic downturn in Murrays’ patronage and income. This material is referred to above; • other material attached to Murrays’ 30 January 2002 letter which supports its submissions, anecdotally and otherwise, of a significant reduction in inbound tourism as well as the uncertain outlook for the future; • evidence that the company was still attempting to manage the severe reduction in its workload as late as mid January 2002 by negotiating arrangements with its workforce to take unpaid leave approximately 1 week in 3 (this was despite the earlier redundancies in November). I find no basis upon which to reinstate the training contracts. The contracts remain cancelled. Murrays’ appeals – effective date of cancellation of training contracts Murrays appealed against the Council’s decision to cancel the training contracts as at 11 February 2002 and sought that cancellation dates of 7 November 2001 (15 November 2001 for 1 trainee) be substituted. I do not allow Murrays’ appeals. I do not believe s. 63 contemplates the date of cancellation being made retrospective, viz. to a time predating the Council’s decision to cancel the contracts. In my view, it is the clear intention of s. 63(3) of the T&E Act that cancellation of a training contract be no earlier than the date upon which the s. 63(2) Information Notice of decision is given to the parties. Usual practice is for cancellation to be effective 4 weeks from the day the notice is given, although the Council has power to shorten the notice period if it is satisfied this is reasonable in the circumstances. (see s. 63(3) and (4)). In this case, the decision to cancel the training contracts was taken on 8 February 2002 and the Council made a conscious decision to make the cancellations effective from 11 February 2002, the day the Council expected the parties to receive the Information Notice. The Council presumably either saw nothing to warrant backdating the cancellation or accepted it did not have the power to do so. The Council felt it reasonable to ascribe the date of cancellation as the date the trainees received notice of same. That decision was clearly open to it. In terms of common sense and justice I also think this date is reasonable in the circumstances. This is because Murrays purported to terminate the training contracts in November 2001. It subsequently applied to have them formally cancelled in accordance with the legislative requirements. It did not satisfy the responsible body, the Training Recognition Council, that grounds existed under s. 63 to support its application until 8 February 2002. Accordingly, in my view, the effective date of cancellation could have been no earlier than that decided by the Council, viz 11 February 2002. I find the effective date of cancellation of the trainees’ training contracts was 11 February 2002. Remedy – Are the trainees entitled to backpay or compensation? Backpay I have found above that the effective date of termination of the trainees’ training contracts was 11 February 2002. What flows from this finding is the question whether the trainees are entitled to receive any wages (backpay) for the period between 7 and 15 November 2001 – the putative termination of the trainees’ employment by Murrays – and 11 February 2002, the effective termination (by cancellation) of their training contracts. All parties touched briefly on the issue of the trainees’ entitlements to backpay in their final submissions – see Mr Reed’s outline of submissions (at paragraph 26) contending the trainees should receive backpay for this period; Mr Murdoch’s SC outline of final submissions (at paragraph 122) conceding a claim for backpay is arguable “if the date of termination of the training contracts postdates the defacto date of termination of employment” (I note this submission was made in the context of others (at paragraphs 107-121); and in Mr C.J. Murdoch’s outline in respect of AT23-32 at paragraph 23(d)) acknowledging the trainees’ right to payment of wages. -- 7 of 9 -- 368 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 19 July, 2002 The issue was also raised, in passing, during the hearing (see pp96-97 and pp148-151 of transcript). A variety of matters bearing on the right to backpay were also canvassed at other times, but only as tangential to other issues. I am concerned that these brief mentions were not adequate opportunity for the parties to present their arguments on this point. Accordingly, I invite all parties to present submissions on the right of the trainees to claim backpay on the basis that the effective date of termination of the training contracts was 11 February 2002. Such submissions should be presented in accordance with the procedure outlined below. Compensation As mooted earlier, the question of the trainees’ entitlement to compensation was raised by Mr Reed at the beginning of the second day of substantive hearing. Mr Reed sought to amend the trainees’ appeals by adding the following provision: “A determination that Murrays, on 7 November 2001, purported to cancel the contracts of the appellant other than in a way allowed under the Training and Employment Act 2000 and to further add, alternatively, an order for compensation under section 237 of the Act equivalent to six months’ wages at the rate payable to the appellant immediately prior to 7 November 2001 and a further subparagraph, that the Commission make an order under section 240 of the Act.”. At that time there followed some debate on the appropriateness of the amendment at such a stage in the proceedings, which included submissions from the parties on whether the remedy/penalty provisions of s. 237 and s. 240 could in fact be invoked in the circumstances of the case, based on whether the threshold conditions of s. 235 were satisfied (see pp141-154 transcript). At the time, and for the reasons set out earlier, I determined not to allow the amendment of the trainees’ appeals as requested by Mr Reed. Now, however, upon reflection, it appears to me that the factual matrix of this case clearly sustains the preconditions in s. 235 and enlivens in me the ability to consider whether payment of any compensation to the trainees under s. 237 would be reasonable in all the circumstances. Subject to my concluding remarks regarding further submissions, I view my ability to consider the matters in Chapter 8, Part 2, Division 2 of the T&E Act as predicated solely upon the satisfaction of the requirements of s. 235, and as matters I may consider, if appropriate, on my own motion. I do not see myself as limited in this by my previous refusal of Mr Reed’s application to amend, or by the absence before me of any other specific application by a party to consider the remedies provided by that Division. Section 235 states: “This division applies if – (a) an appeal to the industrial commission is about the cancellation of a registered training contract; and (b) the commission decides the employer or the apprentice or trainee has purposed to cancel the contract other than in a way allowed under this Act.”. I agree with the parties’ submissions that in s. 235 “contract” must be read as “registered training contract”. Despite Mr Murdoch’s SC various arguments to the contrary (see pp145-147 transcript), including his assertion of a conceptual separation of the act of terminating the trainees’ employment from that of terminating their training contracts, it seems plain to me that the requirements of s. 235 are satisfied. There is: (a) an appeal about the cancellation of a registered training contract; and (b) the employer has purported to cancel the contract other than in a way allowed under the T&E Act. In my view Murrays’ putative termination of the trainees’ employment contracts on 7 and 15 November 2001 was simultaneously a repudiation of Murrays’ obligations under the training contracts sufficient to effect at least “purported” cancellation of the training contracts, and thus sufficient to satisfy s. 235(b). An integral feature of a traineeship is that it is “employment based” training. In the absence of ongoing employment (and exposure to the everyday workplace environment) an employer cannot realistically fulfil their obligations under a training contract. Intentionally terminating a trainee’s employment amounts to a purported termination of the “employment based” training contract (see Bryden and Training Recognition Council (2001) 166 QGIG 305). For completeness I note that this manner of purported cancellation of a training contract (i.e. without the auspices of the Training Recognition Council) is not a method of cancellation allowed under the T&E Act (see Chapter 3, Division 4 of the T&E Act). Having found that my jurisdiction under Chapter 8, Part 2, Division 2 is enlivened, I come to consider the question of remedy for the purported cancellation of the training contracts other than allowed under the T&E Act. I have stated above that there is no basis for the resumption of the trainees’ training contracts. The training contracts are cancelled and the issue is whether, under s. 237(b) of the T&E Act, the trainees should receive some compensation. I have determined that in the circumstances a further penalty payable under s. 240 would not be appropriate. Section 237 states: “If the industrial commission considers it would be inappropriate in the circumstances for training to continue, the commission may order – (a) the contract be cancelled,and; (b) employer pay to the apprentice or trainee the compensation decided by the commission if the commission is satisfied the payment of compensation is reasonable in all the circumstances.”. Under the section, payment of compensation must be reasonable in all the circumstances. Again, in a tangential way, some of the matters going to the reasonableness of payment of compensation, and perhaps a reasonable quantum, were touched upon at hearing and in final submissions. -- 8 of 9 -- 19 July, 2002 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 369 However, due to my refusal to allow Mr Reed’s requested amendment, none of the parties had the opportunity to address me specifically and directly on these questions. I invite the parties to make further submissions directed specifically to reasonableness of payment of compensation in the circumstances, and of quantum. Arrangements for further submissions If a party has no wish to make further submissions on either of the above matters I will rely on the submissions I have from them to date. I will re-list this matter for further submissions restricted to the above two matters on Friday, 26 July 2002 at 10.00 a.m. Parties intending to make submissions should file outlines of arguments, and serve them on the other parties by 12.00 noon on Tuesday, 23 July 2002. The Commission determines and orders accordingly. A.L. BLOOMFIELD, Commissioner. Appearances: Mr R. Reed, Counsel on behalf of Kerry Roy Anthony, Robert Chandra, James Chandra, John Mizzi, Peter Proctor, Derek Scott, Randall Scovell, Diane Thompson, Robert McGown, Timothy Kershaw. Mr J.E. Murdoch, Senior Counsel, with Ms C. Arnold of Counsel, on behalf of Murrays Australia Limited. Mr C.J. Murdoch, Counsel on behalf of the Training Recognition Council. Released: 8 July 2002 -- 9 of 9 --