Federal Court decision raises the bar for right of entry

1 November 2018
Justice Flick’s decision in ALAEA v Qantas raises the bar for union permit holders seeking to exercise their right of entry. The decision sets out strict requirements which a right of entry notice must meet in order to be valid under sections 481 and 518 of the Fair Work Act 2009 (Cth) (the Act). The case does however provide a roadmap about how to draft compliant entry notices.

The case arose from a dispute over Qantas’ application of the “leave burn provisions” of the Enterprise Agreement (EA) which concerned the management of surplus employees. In essence, the provisions entitled Qantas to direct employees to take excess leave prior to declaring positions compulsorily redundant.

ALAEA sought to exercise its right of entry to investigate suspected contraventions of clause 47 and 60 of the EA which are the consultation and leave burn provisions respectively. Qantas asserted that ALAEA had provided insufficient details about the alleged contraventions and thus it only allowed entry for the purpose of interviewing members, but did not permit ALAEA to inspect documents. ALAEA filed in the Federal Court seeking declaratory relief against Qantas for failing to permit ALAEA to inspect documents in contravention of sections 482 and 502 of the Act. The application by ALAEA was dismissed by Justice Flick, who found that ALAEA’s right of entry notice did not comply with the requirements of the Act.

Right of Entry and Entry Notices

Under section 481 entry may be sought by a permit holder to investigate a suspected contravention of the Act or a term of a modern award, enterprise agreement or FWC order. The permit holder must reasonably suspect that the contravention has occurred, or is occurring.  The burden of proving that the suspicion is reasonable lies on the person asserting that fact.  Pursuant to section 482 a permit holder may do certain things whilst on the premises including inspecting and making copies of any record or document that is directly relevant to the suspected contravention.

Before entering premises and inspecting documents in accordance with section 481 and 482 of the Act, a permit holder must, under section 518, issue an entry notice to the occupier containing particulars of the suspected contravention(s).

The key questions considered by Justice Flick in ALAEA v Qantas were: a) what constitutes a reasonable suspicion of a contravention? b) what particulars need to be provided of a suspected contravention in an entry notice? and c) what documents are “directly relevant” to a suspected contravention?

What is a reasonable suspicion?

Justice Flick held that the test as to whether a permit holder reasonable suspects a contravention is whether the existing pool of information available to the permit holder was a sufficient basis upon which a reasonable person could reach a state of suspicion as to a contravention of the Act.[1] Hence the test is an objective one. It does not matter whether the factual material available is capable of making out the contravention, it just needs to be sufficient for a reasonable person to reach a state of suspicion that a contravention has occurred. It also does not matter whether the permit holder could have pursued further inquiries before they reached their stated suspicion.

The problem with ALAEA’s entry permit, was that whilst it stated a suspicion that the consultation clause of the EA had been breached, it did not specify which changes that had a “significant effect on employees” Qantas failed to consult about.[2]

What particulars need to be provided in an entry notice?

His Honour clarified that the particulars which must be specified in an entry notice pursuant to 518(2)(b), are “the facts, matters and circumstances said to give rise to ‘the suspected contravention, or contraventions.’” This means that the entry notice must set out the basis upon which the permit holder reasonably suspects a contravention to have occurred.

When it came to the entry notice submitted by ALAEA, Justice Flick found that there was a "disturbing lack of precision…in the way in which the 'particulars'… were expressed."[3] The problem for ALAEA was that the entry notice referred generally to a breach of the consultation clause of the EA but the clause contained a number of subclauses and ALAEA did not specify which subclause they suspected had been breached or what facts, matter and circumstances gave rise to that suspicion.

What documents are “directly relevant” to a suspected contravention?

Importantly Justice Flick held that “[s]ection 482(1)(c) does not require a permit holder to specify each individual or particular document that he or she considers “directly relevant” to the suspected contravention by reference to (for example) a particular date (or range of dates).”[4] Rather, the permit holder must ensure that the request for documents contains “sufficiently precise subject-matter such that an occupier or employer is left with no justifiable uncertainty as to that which is being sought.”[5] This means that a class of documents may be requested if that class of documents is “directly relevant” to the suspected contravention.

Whether a document is “directly relevant” to a suspected contravention is determined by reference to the facts and circumstances of each individual case. According to Justice Flick  the following guidance can also be gleaned from cases which considered the meaning of “directly relevant” in the context of the discovery process:

  • a document would be “directly relevant” if it “tends to prove or disprove the allegation in issue;”[6] and,
  • a document may remain “directly” relevant even though it “is not itself proof of a fact in issue but is merely a piece of circumstantial evidence tending, along with other evidence, to prove the fact in issue.[7]

Importantly, Justice Flick found that if a request is made for documents and only some of the documents are “directly relevant”, then the whole request is invalid on the basis that it is in excess of the power conferred by s 482(1)(c).[8]  His Honour held that an occupier served with a right of entry must not be put in a position where they need to sift through a broad category of documents and decide which documents are directly relevant or not.[9] The onus is on the permit holder to specify which documents or class of documents they are requesting and to establish that the documents to which access is sought are “directly relevant” to the suspected contravention(s).

Justice Flick observed that ALAEA “failed to establish that any of the documents to which access was sought were “directly relevant” to the suspected contravention of cl 47 of the Enterprise Agreement and … only established that some of the documents sought were “directly relevant” to a suspected contravention of cl 60 of the Enterprise Agreement.”[10]

Take home points from the decision

The key take away from the decision is that “permit holders focus their attention upon that which is truly the subject of justifiable suspicion and justifiable requests for entry and access to documents or records.”[11]

When preparing an entry notice, a permit holder must:

  1. state the specific provisions which they suspect have been contravened; and
  2. specify the facts, matters and circumstances that give rise to the suspected contravention.

If a permit holder is seeking to enter the premises to inspect documents, it is crucial that the entirety of those documents requested to be inspected and/or copied are directly relevant to the suspected contravention specified in the entry notice. To avoid doubt, the permit holder should specify which reasonably suspected contraventions each of the requested documents or class of documents is said to be directly relevant to.

Overall the decision is likely to present some difficulties for permit holders seeking right of entry. A permit holder’s ability to specify the above information in an entry notice and when seeking documents will be limited when the employer has deliberately withheld information that would enable them to comply. It creates a catch-22 situation because one of the primary purposes of the right of entry is to enable the permit holder to investigate the matter further and obtain relevant information. Unfortunately the decision in ALAEA v Qantas may only serve to encourage employers to withhold information and further freeze unions out of the workplace.

 

[1] ALAEA v Qantas, at [88]

[2] ALAEA v Qantas, at [98] - [99].

[3] ALAEA v Qantas, at [54]

[4] ALAEA v Qantas, at [142]

[5] ALAEA v Qantas, at [142]

[6] ALAEA v Qantas, at [152] cf. Robson v REB Engineering Pty Ltd [1997] 2 Qd R 102 at 105 per Demack J

[7] ALAEA v Qantas, at [152] cf. Southern Equities Corporation Ltd (In Liq) v Arthur Andersen & Co (No 5) [2001] SASC 335 at [10] per Bleby J

[8] ALAEA v Qantas, at [157]

[9] ALAEA v Qantas, at [161]

[10] ALAEA v Qantas, at [49]

[11] ALAEA v Qantas, at [164]

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