Amcor Ltd v Construction, Forestry, Mining and Energy Union

• Jurisdiction: Australia Federal only
• Judge: Gleeson CJ,McHugh J,Gummow,Hayne,Heydon JJ,Kirby J,Callinan J
• Judgment Date: 09 March 2005
• Neutral Citation: [2005] HCA 10,2005-0309 HCA A
• Court: High Court
• Docket Number: M311/2003 & M312/2003 Matter No M312/2003
• Date: 09 March 2005

Amcor Limited

Appellant

and

Construction, Forestry, Mining and Energy Union & Ors

Respondents

Minister for Employment and Workplace Relations

Appellant

and

Construction, Forestry, Mining and Energy Union & Ors

Respondents

[2005] HCA 10

Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ

M311/2003 & M312/2003

Matter No M311/2003

Matter No M312/2003

HIGH COURT OF AUSTRALIA

Amcor Ltd v Construction, Forestry, Mining and Energy Union ;

Minister for Employment and Workplace Relations v Construction, Forestry, Mining and Energy Union

Industrial law (Cth) — Certified agreement — Corporate demerger — Business transferred to subsidiary and employees immediately re-employed on same terms and conditions — Change in identity of employer though no change in duties of employees — Whether positions in a business had become redundant and employees had been retrenched — Whether employees entitled to redundancy payments under the agreement — Relevance of termination and succession provisions of the Workplace Relations Act 1996 (Cth).

Words and phrases — ‘position’, ‘business’, ‘position in a business’, ‘redundant’, ‘retrench’.

Workplace Relations Act 1996 (Cth), Pts VIA, VIB, ss 149(1)(d), 170MB, 170MD.

Representation:

A C Archibald QC with R J Buchanan QC and M F Wheelahan for Amcor Limited in both matters (instructed by Allens Arthur Robinson)

S C Rothman SC with S J Howells for the first and second respondents in both matters (instructed by Ryan Carlisle Thomas)

R R S Tracey QC with J L Bourke for the Minister for Employment and Workplace Relations in both matters (instructed by Phillips Fox)

ORDER

Matter No M311/2003

1. Appeal allowed.

2. Set aside the order of the Full Court of the Federal Court of Australia made on 28 March 2003 and in its place order:

• (a) the appeal to that Court is allowed;

• (b) set aside the orders of Finkelstein J made on 12 July 2002 and in their place order that the application is dismissed.

Matter No M312/2003

Appeal allowed.

1 Gleeson CJ and McHugh J. The issue in these appeals is whether, following a corporate reorganisation described as a demerger, certain employees became entitled to redundancy payments under the provisions of an industrial agreement. The employees worked in the same jobs, under the same terms and conditions, following the demerger, but, in consequence of the corporate restructuring, their employer changed.

2 The resolution of the issue turns upon the language of the particular agreement, understood in the light of its industrial context and purpose, and the nature of the particular reorganisation. There is nothing inherent in the idea of redundancy that justifies an expectation either that redundancy payments will, or that they will not, become payable in the event of a reconstruction, merger, or takeover 1. Similarly, there is nothing inherent in the nature of a corporate reconstruction that justifies an expectation either of continuity of a legal entity, or of succession, or of discontinuity. Thus, depending upon the legal regime under which it takes place, a merger between two companies might or might not put an end to the merging entities. The effects upon their pre-existing rights and obligations, and the question of succession to these rights and obligations, will require examination of the relevant legal (usually statutory) framework 2.

3 The demerger in this case was effected by a scheme of arrangement and reduction of capital. An application, pursuant to s 411 of the Corporations Law, was made to the Supreme Court of Victoria for approval 3. Warren J, who dealt with the application, described what was involved as follows 4:

‘Amcor conducts both a packaging and a paper business. The paper business is conducted largely through Amcor's wholly-owned subsidiary PaperlinX Ltd (PaperlinX). Amcor is proposing a demerger whereby it will become purely a packaging business. To that end, the board of Amcor has resolved to put before shareholders an arrangement which has become known as the Demerger Proposal. Pursuant to the Demerger Proposal, Amcor proposes to cancel share capital in an amount of $1.22 per share by way of capital reduction and then to appropriate that $1.22 by using it as the consideration for the transfer to each Amcor

shareholder of one share in PaperlinX for each three shares in Amcor. Thereafter, PaperlinX will cease to be a wholly-owned subsidiary of Amcor. However, after the distribution among Amcor shareholders of those shares in PaperlinX, Amcor will continue to hold approximately 18% of the capital of PaperlinX. Accordingly, Amcor is proposing to sell those shares to the public.’

4 Her Honour later pointed out that the proposed arrangements imposed obligations not only upon Amcor and its members but also upon PaperlinX and that, in a document entitled the Implementation Deed, PaperlinX had covenanted to carry out all the obligations which the scheme imposed on it 5.

5 The information supporting the Scheme of Arrangement included the following:

‘All creditors associated with the Paper Operations will be transferred to PaperlinX pursuant to the internal restructuring. This will include the obligations to lenders, trade creditors and employees of the Paper Operations.’

Specific provisions were made for PaperlinX to accept obligations to employees who had entitlements under the Amcor group's Employee Share Purchase Plan.

6 The commercial benefits that were expected to flow from the separation of the Amcor group's packaging business and paper operations are presently irrelevant.

7 Before the demerger, a wholly-owned subsidiary of Amcor named Paper Australia Pty Ltd (‘Paper Australia’) owned and operated paper mills in which the persons the subject of these appeals had been employed. Some years previously Amcor had transferred those businesses to Paper Australia, but Amcor continued to employ the people who worked in the businesses, providing their services to Paper Australia on the basis that Paper Australia agreed with Amcor to meet Amcor's obligations as employer. As part of the demerger, Amcor transferred its shares in Paper Australia to PaperlinX. Amcor terminated the employment of the employees. They were offered identical terms, including continuity of service for all employment-related purposes, including accrued entitlements, by Paper Australia. They went on doing the same work as before, except that their employer was now Paper Australia. Paper Australia became a wholly-owned subsidiary of PaperlinX, which was the holding company of the group conducting the paper operations.

8 The question is whether, in those circumstances, it is correct to say that, within the meaning of cl 55.1.1 of the Australian Paper/Amcor Fibre Packaging Agreement 1997 (‘the agreement’), the positions of the employees became redundant and they were retrenched. If so, they became entitled to redundancy payments as specified in the clause.

9 The terms of the agreement, the facts, and the relevant legislation, are set out in the reasons of Gummow, Hayne and Heydon JJ, and of Callinan J.

10 The key concept upon which the operation of cl 55.1.1 in the present case depends is that of a position becoming redundant. The appellants contend that, in this context, ‘position’ means a position in a business, and that, in the circumstances of the demerger, in which a conglomerate enterprise involving a packaging business and a paper operations business was split into two parts, each of which continued to function as before, with the employees performing the same functions, on the same terms and conditions, those employees' positions did not become redundant. The respondents contend, and the Federal Court accepted, that there was a critical change in the employment situation, namely the identity of the employer. That is, even if it is a case of succession, so that the employees had the protection of s 170MB of the Workplace Relations Act 1966 (Cth), at the time of the termination by Amcor of their employment, the employees lost their positions, and they lost them because Amcor no longer needed their services. Accordingly, as between Amcor and the employees, the positions of the employees became redundant, and for that reason the employees were retrenched by Amcor, even though they were immediately re-employed by Paper Australia.

11 It is true that this is a case of succession to a business, but there is more to it than that. What was involved was a particular kind of succession. What had been conducted as a combined business enterprise was divided into two separate business enterprises, conducted by corporations which, immediately following the division, were in substantially common ownership. The shareholders of Amcor held 82% of the shares in PaperlinX and the other 18% were held by Amcor. It is also true to say that there was a change in the identity of the employer, but, again, there is more to it than that. Before the demerger, the business in which the employees worked was owned and operated by Paper Australia, then a wholly owned subsidiary of Amcor, even though the employees were employed by Amcor, which provided their services to its subsidiary. Following the demerger, the employees worked in the same jobs, in the same business, now employed directly by Paper Australia, which had become a wholly owned subsidiary of PaperlinX.

12 There is no logically stringent process of reasoning which requires a construction of cl 55.1.1 that favours either side. The problem arises because the agreement is expressed in general terms that do not distinguish between the different circumstances which might arise in different cases. There is nothing unusual, or surprising, in that. In the industrial context, redundancy of position is not a concept of clearly defined and inflexible meaning. Whether cases of succession to a...