Alan Kilpatrick v Jetstar Airways Pty Limited

[2013] FWC 9388

[2013] FWC 9388

FAIR WORK COMMISSION

DECISION

Workplace Relations Act 1996
s.709 - Application to FWC to have a dispute resolution process conducted (Div 5)

Alan Kilpatrick
v
Jetstar Airways Pty Limited
(DR2013/190)

COMMISSIONER JOHNS MELBOURNE, 6 DECEMBER 2013

Dispute concerning interpretation of Clause 21.4(b) of the Agreement and Memorandum of Understanding.

What is this dispute about?

[1] Jetstar Airways Pty Limited (Jetstar) has a Pilot Seniority & Assignment List (Seniority List). The Seniority List produced on 26 June 2013 contained 917 positions comprising a list of:

● named Jetstar pilots; and

● seniority positions notionally allocated to pilots of Qantas Airways Limited (Qantas). The notional Qantas pilot positions are designated by the letter “Q” and are referred to as “ghost positions”.

[2] If Jetstar “offers” a “Q” numbered position an opportunity for promotion, but no Qantas pilot takes up the opportunity then Jetstar is at liberty to offer the opportunity to Jetstar pilots on the Seniority List until it is taken up. Sometimes the opportunity will be taken up by the Jetstar pilot immediately below the “Q” numbered position. In which case the “Q” numbered position immediately above is deleted from the Seniority List. Other times the opportunity might be taken up by a Jetstar pilot much further down the Seniority List.

[3] This decision concerns the impact on the Seniority List in the latter circumstance; that is, when Qantas pilots have been provided with an opportunity to take up a ghost numbered position but do not and the Jetstar pilot who ultimately takes up the opportunity is much further down the Seniority List. In this circumstance:

● Jetstar contends that only one “Q” numbered position is deleted from the Seniority List (that being the “Q” numbered position at which the opportunity was provided);

● the Applicant (represented by the Australian Federation of Air Pilots (AFAP)) contends that all the “ghost numbered” positions between where the opportunity was offered and where it was ultimately taken up are deleted. In the present matter that would result in 38 “Q” numbered positions being deleted from the Seniority List.

How is the Commission invested with jurisdiction to arbitrate this dispute?

[4] On 12 April 2013 Alan Kilpatrick (Applicant) filed an application 1 for the Fair Work Commission (Commission) to deal with a dispute in accordance with the dispute settlement procedure in the Jetstar Airways Pilots Agreement 2008 (Agreement). The dispute settlement procedure (clause 18.1) in the Agreement encompasses “any disputes that may arise over the application of [the] Agreement.” Under clause 18.1.4 unresolved disputes can be referred to the Commission to be resolved “through private conciliation and or arbitration”. Under clause 18.2.6 the Commission can arbitrate when requested to do so.

[5] It is common ground between the parties that the present dispute arises over the application of the Agreement because clause 21 of the Agreement deals with seniority. In particular:

● Clause 21.1 provides,

Jetstar will publish from time to time a seniority list of all pilots in Jetstar’s permanent employment. A number indicating relative length of service with the Company will identify the seniority of each pilot on the list, the longest serving pilot having the number “one”. The list will also indicate start date and fixed term details for fixed term pilots. Once having established a seniority date, a pilot will not lose that date except by termination of employment as a pilot with the Company. Jetstar will amend the seniority list as necessary and publish an amended list at intervals not exceeding 6 months.

● Clause 21.2 provides,

From the date on which the MOU came into effect 7 in each 20 new seniority numbers have been ‘ghost’ Numbers that can be used by eligible Qantas pilots to access First Officer or Captain positions in Jetstar in accordance with the terms of the MOU. This allocation of ghost numbers will continue for the life of the MOU.

● Clause 21.4 provides,

The ‘ghost’ Numbers referred to in clause 21.2 may be, notwithstanding any other provision in this Agreement:

[...]

(b) allocated to such pilots, and continue to be deleted, in the manner and under the conditions prescribed under the MOU.

[6] The MOU referred to is a reference to the Memorandum of Understanding on the Exchange of Career Opportunities for Jetstar and Qantas Pilots (MoU). The MoU was made between Qantas, Jetstar, the Australian and International Pilots Association (AIPA) (representing the interests of Qantas pilots) and the Committee of the Jetstar Pilot Group.

[7] Clause 2 of the Agreement expressly provides that the MoU “does not form part of [the] Agreement”. However, the MoU informs the operation of clause 21.4 of the Agreement. Consequently, in essence, it is the interpretation of the MoU that is at the heart of the present dispute, in particular clause 8.7 which provides that:

“‘ghost’ numbers” will be converted to actual seniority numbers (or deleted or retained), as follows:

8.7.1 if an opportunity is available for a Qantas pilot to access a “ghost number” for a command position, and no applications are received from eligible and suitable Qantas pilots, the “ghost number” will be deleted from the sequence of numbers;

[8] The application was listed for conference on 1 August 2013. Following the conference, on 2 August 2013, the Commission, as presently constituted, issued a draft Recommendation for comment by the parties and any other interested persons. Specifically, Qantas and the AIPA were invited to comment on the draft Recommendation. The AFAP “support[ed] the interpretation of ... clause [8.7.1] as contained in the draft recommendation.” 2 The draft recommendation was opposed in the submissions made by Jetstar (J1), Qantas (Q1) and AIPA (AP1). The AFAP then made submissions in reply (A2).

[9] Following receipt of submissions from the parties and with consent of the parties, the Commission listed the matter for a hearing on 21 August 2013. The Applicant and the AFAP were represented by Mr A Molnar of the AFAP. Having regard to the complexity of the matter Jetstar and Qantas were represented by permission of the Commission by Mr N Ogilvie, of Herbert Smith Freehills. AIPA was represented by Mr D Taylor of Turner Freeman Lawyers, also with permission of the Commission having regard to the complexity of the matter.

What is the factual background to the dispute?

[10] On 3 February 2012 Jetstar advertised 25 vacancies for a command.

[11] On 13 February 2012 the opportunity to apply for the advertised vacancies closed.

[12] Twenty-four applications were received by eligible and suitable Qantas pilots at the time vacancies closed. Twenty-three of these Qantas pilots obtained a command (as one Qantas pilot withdrew at a later date).

[13] The seniority list containing the final allocations of the command was published on 26 June 2012. This seniority list shows the 23 Qantas pilots referred to above being listed as having obtained a command. The last Qantas pilot to obtain a command was Jason Graham (seniority number 404).

[14] That left one command position to be taken up. The next person to obtain a command was a Jetstar pilot Marcus Singh (seniority number 516).

[15] In between Messrs Graham and Singh are 38 ghost numbers; being ghost numbers contained in seniority numbers 412 - 515 (inclusive) (38 ‘ghost’ Numbers). All seniority numbers including 38 ‘ghost’ Numbers had an opportunity of access a command vacancy. However, no applications were received from eligible and suitable Qantas pilots, hence Mr Singh’s appointment at seniority number position 516.

[16] After Mr Graham (at seniority number 404) the next “Q” numbered position is seniority number 412. Jetstar propose to delete that position from the Seniority List by reason of it not having been taken up by a Qantas pilot.

[17] However, the Applicant and the AFAP argue that, by operation of clause 8.7 of the MoU, the 38 ‘ghost’ Numbers should be deleted.

Submissions

Applicant and the AFAP

[18] The Applicant and the AFAP submit that the interpretation advanced by Jetstar, Qantas and AIPA, that one vacancy equates to one opportunity (and therefore only one ‘ghost’ number is to be deleted from the Seniority List) is incorrect. The Applicant and the AFAP submit that “a ‘vacancy’ and an ‘opportunity’ are distinct and separate”. 3 They point to the fact “clause 8.1 of the MoU states in part:

This arrangement will continue until every eligible Qantas pilot has an opportunity to apply for a vacancy under this MOU, subject to clause 8.6.1.

and say “by referring in the same sentence to both an opportunity and a vacancy, it is clear that the MoU treats the concepts of opportunity and vacancy as distinct and separate.” 4

[19] The Applicant and the AFAP agree “that an offer for one position equates to one vacancy,” however, they say “the manner in which seniority is applied when filling that vacancy demonstrates that multiple opportunities may arise.” 5 They say that,

“if [Jetstar] advertised one vacancy for a 787 command, the highest seniority number has an opportunity to take that command. If that seniority number declines the offer, or was not eligible or suitable, the next seniority number has an opportunity and may say no, or be found to be not eligible or suitable. This continues until the vacancy is filled. Accordingly, one vacancy gives rise to multiple opportunities.” 6

[20] The Applicant and the AFAP rely on Kucks v CSR Limited 7 and Watson & Ors v ACT Department of Disability Housing and Community Services,8 in asserting that a clause has to be ambiguous for extraneous material to be taken into account in its interpretation.9 The Applicant and the AFAP submit that the MoU is unambiguous and as such a vacancy is separate to an opportunity.10

Jetstar

[21] Jetstar rejects that clause 8.7.1 requires it to cascade down the seniority list until a position is filled. Jetstar say that it is only when a pilot actually applies for a position that a ghost number may be deleted. 11 Jetstar says that, rather than using the list to find applicants for a position, the MoU creates the order in which they are assessed for a command position.12

[22] Jetstar submits that the MoU is to be read having regard to the Explanatory Note attached to the MoU. 13 The Explanatory Note defines ‘opportunity’ as having the meaning it has in clause 8.6 of the MoU. Clause 8.6 provides:

An eligible Qantas pilot may only enjoy one opportunity under this MoU. An opportunity is:

8.6.1 applying for and being offered a fixed term engagement with Jetstar under this MoU (whether the pilot accepts the offer or not); or

8.6.2 applying for and being considered for a fixed term engagement with Jetstar under this MoU and being found by Jetstar to not meet the Jetstar criteria.

[23] Jetstar submits that,

“clause 8.6 clearly contemplates that there needs to be an engagement available to which a Qantas pilot can be appointed for an opportunity to exist. Therefore ... there can be no opportunity without a vacancy and the number of ‘opportunities’ are necessarily confined to the number of available engagements or vacancies under the relevant [Flight Standing Order] (FSO).” 14

[24] Jetstar also rely on clause 4.3 of the MoU which provides:

Appointments (and subsequent promotions) under this arrangement will be subject to:

4.3.1 The existence of vacancies;

4.3.2 Pilots meeting the selection (and promotional) criteria for the receiving of airline; and

4.3.3 The pilot being available and able to perform active service from the commencement date offered.

[25] Jetstar submits that clause 4.3 makes it clear that the intention of the MoU is for an exchange of career opportunities to be facilitated. Therefore, they say a vacancy must exist to which a pilot may be appointed. 15 In other words, “an opportunity only crystallises when there is a vacancy to which the pilot can be appointed”.16 The Applicant and the AFAP agree “that the intention of the MoU is to provide for an exchange of career opportunities and that a vacancy must first occur for the MoU to be relevant.”17

[26] On this basis, Jetstar submits that the deletion of ghost numbers is necessarily confined to the number of opportunities or engagements made available within any given FSO.

AIPA

[27] The AIPA supports the interpretation of clause 8.7 of the MoU advanced by Jetstar. The AIPA states “the ghost number system is essentially a fixed number in the Jetstar list which is allocated to a floating set of Qantas pilots, and that is the seniority position of whichever Qantas pilot makes that application for that position and is awarded that position.” 18

[28] In support of its submissions the AIPA also refers to advice it received in September 2012 from Mr Adam Hatcher SC (as he then was).

Qantas

[29] Qantas supports the interpretation of clause 8.7.1 of the MoU applied by Jetstar in the construction of the pilot seniority list. Qantas argues:

“Clause 8.7.1 is consistently written in the singular: it refers to ‘an opportunity’, ‘a command position’ and ‘the ghost number’. The clause could have been readily drafted to achieve the outcome sought by the AFAP, however this was not done. Equally, it is not appropriate to selectively read some of the singular references to include the plural and some to remain singular, within the same sentence.” 19

[30] Qantas says that if the Applicant and the AFAP’s position was the intention of clause it should have been drafted such that it provided for any ghost numbers that could have been used to access a vacancy to be deleted. 20

[31] Qantas draws emphasis on the title of the MoU being “The Exchange of Career Opportunities”. It claims that if there is ambiguity in the terms, the “interpretation which best preserves the intent of the agreement should be favoured”. 21

[32] It is the position of Qantas that, “by allowing the deletion of multiple ghost numbers for a failure to take up a vacancy imposes a penalty on eligible Qantas pilots for Qantas having exercised its right under the MoU to not release a pilot for operational reasons.” 22

[33] Qantas does not agree that vacancies cascade down the seniority list. Qantas says this is because ghost numbers are artificial and they are not allocated to a particular person. 23 Qantas joins Jetstar in its submission that ghost numbers only crystallise once the opportunity has been realised and the vacancy has been filled.24

[34] Qantas relies on the decision of the Full Federal Court in SDA v Woolworths SA Pty Ltd 25 in its submission that the Commission must take a purposive approach to interpreting the Agreement. In that decision the Full Court stated:

The modern approach to the interpretation of commercial agreements where context and surrounding circumstances will be taken into account, even if the words at issue are not ambiguous or susceptible to more than one meaning. 26

Consideration

[35] This decision does not repeat all of the submissions of the parties to the dispute and other interested parties. However, the Commission has had regard to all that has been put in these proceedings and the authorities to which it was referred.

[36] At first blush the interpretation of clause 8.7.1 of the MoU advanced by the Applicant and the AFAP is attractive. Therefore it formed the basis of the draft Recommendation in order to provide an opportunity for all interested parties to make submissions about how the clause is properly to be interpreted. It was always open to any interested party to persuade the Commission that the draft Recommendation was in error.

[37] It is clear from clause 4.1 of the MoU that “the intention of [the] MoU is to provide for the reciprocal exchange of career opportunities” as between Jetstar and Qantas. That is a significant guiding principle that must inform the interpretation of the MoU as a whole.

[38] Also relevant in the interpretation of the MoU is the Explanatory Note on the MoU. Although the Explanatory Note “is not a substitute for the MoU” it highlights the main provisions of it and is properly to be regarded as useful when questions about how the MoU is to be interpreted arise. It provides that “an opportunity is defined in clause 8.6 of the MoU for Qantas pilots...”

[39] Clause 8.6 of the MoU refers to “An eligible Qantas pilot...” and “An opportunity...”. That is to say, clause 8.6 of the MoU consistently uses the singular of “an”. As stated above, Jetstar says that,

“clause 8.6 clearly contemplates that there needs to be an engagement available to which a Qantas pilot can be appointed for an opportunity to exist. Therefore, ... there can be no opportunity without a vacancy and the number of opportunities are necessarily confined to the number of available engagements or vacancies under the FSO.” 27

[40] The Applicant and the AFAP say clause 8.6 of the MoU is written in the singular because it only deals with the right or experience of individual Qantas pilots and establishes a limit on them only having “one opportunity” under the MoU. They say clause 8.6 of the MoU does not otherwise assist in interpreting clause 8.7.1 of the MoU.

[41] The different views of the Applicant and the AFAP on the one hand and Jetstar (supported by Qantas and the AIPA) on the other are relevant, but not determinative of how to interpret clause 8.7.1 of the MoU. It is a long established principle that the exercise to be performed is to determine, objectively, the common intention of the parties to the agreement. The exercise is to determine what a reasonable person would understand the contested words to mean. Relevant to this exercise is the intention of the document, its text and all of the surrounding circumstances, which, in this matter, the Commission has had regard to.

[42] In order for clause 8.7.1 to be enlivened at all it is first necessary that “an opportunity is available for a Qantas pilot to access a ‘ghost’ number for a command position....”

[43] In the factual circumstances of the present matter there was only one remaining command position that remained available. In the course of going through the Seniority List it was made available at “Q” number [412]. Had a Qantas pilot taken up the command position they would have been assigned a position in the Seniority List at the highest available ghost number (i.e. at “Q” number [412]). Consequently, “Q” number [412] would have become the Qantas pilot’s seniority number in the Jetstar Seniority List.

[44] Put another way only one Qantas pilot could have taken up the last remaining command opportunity and it is only at “Q” number [412] that they could have taken up that opportunity.

[45] As a matter of practical reality it is not the case that once a Qantas pilot did not take up the last remaining command position (at “Q” number [412]) that vacant command position was then “offered” or made available to the other “Q” numbers between “Q” number [412] and Mr Singh (at seniority number [516]). Had a Qantas pilot taken up the last command position they would only ever have been inserted into the Jetstar Seniority List at “Q” number [412].

[46] The “Q” numbers are, by definition, ‘ghost’ numbers. They are not actual warm bodies in the form of Qantas pilots. They are fictional. Once the last remaining command position was not taken up by a Qantas pilot (at “Q” number [412]”) that was the end of the opportunity for Qantas pilots. They could not have taken up the command position at any other “Q” number. There was only one vacancy left and that ‘ghost’ number opportunity could only have been taken up by one real Qantas pilot.

[47] If these facts had the result of deleting 38 “ghost numbers”, as the Applicant and the AFAP contend, it would reduce the opportunity for career exchange for Qantas pilots. Such an outcome goes against the intent of the MoU.

[48] In the facts of the present matter no Qantas pilot took up the last single command opportunity (which would have been at “Q” number [412]). This was the “an opportunity” referred to in clause 8.7.1 of the MoU. “An opportunity” should be given its usual and ordinary singular meaning. So too should the phrase “the ‘ghost’ number.” Consequently, when clause 8.7.1 of the MoU requires that “the ‘ghost’ number ... be deleted from the sequence of numbers” it is that single ‘ghost’ number which, by operation of clause 8.7.1 of the MoU, is to be deleted.

COMMISSIONER

Appearances:

Mr A Molnar of Australian Federation of Air Pilots representing the Applicant and the AFAP.

Mr N Ogilvie of Herbert Smith Freehills representing Jetstar Airways Pty Limited.

Mr D Taylor of Turner Freeman Lawyers representing Australian and International Pilots Association.

Hearing details:

2013.

21 August.

Melbourne.

 1   A1.

 2   Email from Andrew Molnar, Legal Counsel, AFAP dated 5 August 2013.

 3 A2, at para [3].

 4   Ibid.

 5 Ibid, at para [4].

 6   Ibid.

 7 [1996] IR 182.

 8   [2008] AIRC 291.

 9   Transcript of hearing at PN 69.

 10   Ibid.

 11   Ibid at PN 90

 12   Ibid at PN 101

 13   J1 at para [4]

 14   Ibid at para [5]

 15   Ibid at para [6]

 16   Ibid.

 17 A2, at para [6].

 18   Transcript of hearing at PN 166

 19   Q1 at para [1]

 20   Q1 at para [3]

 21   Q1 at para [2]

 22   Q1 at para [4]

 23   Transcript of hearing at PN 194

 24   Ibid.

 25 [2011] FCAFC 67

 26   Ibid at para [17]

 27 J1 at para [5].

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