Anglo Coal (Drayton Management) Pty Ltd v Construction, Forestry, Mining and Energy Union

[2016] HCATrans 308

[2016] HCATrans 308

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney   No S175 of 2016

B e t w e e n -

ANGLO COAL (DRAYTON MANAGEMENT) PTY LTD

Applicant

and

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

Respondent

Application for special leave to appeal

BELL J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 16 DECEMBER 2016, AT 12.38 PM

Copyright in the High Court of Australia

MR I.M. NEIL, SC:   If it please the Court, I appear with my learned friend, MR C. PARKIN, for the applicant.  (instructed by Ashurst Australia)

MR S. CRAWSHAW, SC:   If the Court pleases, I appear with my learned friend, MR A.M. SLEVIN, for the respondent.  (instructed by CFMEU Northern Mining & NSW Energy District)

BELL J:   Thank you, Mr Crawshaw.  Yes, Mr Neil.

MR NEIL:   If the Court pleases, the proposed appeal turns on what we submit is an error in the construction of an enterprise agreement made under the Fair Work Act which error was materially influenced by a misconstruction of that Act.  We submit that the proposed appeal raises questions of law of public importance because they have a general application substantially for two reasons. 

First, the misconstrued provisions of the Act set minimum standards of employment for most employees in Australia and, second, the judgment of the Federal Court in respect of which special leave is sought, dealt with problems posed by the construction of the particular enterprise agreement and the relationship between that agreement and the Fair Work Act that exist in connection with many industrial instruments in the coal industry.

KEANE J:   And presumably, to the extent that it is a problem, it will be addressed in the next set of industrial agreements or, indeed, may well have been addressed in the set of industrial agreements entered into after this one.

MR NEIL:   That will always be so.

KEANE J:   So, how do we know that this is a question that matters?

MR NEIL:   There can be no guarantee that the question in this form will endure beyond the life of the enterprise agreements that contain these features.  We have to accept that proposition.

KEANE J:   Given that, why would this be an appropriate case for a grant of special leave?

MR NEIL:   Because it would not be right, in our respectful submission, to make any assumptions about whether the next round of enterprise agreements would or would not contain these provisions.

KEANE J:   But if it is a problem, if it is a problem that the agreement has been misconstrued, that is the problem.  That is the problem that you are putting to us.  The issue you are putting to us is one of misconstruction.

MR NEIL:   Well – I am sorry, your Honour.

KEANE J:   So that if the Federal Court has misconstrued this agreement, then that mischief can be attended to in negotiating the next round of agreements, if, indeed, it has not been attended to already.

MR NEIL:   There are two answers to the proposition that your Honour is putting to us.  The first is that there is a problem.  It operates to the advantage of one side of the industrial relationship and the disadvantage of the other side.  The mischief is mischief for one and benefit for another.

KEANE J:   Yes, but it is said to be because what they had signed up to was misconstrued.  To the extent that that proposition is correct, then you have a basis for renegotiating to achieve what the parties really meant. 

MR NEIL:   That would be so if it could be presumed, as it in our submission cannot, that both parties would seek to remedy the misconstruction.  Whereas ‑ ‑ ‑

KEANE J:   It always takes two to tango.

MR NEIL:   It does.  Put bluntly, your Honour, by reason of what we contend is a misconstruction of this particular enterprise agreement and other enterprise agreements like it, one side on the bargaining table has gained a very significant advantage.  They are being paid when they cash out there – employees are being paid when they cash out their personal leave, sick leave, in the old parlance, not for an hour’s value, as we contend they ought to be, but sometimes for more than an hour’s worth.  Now, why would they give up that advantage?  In our submission, there is no reason to assume or presume, for present purposes, that they would.  That is one answer we give to your Honour’s proposition. 

The second is that while the proposed appeal would appear to involve a narrow and particular point of the construction of a particular enterprise agreement and that is the pointy end of the proposed appeal, of course, it does engage larger questions including the proper construction of the Act.  One of the matters of which we wish to – aspects of the judgment of the Federal Court against which we would wish to appeal is that the Federal Court construed the enterprise agreement in accordance with a misconstruction of relevant provisions of the Fair Work Act.  Now, that problem – that is, the problem of the misconstruction of those provisions – will endure regardless of what might happen in projected future rounds of enterprise bargaining.  So that is a second answer to the proposition that your Honour has put.

BELL J:   What is the misconstruction of the Act?

MR NEIL:   Of the Act?  It relates to paragraph – or section 101(2)(c). 

BELL J:  

the employee must be paid at least the full amount that would have been payable to the employee had the employee taken the leave that the employee has forgone.

MR NEIL:   Yes.

BELL J:   His Honour’s error in?

MR NEIL:   The error was to give to that provision a construction that required payment in the circumstance of cashing out that required payment of the whole amount that an employee would have been paid for a whole shift if they took personal leave on that shift rather than on the rate of pay for the hour of personal leave that was cashed out.  That is the nub of the problem – nub of the error, I am sorry.

BELL J:   Does this only arise in the circumstance where the employee works part of the shift and then ‑ ‑ ‑

MR NEIL:   No, your Honour.  It arises in – I am sorry, your Honour, I am interrupting.

BELL J:   No, no, so it is the general point – I am sorry, no, not at all.  What was wrong with his Honour’s approach?

MR NEIL:   Because the correct focus, not just of the enterprise agreement but also of this paragraph, is on the rate of pay for the personal leave that is cashed out.

BELL J:   Yes.

MR NEIL:   One can see that error in paragraph 13 of the judgment in the Federal Court, that is on page 43 of the application book.

BELL J:   Where his Honour says:

any cashing out under an enterprise agreement must reflect what would happen by way of payment if periods of leave were actually taken.

MR NEIL:   Yes, and then secondly, in paragraph 35 on page 48, lines 44 to 45.  We would make four points about the proper construction of that provision.  Your Honours will find that on page 75 of the application book.  First of all, the word “paid” must mean paid for the leave that has been cashed out.  Second, the word “foregone” directs attention to the leave that the employee goes without – that is, the leave that they give up in return for cash in the case of this enterprise agreement and every enterprise agreement that reckons entitlements by hours rather than days or shifts.  In this case, it means the actual hours that the employee sacrifices from the annual credit that the employee receives on account of personal leave at the anniversary of each – at each anniversary of their employment.  So, from that annual amount is deducted a particular number of hours. 

BELL J:   That does produce a result, does it, that the cashed out amount of leave is less than the employee might have received had the employee taken the leave?

MR NEIL:   We would submit, no, for the reason that it produces the same hourly payment for hourly rate of pay for each hour that is deducted from the annual allotment and thereby achieves what, in our submission, is the purpose of this paragraph and also of the relevant provisions in the enterprise agreement.  That, in our submission, is the end of the relevant question, the question posed by the enterprise agreement and by this provision.  What would the employee be paid for each unit of leave that they forego if they had actually taken leave for that unit of leave?  The answer is not what they would have been paid for the whole of the shift, it is what they would have been paid for that unit. 

KEANE J:   How can that stand with clause 21.7 set out at page 44:

An employee will be paid for each shift of approved personal/carer’s leave as if at work.

MR NEIL:   Clause 21.7, your Honour, deals with a different problem.  One reason why the erroneous construction produces the very odd result to which the Federal Court arrived is that by the operation of clause 21.4 and 21.7 an employee who actually takes personal leave may have deducted – or may be paid for more hours than are deducted from their allotment.

KEANE J:   Yes, why is that not what clause 21.4 and clause 21.7 plainly contemplate?

MR NEIL:   They do, they do, but that, in our submission, is a cause of the problem rather than the answer. 

KEANE J:   What is so odd about that?

MR NEIL:   Because it produces the result that where one has, as in this case, employees with shifts longer than 8.5 hours, the value of the personal leave hours that they elect to sacrifice – and that is the test in the enterprise agreement – is, in the case of each such hour, not an hour’s worth, it is valued as though the hour was more than an hour, sometimes as much as another half again.

BELL J:   Sometimes 50 per cent more.

MR NEIL:   Yes.

BELL J:   Yes. 

KEANE J:   You have got an express provision in 21.4 which tells you the deduction will operate on the basis of 8.5 hours per shift, but 21.7 contemplates payment for each shift as if it was worked.

MR NEIL:   Yes, the whole of the shift.

KEANE J:   Yes, and the cashing out is paid on the basis as if the employee had taken the leave.  So these provisions contemplate that the employer deducts from the personal leave credit, or the accumulated credit, 8.5 hours per shift but the employee actually gets paid as if at work – that is, as if the employee has worked the shift.  What meaning can 21.7 otherwise have?

MR NEIL:   It relates to a different circumstance than the circumstance addressed by clause 21.11.  Clause 21.7 applies if the leave is actually taken but if one turns to the language of ‑ ‑ ‑

KEANE J:   That is right, 21.7 applies as if at work, payment as if at work.  Clause 21.11 says cashing out payment as if you had taken the leave.  So, 21.11 is saying you cash out, you get paid just as if you would get paid under 21.7.

MR NEIL:   We would, of course, argue otherwise.  We would suggest, with respect, that your Honour has started at the back end of clause 21.11 and worked forwards.  The critical words in that provision are the words that conclude each of the second and third paragraphs, the “value of the personal . . . leave hours that the employee elects to sacrifice”.  That is the – what is the value, how do you quantify the moneys’ worth of the actual hours that the employee elects to deduct from their next years’ credit allowance.  Our submission is simply this, that in those ‑ ‑ ‑

KEANE J:   Are you saying that is always 8.5 hours for every shift?

MR NEIL:   No, your Honour, we are saying it is the rostered hourly rate of play for each such hour.  Our submission is, shortly, that the meaning of those words, which is the nub of the question of construction, is that employees should be paid for each hour of leave that they sacrifice the same rostered hourly rate of pay that they would have been paid for that hour if they had actually taken leave.  That is what we say is the correct construction.  What we say in short ‑ ‑ ‑

BELL J:   That, you say, fits in with section 101(2)(c) of the Act?

MR NEIL:   As it is properly construed, yes.  His Honour’s misconstruction of that paragraph deflected his Honour from that construction.  Our point is simply this, if we could put it bluntly.  Is the value of an hour within – as that concept is used in the words to which we have pointed in clause 21.11, is the value of an hour an hour’s worth, as the Federal Circuit Court held and as we now contend, or can an hour sometimes be valued as if and as though it was more than an hour?  That is what the Federal Court held.

BELL J:   Mr Neill, but can I come back to paragraph 35 of the Federal Court’s reasons, this is at application book 48?

MR NEIL:   Yes.

BELL J:   Am I right in understanding that if you are a worker at this mine and you are on a shift, let us call it the (i) shift, that is a shift where you work 12.5 hours per day.  If you, in fact, take your sick leave or your carer’s leave or however you describe it on that day, you get paid the amount that you ordinarily receive for a day’s work being an (i) shift employee’s 12.5 hours.  Am I right in understanding that?

MR NEIL:   Correct.

BELL J:   And on your construction his Honour erred in concluding that when you cash it out you do not get the same.

MR NEIL:   That is right.  Essentially by transposing the calculation required by clause 21.7 and the result that your Honour has described into the different exercise of valuation required by clause 21.11.  That is the short point.

BELL J:   Yes.

MR NEIL:   An hour, we would submit, is a fixed unit of time.  Each hour has a fixed value.  The enterprise agreement deals with that.  For each shift there is a prescribed hourly rate. 

BELL J:   But the enterprise agreement cannot provide for cashing out of paid personal carer’s leave unless it requires the employee to be paid at least the full amount that would have been payable had the employee taken the leave.

MR NEIL:   Yes, and in our submission what that means, properly construed, is that for each hour that it deducted at the employee’s election, that the employee should receive precisely the same rostered hourly rate of pay that the employee would have received for that hour if they had actually taken the leave. 

KEANE J:   One thing that is clear is that there is no deducting for hours.  One thing that is clear from this agreement is that there is no deducting by reference to hours.  It is in 21.4 you deduct 8.5 hours per shift, so you have got a specific provision which controls what the employer can do.

MR NEIL:   Yes, if the leave is actually taken, yes.

KEANE J:   Then you have got provisions which do not operate by reference to hours.

MR NEIL:   Our submission is that when one turns to clause 21.11 it talks of nothing but hours.  It sets a condition for the right to make an election; a certain amount must be accumulated.  That is fixed in hours.  It sets a limit of the amount that might be deducted or sacrificed.  It fixes that in hours and when it talks about value it uses the word “hours”.  The policy behind paragraph 101(2)(c), in our submission, is to prohibit agreements whereby employees receive less than the true value of the personal leave that they elect to cash out.  It is not to provide that they receive more than that value but for every hour they elect to deduct they receive more than an hour’s worth.  That is the short point. 

Now, I have rather lost track of time.  We have drawn attention to the matters that, in our submission, give rise to the public importance of the proposed appeal in our written submissions.  May we point out shortly that by way of expanding upon what we there said that many enterprise agreements in the coalmining industry and the black coalmining award, which sets the default conditions throughout the industry, have features that are materially similar to this enterprise agreement and they have a similar relationship with the Act. 

Those three features we have identified as, first, varying shift links, second, personal leave entitlements reckoned in hours rather than days or shifts and, third, provisions for cashing out personal leave that are reckoned and calculated in that way.  By our count, there are at least 39 enterprise agreements in the coal industry alone that have those three features in New South Wales and Queensland.  That count relates only to the cashing out of personal leave. 

The same issues of construction arise in cashing out other forms of leave, notably annual leave, and also in calculating payments for untaken annual and sick leave in the event of redundancy.  We point to all of those circumstances by way of demonstrating what, in our submission, is the public importance in the proposed appeal.  Now, unless we can be of any more assistance, that is what we would wish to say by way of supplementing our written submissions.

BELL J:   Thank you, Mr Neil.  Yes, we do not need to hear from you, Mr Crawshaw.  In our opinion, no question of sufficient public importance is raised by the application to justify the grant of special leave.  Special leave is refused with costs.  The Court will adjourn to 10.15 am on Monday, 30 January 2017 in Canberra.

AT 1.02 PM THE MATTER WAS CONCLUDED