Association of Professional Engineers, Scientists and Managers, Australia, The v Oceanic Coal Australia Pty Ltd

[2011] FWA 3146

[2011] FWA 3146

FAIR WORK AUSTRALIA

DECISION

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Item 10 Sch. 3—Variation of transitional instrument

Association of Professional Engineers, Scientists and Managers, Australia, The
v
Oceanic Coal Australia Pty Ltd
(AG2011/7654)

Coal industry
VICE PRESIDENT LAWLER	MELBOURNE, 19 MAY 2011

Application to vary agreement to remove ambiguity or uncertainty - decision turning on its own facts.

[1] This is an application by the Association of Professional Engineers, Scientists and Managers, Australia (APESMA) pursuant to item 10 of Schedule 3 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Transitional Act) for an order varying clause 13.2 of the West Wallsend Staff and Deputies Agreement 2007 (Staff Agreement) to remove an ambiguity. The Staff Agreement covers deputies and staff at the West Wallsend Mine (Mine) operated by Oceanic Coal Pty Ltd (Company), part of the Xstrata Group. The CFMEU also appeared but did little more than support the submissions of APESMA.

[2] Item 10 of Schedule 3 to the Transitional Act provides:

“10 All kinds of transitional instrument: variation to remove ambiguities etc.

(1) On application by a person covered by a transitional instrument, FWA may make a determination varying the instrument:

(a) to remove an ambiguity or uncertainty in the instrument; or

(b) to resolve an uncertainty or difficulty relating to the interaction between the instrument and a modern award; or

(c) to remove terms that are inconsistent with Part 3-1 of the FW Act (which deals with general protections), or to vary terms to make them consistent with that Part.

Note: For variation of a transitional instrument to resolve an uncertainty or difficulty relating to the interaction between the instrument and the National Employment Standards, see item 26.

(2) A variation of a transitional instrument operates from the day specified in the determination, which may be a day before the determination is made.”

The dispute giving rise to the application

[3] Clause 13.2 of the Staff Agreement provides:

“13.2 Additional Superannuation

The Company will also make an additional superannuation contribution to Coalsuper in accordance with the below table. This additional contribution will only be made on behalf of full time permanent employees that are employed at West Wallsend at the date of lodgement of this Agreement with the Office of the Employment Advocate (OEA), and are a party to this agreement. The additional contribution will not be made on behalf of full time employees employed after the lodgement date of this Agreement, part time employees, fixed term or specified task employees, temporary employees, casual employees or other employees.

West Wallsend Mine	Description	Superannuation
Classification	Contribution
Group 10	U/M in Charge	$245/wk
Group 8	Mechanical Eng. IC	$245/wk
Electrical Eng. IC
LW Coordinator
Dev. Coordinator
Group 7	Accountant	$240/wk
Undermanager
Personnel Coord.
Senior Surveyor
Group 6	Maintenance Engineer	$235/wk
Group 5	Surveyor	$235/wk
Chief Clerk
Purchasing Officer
Group 4B	Deputy	$230/wk
Group 4A	Control Room Operator	$225/wk
Group 3	Senior Stores Clerk	$220/wk
Group 2	Clerk	$220/wk
Senior Clerk
Stores Clerk
Assistant Surveyor
Group 1	First year of service in Group 2 classification	$215/wk

The above additional superannuation contribution is in lieu of the Company contribution into a health fund and the additional seven per cent contribution into Coalsuper.”

(underline emphasis added)

[4] Section 342(1) of the WR Act required an employer who was party to a collective agreement approved by employees to lodge the agreement, in accordance with section 344, within 14 days after the approval. Section 344 stipulated various procedural requirements for the lodging of an agreement “with the Workplace Authority Director”. There is no issue that those requirements were met in this case. It may be noted that the Office of the Employment Advocate had been replaced by the Workplace Authority by the time the Staff Agreement was made. There is no dispute that the reference to “the Office of the Employment Advocate” in clause 13.2 should be construed as a reference to the Workplace Authority Director. Section 347(1) of the WR Act provided “[a] workplace agreement comes into operation on the day the agreement is lodged.” The Staff Agreement was lodged with the Workplace Authority on 14 September 2007 and, accordingly, it came into operation on that day.

[5] At all material times there have been two collective agreements covering employees at the Mine: one covering staff and deputies (the Staff Agreement and its predecessors) and another covering tradespersons and operators (Operators Agreement).

[6] The dispute that gave rise to the present application relates to an employee, Mr Gardiner. Mr Gardiner had been employed for some years as a permanent full-time tradesperson and in that capacity was covered by the Operators Agreement and its predecessors rather than predecessors to the Staff Agreement. For a period prior to 14 September 2007 Mr Gardiner had been acting in a (full-time) deputy’s position pursuant to a “step-up” provision in the Operators Agreement. It is common ground that during this period Mr Gardiner continued to be covered by the Operators Agreement rather than the predecessor to the Staff Agreement.

[7] Sometime after the Staff Agreement was lodged with the Workplace Authority Mr Gardiner was promoted to the position of Deputy, a position covered by the Staff Agreement. The parties are in dispute over whether, as a Deputy, Mr Gardiner is entitled to the payment provided for in clause 13.2.

[8] Plainly enough, the purpose of clause 13.2 was to quarantine the entitlement to additional superannuation contributions to existing full-time employees and thereby achieve a reduction in costs over time. The issue is whether that quarantining was limited to full-time employees who were entitled to private health insurance and additional superannuation contributions at the time the Staff Agreement was lodged (because they were covered by its predecessor) or whether it included any employee who was a full-time employee of the Company at the time the Staff Agreement was lodged, even if they were not covered by the Staff Agreement at that time (and therefore not in receipt of the health insurance and additional superannuation contributions at that time).

Relevant Principles

[9] I proceed on the basis, accepted by the parties, that the authorities governing the exercise of the discretion to remove ambiguity or uncertainty conferred by s.176MD of the Workplace Relations Act 1996 and s.170MK of the Industrial Relations Act 1998 before it are equally applicable to the exercise of the discretion in item 10 of Schedule 3 to the Transitional Act.

[17] I proceed on the basis that the relevantly applicable principles are as follows:

(a) The discretion to vary an agreement to remove ambiguity or uncertainty not enlivened unless and until the tribunal identifies ambiguity or uncertainty. 1

(b) Once ambiguity or uncertainty has been identified it is a matter of discretion as to whether or not the agreement should be varied to remove the ambiguity or uncertainty. 2

(c) In exercising that discretion the tribunal must have regard to the mutual intention of the parties at the time the agreement was made as a matter to which significant weight should be accorded. 3 In particular:

(i) The tribunal should have read to the mutual intention of the parties objectively ascertained. That is, the tribunal should have regard to the construction of the relevant clause that is yielded by an application of the conventional principles of construction of industrial agreements. This will usually, if not invariably, involve the tribunal in considering the objective matrix of facts within which the agreement was made. 4

(ii) The tribunal should also have regard to whether there was an mutual subjective intention, that is, whether the subjective intention of the parties coincided. Such an intention may be discerned from the circumstances at the time and the subsequent conduct of the parties. 5

(d) Regard should be had to the objects of the Act in which the power to vary is found. 6

(e) While the discretion should be exercised having regard to all the circumstances of the case, other matters to which regard may be had include representations as to the effect of the agreement made to employees by the employer, directly or through an agent (which may include a union). 7

Application of the principles in this case

Ambiguity or uncertainty

[10] I am satisfied that clause 13.2 is affected by ambiguity or uncertainty. It is not obviously clear from the words of clause 13.2 whether Mr Gardiner is or is not entitled to the payment provided for in clause 13.2.

Proper construction of the Staff Agreement - intention of the parties objectively ascertained

[11] The usual principles governing the construction of industrial agreements are well-known 8 and need not be repeated here.

[12] The factual matrix in which the Staff Agreement was negotiated included the following:

• The commercial performance of the Mine was relatively poor in the period leading up to the negotiation of the Staff Agreement. Indeed, a sale of the mine was one of the options that had been under active consideration.



• The Company’s basic position in the negotiation was that it was essential to achieve reductions in costs and or increases in productivity so as to improve the mine’s profitability.



• The provision of private health insurance and additional superannuation contributions for some staff employees was a legacy from the time when the mine was owed by BHP. They were not benefits that had ever been provided to non-staff employees at the mine. They were not benefits generally provided to employees in the coal mining industry. They were not benefits provided to any employees at other Xstrata mines. The Company’s initial negotiating position was that these benefits would not be maintained in the proposed Staff Agreement.

[13] In the first draft agreement considered during the negotiations, clause 13.2 provided:

“13.2 Additional Superannuation

The Company will also make an additional superannuation contribution to Coalsuper of $230 per week. This additional contribution will only be made on behalf of full time permanent employees that are a party to this agreement. The additional contribution will not be made on behalf of part time, fixed term or specified task, temporary, casual or other employees.

The above additional superannuation contribution is in lieu of the Company contribution into a health fund and the additional seven per cent contribution into Coalsuper.”

[14] The scope of this first draft was confined to deputies who were not employed under a “salaried agreement”. The monetary value of the private health insurance and additional superannuation premiums for a deputy under the immediate predecessor to the staff agreement was assessed at $230 per week. The scope of the proposed agreement was subsequently broadened to include staff employee classifications which in turn led to the introduction of the table in clause 13.2 in subsequent drafts and the Staff Agreement as made.

[15] It is tolerably clear that the Company’s negotiators came to a realisation that wording of clause 13.2 in the first draft was unsatisfactory and the third draft prepared by the Company contained a different wording for clause 13.2. That wording was maintained in subsequent drafts and in the Staff Agreement.

[16] In addition to the insertion of the table in clause 13.2, the additions to clause 13.2 between the first and third drafts are indicated by the underlined words in the following:

“13.2 Additional Superannuation

The Company will also make an additional superannuation contribution to Coalsuper in accordance with the below table. This additional contribution will only be made on behalf of full time permanent employees that are employed at West Wallsend at the date of lodgement of this Agreement with the Office of the Employment Advocate (OEA), and are a party to this agreement. The additional contribution will not be made on behalf of full time employees employed after the lodgement date of this Agreement, part time employees, fixed term or specified task employees, temporaryemployees, casual employees or other employees.

...

The above additional superannuation contribution is in lieu of the Company contribution into a health fund and the additional seven per cent contribution into Coalsuper.”

[17] The position for which the union contends would have been achieved by clause 13.2 in the first draft. The fact that words were added to clause 13.2 objectively suggests that, objectively determined, the parties intended to further confine the availability of the benefit conferred by the clause and brought a particular focus to employment at the time the agreement was lodged and thus commenced to operate.

[18] Evidence of the subjective intention of the union negotiators and post-contractual conduct is also not properly admissible on the construction of the Staff Agreement and has been disregarded in determining the proper construction of clause 13.2 through an application of the conventional principles of construction of industrial agreements.

[19] The construction question comes down to whether the words “and are a party to this agreement” were intended to mean a party to the agreement at any time during its life or to mean a party to the agreement at the time it was lodged. Having regard to the structure of clause 13.2 in Staff Agreement as made, the factual matrix within which the Staff Agreement was made and the evolution of clause 13.2 between first and third drafts, the better view is that the intention of the parties, objectively ascertained, was that the expression “and are party to this agreement” was objectively intended to relate to the time the agreement was lodged. I so find.

Mutual subjective intention

[20] I am not satisfied on the evidence that the negotiating parties had a mutual subjective intention as to the operation and effect of clause 13.2. I accept the evidence of the members of the union negotiating team to the effect that they understood and intended that the clause 13.2 payment would be available to any employee of the Company who was a full-time employee at the time the Staff Agreement commenced operation who was subsequently promoted to a position in the table in clause 13.2. On the other hand, I also accept the evidence of the employer witnesses to the effect that they understood and intended that the payment in clause 13.2 was limited to full-time employees who were covered by the Staff Agreement on the day it was lodged and came into effect.

[21] I accept that Mr Claridge, the Mine’s commercial manager, may have made some statements during the negotiations for the Staff Agreement that, while subjectively intended by Mr Claridge to convey the true position of the Company, were understood by union negotiators as amounting to an acceptance of the position for which they were contending (indeed, that very thing happened during his cross-examination). To the extent that such statements were made I am satisfied that they were made when Mr Ireland, the Mine’s Operations Manager and the Company’s lead negotiator, was not present. I am also satisfied that Mr Claridge said things that were inconsistent with the position for which the union was contending at other points in the negotiation. More importantly, I am satisfied that Mr Ireland, was consistent in explicitly advancing the Company’s position that the payment pursuant to clause 13.2 was to be “grandfathered” and limited to full-time employees who were already entitled to private health insurance and additional superannuation payments. I was particularly impressed with the evidence of Mr Ireland. I accept and act upon his evidence to the effect that he made it clear in the negotiations that the Company intended to “draw a line in the sand” and to “grandfather” the payments in this fashion. I note that some of the union witnesses agreed that the words “grandfather” and “grandfathering” were used. It is implicit in those terms that only those employees who were already in receipt of the relevant benefits would receive the replacement benefit in clause 13.2.

[22] APESMA relies upon the treatment of Mr Rolla as evidence of subsequent conduct indicative of a mutual subjective intention that clause 13.2 would operate in the fashion for which it contends. Like Mr Gardiner, Mr Rolla had been in a position covered by the Operators Agreement at the time the Staff Agreement came into operation. Shortly after this Mr Rolla was promoted to the position of deputy. Sometime after Mr Rolla commenced in that role, there was a dispute over whether Mr Rolla was entitled to the payment provided in clause 13.2. That dispute was resolved when the Company agreed to make that payment to Mr Rolla.

[23] I accept the evidence of Mr Ireland that it was he who employed Mr Rolla in the position of deputy and that he did so on the basis that Mr Rolla would not receive the payment in clause 13.2 because he was not covered by the Staff Agreement on the day it took effect. The decision to make the clause 13.2 payment to Mr Rolla was made subsequently by a manager who took over after Mr Ireland had left the Mine and was a mistake. These circumstances reduce the weight to be accorded to the fact that the Company agreed to make the clause 13.2 payment to Mr Rolla.

[24] I do not regard the “interim agreement” as bearing materially on this issue. It does not strongly favour either position and, in any event, had been overtaken by the events, not the least of which was the course of the negotiations.

[25] I find, that there was no mutual subjective intention as to the operation and effect of clause 13.2.

Other matters going to the exercise of the discretion

[26] The Transitional Act does not have any relevant objects. To the extent that the objects of the FW Act may be thought to be relevant I do not regard those objects as strongly favouring either of the competing positions in this case.

[27] There is no evidence that the Company constituted any union as its agent to convey to employees the intent and effect of the Staff Agreement. There is no evidence that the Company represented to employees in connection with the making of the Staff Agreement that clause 13.2 had the effect for which APESMA contends. I do not regard the Powerpoint presentation that is attachment RW5 to Exhibit 2 as constituting such a representation. It was prepared with the existing staff employees in mind, all of whom were to receive the relevant benefit. It contains no statement that employees who were not existing staff employees would receive the relevant benefit if they subsequently became staff.

[28] Mr Ireland’s original instructions from the Chief Operating Officer of Xstrata in relation to the negotiation of the Staff Agreement had been to insist upon a removal of the health insurance premiums and additional superannuation for staff employees altogether. Mr Ireland persuaded the COO that it was not practicable to expect employees in receipt of those benefits to give them up and that he should be permitted to offer to ‘grandfather’ the benefits for those who were already in receipt of them on the basis that this position was “non-negotiable”. The union negotiators had objected to clause 13.2 as it eventually appeared in the Staff Agreement (that is, on their understanding of its operation) on the basis that it was “discriminatory” against new employees. However, the union negotiators agreed to clause 13.2 notwithstanding those objections. I find it more likely than not that the union negotiators ultimately would have accepted clause 13.2 having an operation for which the Company contends. This was a ‘big ticket’ item for the Company that was non-negotiable. I think it less likely than not that the union would have made its view of clause 13.2 a ‘deal-breaker’. Given the poor performance of the mine at the time, I think it more likely than not that the union would have conceded the issue rather than embark upon a protracted period of industrial action to force the Company from its “non-negotiable” position with the consequent risk to job security flowing from a decision by the Company to respond to by selling the mine or closing it for a period (an option that had also been under active consideration by the Company). I think it more likely than not that the employees covered by the Staff Agreement would have acted on the union’s recommendation to approve the Staff Agreement in those circumstances.

[29] The commercial performance of the Mine has, since the Staff Agreement was made, improved dramatically in line with the increase in coal prices associated with the present mining boom.

[30] The effect of the union’s position on clause 13.2 would be to make it more than $11,000 a year more expensive to recruit a new deputy from the existing ranks of tradespersons and operators rather than to recruit a new deputy externally. Although, this notwithstanding, the CFMEU supported APESMA’s present application, I think that it represents a species of disadvantage to existing tradespersons and operators by reducing the opportunity for career progression through promotion to the position of deputy and that this should be accorded some weight, albeit minor.

Conclusion

[31] In all the circumstances I am comfortably persuaded that the tribunal should exercise its discretion to vary clause 13.2 to remove the ambiguity that APESMA accepts is present in that clause and that such variation should be in line with the position advanced by the Company.

[32] The matter considered in paragraph [28] lent some weight in favour of the Company’s position. However, even if I had disregarded this matter I would still have been comfortably persuaded to vary the Staff Agreement in line with the position advanced by the Company.

[33] I have decided that the variation should not be given a retrospective operation. It would provide a foundation for the Company to recover the clause 13.2 monies paid to Mr Rolla thus far. Given that the Company had agreed to pay those monies after the issue had been placed in dispute, I do not think it would be fair to provide that foundation. So far as Mr Gardiner is concerned (the only other person directly affected by the present application), the Company is entitled to continue contending that on the proper construction of the Staff Agreement, Mr Gardiner has not been entitled to the clause 13.2 payment. I have found that the construction of clause 13.2 advanced by the Company is the correct construction. That finding is not binding on any court and its is a matter for Mr Gardiner as to whether he wishes to make a claim in an appropriate court with a view to obtaining a different construction.

[34] Clause 13.2 of the Staff Agreement will be varied by deleting the words “and are a party to this agreement” and replacing them with the words “and are covered by this agreement at that time”.

VICE PRESIDENT

Appearances:

T Slevin of Counsel for the Association of Professional Engineers, Scientists and Managers, Australia, with K Rooke.

J de Flamingh and K. Peterson for Oceanic Coal Australia Pty Ltd.

K Endacott for the Construction, Forestry, Mining and Energy Union.

Hearing details:

2011.

Sydney:

May 16.

 1   Re Tenix Defence Pty Limited Certified Agreement 2001-2004 (PR917548) (Tenix) at [28], [32] and [54]; Re Telstra - Corporate Group Enterprise Agreement 2002-2005 (PR954989) (Telstra) at [17]

 2   Ibid

 3   Ibid

 4   Telstra generally but esp. at [39]

 5   Telstra at [43]-[45]; Re Victorian Public Transport Enterprise Agreement 1994 (Print M2454) at p.4

 6   Telstra at [49]

 7   Tenix

 8   See, for example, the summary in Watson v ACT Department of Disability, Housing and Community Services (2008) 171 IR 392 at [7]ff

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