Australian and International Pilots Association v Qantas Airways Limited
[2014] FWCFB 8199
•25 NOVEMBER 2014
[2014] FWCFB 8199
DECISION
| Fair Work Act 2009 | |
| s.604—Appeal of decision | |
| Australian and International Pilots Association | |
| v | |
| Qantas Airways Limited | |
| (C2014/1183) | |
| Airline operations | |
| JUSTICE BOULTON, SENIOR DEPUTY PRESIDENT | |
| DEPUTY PRESIDENT LAWRENCE | |
| COMMISSIONER BULL | SYDNEY, 25 NOVEMBER 2014 |
Appeal against decision [PR550766] and order [PR552082] of Vice President Watson at Melbourne on 16 June 2014 in matter number AG2013/9555 - ambiguity or uncertainty in a transitional instrument - whether the Vice President correctly found that there was an ambiguity or uncertainty - whether there was an objectively ascertainable mutual intention of the parties - proper interpretation of the provisions - no error found - permission to appeal refused.
[1] This is an application by the Australian and International Pilots Association (the Association) under s.604 of the Fair Work Act 2009 (the Act) for permission to appeal and, if
granted, an appeal against a decision of Vice President Watson delivered on 16 June 2014.[1]
[1]PR550766.
The decision dealt with an application by Qantas Airways Ltd (Qantas) to vary the Qantas
Airways Limited Flight Crew (Short Haul) Workplace Agreement 2007 (the Agreement)[2]in
relation to the superannuation entitlements of Training Captains.
[2] The variation sought to resolve an alleged ambiguity in the Agreement concerning the inclusion of a training allowance paid to Training Captains in the definition of “Superannuation Salary” in the Qantas Airways Limited Staff Superannuation Plan Trust
Deed and Rules (the Trust Deed).
[3] The background to the application was a dispute between the Association and Qantas as to whether the “two hundred and forty hours per year training allowance” (hereinafter the 240 hours allowance) was to be included for superannuation purposes in the salary of Short Haul Pilots doing training work. The Association has brought enforcement proceedings in the [2014] FWCFB 8199
Federal Court alleging a breach of the Agreement in regard to the non-inclusion of the 240
hours allowance.[3]
[4] The application was heard by the Vice President in proceedings lasting three days and with evidence being given by eight witnesses. In his decision, the Vice President considered:
the evidence relating to the history of the various agreements between Qantas and
the Association and the negotiations leading to the development of the Agreement
and its predecessors;
the legislative basis for the application, namely Item 10(1)(a) of Schedule 3 to the
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the
Transitional Act) which provides that the Commission may on application make a determination varying a transitional instrument “to remove an ambiguity or uncertainty in the instrument”;
the approach which the Commission should take in the exercise of the discretion to vary an agreement to remove ambiguity or uncertainty;[4]and [4]PR550766 at [9] - [16].
the proper interpretation of the relevant clauses in the Agreement and the Trust
Deed.[5]
[5]Ibid at [17] - [36].
[5] The Vice President found that:
(i) there was an ambiguity or uncertainty in the operation of the relevant clauses in the
Agreement;[6]
[6]Ibid at [23] - [24].
(ii) after considering the history of the relevant provisions in the Agreement and the Trust Deed, together with the practice of Qantas not including the 240 hours allowance into superannuation contributions and the recent origin of the claim that it should be included, that there was no mutual intention of the parties that the allowance should be included in superannuation contributions;[7]and
[7]Ibid at [34] - [36].
(iii) the proper interpretation of the provisions was that the 240 hours allowance is not
payable for superannuation purposes under the Agreement.
[6] The Vice President decided that the Agreement should be varied to reflect the mutual
intention of the parties and the long-standing practice of the employer. An order was made to
this effect.[8]
[2014] FWCFB 8199
[7] In the appeal, the Association challenged each of the findings of the Vice President. It was submitted that it is in the public interest for permission to appeal to be granted as the appeal raises issues as to the correct approach to the assessment of ambiguity and uncertainty in agreements and the assessment of the mutual intention of the parties prior to the variation of an agreement. It was also submitted that the decision is attended with sufficient doubt as to warrant it being reconsidered by a Full Bench.
[8] An appeal under s.604 of the Act involves an appeal by way of rehearing, with the powers of the Full Bench being exercisable only if there is error on the part of the primary decision-maker: see Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission.[9]
[9] The majority of the High Court explained in the following passage how error may be identified where a discretionary decision is involved:
“Because a decision-maker charged with the making of a discretionary decision has some latitude as to the decision to be made, the correctness of the decision can only be challenged by showing error in the decision-making process (See Norbis v Norbis (1986) 161 CLR 513 at 518-519). And unless the relevant statute directs otherwise, it is only if there is error in that process that a discretionary decision can be set aside by an appellate tribunal.” [10]
[10]Ibid at [21].
[10] The errors that might be made in the decision-making process were identified, in relation to judicial discretions, in House v The King[11]in these terms:
[11](1936) 55 CLR 499
“If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters
to guide or affect him, if he mistakes the facts, if he does not take into account somematerial consideration, then his determination should be reviewed and the appellate
court may exercise its own discretion in substitution for his if it has the materials for
doing so”;[12]
[12]Ibid at 505.
and
“It is not enough that the judges composing the appellate court consider that, if they had
been in the position of the primary judge, they would have taken a different course. It
must appear that some error has been made in exercising the discretion...”[13]
[13]Ibid at 504-505.
[11] An appeal under s.604 of the Act may only be pursued with the permission of the
Commission. Section 604(2) requires the Commission to grant permission to appeal if it is
satisfied that it is in the public interest to do so.
[2014] FWCFB 8199
[12] In the proceedings before the Full Bench, the Association was represented by Mr C W Dowling of Counsel and Qantas was represented by Mr R Kenzie QC and Mr R Dalton of Counsel. The parties filed written outlines of their submissions and these were expounded upon by counsel in the hearing.
[13] For the purposes of the appeal, we set out the following provisions of the Agreement
and the Trust Deed. Subclause 21.1.8 of the Agreement governs the salary payable to Training
Captains Category A/B. It is in the following terms:
“21.1.8 Salary
...
21.1.8.2. A Training Captain A/B’s annual salary, paid in twelve (12) monthly
amounts, will consist of the following elements;
a) Six-hundred and ninety six (696) hours at the Captain’s applicable hourly rate in this Agreement; b) An additional sixty-six (66) hours (calculated at the Captain’s applicable hourly rate in this Agreement) as a supervisory allowance; c) year at the Captain’s applicable hourly rate;
(iii)a training allowance of two hundred and forty (240) hours each of the top 50% of active Training Captains Category D’ hours earned in excess of seventy eight (78) hours for the bid period by the Training Captain A/B’s whichever is the greater, at the applicable hourly rate in this Agreement.”
[14] Subclause 21.1.11 of the Agreement relates to superannuation and is in the following
| terms: |
“21.1.11. Superannuation
Superannuation contributions and entitlements will be in accordance with the Trust Deed and Rules of the Qantas Airways Limited Staff Superannuation Plan, plus the 10% Supervisory Allowance”
[15] “Superannuation Salary” is defined in the Trust Deed as follows:
“Superannuation Salary
a) Subject to paragraph (f) below, the salary to be used for superannuation purposes for a Member in Division 1 or Division 2 who is: ...
iv)
A Short Haul Pilot, shall be base pay equivalent to 55 hours per calendar month in accordance with the Australian Airlines Pilots
[2014] FWCFB 8199
Award (1989), plus supervisory and training allowances, but exclusive of any other allowances;
v) A member of Long Haul Technical Aircrew, shall be base pay equivalent to 132 hours per 56 days in accordance with the International Airline Pilots Agreement (1986) or the International Airline Flight Engineer Officers Agreement (1988), as applicable, plus supervisory and training allowances, but exclusive of overseas pay and any other allowances.
b) Subject to paragraph (f) and paragraph (g) below, the salary to be used for superannuation purposes for a Member in Division 3, Division 3A, Division 4 or Division 6 who is: ...
iv) A Short Haul Pilot, shall be base pay equivalent of 55 hours per calendar month in accordance with the Australian Airlines Pilot Award (1989), plus supervisory and training allowances, but exclusive of any other allowances; v) A member of Long Haul Technical Aircrew, shall be base pay equivalent to 170 hours per 56 days in accordance with the International Airline Pilots Agreement (1986) or the International Airline Flight Engineer Officers Agreement (1988), as applicable, plus supervisory and training allowances, but exclusive of overseas pay and any other allowances.”
[16] In his decision, the Vice President set out and considered the meaning of the relevant provisions in the Agreement and the Trust Deed. The Vice President also considered the relevant provisions of the Transitional Act and the approach adopted by the Commission and its predecessors in the exercise of the power to vary agreements to remove ambiguity or
uncertainty.[14]His Honour also referred to the principles of interpretation of enterprise
agreements as considered in decisions of the High Court.[15]
[15]Ibid at [10] - [16]. See Amcor Ltd v Construction, Forestry, Mining and Energy Union; Minister for Employment and
[17] The Vice President recognised that the Commission is required to address the question of ambiguity or uncertainty as a jurisdictional fact and could not consider the merits of the application to vary without having first found an ambiguity or uncertainty in the relevant provisions of the Agreement. The Vice President identified that the proper approach to this “first step” involved the making of an objective judgement as to whether, on the proper
construction of the relevant provision of an agreement, the wording of that provision is
susceptible to more than one meaning.[16]
[16]PR550766 at [9]. See decision in Beltana Highway Mining Pty Ltd PR932468. See also Coinvest Ltd v Visionstream Pty
[18] Having set out the relevant clauses of the Agreement and the Trust Deed, and having
summarised the competing contentions of the parties, the Vice President’s findings on
jurisdictional fact were as follows:
“[23] In my view Qantas has established that there is an ambiguity or uncertainty in the operation of these provisions. There is no mention of training allowances in the superannuation provision of EBA 6 - but there is a reference to the inclusion of the 10% supervisory allowance in the superannuable salary. The reason for this selective reference is unclear. The reference to contributions to be in accordance with the trust deed requires consideration of the terms of the trust deed to ascertain the nature of the obligation in EBA 6. The relevant instruments were made at different times and have operated in conjunction with other instruments over time. [24] The reference to allowances in the trust deed expressly includes supervisory and training allowances but also expressly excludes all other allowances. I accept that it may be contended that a reference to a training allowance could mean anything termed a training allowance. However it may also be contended that it is intended to describe the nature of the allowance rather than the terminology used to describe it. Further, the training allowance in EBA 6 does not appear to be associated with the activity of training as such and therefore the competing contentions have real significance. In my view therefore the combination of these considerations gives rise to an uncertainty and an ambiguity as to the proper meaning of these provisions and in particular the nature of Qantas’s obligation as to the rate of superannuation contributions under EBA 6.”[17] [17]PR550766 at [23] - [24].
[19] It was submitted by the Association that there was no ambiguity or uncertainty in the Agreement. It was said that the obligation in clause 21.1.11 was clear, namely to make superannuation contributions “in accordance with the Trust Deed”. It was said that the Trust Deed is not incorporated into the Agreement and therefore there is no uncertainty or ambiguity in the words of clause 21.1.11 and the related references to “training allowance”. The obligation in the Agreement is simply to comply with the Trust Deed. It was also submitted that, if the Trust Deed is imported into the Agreement, the reference to “training allowance” in the Trust Deed would accommodate the meaning of “training allowance” as referred to in the Agreement.
[20] We do not need to determine whether the words “in accordance with the Trust Deed” in clause 21.1.11 of the Agreement should be characterised as words of incorporation. There was no finding by the Vice President that the clause had the effect of incorporating the terms of the Trust Deed. However the words do impose an obligation upon the employer to make superannuation contributions. The ambiguity or uncertainty in clause 21.1.11 arose from the way the parties framed the content of that obligation. The content of the obligation could only be understood by resort to the definition of “Superannuation Salary” in the Trust Deed. The salary of Short Haul Pilots for superannuation purposes is expressed to be base pay “plus supervisory and training allowances, but exclusive of any other allowances”. There is no
[2014] FWCFB 8199
definition in the Trust Deed as to the meaning of training allowance. There is therefore
uncertainty as to obligation upon Qantas to make superannuation contributions.
[21] When the relevant provisions of the Agreement and the Trust Deed are read together, and having regard to the various considerations referred to by the Vice President above, it is evident that there was ambiguity or uncertainty as to the meaning of the relevant clauses in the Agreement and in particular in relation to the nature of Qantas’ obligations under the Agreement to make superannuation contributions in respect of Training Captains.
[22] We consider that the approach adopted by the Vice President and the conclusions
reached by him in relation to the question as to whether there was an ambiguity or uncertainty
in the Agreement were in line with relevant authorities and were correct.
[23] Having found that there was ambiguity or uncertainty as to the proper meaning of the provisions, the Vice President went on to consider whether the Commission should vary the Agreement to remove the ambiguity or uncertainty. This “second step” in the process involved a consideration as to the mutual intention of the parties at the time the Agreement was made[18]as well as other matters including the proper construction of the relevant
provisions of the Agreement. As the Vice President said in the decision, in this exercise the Commission “should endeavour to find the industrial purpose behind the disputed provision.”[19]This involved a consideration of the meaning of the relevant provision in context having regard to the words used by the parties to the Agreement and their mutual intention at the time the Agreement was made.
[18]See Beltana Highway Mining Pty Ltd PR932468. See also Re Tenix Defence Systems Pty Ltd Certified Agreement 2001-
[19]PR550766 at [25].
[24] In this regard, the Vice President considered a range of matters, including: the history of the relevant provisions in the Trust Deed, the Agreement and predecessor agreements;[20]the evidence that it was not the practice of Qantas to include the 240 hours allowance into superannuation contributions;[21]and the fact that the Association had only pressed its claim for
the inclusion of the 240 hours allowance since 2009 and not during the negotiations for the
Agreement or its predecessors.[22]
[20]Ibid at [26] - [30], [33].
[21]Ibid at [31].
[25] The Vice President was not persuaded that the intention of the parties was to include the 240 hours allowance in superannuation calculations. The Vice President said:
“[34]
In my view there was no intention to include the 240 hours pa allowance in superannuation calculations in 1995 when the trust deed was formulated, no such intention in 2001 when the allowance was re-titled a training allowance, no such intention when the wording of LOA 4 was included into EBA 5 in 2002-3 and no such intention when the wording was changed in the course of negotiating and finalising EBA 6 in 2007.
[2014] FWCFB 8199
[35] Further I do not regard the 240 hours pa allowance as a training allowance in the conventional sense.
[26] In the appeal, it was submitted by the Association that there was no evidence of objectively ascertainable mutual intentions of the parties at the time the Agreement was made. It was also submitted that there was not sufficient evidence of a common understanding between the parties in relation to the meaning of clause 21 of the Agreement.
[27] In support of its submissions, the Association referred to the evidence given before the Vice President by Mr K Sargeant, a former Senior Check Captain, regarding the change in the description of the 240 hours allowance from “check/admin allowance” to “training allowance”. This change was made in a letter of agreement between the parties entitled LOA4 in May 2001. It was suggested by Mr Sargeant’s evidence that the effect of the name change to training allowance was to reflect that term as used in the Trust Deed and attempt to align the superannuation entitlement of Short Haul Pilots with other Training Captains in Long Haul. Reference was also made to the evidence that the Association had raised the issue of the failure to pay superannuation in accordance with the Agreement since at least 2009 and that until that time the relevant pilots had assumed that superannuation payments were being made correctly by Qantas and in line with its obligations.
We have considered the evidence and submissions before the Vice President and the submissions in the appeal. We do not consider that it has been demonstrated that there was any error by the Vice President in the consideration of the evidence before him or in the conclusions he reached regarding the evidence. There was ample evidence and material before the Vice President to support a conclusion that, having regard to the historical context and the relevant documents, there was no intention by the parties to include the 240 hours allowance in superannuation calculations.
[28] Captain G Terrill, Senior Training Captain, gave evidence before the Vice President about the check/admin allowance which was paid to Senior Check Captains at Qantas[23]. This allowance was provided in order to address the inequity suffered by Senior Check Captains as compared with other pilots and training captains due to them missing out on additional earnings because their check duties required them to forgo flying opportunities. The 240 hours allowance was not treated as part of salary for superannuation purposes and had quite a different history and was of a different character compared with the supervisory allowance paid to Check Captains and Administrative Captains and the training allowance of 8.5% paid to Training Captains. The supervisory allowance and the 8.5% training allowance were part of the superannuable components of salary for the other (long haul) training captains.
[29] There was also extensive evidence before the Vice President regarding the
negotiations which led to Qantas and the Association entering into a letter of agreement (LOA 4) in May 2001 regarding terms and conditions for Senior Check Captains. This evidence included the statement and cross-examination of Mr Sargeant. It also included evidence from four other witnesses, who were on both sides of the negotiating table when LOA 4 was negotiated.[24]The evidence of these witnesses was to the effect that there was no claim by the
[2014] FWCFB 8199
Senior Check Captains or the Association at that time to change the character of the 240 hours allowance so as to require it to be included for superannuation purposes. It would have been a significant matter to make such a change as it would involve a significant increase in the superannuation obligations in relation to the relevant Training Captains.
[30] In these circumstances, and having regard to all the evidence presented in the proceedings, it was open to the Vice President to conclude that the change in the name of the 240 hours allowance was not intended to result in the inclusion of that allowance in superannuation calculations. We consider that the Vice President was correct in so finding and that a proper understanding of the provisions is that the allowance is not part of salary for superannuation purposes under the Agreement. It was also open to the Vice President in those circumstances to determine that the Agreement should be varied to remove the ambiguity or uncertainty and to give effect to the intentions of the parties in making the Agreement.[25]There were no other considerations which weighed against making such a variation. The variation reflected the intention of the parties in making the Agreement and the long-standing practice of Qantas.
[31] For all the above reasons, we do not consider that the Association has demonstrated that there is any error in relation to the decision of the Vice President or the order made varying the Agreement. The finding of ambiguity or uncertainty was made having regard to the relevant statutory provisions and the approach and principles adopted by the Vice President were consistent with previous Full Bench decisions. The finding that there was no mutual intention to include the 240 hours allowance in superannuation was appropriate given the history and context of the relevant provisions in the Agreement and the Trust Deed. In those circumstances, it was open to the Vice President to vary the Agreement to reflect the proper and intended construction of the relevant provisions.
[32] Having considered the various grounds of appeal and the submissions made, together
with the decision of the Vice President and the reasons given in that decision, we have
decided not to grant permission to appeal in this matter.
SENIOR DEPUTY PRESIDENT
Appearances:
C W Dowling of counsel appeared on behalf of the appellant.
R Kenzie QC with R Dalton of counsel appeared on behalf of the respondent.
Hearing details:
2014:
[2014] FWCFB 8199
Sydney.
September 25.
Printed by authority of the Commonwealth Government Printer
<Price code C, PR557879>
proceedings in the Commission.
Workplace Relations v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 and Codelfa Construction
Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337.
Ltd (2004) 134 IR 43 at [42] - [43].
2004 PR917548 at [54], [115] and CPSU v Telstra Corporation Ltd (2005) 139 IR 141 at 150 [32] and 154 [48].
airlines.
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