Australian and International Pilots Association v Qantas Airways Ltd

[2016] FCCA 2604

FEDERAL CIRCUIT COURT OF AUSTRALIA

AUSTRALIAN & INTERNATIONAL PILOTS ASSOCIATION v QANTAS AIRWAYS LTD [2016] FCCA 2604

Catchwords:
INDUSTRIAL LAW – Contravention of an industrial agreement – construction of the agreement – whether there was a breach of a dispute resolution clause – no contravention identified – application dismissed.

Legislation:

Acts Interpretation Act 1901 (Cth), s.46.

Fair Work Act 2009, ss.54, 186-188, 566, 570.

Cases cited:

City of Wanneroo v Australian Municipal, Administration, Clerical and Services Union (2010) 153 IR 426.

Applicant: AUSTRALIAN & INTERNATIONAL PILOTS ASSOCIATION

Respondent: QANTAS AIRWAYS LIMITED

File Number: SYG 656 of 2016

Judgment of: Judge Street

Hearing date: 10 October 2016

Date of Last Submission: 10 October 2016

Delivered at: Sydney

Delivered on: 10 October 2016

REPRESENTATION

Counsel for the Applicant: Mr A Slevin

Solicitors for the Applicant: Turner Freeman Lawyers

Counsel for the Respondent:

Mr F Parry

Mr R Dalton

Solicitors for the Respondent: Herbert Smith Freehills

ORDERS

1. The application is dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 656 of 2016

AUSTRALIAN & INTERNATIONAL PILOTS ASSOCIATION

Applicant

And

QANTAS AIRWAYS LIMITED

Respondent

REASONS FOR JUDGMENT

1. This is a matter within the Court’s jurisdiction under s.566 of the Fair Work Act 2009 (Cth) (“the Act”), in respect of which the applicant alleges particular contraventions of an industrial instrument, being the Qantas Airways Limited (Long Haul) Pilots Agreement 2015 (“EBA9”).

2. The dispute between the parties arose as a result of the promulgation of a Notice to Flying Staff No 074/15 issued on 8 September 2015. That document was purportedly issued in accordance with cl.18.1.12 of the said EBA9 agreement and identified that Qantas was required to promulgate the number and category of surplus flight crew members affected and the date the reduction should become effective.

3. The number was identified as 16, the category was identified as ‘A380 flight officer’, and the effective date was 8 October 2015. The promulgation then identified the names and seniorities of the flight crew members in the category and bases affected by the surplus, following which, the names were set out. The notice identified that pursuant to cl.8.1.12(c)(v), the respondent was proposing to redeploy the named pilots to bases and categories listed below. The notice identified that A380 first officers senior to those pilots listed above may bid for the redeployment positions and also identified that the A380 first officers whose names it published on the above list should indicate a preference of which category the particular officer wishes to be allocated to.

4. There was then a table set out identifying the category as either A330 captain or A330 flight officer. The A330 captain was to be based at Perth, and there were four numbered redeployment positions, following which, there was a bid period. The A380 flight officers would be based at Sydney, and there were 10 in the number of redeployment positions. The notice identified that any A380 first officer who wishes to exercise any entitlements available under cl.18.1.12(e)(iii) must do so in writing to a particular location by a particular time.

5. The parties agreed the following facts:

   1. The Qantas Airways Limited Pilots (Long Haul) Enterprise Agreement 2015 (EBA9) covers and applies to:

   (a) the Respondent (Qantas);

   (b) the Applicant (AIPA); and

   (c) all long haul pilots employed by Qantas who are members or eligible to be members of AIPA.

   2. All long haul pilots employed by Qantas (hereinafter 'pilots') are eligible to be members of AIPA.

   3. A reference to a clause in this statement is a reference to that clause in EBA9.

   4. This proceeding concerns the ‘reduction in numbers’ process (RIN) that commenced pursuant to clause 18.1.12 in September 2015 (2015 A380 F/O RIN).

   B. Terminology

   5. Each pilot is allocated to an aircraft type and may only work on one aircraft type at any given time.

   6. Pilots currently operate on the A380, A330 or B747 aircraft.

   7. Each pilot has a ‘status’.

   8. Each pilot has a ‘category’. A category is a pilot's status on an aircraft type.

   9. Each pilot also has a 'base' which is a physical location. A380 F/Os were allocated at the relevant time to either Qantas’s Melbourne or Sydney base.

   C. Seniority

   10. Seniority is a key concept in EBA9.

   11. Qantas publishes a seniority list each year pursuant to the provisions of EBA9.

   12. For the purposes of this proceeding, the relevant seniority list is the ‘Q’ seniority list that was published in July 2015 (Seniority List).

   13. All pilots have a seniority number.

   14. Each pilot is listed on the Seniority List alongside his or her seniority number. The Seniority List starts at number 1 for the most senior pilot and at the relevant time continued to number 2176 for the most junior pilot.

   15. An award is an allocation that a pilot bids for (i.e. wants) while an assignment is an allocation that the pilot has not bid for (i.e. one that is imposed by Qantas).

   16. 'Seniority order' is defined at clause 16.1.9 as:

   “Seniority order in relation to an offer, award or assignment means, unless otherwise specified:

   (a) for an offer or award, from most senior to least senior;

   (b) for an assignment, from least senior to most senior (‘reverse seniority’)”.

   17. Clause 16.4(a) provides that, without limiting any other provision of EBA9 and provided that in each case the pilot is sufficiently qualified to undertake the training or duty required, seniority will determine the order of selection of pilots for:

   (a) promotion;

   (b) transfer to a base (or posting);

   (c) transfer to, and status on, an aircraft type; and

   (d) demotion or termination if redundancies occur.

   D. Supervisory appointments

   18. Clause 25 deals with the appointment of supervisory pilots.

   19. Supervisory pilot means a pilot appointed to a supervisory position. Supervisory pilots are classified by Qantas under EBA9 as either administrative or training supervisories.

   20. The appointment of a pilot to a supervisory position is at Qantas’s discretion and does not depend on seniority.

   21. Supervisory appointments are usually made for an initial two year term and may be extended at the discretion of Qantas.

   22. Supervisory pilots remain on the Seniority List and have seniority numbers.

   23. Other than as provided for by clause 7.2, the terms and conditions of employment of all pilots, including pilots holding supervisory appointments, are as contained in EBA9.

   24. Supervisory pilots may also be subject to separate contractual arrangements, provided that in the event of any conflict with EBA9, EBA9 prevails.

   E. 2015 A380 F/O RIN

   25. At some time prior to September 2015, Qantas determined to reduce the number of pilots in the A380 F/O category by 16 across its Sydney and Melbourne bases.

   26. The process for a RIN is set out at clause 18.1.12.

   27. Notice to Flight Staff No 074/15 issued on 8 September 2015 (the NTFS) promulgated information required about the 2015 A380 F/O RIN, a copy of which is attached and marked “A”.

   28. EBA9 provides that a reduction is “effected in reverse order of seniority of pilots in that category at the base” [clause 18.1.12(d)].

   29. The NTFS named 16 pilots in the A380 F/O category across Qantas’s Sydney and Melbourne bases starting with the most junior pilot in the category, Sunderland (Q Sen# 1269). The most senior pilot names was Ouwerkerk (Q Sen# 1144).

   30. The NTFS did not name two pilots Taylor (Q Sen# 1226) and McDonogh (Q Sen# 1200). Both Taylor and McDonogh held (and continue to hold) supervisory positions as Type Rated Instructors (‘TRI-FO’).

   31. As a result of 2015 A380 F/O RIN, six pilots were assigned to a lower category.

   32. Those six pilots were:

   (a) F/O Walker (Q Sen# 1214);

   (b) F/O Clewett (Q Sen# 1215);

   (c) F/O Cantor (Q Sen# 1216);

   (d) F/O Cameron (Q Sen# 1229);

   (e) F/O Hindley (Q Sen# 1231); and

   (f) F/O Sunderland (Q Sen# 1269).

   33. F/O Taylor (Q Sen# 1226) was not assigned to a lower category.

   F. Displacement

   34. A pilot included in the NTFS was entitled to, subject to clause 16, use seniority to displace the most junior pilot in any category and base.

   35. In the 2015 A380 F/O RIN, F/O Clewett sought to displace F/O Taylor.

   36. Qantas refused to permit F/O Clewett to use his seniority to displace F/O Taylor.

   G. The effect of the reduction on Walker and Clewett

   37. EBA9 provides different hourly rates of pay for each category.

   38. F/O Walker and F/O Clewett were assigned to the A330 F/O category. Both have more than 12 years’ service with Qantas.

   39. The hourly rate of pay for A330 F/O with 12 years of service to Qantas is currently $183.95. The hourly rate of pay for A380 F/O with 12 years of service to Qantas is currently $202.83.

   40. On average, an A330 F/O earns approximately $59,000 per annum before tax less than an A380 F/O. There is also a corresponding difference in superannuation contributions.

6. The parties agreed a statement of issues, relevantly, as follows:

   1. Whether clause 18.1.12 of the Qantas Airways Limited Pilots (Long Haul) Enterprise Agreement 2015 (EBA9) had any application to pilots appointed by Qantas to a supervisory position.

   2. Whether Taylor and McDonogh were in the A380 F/O category.

   3. Whether a pilot appointed by Qantas to a supervisory position could be displaced by a pilot exercising his or her right pursuant to clause 18.1.12(e)(iii) of EBA9.

7. The pleading and the submissions of the parties identify that the applicant was seeking to pursue relief in relation to both a particular individual said to have been disadvantaged by the alleged breach, as well as a penalty.

8. The industrial agreement had been the subject of a decision of the Fair Work Commission (“the Commission”) on 19 August 2015, identifying that the requirements of ss.186, 187 and 188 of the Act that were relevant for the application for approval had been met. That decision identified that the agreement was approved by the Fair Work Commission, and in accordance with s.54(1) of the Act, would operate from 26 August 2015 with an expiry date of 30 June 2019.

9. Relevantly, the agreement included a dispute resolution clause as follows.

   47 – Dispute Resolution

   47.1 Scope

   This clause 47 applies where any dispute arises about any matters arising under this Agreement or in relation to the National Employment Standards.

   47.2 Dispute settlement procedure

   Note: For the purpose of this clause 47.2, 'party' means the Company and pilot(s) covered by this Agreement.

   It is important that pilots and the Company commit to resolving any disputes that may arise, however if such a dispute arises the following procedure must be followed:

   47.2.1 The matter will first be discussed by the affected pilot(s) and Fleet Manager.

   47.2.2 If not resolved, the matter will be discussed by the affected pilot(s) and the Chief Pilot (or delegate).

   47.2.3 Should an issue remain unresolved, it may be referred by either party to the FWC to resolve through private conciliation and/or arbitration.

   47.2.4 Subject to the provisions of this clause and clause 46.1, the parties to the dispute will accept the outcome of any arbitration.

   47.2.5 If a dispute is referred to the FWC for resolution, the FWC can take any or all of the following actions as it considers appropriate to resolve the dispute:

   (a) convene conciliation conferences of the parties or their representatives at which the FWC is present;

   (b) require the parties or their representatives to confer among themselves at conferences at which the FWC is not present;

   (c) request, but not compel, a person to attend proceedings;

   d) request, but not compel, a person to produce documents;

   (e) where either party requests, conciliate or make recommendations about particular aspects of a matter about which they are unable to reach agreement; and

   (f) subject to clause 46.1, where the matter(s) in dispute cannot be resolved (including by conciliation) and one (1) party or both request, arbitrate or otherwise determine the matter(s) in dispute.

   47.2.6 The FWC must follow due process and allow each party a fair and adequate opportunity to present his or her case.

   47.2.7 Any determination by the FWC under clause 47.2.5(f) must be in writing if either party so requests, and must give reasons for the determination.

   47.2.8 Any determination made by the FWC under clause 47.2.5(f) must not require a party to act in contravention of an applicable industrial instrument or law. Where relevant, and circumstances warrant, the FWC will consider previous decisions of the FWC.

   47.2.9 The FWC must not issue interim orders, 'status quo' orders or interim determinations.

   47.2.10 A pilot may request to have a representative of his or her choice, which may include a representative from the Association (or a representative of a Registered Industrial Organisation of which they are a member), represent them at any stage of this dispute settlement procedure. Any such representative nominated by the pilot pursuant to this dispute resolution procedure will be allowed access to the pilot on Company premises, or such other place as may be agreed to between the Company and the pilot, so that relevant information and instructions can be obtained.

   47.2.11 While the parties attempt to resolve a dispute pilots must continue to work as normal in accordance with this Agreement and the pilot's contract of employment unless a pilot has a reasonable concern about imminent risk to safety or health.

   47.2.12 No party will be prejudiced as to the final settlement by the continuance of work in accordance with this clause 47.2.

   47.2.13 Where a bona fide safety issue is involved, the Company and the appropriate safety authority must be notified concurrently or at least a bona fide attempt made to so notify the authority.

10. Ordinarily, parties that agree to a dispute resolution regime should be held to that regime. More importantly, the Commission is obviously an authority that has considerable familiarity and expertise in relation to the particular enterprise agreement that it approved. Further, I accept the respondent’s submissions that the powers of the Commission, whilst not including the penalty procedure, would have permitted the granting of a relief of the kind contended for by the applicant if the applicant was correct in respect of its construction.

11. Ordinarily, it is not appropriate, for parties to bring proceedings for a penalty in circumstances where there is a genuine construction dispute. It is apparent on the communications between the parties in the present case that there was a genuine construction dispute in relation to a particular provision. In those circumstances, to pursue proceedings in this Court, on one view, is a breach of the dispute resolution clause, and arguably, a breach of the Act, or otherwise, unreasonable conduct potentially enlivening the Court’s considerations under s.570 of the Act.

12. However, in the present case, the respondent, although having raised with the applicant that it should have followed the dispute resolution procedure by letter dated 29 September 2015, does not seek to suggest that a s.570 of the Act issue should be dealt with in the present case. Relevantly, in this regard, this is an agreement that the parties have in the past renegotiated and will in the future renegotiate. To bring proceedings before this Court for a penalty in those circumstances in respect of a construction dispute, rather than comply with the agreed dispute resolution regime, on its face would be unreasonable.

13. That said, in respect of the construction dispute, the Court has had regard to the agreement as a whole and in particular the relevant provisions in cls.1-5, 7, 9, 13.1- 13.7, from the definitions, the definitions of hourly rate(s) of pay, assignment time available pilot, base, bid line, bid line pilot, bid period, pattern, pattern line, pattern line holder, pilot, posting, pre‑allocated flying, promulgate, supervisory pilot, time available pilot, TRI-SO, cls.15.9-15.10, 16.1-16.4, 16.6, 17.1-17.5, 18.1.12, 25, and 33.3. These specific provisions comprise approximately 36 pages, which are accordingly too voluminous to incorporate or set out in this judgment. The Court has had particular regard to each of those provisions. It is, however, convenient to set out the following terms: 16.6.1; 17.4; and 18.1.2.

    16.6.1 Supervisory check or training appointments

    The selection of a pilot to a supervisory, check or training appointment is at the discretion of the Company and does not depend on seniority.

17.4 Category of pilot according to aircraft type

The category of a pilot is the pilot's status on an aircraft type and is ranked in the following descending order:

(a) A380 Captain;

(b) B747 Captain;

(c) B787 Captain

(d) A330 Captain;

(e) B767 Captain;

(f) A380 F/O;

(g) B747 F/O;

(h) B787 F/O;

(i) A330 F/O;

(j) B767 F/O;

(k) A380 S/O;

(l) B747 S/O;

(m) A330 S/O;

(n) B787 S/O.

18.1.12 Reduction in numbers at a base

(a) Prior to a reduction in numbers, the Company, in consultation with the Association, will consider all reasonable alternatives including natural attrition, secondment to other operators, redeployment, LWOP and voluntary redundancies.

(b) Subject to clause 18.1.12(a), where a reduction in numbers is required at a base and:

(i) there are vacancies in the same category at another base; and

(ii) there will be no change in the overall pilot numbers in the category across all bases, the Company will complete the followings steps:

(iii) award from letters of preference, in seniority order, a base transfer to pilots in that category; and

(iv) where the above awards results in residual vacancies in the category at other bases, award from letters of preference, in seniority order, the residual base transfers to pilots in the category until all vacancies or bids by pilots in the category are satisfied.

(c) Subject to clauses 18.1.12(a) and 18.1.12(b), at least 30 days prior to a reduction in numbers at a base in accordance with clauses 18.1.12(d) and 18. 1. 12(e), the Company will promulgate the following information:

(i) the number and category of surplus pilots;

(ii) the date(s) from which reductions will become effective;

(iii) the names of pilots in the category at the base affected by the surplus;

(iv) bases where vacancies in the category are available or will become available; and/or

(v) if applicable to the circumstances, bases and categories where the Company is proposing to re-deploy surplus pilots.

(d) The reduction will be effected in reverse order of seniority of pilots in that category at the base except that a more senior pilot in the category may bid for any vacancy in any base or any base and/or category which is notified as available pursuant to clause 18.1.12(c).

(e) A pilot included in the promulgation issued under 18.1.12(c) may, subject to clause 16:

(i) bid for any advertised vacancy;

(ii) if applicable, bid for any notified base and/or category which is promulgated as available for re-deployment pursuant to clause 18.1.12(c)(v); or

(iii) exercise his or her seniority to displace the most junior pilot in any category and base provided the election to displace is QAL LHP EA2015 - Allocation to Bases, Postings and Localised Lines 52 made at or before the promulgated date or dates specified in clause 18.1.12(c) and provided he or she will not displace a pilot in a higher status unless the pilot affected by the reduction would otherwise be demoted to a lower status or have his or her services terminated.

1. Mr Slevin of Counsel on behalf of the applicant contends that the definition of “pilot” as well as the categories of a pilot and the pilot seniority list are of material significance in understanding the proper construction of cl.18.1.12(c). The effect of the applicant’s construction is to the effect that all pilots in a particular category should be included in relation to the mechanism identified under cl.18.1.12(c) to deal with a management surplus. The applicant contends that this means that the category must include supervisory pilots.

1. It is common ground the two supervisory pilots were not included in the reduction of numbers promulgated on 8 September 2015. The applicant contends that the promulgation and bid process identified in cl.18.1.12 can be applied by including all pilots in the relevant category, notwithstanding that some may be allocated as supervisors. The consequence of that construction and bid process is the potential need to retrain further supervisors. Further, that construction does not adequately take into account the work done by cl.15.9, which identifies a cascading number of steps that the company can take where management is of the view that there are surpluses.

2. Those cascading steps include, in 15.9(g), a reduction in numbers, which is the procedure activated by cl.18.1.12. It is apparent from the promulgation in the present case that management was of the view that there was a surplus of pilots in the category A380FO, but that the company did not regard there as being a surplus in relation to those A380FO pilots who were supervisors. The principles relating to the construction of an industrial agreement are not in dispute and, relevantly, the Court should first seek to understand the agreement by reference to the plain meaning of the terms read in context.

3. The Court can, where there is then demonstrated ambiguity or uncertainty, have regard to extrinsic material to aid the interpretation. French J as he then was in City of Wanneroo v Australian Municipal, Administration, Clerical and Services Union (2010) 153 IR 426 at [53] said as follows:

   The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words.  As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed.  Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction.  It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed.  It may extend to ‘… the entire document of which it is a part or to other documents with which there is an association’.  It may also include ‘… ideas that gave rise to an expression in a document from which it has been taken’ – Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services Union v Treasurer of the Commonwealth of Australia (1998) 80 IR 345 (Marshall J).

4. Whilst French J as he then was, was referring to the award, similar considerations apply to an enterprise agreement. A contextual reading by the Court is not one in which the Court is free to give effect to what it considers would be fair or just regardless of what is written. The Court should not apply an over-pedantic approach and the exercise is ultimately one of interpreting the agreement. Further, the Court is required to have regard to the fact that the instrument being interpreted is a negotiated instrument.

5. In Wanneroo, the Court said at [57]:

   It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration.  Its words must not be interpreted in a vacuum divorced from industrial realities – City of Wanneroo v Holmes (1989) 30 IR 362 at 378-379 and cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned – see eg Geo A Bond and Co Ltd (in liq) v McKenzie [1929] AR 499 at 503-4 (Street J). It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):

   ‘Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language.  They bind the parties on pain of pecuniary penalties.’

6. The Court notes that an enterprise agreement approved pursuant to the Act is not an instrument made by the Commission and does not fall within the meaning of a test set out in s.46 of the Acts Interpretation Act 1901 (Cth). The plain meaning of the term “management of surpluses” in cl.15.9 is clearly intended to give industrial flexibility to the respondent in determining whether or not there were surpluses that required it to address a particular difficulty in respect of maintaining a viable commercial business.

7. I accept the submissions of the respondent that it is for the respondent to determine whether there are surpluses that engage the escalating procedure under cl.15.9. There is no suggestion in the present case that there was a surplus of supervisors. To require the company to go through the reduction in numbers process by including supervisors in those circumstances makes little sense and gives no real work to the reference surplus in cl.18.1.12, which is clearly a reference back to the management concept of surpluses identified in cl.15.9.

8. Further, the concept of a company proposing to redeploy surplus pilots could have no application if, in the present case, the company was required to include supervising pilots in the category of A380 flight officers that the company clearly in the present case did not intend to redeploy at all and were not identified as being surplus by management. In substance, the applicant’s construction was to incorporate into cl.18.1.12(c) an inflexibility by reference to the pilot seniority list and category, so as to create an artificial requirement to include persons who were not surplus and who were not identified by management as surplus and who the company did not propose to redeploy.

9. On the plain meaning of the terms read in that context, the reference to “surplus pilots” were surplus pilots as determined by management to be surplus. The construction adopted by the Court is also consistent with a practical working of the industrial agreement as a whole. Further, the construction advanced by the applicant ignores the important role of management under the agreement in determining a surplus of pilots. The applicant’s construction assumes a false state of affairs by management that in the present case there is a surplus of supervising pilots. On its proper construction the clause does not require the respondent to adopt a false state of affairs which management has not determined. Further, the applicant’s construction would potentially give rise to the need for retraining or training supervising pilots at considerable cost and does not accord with the industrial context of the agreement as a whole.

10. In the present case, management did not identify supervising pilots to be surplus. On its proper construction there was no obligation upon the applicant to include supervising pilots in the promulgation of a notice under cl.18.1.12(c). There was no contravention by the respondent of cl.18.1.12(c). In these circumstances, it was not necessary on the construction the Court has accepted to include the supervisory pilots as they were not identified as surplus pilots by management, and there was no contravention of cl.18.1.12(d).

11. In relation to the third alleged contravention of cl.18.1.12(e), there was no requirement for the applicant to include the two supervisors in A380FO flight officers and, accordingly, the purported bid was of no relevant effect and does not give rise to any contravention of the agreement by the respondent.

12. In response to the statement of issues, the answer to question 1 is that the notice did not apply to a supervisory position in the present case. The answer to question 2 is no. The answer to question 3 in the present case is no. There were no formal orders by the Court for a separate determination of questions and the substance of the issues raised by the parties has been addressed above.

13. The application is dismissed.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Judge Street

Date: 10 November 2016