"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)-New South Wales Branch v Berri Limited

[2017] FWC 514

[2017] FWC 514

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.739 - Application to deal with a dispute

"Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU)-New South Wales Branch
v
Berri Limited
(C2016/5808)

DEPUTY PRESIDENT LAWRENCE SYDNEY, 27 JANUARY 2017

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)].

Introduction

[1] On 27 September 2016 the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) lodged an application for the Fair Work Commission (the Commission) to deal with a dispute in accordance with the dispute settlement procedure in an agreement pursuant to s.739 of the Fair Work Act 2009 (the Act).

[2] The Respondent is Berri Limited (Berri) in respect of its fruit juice processing plant in Leeton, New South Wales.

[3] The relevant agreement is the Berri Pty Limited (Leeton) Enterprise Agreement 2014-2017 [AE411150] (the Agreement).

[4] Berri is now a subsidiary of the Lion group of companies.

[5] The dispute is about the non-payment of a Laundry Allowance to employees, who in the AMWU’s submission should have been paid it, pursuant to the Agreement. Instead, it is said that only one employee since about 2007 has received the allowance. Employees are required to launder their own work clothes and Berri does not provide laundering facilities.

[6] In correspondence on 12 September 2016 to the AMWU, Ms Michelle Wicks, on behalf of Berri, stated that her research had revealed that the allowance appeared to have been absorbed into the wage rate in EBA negotiations in about 1995. Only Stephen Alexander, who had 35 years’ service received the allowance, and continued to receive the allowance in a grand-fathered arrangement. The matter had not been raised in previous EBA negotiations.

Commission Proceedings

[7] Dispute proceedings between the AMWU and Berri were also before me in relation to the restructuring and the resultant redundancies at Berri’s Leeton and Smithfield plants (C2016/4989). It was during one of these conferences that the AMWU’s allegation about the non-payment of the Laundry Allowance came to light.

[8] The AMWU then lodged this application which was listed for conference on 28 September 2016.

[9] The matter was not resolved. Consequently, Directions for the filing of submissions and evidence were issued and it was set down for hearing on 8 November 2016.

[10] Ms L. Saunders appeared for the AMWU. Mr L. Izzo together with Ms N. O’Halloran and Ms M. Wicks appeared for Berri. Mr Izzo was granted permission to appear, pursuant to s.596 of the Act.

[11] The AMWU relied on written submissions and witness statements from:

● Brad Hattenfels, AMWU Organiser (Exhibit S3)
● Shane Olrick, AMWU delegate (Exhibit S2)

[12] Berri relied on written submission and witness statements of:

● Michael Burton (Exhibit I3)
● Pauline Smith (Exhibit I2)
● Mark Harrison (Exhibit I5)
● Alan Wescombe (Exhibit I4)

Berri filed a witness statement by Kerry Davy but did not seek to tender it. I marked it Commission 1 and allowed both parties to cross-examine him.

[13] Berri also lodged an application to vary the Agreement in order to remove an ambiguity or uncertainty. This application was heard together with the AMWU dispute notification.

Relevant Agreement Provisions

[14] The Agreement was made by me on 17 November 2014. It operated from 24 November 2014 and has a nominal expiry date of 1 February 2017. The Agreement incorporates the Food, Beverage and Tobacco Manufacturing Award 2010 (MA000073) (the Award) but will prevail to the extent of any inconsistencies.

[15] Clause 10, “Rates of Pay, Classification” deals with rates of pay and provides:

“10.1 Production, Distribution & Laboratory Employees shall be paid according to the weekly rates set out in Attachment 1 - Classification and Wage Structure.

10.2 These rates are inclusive of all skills and licence requirements for the particular classification, all special rates and disabilities except cold room rates.”

[16] Clause 26, “Protective Clothing” requires Berri to provide protective clothing which remains the property of the company. Clause 26.6 provides:

“It is the responsibility of the employee to ensure that the protective clothing is kept clean and in good repair”.

[17] Clause 34 “Avoidance of Disputes” provides for the settlement of disputes in relation to “grievances” which are defined as including:

“. . . a dispute about any matters arising under the Agreement and in relation to the National Employment Standards.”

[18] Clause 34.6 provides for arbitration by the Commission if the dispute cannot be settled.

[19] Classification names and wage rates are contained in Attachments 1 and 2. Attachment 3 “Allowance Structure” contains a number of additional disability and reimbursement allowances. One of these is “Laundry Allowance” which, appears to have moved with wages and, at 1 February 2016 was $9.44. It is not stated whether this is a weekly or hourly payment.

[20] Earlier versions of the Agreement were also tendered. There appears not to be relevant different provisions in the 2011/2014, 2005/2008, 2003/2005, 2001/2003, or 1999/2001 versions.

[21] The 1996/1998 Sunburst Foods Limited – Leeton Certified Agreement (AG797035 PR797035)(the 1996 Agreement) where the employer was “Sunburst Foods” has the following additional provision in Clause 15 “Protective Clothing”:

“(d) A laundry allowance refer (sic) attachment per week will be paid to all permanent employees issued with Company uniforms.”

The Laundry Allowance of $4.50 per week is contained in Attachment 1.

The AMWU’s Case

[22] The AMWU submits that Attachment 3 of the Agreement clearly provides for a Laundry Allowance and Berri has failed to pay it. It must pay the allowance, which is $9.44 per week, to employees who are required by Berri to wear protective clothing and are required to launder them.

[23] In accordance with the principles summarised in The Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd[2014] FWCFB 7447 (Golden Cockerel), it is submitted that the payment of the allowance is clear on the face of the Agreement. There is no ambiguity in the Attachment. There was no mutual intention of the negotiating parties that the allowance not be paid. Mr Olrick says that two employees continued to receive the allowance.

[24] It is submitted that there is no indication in the Agreement that the allowance is absorbed into the base rates of pay. Clause 10.2, quoted above, says that the rates include “special rates”. The Laundry Allowance is not a special rate and is not covered by this phase. That is why special rates, as usually defined in the Award, are not contained in the Attachment. It is submitted that this shows an intention of the parties that the allowance be paid.

[25] The evidence shows that the nature of the work requires that the employees’ work clothes would need to be frequently laundered. No laundry facilities are provided by Berri. Therefore there is an obvious cost to employees of laundering the clothes themselves or having them laundered.

[26] It is submitted that the overall context of the Agreement indicates that the allowance is payable weekly. Where allowances are not payable weekly the Agreement expressly says so.

[27] The AMWU seeks orders that Berri must pay the allowance and that there be an identification of current and former employees and calculation of the alleged underpayments. The proposed order then seeks that these payments be made within seven days.

[28] Shane Olrick, who had been on site for 12 years, gave evidence that three sets of pants and shirts were provided by Berri “a bit less than once a year”. He washes his clothes at home each day. The second employee, who had received the allowance, Steve Smith, left as a result of redundancy in September 2016. He, and other delegates, became aware of the non-payment of the allowance in late 2015 and then raised it with his organiser, Brad Hattenfels. He says that Berri never mentioned that the allowance had been absorbed into the wage rates in any of the last four or five enterprise agreement negotiations that he has been involved in.

[29] Brad Hattenfels says that his understanding, in the negotiations for the 2014-2017 Agreement, was that the Agreement clearly specified the payment of the allowance. He first heard “about the supposed 1999 sick leave cash-out deal” in October 2015. He then raised the issue with Berri. An exchange of emails then took place with the then site manager. There is no mention of the Laundry Allowance in any of the documents/notes tendered arising from the 2014 negotiation.

[30] In its written submission in reply, the AMWU submits that Berri’s position means ignoring the plain words of the Attachment. The Agreement should be read as a whole and its full content be given practical effect.

[31] The AMWU also submits that the removal of the Laundry Allowance reference from the body of the 1999 Agreement could have a number of explanations, including an error. In any event, its absence is not enough to over-ride the words of the Attachment. It notes that the Laundry Allowance was varied from year to year.

[32] The AMWU refutes the Berri submission that the application is a breach of the “No Extra Claims” clause. The AMWU is not seeking to change the terms of the Agreement but rather resolve a dispute about what the Agreement actually means.

[33] The AMWU says that the evidence about the alleged 1999 trade-off agreement is confused. Kerry Davy, for example, said that new employees would not get the Laundry Allowance.

[34] In any event it is submitted that any 1999 side deal cannot bind the negotiations in 2014.

Berri’s Case

[35] Berri submits that there is no entitlement to the Laundry Allowance pursuant to the Agreement.

[36] It is submitted that there is an ambiguity in the Agreement arising from Attachment 3. The intent of Berri’s application is to remove the ambiguity by deleting any reference to a Laundry Allowance.

[37] Berri points out that there is no specific reference in the body of the Agreement to an entitlement to a Laundry Allowance. The Attachment causes confusion but it does not define the application of the allowance or even whether it is weekly, hourly or monthly. All the other allowances e.g. boiler, cool-room, meal, tool, first aid etc. are specifically provided for in clauses of the Agreement.

[38] It is submitted that the deletion of the entitlement following the 1996 Agreement, as I have noted above, is supportive of Berri’s submission.

[39] The evidence of Michael Burton (site manager 1991-2002) was that the allowance was traded off for the pay-out of sick leave accruals in the 1999 negotiations. There was a one off pay-out so that entitlements were reduced to four weeks. Kerry Davy, a supervisor, agreed. Pauline Smith, the payroll officer at the time confirms the timing of the payment ceasing.

[40] It is submitted that the retention of the reference to the allowance in the Attachment was an error. The two employees who continued to receive the allowance appear to have been considered to have particularly dirty work. Mark Harrison, who held various positions at the factory in the 1990s, confirmed this was the case.

[41] Berri further submits that the granting of the AMWU claim would be contrary to the “No Extra Claims” clause of the Agreement.

[42] The fact that the AMWU did not raise the issue for over 15 years is an indication that it was conceded that the entitlement to the allowance had been withdrawn. The evidence establishes that there was a mutual intention that the allowance not be paid.

[43] The Commission should exercise its discretion to vary the Agreement, as from its operative date, 24 November 2014, to remove the reference to a Laundry Allowance in Attachment 3.

Jurisdiction of the Commission

[44] There was no disagreement between the parties as to the Commission’s jurisdiction to deal with the dispute and to arbitrate.

[45] The Commission’s jurisdiction to arbitrate arises from a combination of the Dispute Settlement Clause 34 and ss. 738, 739 and 595 of the Act. Clause 34 is drafted in broad terms and deals with disputes about a matter arising under the Agreement or the NES. The nature of the power to arbitrate derives from the dispute settlement clause. However, in exercising that power the Commission has a broad power, pursuant to s.595, to settle the dispute by making orders it considers appropriate.

[46] The relevant sections provide:

“595 FWC’s power to deal with disputes

(1) The FWC may deal with a dispute only if the FWC is expresslyauthorised to do so under or in accordance with another provision of this Act.

(2) The FWC may deal with a dispute (other than by arbitration) as it considers appropriate, including in the following ways:

(a) by mediation or conciliation;
(b) by making a recommendation or expressing an opinion.

(3) The FWC may deal with a dispute by arbitration (including by making any orders it considers appropriate) only if the FWC is expresslyauthorised to do so under or in accordance with another provision of this Act.

(4) In dealing with a dispute, the FWC may exercise any powers it has under this Subdivision.

(5) To avoid doubt, the FWC must not exercise the power referred to in subsection (3) in relation to a matter before the FWC except as authorised by this section.”

“738 Application of this Division

This Division applies if:

(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or
(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or
(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or

(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.

739 Disputes dealt with by the FWC

(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.

(2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or
(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

(5) despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6) The FWC may deal with a dispute only on application by a party to the dispute.”

[47] In upholding my decision in a dispute between the CFMEU and Lend Lease, a recent Full Bench decision, Lend Lease Project Management and Construction (Australia) Pty Limited v Construction, Forestry, Mining and Energy Union ([2015] FWCFB 1889) has confirmed the broad discretion given to the Commission to arbitrate pursuant to a dispute settlement clause:

‘[22] No relevant limitation on the scope of the Commission’s power to arbitrate a dispute under clause 19 may be identified in the terms of clause 19 itself. It is not necessary to explore the outer limits of what might constitute a “dispute” for the purpose of clause 19, since there was no issue that the dispute concerning Mr Genovese’s return to work was one to which clause 19 applied. We consider that an unrestricted power to arbitrate a dispute involves the conferral on the decision-maker of a broad discretion. Lend Lease accepted in its submissions that the power exercised by the Deputy President was discretionary in nature and that (leaving aside for present purposes Lend Lease’s jurisdictional ground of appeal based on alleged inconsistency with State OHS laws), it was necessary for it to demonstrate error of the type identified in House v The King (1936) 55 CLR 499 at 504-5.’.”

[48] Of course, it is necessary to properly characterise the dispute. Vice President Watson in Maritime Union of Australia v ASP Shipping Management Pty Ltd[2015] FWC 4523 summarised the approach taken in various decisions:

“[18] In the Private Arbitration Case, the High Court made it clear that the power of arbitration under a dispute settlement clause is a power conferred by the parties under their agreement. The Commission's jurisdiction is therefore derived from the dispute resolution term in the relevant workplace instrument, and qualified by any limitation in the agreement. This notion is reflected in s.739 of the Act.

[19]In Re PKIU; Ex parte Vista Paper Products Pty Ltd Gaudron J (with whom Brennan, Dawson and Toohey JJ relevantly agreed) noted that:

‘…an industrial dispute is not necessarily fixed and definite, either in terms of its subject-matter or in terms of the parties to it; a dispute “may be diminished or ended or enlarged or altered during ... proceedings in the Commission” (R v Bain; Ex parte Cadbury Schweppes Australia Ltd (1984) 159 CLR 163, per Murphy J at p 168) or, for that matter, at any stage during the course of the dispute itself’

[20]A Full Bench has observed thatalthough that comment was made in the context of an “industrial dispute” within the meaning of s.4 of the Industrial Relations Act 1988, it is equally applicable to a dispute notified pursuant to a dispute settlement procedure in a certified agreement.

[21]In Maritime Union of Australia v Australian Plant Services Pty Ltd, Lacy SDP expressed the importance of characterising a dispute in this way:

‘Parliament has authorised the Commission to exercise powers under the agreement to settle disputes over the application of the agreement and, accordingly, its powers are limited to disputes of that kind. Therefore it is necessary for the Commission, in each case where it is asked to deal with the matter arising under the disputes settling procedure in an agreement, to ascertain the character of the dispute before it in order to determine whether the matter is a dispute over the application of the agreement, and, importantly, the character of the dispute is distinguishable from the order that may be made in settlement of the dispute.’

[22]These observations have been approved by Full Bench decisions of the Commission including Goodman Fielder Consumer Foods Limited v CEPU, Seven Network (Operations) Limited v CPSU, and United Firefighters’ Union v Metropolitan Fire and Emergency Services Board.

[23]It is therefore necessary to have regard to the nature of a dispute said to arise under the terms of the agreement having regard to the original notification and the relevant factual circumstances as they evolve through the process of conciliation and arbitration of the dispute. Such a broad approach was endorsed by a Full Bench of the Australian Industrial Relations Commission in the case of Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Holden Limited where the following is stated:

‘[45] A dispute referred to the Commission must be properly characterised before powers conferred by a dispute settlement provision in a certified agreement are exercised. This is necessary in order to determine whether the dispute is ‘over the application of the agreement’ within the meaning of s.170LW of the WR Act. As noted by a majority of the Full Bench in Automated Reading Services (AMRS) v ASU, this expression has not been judicially considered. The majority went on to observe that:

“A relationship between the provisions of the relevant agreement and the subject matters in dispute would appear to be an essential element in the identification of any dispute over the application of the agreement. ...”

[46] We adopt these observations. Further, in our view the expression should not be narrowly construed. In this context we agree with the observation of the Full Bench in Shop, Distributive and Allied Employees Association v Big W Discount Department Stores that:

“...what comprises a dispute over the application of the agreement should not be narrowly construed; to do so would be contrary to the notion that certified agreements are intended to facilitate the harmonious working relationship of the parties during the operation of the agreement.”

[47] In characterising the nature of the dispute in this matter the Commission is not confined to the dispute notification document. The entire factual background is relevant, including matters such as the submissions advanced. In this context we note that in TWU v Mayne Nickless Ltd the Full Court of the Federal Court held that in determining whether an application calls on the Commission to exercise judicial, as opposed to arbitral, power ‘a court should review the entire factual background to properly characterise the claim and the power sought to be invoked’

[24]In the United Firefighters’ Union case, referred to above, a Full Bench considered the scope of a dispute over a consultation provision. It said:

“Policies which are not dealt with in the Agreement are subject to the consultation processes in clause 9. Although the consultation processes end with a disputes resolution clause, we are of the view that on its proper construction, that clause concerns disputes over the consultation process under the clause, rather than disputes over matters which are subject to consultation.”

[25]I am satisfied that the dispute that has evolved during the course of discussions, conciliation and arbitration extends to consultation. Through the dispute settlement processes there has been a consideration of consultation obligations. Insofar as there remains a dispute about the application of the consultation clause I consider that the Commission has jurisdiction to deal with it. Hence the Commission has jurisdiction to consider those aspects of the dispute summarised in paragraph 2(a) and (b) of the MUA’s formulation set out above.”

[49] I am satisfied that the dispute falls within Clause 34 of the Agreement. It is about whether or not Laundry Allowance which is contained in Attachment 3 of the Agreement is properly payable to employees at the Leeton plant who are required to wear and keep clean, as required by clause 26, their protective clothing which is provided by Berri.

[50] As a matter of discretion, I decided to deal with Berri’s application to vary the Agreement at the same time.

Approach of the Commission

[51] The parties also agreed on the approach to be taken by the Commission to the construction of Agreements and the settlement of disputes about the interpretation of Agreements.

[52] The 2014 Full Bench decision in Australian Meat Industry Employees Union v Golden Cockerel Pty Ltd (2014) FWCFB 7447 (Golden Cockerel) sets out the Commission’s approach to the interpretation of agreements. I set out below the relevant passages which refer to the relevant authorities:

“General Approach

19. The general approach to the construction of instruments of the kind at issue here is set out in the judgment of French J, as he then was, in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) 153 IR 426 (Wanneroo):

‘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). ’ (Wanneroo)

20. To this we add the oft-quoted observations of Madgwick J in Kucks v CSR Limited (1996) 66 IR 182 (Kucks) that a narrow pedantic approach to interpretation should be avoided, a search of the evident purpose is permissible and meanings which avoid inconvenience or injustice may reasonably be strained for, but:

‘. . . the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.’    (Kucks)

21. Although their Honours were each dealing with the proper interpretation of an award, the same principles are apt to apply to the interpretation of enterprise agreements. See: Swire Cold Storage Pty Ltd v TWU [2008] AIRCFB 397 at [29] and AMWU v Silcar Pty Ltd[2011] FWAFB 2555 at [11] For example, similar observations were made in Amcor Limited v CFMEU.(2005) 222 CLR 241 (Amcor):

‘Clause 55.1.1 must be read in context. It is necessary, therefore, to have regard not only to the text of cl 55.1.1, but also to a number of other matters: first, the other provisions made by cl 55; secondly, the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the Agreement was made and in which it was to operate.” (Amcor) at 253 per Gummow, Hayne and Heydon JJ.’

22. The fact that the instrument being construed is an enterprise agreement is itself an important contextual consideration. As French J observed in Wanneroo:

‘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 GeorgeA Bond and Co Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503-504 (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.” (2006) 153 IR 426 at 440.”’

Use of extrinsic material as an aide to interpretation

23. As is often the case in disputes that involve the construction of an enterprise agreement, parties will seek to place reliance of a variety of extrinsic material as an aide to interpreting the provisions of an agreement in issue. The use to which extrinsic material of the surrounding circumstances may be put to assist in the interpretation of an instrument is set out in the judgement of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337(Codelfa). In Codelfa his Honour said:

‘The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.’ (Codelfa) at 352”

[53] The Full Bench then dealt in some detail with subsequent cases which took varying approaches to the determination of an ambiguity. It went on to conclude as follows:

“30. Regard may therefore be had to evidence of the surrounding circumstances before the existence of ambiguity in an agreement is identified as an aide to interpreting the agreement for the purposes of determining whether an ambiguity exists. If thereafter ambiguity is not identified extrinsic material cannot be used to contradict the language of the instrument. If ambiguity is identified the material may be used as contextual material to aide in the interpretation of the instrument. In this context we would make the observation that the law in relation to the interpretation of commercial contracts (Codelfa; Metcash and Stratton) has now aligned with the approach to the construction of awards and enterprise agreements as espoused by Burchett J in Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 and confirmed by French J, as he then was, in Wanneroo.

Application of the Acts Interpretation Act 1901 to enterprise agreements approved under the Act

31. Both at first instance and before us the Appellant maintained that the Agreement must be interpreted in accordance with the Acts Interpretation Act 1901 (AI Act). (AB268-AB271 and Transcript PN271-PN280) That proposition is made on the basis that an enterprise agreement is an agreement that is made by the Commission pursuant to a power conferred by the Act to make the agreement. (See Section 46 of the AI Act) To make good the proposition the Appellant at first instance relied on the following passage from the judgement of French J in Wanneroo:

‘The interpretation of legislative instruments is dealt with in the Legislative Instruments Act 2003 (Cth). Awards and agreements made under the Act are declared, by s 7(1) of the Legislative Instruments Act, not to be legislative instruments – see Item 18 in the table set out in s 7(1). This leaves such awards and agreements within s 46 of the Acts Interpretation Act 1901 (Cth) which provides, inter alia:

‘(1) If a provision confers on an authority the power to make an instrument that is neither a legislative instrument within the meaning of the Legislative Instruments Act 2003 nor a rule of court, then, unless the contrary intention appears:

(a) this Act applies to any instrument so made as if it were an Act and as if each provision of the instrument were a section of an Act; and

(b) expressions used in any instrument so made have the same meaning as in the enabling legislation; and

(c) any instrument so made is to be read and construed subject to the enabling legislation, and so as not to exceed the power of the authority.’

An award is an instrument made by an authority, in this case the Australian Industrial Relations Commission, and so attracts the application of the Acts Interpretation Act for the purposes of its interpretation.” (2006) 153 IR 426 at 438 [52]

32. The decision in Wanneroo does not support the proposition contended by the Appellant. In Wanneroo Justice French was concerned with the construction of an award under the Workplace Relations Act 1996 (WR Act) and not an enterprise agreement made under the Act. Relevantly, the award in question was an instrument that was not a legislative instrument but was an instrument made by the Australian Industrial Relations Commission pursuant to a power under the WR Act to make the instrument. Consequently French J concluded that the award was “an instrument made by an authority, in this case the Australian Industrial Relations Commission, and so attracts the application of the Acts Interpretation Act (AI Act) for the purposes of its interpretation.”

[54] The Full Bench, having dealt with s.172 of the Act, which contains the requirement for an agreement to be made about permitted matters (pertaining to the relationship between the employer and the employer’s employees) summarised its conclusions as follows:

“Summary

41. From the foregoing, the following principles may be distilled:

1. The AI Act does not apply to the construction of an enterprise agreement made under the Act.

2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

3. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.

4. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.

5. If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aid the interpretation of the agreement.

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(b) notorious facts of which knowledge is to be presumed;
(c) evidence of matters in common contemplation and constituting a common assumption.

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

(a) the text of the agreement viewed as a whole;
(b) the disputed provision’s place and arrangement in the agreement;
(c) the legislative context under which the agreement was made and in which it operates.

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.”

[55] I have applied the principles summarised above in this decision.

Consideration

[56] I decided to hear the Berri application to vary the Agreement at the same time as the AMWU dispute notification. In my view, similar considerations apply. The first question to be determined is whether there is an ambiguity. Surrounding circumstances can be considered in determining whether this is the case provided that the clear words of the Agreement are applied. There are then a number of options to resolve the dispute including the competing draft orders submitted by the AMWU and Berri.

[57] I am satisfied that there is an ambiguity in the Agreement with respect to the Laundry Allowance. The ambiguity arises from the failure of the Agreement to specify how the allowance is to be paid and explain the basis of the payment. The Agreement does not explain who is entitled to it. There is no positive obligation under the Agreement to pay the allowance.
[58] In accordance with the Golden Cockerel principles, regard then needs to be had to the surrounding circumstances to determine the meaning of the Agreement. Crucial to this is evidence of past negotiations. Unfortunately in this case, the evidence is sparse and confused. There is no documentary evidence relating to the negotiations of the various agreements from 1996 produced by Berri or the AMWU. There is no documentation that says that the Laundry Allowance was absorbed into the wage rates.

[59] It is clear that the specific entitlement words in the Agreement for the Laundry Allowance were deleted from the 1999 version of the Agreement. It is also clear that employees ceased receiving the allowance at about that time. Two employees continued to receive the allowance. The only explanation we have for this is that their jobs were particularly dirty.

[60] It is true that Berri’s explanations about what happened in the 1990s varied. Michael Burton originally said that the allowance was traded off for the pay-out of sick leave accruals in the 1999 negotiations. He then said that the trade-off was not a “one for one” but rather part of the overall package. Kerry Davy was unclear about the timing. Pauline Smith agreed on the timing but could not assist as to the reason for the payment being stopped.

[61] Michael Burton’s evidence is contained in the following answer:

“Is that paragraph correct?---In most words, yes. Except the – I made a blue here when I’ve written it, and it’s been put down here as the laundry allowance and the sick leave were different items. The sick leave was a – to reduce the premium – the moneys that we had sitting owing to the employees, it would give them the operation to have the sick leave paid out down to four weeks, so if you had 16 weeks and we paid it down to four weeks. They didn’t have to take that but that was just part of the things in the negotiations at the time. The laundry allowance was just a trade-off, it’s probably the wrong word, of the negotiation where you give and take; you give a little bit, and we’ll give a little bit. And I can’t remember what the figure was but the laundry allowance was to be taken out of the EBA and say four and a half or five per cent whatever it was at the period of time, for the increase to go through.”

(Transcript PN308)

[62] Crucially, neither the AMWU officials nor delegates then raised the non-payment of the allowance for some 16 years. It is clear that it was not mentioned in the 2014 negotiations, which were the only negotiations in respect of which the AMWU provided documentation. Brad Hattenfels said he became aware of the issue in October 2015. There is no real explanation as to how this came about. (See Transcript PN187-202)

[63] The evidence is also confused about the employees who received the allowance. I am not convinced that their work is dirtier than others but in the absence of evidence, there is little option but to accept this explanation. It appears that there are two other pre-1999 employees left at the site and they do not receive the Laundry Allowance. (see Transcript PN1019 – PN1034) Mr Izzo agreed that there was no certain explanation for the continued payment to the two employees. It is clear that it was not phased out for new starters from 1999.

[64] The Laundry Allowance in the Attachments was adjusted each time wages moved but I do not think this means anything. The fact is it was not being paid and no-one questioned it.

[65] On the balance of probabilities, I accept Michael Burton’s evidence that the Laundry Allowance was bought out by the Company as part of a wages package for the 1999 EBA. Mr Davy’s evidence, although confused about dates, is supportive of a trade-off arrangement.

[66] The 2014 Agreement needs to be read in the context of what went before it. This is especially so because the evidence is that there was no consideration of the Laundry Allowance during the negotiations for the 2014 Agreement. I cannot therefore accept the AMWU submission that the 2014 Agreement should be considered on its own merits.

[67] I am therefore satisfied that the correct interpretation of the Agreement is that there is no entitlement for employees to be paid the Laundry Allowance.

[68] I do not accept Berri’s argument that the application is in breach of the “No Extra Claims” clause. In general, both parties proceeded on the basis that an interpretation of the Agreement was required only and I am satisfied that this was correct.

[69] Whilst I do not accept the AMWU’s argument, I do not propose to vary the Agreement to remove the reference to the Laundry Allowance in Attachment 3 as sought by Berri. I note that the nominal expiry date of the Agreement is 1 February 2017. Any re-drafting of the Agreement should be addressed by the parties in bargaining.

Summary

[70] Accordingly, I decide there is no entitlement to the payment of Laundry Allowance to employees of Berri at the Leeton factory pursuant to the Agreement. The application by the AMWU pursuant to s.739 of the Act is therefore dismissed.

DEPUTY PRESIDENT

Appearances:

L. Saunders with S. Howe for the Applicant;

L. Izzo solicitor with N. O’Halloran and M. Wicks for the Applicant.

Hearing details:

2016

Sydney:

September 28 (telephone conference)

November 8.

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<Price code C, PR589670>