Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Kentz Pty Ltd T/A Kentz

[2018] FWC 6909

[2018] FWC 6909

FAIR WORK COMMISSION

DECISION

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

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia
v
Kentz Pty Ltd T/A Kentz
(C2018/3661)

COMMISSIONER SIMPSON BRISBANE, 9 NOVEMBER 2018

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)] – Preliminary question – Proper construction of paragraph (b) of Appendix 1 of the Kentz Pty Ltd Ichthys Onshore Construction Greenfields Agreement

[1] On 5 July 2018, the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) made an application to the Fair Work Commission (the Commission) under s.739 of the Fair Work Act 2009 (the Act).

[2] The CEPU’s application is for the Commission to deal with a dispute in accordance with the dispute settlement procedure at Clause 18 of the Kentz Pty Ltd Ichthys Onshore Construction Greenfields Agreement (the Agreement). Kentz Pty Ltd (Kentz) is the Employer Respondent to this application.

[3] A directions hearing was conducted before the Commission on 27 August 2018 that sought to narrow the issues in dispute between the parties. The matter was then listed for hearing on 29 and 30 October 2018 and directions were issued for the filing of a question for arbitration, as well as for submissions and evidence from both parties.

[4] On 3 October 2018, the parties reached an agreement on the Question for Arbitration. The Question for Arbitration read as follows:

“Were the employees listed in Schedule 1 entitled to be classified as “Instrumentation and Controls Tradespersons” on the proper construction of Clauses 12 and 13, and Appendices 1 and 3, of the Kentz Pty Ltd Ichthys Onshore Construction Greenfields Agreement recorded at [2014] FWCA 6641?”

[5] On 24 October 2018, the CEPU’s representative lodged an interlocutory Form F1 Application requesting an adjournment of the hearing scheduled for 29 and 30 October. A directions hearing was held on 25 October 2018 to determine the CEPU’s application for an adjournment.

[6] At the directions hearing on 25 October 2018 the Commission determined that the hearing scheduled for 29 October 2018 would proceed, however, it would be limited to the determination of a preliminary issue as identified by the parties at the directions hearing.

[7] This decision is therefore limited to determining the preliminary issue outlined below, at paragraph [8], and does not purport to determine the general question for arbitration or any other substantive matter arising from the dispute.

Preliminary Question for Arbitration/Determination

[8] The preliminary question for arbitration/determination is whether, on a proper construction of the Agreement, the term “and/or” at Item 3 on the enumerated list at Paragraph (b) of Appendix 1 of the Agreement (the enumerated list) operates disjunctively or conjunctively.

[9] Determining this question is directly relevant to resolving the substantive issue in dispute between the parties, as the enumerated list at Paragraph (b) of Appendix 1 of the Agreement outlines the duties that must be undertaken by a Kentz employee in order to qualify for classification as an “Instrumentation and Controls Tradesperson.”

[10] The CEPU submitted that the term “and/or” has a disjunctive effect, so that items [1], [2], [3] and [4] are read separately. This would have the effect that employees under the Agreement would only need to perform one of the listed duties in order to qualify for classification as “Instrumentation and Controls Tradespersons.”

[11] Kentz rejects that submission, instead claiming that the term “and/or” has a conjunctive effect and therefore the items should be read jointly. Kentz submitted that this excludes items [3] and [4], which they argue operate as either/or requirements. This interpretation would have the effect of requiring employees to perform the duties listed in items [1] and [2], as well as either of the tasks outlined in items [3] and [4], in order to qualify for classification as “Instrumentation and Controls Tradespersons.”

Applicant’s Submissions

[12] The CEPU submitted that under the principle in Kucks v CSR, the Commission should avoid interpreting Paragraph (b) of Appendix 1 of the Agreement narrowly. 1 Rather, the CEPU argues the Commission should turn its mind to what is the “sensible industrial outcome” in the circumstances.2 The CEPU further submitted that the Commission should construe the clause in the light of its historical context and intended purpose, being mindful that the agreement was not drafted by lawyers with knowledge of legal jargon and niceties.3

[13] The CEPU submitted that, on a proper reading of the Agreement in line with the authority outlined above, the items at Paragraph (b) of Appendix 1 of the Agreement should be viewed as a discrete list of “Instrumentation and Controls Tradesperson” duties. The CEPU submitted that the practical effect of the clause is that the performance of any one of the duties listed in the enumerated list, is sufficient to qualify an employee of Kentz for classification as an “Instrumentation and Controls Tradesperson.” The CEPU argues that if the drafters intended for the “Instrumentation and Controls Tradespersons” classification to extend only to those who performed each of the listed duties they would have included the term “and” after each item.

[14] The CEPU submitted that its interpretation is preferable as it is an accepted linguistic convention to use semi-colons after items in a numbered list and then use a joining term after the final item that is intended to apply to all the items in the list. On this interpretation, the clause would read as:

“In addition, to be classified as an Instrumentation and Controls Tradesperson, a tradesperson must be required as part of their duties to:

(1) Maintain and repair multi-function printed circuitry of the type described in this definition using circuit diagrams and test equipment; and/or

(2) Work under minimum supervision and technical guidance; and/or

(3) Provide technical guidance to other Employees or to management within the scope of the work described in this definition; and/or;

(4) Prepare reports of a technical nature on specific tasks or assignments as directed and within the scope of the work described in this definition.”

(My emphasis added)

[15] The CEPU submitted that the interpretation of the Agreement proposed by Kentz ignores the drafter’s deliberate choice of the term “and/or.” The CEPU claims that if the drafters wished to adopt the Kentz interpretation, they would have only included the term “and” after the penultimate entry in the list. In this context, the clause would read as:

“In addition, to be classified as an Instrumentation and Controls Tradesperson, a tradesperson must be required as part of their duties to:

(1) Maintain and repair multi-function printed circuitry of the type described in this definition using circuit diagrams and test equipment; and

(2) Work under minimum supervision and technical guidance; and

(3) Provide technical guidance to other Employees or to management within the scope of the work described in this definition; and;

(4) Prepare reports of a technical nature on specific tasks or assignments as directed and within the scope of the work described in this definition.”

(My emphasis added)

[16] The CEPU submitted that, as the drafters chose not to construct the agreement in the form outlined at paragraph [15], then the Commission should reject the Kentz interpretation of the clause and instead adopt the formulation proposed by the CEPU.

[17] In oral submissions the CEPU also drew attention to a passage from a recent decision of the Full Court of the Federal Court in WorkPac Pty Ltd v Skene 4 setting out the approach to interpretation of an enterprise agreement.

[18] In response to the Kentz submissions the CEPU made the point that a worker who meets more than one of the duties listed in the enumerated list also satisfies the criteria.

[19] The CEPU submitted that Kentz at paragraph 41 of its submission misconstrued the CEPU submission in that the Union said an employee can meet multiple criteria but doesn’t have to.

[20] The CEPU submitted in response to Kentz that whilst an employee need only satisfy one of the items on the enumerated list at Paragraph (b) of Appendix 1, they will have already satisfied all the requirements of the first two paragraphs within the classification description. The CEPU also took issue with the Kentz submission that’s its reading of the expression “and/or” was consistent with the way the expression was otherwise interpreted in a range of other clauses throughout the agreement, by referring to clause 10.1(b) as an example of where this was not the case.

Respondent’s Submissions

[21] Kentz rejects the CEPU’s interpretation of Paragraph (b) of Appendix 1 of the Agreement, submitting that their formulation of the term “and/or” gives “and” no work to do and therefore reads as merely “or.” Kentz submitted that on this interpretation the clause would read:

“In addition, to be classified as an Instrumentation and Controls Tradesperson, a tradesperson must be required as part of their duties to:

(1) Maintain and repair multi-function printed circuitry of the type described in this definition using circuit diagrams and test equipment; or

(2) Work under minimum supervision and technical guidance; or

(3) Provide technical guidance to other Employees or to management within the scope of the work described in this definition; or;

(4) Prepare reports of a technical nature on specific tasks or assignments as directed and within the scope of the work described in this definition.”

(My emphasis added)

[22] Kentz submitted that, had the drafters of the clause intended for it to be read as outlined above, they would have included precursory words indicating as such in the paragraph above the enumerated list. Kentz submitted that the wording of the precursory words that would need to be read into Paragraph (b) of Appendix 1 of the Agreement in order for the CEPU’s interpretation to be correct, would be to the effect of “In addition, to be classified as an Instrumentation and Controls Tradesperson, a tradesperson must be required as part of their duties to do any one of the following.”

[23] Kentz submitted that on a plain and ordinary interpretation of the enumerated list and the preceding paragraph outlined at Paragraph (b) of Appendix 1 of the Agreement, the agreement required employees seeking classification as “Instrumentation and Controls Tradespersons” to undertake each of the duties outlined in the enumerated list.

[24] Kentz further submitted that the “and/or” at the end of item 3 of the enumerated list implies that at least one of the duties outlined in items [3] and [4] must be performed in order for an employee to attain classification as an “Instrumentation and Controls Tradesperson.” In addition, Kentz submitted that the “and/or” at the end of item 3 of the enumerated list has the effect of denoting that an employee seeking to be classified as an “Instrumentation and Controls Tradespersons” need only perform one of either of the duties listed in item [3] and [4] of Paragraph (b) of Appendix 1 of the Agreement.

[25] Kentz submitted that the term “either” need not be read into Paragraph (b) of Appendix 1 of the Agreement in order for their interpretation to be valid, though submitted for clarity that their interpretation of the clause can be read as:

“In addition, to be classified as an Instrumentation and Controls Tradesperson, a tradesperson must be required as part of their duties to:

(1) Maintain and repair multi-function printed circuitry of the type described in this definition using circuit diagrams and test equipment;

(2) Work under minimum supervision and technical guidance;

And either

(3) Provide technical guidance to other Employees or to management within the scope of the work described in this definition; OR;

(4) Prepare reports of a technical nature on specific tasks or assignments as directed and within the scope of the work described in this definition.”

(My emphasis added)

[26] In oral submissions Kentz emphasised the significant difference between the qualification payments that attached to the different roles, and whilst the expression “complex control system” appeared in both the classification for “Instrument Tradesperson – Complex Systems” and “Instrumentation and Controls Tradesperson”, there is a greater emphasis on instrumentation for the higher classification of “Instrumentation and Controls Tradesperson” classification. For example the “Instrumentation and Controls Tradesperson” has a higher level of knowledge and skill about complex control systems that utilises some combination of electrical, mechanical, hydraulic and pneumatic principles, and electronic circuitry containing complex analogue and/or digital control systems utilising integrated circuitry.

[27] Kentz submitted the “Instrumentation and Controls Tradesperson” called for higher skills and knowledge about “devices” referred to in the second paragraph. Kentz said the reference to “devices” meant skills and knowledge about “devices” of various kinds in complex systems. Kentz submitted that this ties into supervision and technical guidance, one of the four items on the enumerated list.

[28] Kentz submitted the CEPU interpretation was inconsistent with the plain ordinary words and specifically contrary to the “and”, as if it is read as “or” the “and” cannot work. Kentz submitted that for the CEPU interpretation be correct it would be required to be understood as having the effect that it can operate as any of the following; both of item 3 or 4, one of item 3 or 4, or neither of item 3 or 4.

[29] Kentz also submitted the CEPU interpretation is not consistent with the intention of the parties because it fails to distinguish between the classification of “Instrumentation Tradesperson – Complex Systems” and “Instrumentation and Controls Tradesperson”. The “Instrumentation and Controls Tradesperson” sets out in the first paragraph a requirement to work at the level of the classification of “Instrumentation and Controls Tradesperson” and who is mainly engaged in applying the skills and knowledge then listed.

[30] Kentz submitted the two classifications are also distinguishable by the requirement for the “Instrumentation and Controls Tradesperson” to work under minimum supervision and technical guidance, however on the CEPU submission this requirement is merely optional.

[31] Kentz also said the expressions “electronic circuitry” and “utilising integrated systems” distinguishes the “Instrumentation and Controls Tradesperson” role from the “Instrumentation Tradesperson – Complex Systems” role, and to interpret item 1 on the enumerated list as optional is inconsistent with the rest of the definition.

[32] Kentz also referred to a number of other parts of the enterprise agreement where the expression “and/or” is read and interpreted in a manner consistent with its case here.

Consideration

[33] Both parties have drawn the Commission’s attention to the recent decision of the Full Bench of the Commission in AMWU v Berri Pty Limited 5. It may be useful to set out the most relevant section of that judgement where, at [114], the Bench helpfully summarised the principles in relation to the interpretation of enterprise agreements:

“[114] The principles relevant to the task of construing a single enterprise agreement may be summarised as follows:

1. The construction of an enterprise agreement, like that of a statute or contract, begin with a consideration of the ordinary meaning of the relevant words. The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose. Context might appear from:

(i) the text of the agreement viewed as a whole;

(ii) the disputed provision's place and arrangement in the agreement;

(iii) the legislative context under which the agreement was made and in which it operates.

2. 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.

3. The common intention of the parties is sought to be 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, without regard to the subjective intentions or expectations of the parties.

4. The fact that the instrument being construed is an enterprise agreement made pursuant to Part 2-4 of the FW Act is itself an important contextual consideration. It may be inferred that such agreements are intended to establish binding obligations.

5. The FW Act does not speak in terms of the 'parties' to enterprise agreements pursuant to Part 2-4 agreements, rather it refers to the persons and organisations who are 'covered by' such agreements. Relevantly s172(2)(a) provides that an employer may make an enterprise agreement 'with the employees who are employed at the time the agreement is made and who will be covered by the agreement'. Section 182(1) provides that an agreement is 'made' if the employees to be covered by the agreement 'have been asked to approve the agreement and a majority of those employees who cast a valid vote approve the agreement'. This is so because an enterprise agreement is 'made' when a majority of the employees asked to approve the agreement cast a valid vote to approve the agreement.

6. Enterprise agreements are not instruments to which the Acts Interpretation Act 1901 (Cth) applies, however the modes of textual analysis developed in the general law may assist in the interpretation of enterprise agreements. An overly technical approach to interpretation should be avoided and consequently some general principles of statutory construction may have less force in the context of construing an enterprise agreement.

7. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or it is ambiguous or susceptible of more than one meaning.

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

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

10. If the language of the agreement is ambiguous or susceptible of more than one meaning then evidence of the surrounding circumstances will be admissible to aide the interpretation of the agreement.

11. The admissibility of evidence of the surrounding circumstances is limited to evidence tending to establish objective background facts which were known to both parties which inform and the subject matter of the agreement. Evidence of such objective facts is to be distinguished from evidence of the subjective intentions of the parties, such as statements and actions of the parties which are reflective of their actual intentions and expectations.

12. Evidence of objective background facts will include:

(i) 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;

(ii) notorious facts of which knowledge is to be presumed; and

(iii) evidence of matters in common contemplation and constituting a common assumption.

13. The diversity of interests involved in the negotiation and making of enterprise agreements (see point 4 above) warrants the adoption of a cautious approach to the admission and reliance upon the evidence of prior negotiations and the positions advanced during the negotiation process. Evidence as to what the employees covered by the agreement were told (either during the course of the negotiations or pursuant to s.180(5) of the FW Act) may be of more assistance than evidence of the bargaining positions taken by the employer or a bargaining representative during the negotiation of the agreement.

14. Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or rewrite the provision in order to give effect to an externally derived conception of what the parties' intention or purpose was.

15. In the industrial context it has been accepted that, in some circumstances, subsequent conduct may be relevant to the interpretation of an industrial instrument. But such post agreement conduct must be such as to show that there has been a meeting of minds, a consensus. Post-agreement conduct which amounts to little more than the absence of a complaint or common inadvertence is insufficient to establish a common understanding.”

[34] Neither party to this dispute has pressed an argument that the language of the agreement is ambiguous or susceptible to more than one meaning. If the enumerated list were to be read in isolation it may be possible to make such an argument, however I am satisfied that when the items on the enumerated list are read having regard to the context and purpose of the whole classification description for an “Instrumentation and Controls Tradesperson,” and with reference to the classification of “Instrumentation Tradesperson – Complex Systems” the intended purpose of the enumerated list becomes clear.

[35] The clause is intended to outline the duties that are required to be performed by those seeking to be classified in a certain employment classification level. The employment classification level in question, “Instrumentation and Controls Tradesperson,” entitled those classified in it to a higher rate of remuneration. It follows, as a matter course, that higher remuneration carries with it an expectation that the work being undertaken is of a more complex or onerous nature, which is clear from the language of Paragraph (b) of Appendix 1 of the Agreement.

[36] Given this context, it seems contrary to the intended purpose of the clause for the CEPU’s interpretation to be the correct formulation of the clause. As the clause purports to impose strict and detailed requirements on the type of work that would qualify an employee for classification as an “Instrumentation and Controls Tradesperson,” it seems counter to that stated purpose that only part of these requirements need be satisfied to achieve classification that attracts the higher remuneration.

[37] Further, the language of the clause that precedes the enumerated list lays out a thorough and wide-ranging set of technical skill and expertise that an employee must demonstrate in order to achieve the “Instrumentation and Controls Tradesperson” classification. It appears contrary to a plain and ordinary reading of the Agreement that Paragraph (b) of Appendix 1 of the Agreement would set out a comprehensive range of skills that employees must have, but then intend the inclusion of the four items on the enumerated list to operate in a manner that qualifies an employee to receive the higher remuneration on satisfaction of only one of the four items. This is particularly so when more than one of the items appears to relate directly to the higher level of skill or knowledge described in the preceding paragraphs.

Conclusion

[38] I am satisfied that when the agreement is read as a whole and in context, the term “and/or” as it appears in the enumerated list at Appendix 1(b) paragraph 3, has a conjunctive effect and therefore the items should be read jointly, excluding items [3] and [4], which operate as either/or requirements. This interpretation has the effect of requiring employees to perform the duties listed in items [1] and [2], as well as either of the tasks outlined in items [3] and [4], in order to qualify for classification as “Instrumentation and Controls Tradespersons.”

[39] The matter will be listed for a further directions hearing at 10:00am Wednesday 14 November 2018.

COMMISSIONER

Appearances:

Mr L. Tiley of Hall Payne Lawyers appearing on behalf of the Applicant

Mr M. Easton of Counsel instructed by Thomson Geer appearing on behalf of the Respondent

Hearing details:

2018,

Brisbane:

October 29

Printed by authority of the Commonwealth Government Printer

<PR702195>

 1 (1996) 66 IR 182 at 184.

 2   Amcor Limited v Construction, Forestry, Mining and Energy Union and Others [2005] HCA 10; (2005) 222 CLR 241 at [96].

 3   Short v. FW Hercus Pty Ltd (1993) 40 FCR 511 at 517 per Burchett J (with Drummond J agreeing).

 4 [2018] FCAFC 131 at [197]

 5   [2017] FWCFB 3005.