Construction, Forestry, Mining and Energy Union

[2011] FWA 6946

[2011] FWA 6946

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.217—Enterprise agreement

Construction, Forestry, Mining and Energy Union
(AG2011/953)

TAHMOOR COLLIERY SITE ENTERPRISE AGREEMENT 2010

Coal industry
COMMISSIONER ROBERTS	SYDNEY, 21 OCTOBER 2011

Application to vary agreement to remove ambiguity or uncertainty - preferred labour allocation.

[1] This is an application by the Construction, Forestry, Mining and Energy Union (the CFMEU or the Union) pursuant to s.217 of the Fair Work Act 2009 (the Act) for an order varying the Tahmoor Colliery Site Enterprise Agreement 2010 (the Agreement). The Agreement was approved by Vice President Lawler on 20 October 2010 to operate from 27 October 2010 with a nominal expiry date of 7 September 2014. The Agreement provides at clause 3:

“3.1 The Agreement is binding on the following parties:

3.1.1 Tahmoor Coal Pty limited;

3.1.2 All employees of Tahmoor Coal Pty Limited who but for this Agreement would be covered by Schedule A of the [Black Coal Mining Industry] Award [2010] and who work at the underground and surface operations of the Tahmoor Colliery.

3.2 This Agreement replaces in their entirety all other awards, agreements, letters or memorandums of understanding, whether written or unwritten, which applied prior to the making of this Agreement and which regulated the terms and conditions of employees covered by this Agreement.”

[2] Clause 10 (Grievance and Disputes Procedures) sets out the framework for the resolution of grievances and disputes. Subclause 10.6 provides:

“10.6 If the matter remains unresolved, it may be referred to Fair Work Australia by either party for conciliation and, if agreed, arbitration.”

[3] Section 217 of the Act provides:

“217 Variation of an enterprise agreement to remove an ambiguity or uncertainty

(1) FWA may vary an enterprise agreement to remove an ambiguity or uncertainty on application by any of the following:

(a) one or more of the employers covered by the agreement;

(b) an employee covered by the agreement;

(c) an employee organisation covered by the agreement.

(2) If FWA varies the enterprise agreement, the variation operates from the day specified in the decision to vary the agreement.”

[4] Clause 29 of the Agreement provides:

“29. Labour Allocation and Teamwork

29.1 It is acknowledged and agreed that the Company has a right to allocate employees to tasks and duties in accordance with Clause 16 of this Agreement and in accordance with the safe and efficient operation of the mine and CHPP.

29.2 Without restriction, all employees covered by this Agreement will work cooperatively together to ensure safety and productivity is maximised.

29.3 The preferred labour allocation for development and/or longwall operations is four operators, an electrical trade and a mechanical trade.

29.4 The preferred labour allocation for the CHPP is four employees for each production shift.

29.5 Where the above preferred labour allocation is not available, operations will continue in accordance with the reasonable direction of management.”

[5] The specific alleged ambiguity or uncertainty is contained at subclause 29.5 of the Agreement. The CFMEU seeks a variation to subclause 29.5 to the following:

“29.5 It is intended that the labour allocation referred to in subclause 29.3 and 29.4 shall constitute the actual labour allocation deployed by the Company, except if there are insufficient employees available. In these circumstances, operations will continue in accordance with the reasonable direction of management.”

[6] The CFMEU’s application came before me initially for conciliation in Sydney on 30 May 2011, the matter was unable to be resolved. The application then came before me for determination in Sydney on 3 August 2011. The CFMEU was represented by Mr A Slevin of Counsel and Tahmoor Coal Pty Limited (Tahmoor or the Company) was represented by Mr J Murdoch of Senior Counsel with Mr A Morris of Blake Dawson. Mr R Deaves (President of the Tahmoor Coal Handling and Preparation Plant (CHPP) Lodge of the CFMEU) gave sworn evidence for the CFMEU. Mr K Parry (the CHPP Manager) and Mr P Vale (the Operations Manager) gave sworn evidence for Tahmoor.

Evidence

Mr Deaves

[7] Mr Deaves gave sworn evidence for the CFMEU and submitted a witness statement 1.

[8] In his witness statement Mr Deaves said that he has been President of the Tahmoor CHPP Lodge since June 2010. Prior to that date, he was Lodge Vice President and has worked at the CHPP for some 23 years.

[9] The CHPP is a surface operation at the Tahmoor Colliery which processes mined coal before it is transported to customers. Mr Deaves was closely involved in negotiations leading to the making of the Agreement, the making of which followed a long running industrial dispute between the CFMEU and the Company.

[10] Mr Deaves went on to say that disagreement between the Company and the CHPP Lodge in relation to the meaning of clause 29 became apparent within one month of the Agreement coming into operation. “The Lodge became aware that the Company had on a number of occasions during October and November 2010 run the CHPP with less than four operators per shift. This caused the Lodge some concern as the Company’s approach did not reflect our understanding of how the labour allocation clause of the Agreement was meant to operate.”

[11] Meetings with the Company began on 21 October 2010. “I recall that Kevin Parry offered an interpretation of these clauses that had the effect that the Company could keep the CHPP operating with less than four operators whenever it chose. That is, Kevin Parry said that the Company employed four persons per shift and if one or more was not available to work for any reason, the Company could continue working with the lesser number.” A number of meetings during late 2010 and early 2011 failed to resolve the issue between the parties. Correspondence ensued between the CFMEU National Office and the Company and ultimately the current application was lodged when the Company refused to accept the CFMEU interpretation of clause 29 of the Agreement by 1 April 2011.

[12] Appended to Mr Deaves’ witness statement were copies of correspondence between the CFMEU and the Company over the differing interpretations of clause 29 of the Agreement. I have paid regard to that correspondence in the making of this decision and sections of that correspondence are referred to below.

[13] Mr Deaves was not cross-examined.

Mr Parry

[14] Mr Parry gave sworn evidence for Tahmoor and submitted a witness statement 2.

[15] In his witness statement, Mr Parry said he took up his current position in January 2008 and that he is responsible for the day to day management and operation of the CHPP. He reports to Mr Vale. As CHPP Manager he was involved in the negotiations leading up to the making of the Agreement. Mr Parry’s statement went on in some detail to set out the operations of the CHPP and the roles performed by employees. He said: “Tahmoor prefers to allocate four employees to each production shift in the CHPP. Tahmoor prefers the composition of each crew to be two Mechanical Mineworkers and two Electrical Mineworkers. However, depending on operational requirements, we may operate with less or more than the preferred number of employees. For example, when there is maintenance work that is required to be completed during a production shift, we may call in overtime and have five employees on the crew, or engage contractors to assist with the additional work. There have also been circumstances in which we have safely operated the CHPP with fewer than the preferred number of employees.”

[16] Mr Parry went on to set out company arrangements to cater for planned and unplanned absences and arrangements made by the Company in such circumstances and details of cases where shifts have operated with less than the preferred number of employees.

[17] Mr Parry’s statement sets out in considerable detail the operation of the CHPP with less than the preferred numbers and the details of manning of shifts over the period October 2010 to June 2011.

[18] Mr Parry also addressed the proposed variation to clause 29 of the Agreement as sought by the CFMEU. He referred to the provisions of subclause 9.4 (Crew Manning) of the Tahmoor Washery Workplace Agreement 2006 (2006 Washery Agreement):

“9.4 Crew Manning

The minimum manning for a wash crew will be three (3) and one (1) for rail loading. If, for unforeseen circumstances this manning is not available (eg. because of absenteeism) and all avenues for gaining overtime coverage have been exhausted, the plant will continue to run and trains will be loaded, subject only to safety considerations, until the required labour has been sourced.”

[19] Mr Parry went on to say:

“When this clause was in operation, the minimum manning requirements forced management to allocate three Mineworkers to the wash plant and one Mineworker to load trains. If an employee was absent, work would continue while management was trying to source additional labour using overtime. However, if the required number could not be sourced, the clause required operations to cease.

In circumstances where trains were required to be loaded, the operation of the old clause would result in management being required to call for overtime even where there was a low workload in the washery.

The distinction between employees allocated to the wash crew and the employees allocated to load trains in the 2006 Agreement also created demarcation issues. If only three Mineworkers were working on a particular shift and outbye work needed to be performed, the Mineworkers would refuse to continue operating the CHPP in circumstances where one Mineworker was required to leave the CHPP to perform the outbye work leaving only two Mineworkers in the CHPP.”

Mr Vale

[20] Mr Vale gave sworn evidence for Tahmoor and submitted a witness statement 3. In his witness statement Mr Vale said that he has held the position of Operations Manager since late December 2010 and is responsible for the management and operations of the underground mine and the CHPP. The Production Manager and the CHPP Manager (Mr Parry) report to him. Mr Vale has worked at the Tahmoor Colliery since January 1987 and prior to taking up his current position was Production Manager. He was heavily involved in two years of negotiations between the Company and the CFMEU leading up to the making of the Agreement.

[21] Mr Vale’s witness statement went on in some detail to set out the underground and surface operations at Tahmoor and the allocation of labour to various roles and tasks.

[22] Mr Vale’s evidence relating to management of planned and unplanned absences was essentially in line with that of Mr Parry.

[23] Mr Vale went on to say:

“I have read the Application filed by the CFMEU in these proceedings. If Clause 29 of the Agreement was varied in the manner proposed by the CFMEU, I am concerned that this may lead to some of the problems that existed under the Tahmoor Colliery Enterprise Agreement 2006 (2006 [Colliery] Agreement) arising again.

The 2006 Agreement included the following clause in relation to minimum manning:

9.4 Crew Manning

The minimum manning for a development crew will be four (4) operators unless under special circumstances where a risk assessment has been conducted and agreed with the local check inspector.

Brushing crews will be a minimum of three (3) operators.

Discussions will be undertaken to determine the minimum required for a longwall crew. Those discussions will occur prior to July 1, 2006. As an interim the current crew size (4 operators) will remain.

When this clause was in operation, the minimum manning requirements forced management to allocate specific numbers of operators to each production area. The absence of the required number of operators led to numerous delays in the operation of the longwall and in the development operations.”

[24] Negotiations for the Agreement involved some 80 meetings and the issue of minimum manning was a feature of negotiations. “Throughout the two year negotiation period, the Company was adamant that it would not agree to include minimum manning requirements in the Agreement, particularly in light of the issues experienced as a result of clause 9.4 of the 2006 Agreement.” Mr Vale went on in considerable detail to set out the progress of the negotiations particularly as involved the minimum manning issue. “In negotiating Clause 29 and other clauses which provided the Company with flexibility and productivity benefits, the Company agreed to provide employees with significant benefits, including in relation to rates of pay and increased production bonus payments.” CFMEU representatives consistently opposed the use of the term ‘preferred’ and argued for minimum manning levels as per the 2006 Agreements.

[25] Appended to Mr Vale’s witness statement were a number of documents including notes regarding bargaining meetings with the CFMEU. I have paid regard to that material.

[26] I have also paid regard to the supporting oral evidence of Mr Parry and Mr Vale, to the limited cross-examination of both witnesses and the re-examination of Mr Parry.

Submissions

The CFMEU

[27] The CFMEU, per Mr Slevin, filed a written outline of submissions 4. In those submissions, the Union argues that: “An ambiguity will arise if the rival contentions of the parties gives rise to an arguable case for more than one contention.” In support of that contention, my attention was drawn to the decision of a Full Bench of the Australian Industrial Relations Commission in Re Tenix Defence Systems Pty Ltd Certified Agreement 2001-20045 (Tenix) where the Full Bench said: “The Commission will generally err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and an arguable case is made out for more than one contention.”

[28] The submissions by the CFMEU go on to say:

“The CFMEU contends that Clause 29 deals with labour allocation in a manner which regulates the number of employees to be allocated to particular shifts. That allocation may only be departed from where there is insufficient labour available to be allocated provided that it is safe to do so. So much is clear from the terms of the clause.

Clause 29.1 is concerned with the right of the Company to allocate employees to particular tasks and duties consistent with the provisions of clause 16 of the Agreement and the ‘safe and efficient operation of the mine and CHPP’. Clause 16 deals with a number of individual employee obligations, including that of undertaking all duties within the employee's skill and competence, undertaking training, assisting with first aid, etc.

Sub-clause 29.2 does not relate to minimum labour allocation. The sub-clause imposes an obligation on employees to work ‘cooperatively’ and ‘without restriction’ to ensure that safety and production is maximised. The purpose of the clause is related to the elimination of demarcations and not to minimum labour allocation.

Sub-clauses 29.3 and 29.4 provide for an obligation on the company to allocate ‘preferred labour allocation’. The term ‘preferred labour allocation’ is clearly intended to have a particular meaning. It is a way of expressing the intention of the parties to the Agreement that the labour allocation in the specified areas of the mine should be the numbers and for the mine, classifications, referred to in the subclauses.

This is consistent with the ordinary meaning of the term ‘prefer’ which is defined in the Macquarie Dictionary as follows:

prefer verb (t) (preferred, preferring) 1. to set or hold before or above other persons or things in estimation; like better; choose rather: to prefer Dickens 10 Thackeray. 2. Law to give priority, as to one creditor over another. 3. to put forward or present (a statement, suit, etc.) for consideration or sanction. 4. to put forward or advance, as in rank or office. 5. to favour: to prefer kicking with your right foot. -phrase 6. prefer charges, Law (sometimes followed by against) to present the charges laid. [Middle English preferre, from Latin praeferre bear before, set before, prefer] - preferrer, noun

The numbers of employees provided for in sub-clauses 29.3 and 29.4 are intended to take priority over any other labour allocation. Consequently, sub-clauses 29.4 and 29.5 set the rule that the mine and the CHPP operate with the number and categories of employees described.

Sub-clause 29.5 deals with the exception to the rule that the preferred allocation should be in the numbers prescribed. That exception arises in a situation where the preferred labour allocation is ‘not available’, in which case ‘operations will continue in accordance with the reasonable direction of management’. The term ‘available’ as used in the context of clause 29.5 is a reference to the availability of employees to be utilised to fulfil the preferred labour allocation.

Sub-clause 29.5 sets a two-step process in allocating labour to a particular shift or operation. That is, management must first ascertain whether there are ‘available’ employees to meet the preferred labour allocation requirement. If so, the relevant employees are deployed and the clause has no more work to do. However, if the necessary employees are not available (in accordance with the ordinary meaning of that term), management may exercise its prerogative to issue a reasonable direction that could include commencing or continuing operations with less than the preferred labour allocation. In the event of such a direction, relevant employees would be required to comply as a result of the operation of 29.1.”

[29] In relation to the Company’s contention, the CFMEU argues:

“The company's contention is set out in the correspondence of Mr Vale in his letter addressed to the CFMEU's South West District Vice President Bob Timbs, dated 11 March 2011. In that correspondence Mr Vale contends that the clause operates such that:

If CHPP management is of the view that the plant can be operated with less than four employees, then it can direct employees to operate with less than four employees. This is consistent with the Company's discretion under clause 29.1.

And:

Looked at as a whole, clause 29 is intended to enable the Company to operate with less than the preferred number of employees where this is safe and efficient.

The CFMEU's primary submission is that this contention is not arguable and relies upon the submissions above.

lf FWA finds that this contention is arguable then an ambiguity arises and the CFMEU submits that the tribunal should exercise its discretion to vary the agreement to remove the ambiguity.”

[30] In relation to the exercise of my discretion pursuant to s.217 of the Act, the CFMEU submits that I should exercise that discretion “because the clause has been the source of dispute at the workplace.” The exercise of my discretion would make the entitlement clear and thus avoid further disputation.

Tahmoor

[31] Tahmoor, per Mr Murdoch, also filed a written outline of submissions 6. In those submissions, Tahmoor argues:

“The inclusion of Clause 29 in the Agreement represented a significant shift from the previously applicable enterprise agreements, which mandated labour allocation numbers, to a more flexible system where minimum manning requirements are not set forth in the Agreement and under which preferred numbers of employees are provided. Clause 29 underwrites the Company’s right to allocate labour according to its business needs, subject to safety considerations.

The Company’s objective of removing minimum manning requirements from the agreement was one of a short list of flexibility and productivity gains at the centre of the negotiations throughout the bargaining period.

During the negotiations the parties focused closely on the wording of the clause. In particular, the inclusion of the word ‘preferred’ was debated in meetings and was resisted by the CFMEU representatives.”

[32] Tahmoor goes on to argue that the inclusion of clause 29 in the Agreement after some two years of negotiations was part of the mutually negotiated outcome and the clause is neither ambiguous nor uncertain. If the Tribunal were to find that there is some degree of uncertainty or ambiguity in clause 29, “there is a strong discretionary case against the Tribunal interfering with the wording of the clause. This is particularly so given the substantial benefits which the Company ultimately gave to employees in consideration of the hard fought for productivity gains included in the agreement, one of which was Clause 29.”

[33] “The Applicant’s outline of submissions attempts to simplify the test for ambiguity and ignores the requirement that the Tribunal must make an objective judgment as to whether, on the proper construction of the relevant provision of an agreement, the wording of that provision is susceptible to more than one meaning. An ambiguity will not arise merely because the parties have rival contentions concerning the proper interpretation of the clause.”

[34] Tahmoor submits that the Company pressed for the inclusion of clause 29 of the Agreement following problems it experienced with the 2006 Washery Agreement and the 2006 Colliery Agreement in relation to manning. “It was because of these issues that the Company was adamant not to include a restriction on manning in the Agreement. Throughout the negotiations, the Company maintained that it would not agree to include a clause in the agreement which placed a restriction on the Company’s ability to allocate labour to particular department in accordance with the needs of the business.”

[35] “The context of the negotiations demonstrates the mutual intention of the parties to include a clause in the Agreement which referred to ‘preferred’ rather than ‘actual’ labour allocation and did not impose restrictions on the Company’s ability to resource the mine according to its operational requirements, subject to safety considerations.” When voting on a new agreement, all employees were provided with a document explaining the terms of the proposed agreement and their effect. “It is clear from the explanation of Clause 29 contained in this document that when employees voted to approve the Agreement, they did so on the basis that the agreement did not include any restriction on manning.”

[36] “The Tribunal should not concern itself with speculative and academic debates concerning the meaning of Clause 29. It is clear from the way that the clause has been applied that it is not ambiguous.”

[37] Tahmoor relies on the interpretation set out in its correspondence to the CFMEU dated 11 March 2011 (see paragraph 40 below). In summary, Tahmoor argues that clause 29 “does not impose a restriction on the Respondent’s ability to allocate labour to particular crews where this is safe and efficient. Rather, the Clause describes the Company’s ‘preferred’ labour allocation for particular departments.”

[38] “The objective framework of facts within which Clause 29 should be considered include: (i) The provisions of the 2006 Agreements, which imposed restrictions on manning requirements; (ii) Evidence of the negotiations of the Agreement which establishes the objective background facts known to both parties and the subject matter of the contract (see statement of Mr Vale, paragraphs 67 to 82); and (iii) Other relevant clauses in the Agreement. If the Tribunal were to vary the Agreement in the manner contended for by the Applicant, the variation would not remove an ambiguity or uncertainty, but would install something that was not inherent to the agreement when it was made and would impose on the Respondent an outcome which it would not have countenanced when it entered into the agreement.”

Oral submissions

Mr Slevin

[39] Mr Slevin argued that the core dispute between the parties was contained in a letter from Mr Vale to Mr R Timbs of the CFMEU dated 11 March 2011 in which Mr Vale wrote 7:

“Subclause 29.4 expresses the position that during a production shift at the CHPP, the ‘preferred’ labour allocation is four employees. This preference reflects management’s view that four employees is the preferred number of employees when the CHPP is running and train loading is required. The use of the word ‘preferred’ makes it clear that the number is indicative and is not prescriptive or mandatory. Tahmoor Coal gives effect to this preferred labour allocation by generally rostering four employees on shifts where the CHPP is running and train loading is to take place. However, the Company may choose not to allocate four employees to shifts where the CHPP can operate efficiently with less than four employees, including for example, overtime shifts. If CHPP management is of the view that the plant can be operated with less than four employees, then it can direct employees to operate with less than four employees. This is consistent with the Company’s discretion under clause 29.1.”

[40] The Union responded to Mr Vale’s letter, per Mr A Bukarica, the CFMEU’s National Legal Officer, stating the Union’s position as follows 8:

“Sub-clauses 29.3 and 29.4 are centrally important and use similar language in describing a ‘preferred labour allocation’ obligation. The term ‘preferred labour allocation’ is clearly intended to have a particular meaning in the context of underground and CHPP operations, a conclusion supported by the fact that the term appears twice in two separate sub-clauses of the Agreement. The term ‘preferred labour allocation’ is we contend, a way of expressing the intention of the parties to the Agreement that this be the actual allocation of labour. Such an approach is consistent with the ordinary meaning of the term ‘prefer’ which is ‘to set or hold before or above other persons or things in estimation; like better; choose rather: to prefer Dickens to Thackeray’ (The Macquarie Encyclopaedic Dictionary). In other words, the ‘preferred’ labour allocation provided for in sub-sections 29.3 and 29.4 is intended to take precedence over any other labour allocation. Accordingly, we do not accept the Company’s assertion that the term ‘preferred’ as used in the present context is merely ‘indicative and not prescriptive or mandatory’.”

[41] Mr Slevin went on to argue that the Company is treating subclause 29.5 as being purely aspirational whereas the CFMEU’s view is that every effort must be made by the Company to fill any gap in the preferred labour allocation before the Company is released from its obligations under subclause 29.5. Mr Slevin argues that the intention of the parties at the time the Agreement was made is important to the determination of the question before me. There is nothing before me to show a subjective intention on behalf of the CFMEU to have a clause “that did not have a preferred allocation of labour or a requirement that there be an allocation of labour in the numbers recorded in a clause with a mechanism that allows for fewer number to be used where there’s no availability.” 9

[42] Mr Slevin said that the intention of the variation sought by the Union to subclause 29.5 was not intended to act as a minimum manning clause but rather to make it clear that the preferred labour allocation is to apply unless there is an insufficient number of employees.

[43] In reply to Mr Murdoch, Mr Slevin argued that none of the evidence before me could assist me in establishing the mutual intentions of the parties in the making of the Areement.

Mr Murdoch

[44] Mr Murdoch argued that “the whole of clause 29 needs to be read together, and clause 29 starts out with quite a specific endorsement of the company's capacity to manage the business.” 10 There is no requirement to solicit overtime to make up a minimum number of employees when that number is not otherwise available and not required.

[45] Mr Murdoch went on to argue that: “Consequently, the way in which the clause has been applied in the real-life circumstances of the preparation plant and the mine is relevant and should be considered. Can I point out also in relation to that quote, that on the point of ascertaining whether there's an ambiguity or uncertainty, note that whilst establishing the existence of rival contentions is relevant, that only takes you part of the way because the additional element is that an arguable case can be made out for more than one contention.” 11

[46] “So if I can sum up, our case is that the jurisdictional fact, the existence of an ambiguity or uncertainty, has not been satisfied. If you're against us on that, we submit that the ascertainment of the intention of the parties at the time the bargain was made is best ascertained by an examination of firstly the history - what went before, what came after - in terms of the wording of the clauses and additionally the content of the document which went out with the agreement a week preceding the vote of the employees, which clearly stipulated the intention.” 12

Case Law and Principles

[47] Most guidance on the question of ‘ambiguity’ or ‘uncertainty’ is contained in case law decided under various predecessor versions of the Act and in other jurisdictions. However, that case law provides useful guidance to the principles to be adopted in the case before me.

[48] Ryan J observed in Reeves v MaxiTRANS Australia Pty Ltd 13 (MaxiTRANS):

“It is to be borne in mind that an industrial agreement is the product of negotiation and often of compromise on each side. Not every provision in such a document is to be taken as intended to impose an enforceable obligation on one party or another so as to expose that party to the imposition of a penalty in the event of non-compliance with the provision. Some provisions may be characterised as ‘hortatory’ or merely reflective of a desirable policy or end which the parties have agreed to implement or attempt to achieve but without attracting penal consequences if the efforts of either party towards that end are later seen to be lacking in some respect. A helpful analogy is afforded by Ventana Pty Ltd v Federal Airports Corp and Fairways Group Pty Ltd and Fairways Leisure Market Pty Ltd [1997] FCA 538; (unreported, Federal Court of Australia, 20 June 1997). That case concerned a provision of the Federal Airports Corporation Act 1986 (Cth), which required that a statutory body ‘endeavour to perform its functions’ in a certain manner. Those words, I considered:

... embody no more than an exhortation as to what the [statutory body] should try to achieve as far as circumstances, and what can obviously be the conflicting demands of some of its various functions and powers, permit. Hortatory words of that kind, I consider, are inapt to import an enforceable obligation.” 14

[49] Tenix makes it clear that the identification of an ambiguity or uncertainty requires the determination of a jurisdictional fact: “In the context of s.170MD(6)(a) [of the Workplace Relations Act 1996] the Commission must first identify the existence of an ambiguity or uncertainty before exercising its discretion to vary the agreement. We agree with the Full Bench in Re: CFMEU Appeal which described the existence of an ambiguity or uncertainty as ‘a necessary statutory prerequisite to any variation being made.’ 15

[50] In S J Higgins Pty Ltd and others v CFMEU 16, Senior Deputy President Williams of the Australian Industrial Relations Commission (the AIRC) said:

“In my view, it is not enough that there are or may be rival contentions as to the proper construction of the terms of an award or agreement. Nor is it enough that claims may have been made in the field for the application of a particular provision in circumstances and its applicability of the provision is disputed. Such contentions and claims may well be self serving. The correct approach, as applied by the Full Bench, requires the making of an objective judgment as to whether, on the proper construction of the relevant provision of an agreement, the wording of that provision is susceptible to more than one meaning.” 17

[51] In Telstra v CPSU 18, a Full Bench of the AIRC said:

“What is clear from these principles of construction of contracts is the resolve of the Courts to give effect to the contract once it is established that the parties intended to be bound by their agreement. And Courts will impute a common intention by reference to the terms of a contract and the surrounding circumstances. In the absence of mutual intention, imputed or actual, the agreements must fail for frustration. In this regard reference may be had to the words of McHugh JA in G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd:

‘[T]he decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances. If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction. [footnotes omitted]

The point was made even more forcefully by Hand J in Hotchkiss v National City Bank [footnotes omitted]:

‘A contract has, strictly speaking, nothing to do with the personal, or individual, intent of the parties. A contract is an obligation attached by the mere force of law to certain acts of the parties, usually words, which ordinarily accompany and represent a known intent. If, however, it were proved by twenty bishops that either party when he used the words intended something else than the usual meaning which the law imposes on them, he would still be held, unless there were mutual mistake or something else of the sort.’”

[52] The decision of Senior Deputy President Marsh in Beltana Highwall Mining Pty Ltd 19 helpfully provides a useful summary of guidance from authorities dealing with applications such as this:

“ before exercising its discretion to vary an agreement pursuant to s.170MD(6)(a) the Commission must first identify the ambiguity or uncertainty;

• the Commission may then exercise the discretion to remove the ambiguity or uncertainty by varying the agreement;



• the first step i.e. identification of an ambiguity or uncertainty requires the determination of a ‘jurisdictional fact;



• the correct approach to identifying an ambiguity or uncertainty requires the making of an objective judgment as to whether, on the proper construction of the relevant provision of an agreement, the wording of that provision is susceptible to more than one meaning;



• the words used in the provision are construed in their context including where appropriate the relevant parts of the parent award with which a complementary provision is to be read;



• s.170MD(6)(a) is not confined to the identification of which words of a clause give rise to an ambiguity or uncertainty. A combination of clauses may have that effect;



• the Commission will generally err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and an arguable case is made out for more than one contention;



• the Commission's task is to make an objective judgment as to whether the wording of a provision is susceptible to more than one meaning. It must avoid contentions that are ‘self serving’;



• the second step in the process is the exercise of discretion as to whether or not an agreement should be varied to remove the ambiguity or uncertainty;



• the Commission may not appropriately use its power to rewrite an agreement to install something that was not inherent to the agreement when it was made;



• the Commission is to have regard to the mutual intention of the parties at the time the agreement was made and subsequent conduct of the parties;



• the Commission is empowered to remove an ambiguity or uncertainty by varying an agreement to remove it in a manner which gives effect to the mutual intentions of the parties at the time the agreement was made. The Commission is not limited by the form of the application before it;



• in looking at the context of a provision the Commission is entitled to consider:



• the effect of a prefatory statement made by the parties at the time when it was introduced into the award;



• the circumstances of the origin and use of the clause;



• the time when and the circumstances under which the instrument is made;



• the entire document of which the contentious provision is part or other documents with which there is an association;



• ideas that give rise to an expression in a document.” 20 [case citations omitted]

[53] In Shop Distributive and Allied Employees' Association v Woolworths SA Pty Ltd 21, their Honours said:

“Support for the position that the industrial context and the intention or purpose of the makers of an industrial instrument should be paramount notwithstanding the strict wording of the document is found in the judgments of members of the High Court in Amcor Ltd v Construction, Forestry, Mining and Energy Union [case citation omitted].

In Amcor, Gleeson CJ and Mc Hugh J stressed at [2] that:

(t)he resolution of the issue turns upon the language of the particular agreement, understood in the light of its industrial context and purpose, and the nature of the particular reorganisation.

See also at [13], where their Honours referred to:

… the industrial purpose of the agreement, and the commercial and legislative context in which it applies.

Further, the purposive approach to the construction of industrial instruments was persuasively illustrated by Kirby J in Amcor at [96] where his Honour said:

The nature of the document, the manner of its expression, the context in which it operated and the industrial purpose it served combine to suggest that the construction to be given to cl 55.1.1 should not be a strict one but one that contributes to a sensible industrial outcome such as should be attributed to the parties who negotiated and executed the Agreement. Approaching the interpretation of the clause in that way accords with the proper way, adopted by this Court, of interpreting industrial instruments and especially certified agreements. I agree with the following passage in the reasons of Madgwick J in Kucks v CSR Ltd, where his Honour observed:

It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.

See also per Gummow, Hayne and Heydon JJ at [30].

The approach of the High Court in Amcor is consistent with the modern approach to interpretation of commercial agreements where context and surrounding circumstances will be taken into account “even if the words at issue are not ambiguous, or susceptible of more than one meaning”; see Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [case citation omitted] at [46], per Weinberg J and see also at [251] where Lander J said:

It is now clear and settled law that the meaning of commercial contracts and documents is to be determined objectively. To determine the objective intention of the parties regard must be had, of course, to the words in the document themselves, but regard should also be had to all of the surrounding circumstances which were known to the contracting parties at the time the document was created including the underlying purpose and object of the commercial transaction: Pacific Carriers per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ at [22].

What is true of commercial contracts and their construction is also true of the construction of industrial agreements where regard must be had to the industrial context and the purpose of the provisions in question.” 22

[54] In the making of this decision, I have also had regard to the decision in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales 23.

Conclusions and Findings

[55] The terms of clause 29 of the Agreement, and in particular subclause 29.5, cannot be considered in splendid isolation. In this context, the provisions of the 2006 Washery Agreement and the 2006 Colliery Agreement at subclause 9.4 of each agreement (see paragraphs 18 and 23 above) are important, as is the history behind the making of the current Agreement.

[56] The provisions for ‘Crew Manning’ in the two predecessor agreements both contain the term ‘minimum manning’. Both subclauses in the predecessor agreements are clear and unambiguous in their intent and clearly prescribed the obligations of Tahmoor in relation to manning. Subclause 29.5 of the current Agreement is a different creature.

[57] Negotiations leading to the making of the current agreement extended over two years and involved some 80 meetings between the parties and significant proceedings in the Tribunal. I personally have knowledge of those negotiations from the proceedings before me which led to the making of my decision in Construction, Forestry, Mining and Energy Union v Tahmoor Coal Pty Ltd 24. That decision was appealed to a Full Bench and upheld. During the current proceedings, Mr Murdoch memorably described the negotiations as a ‘two year slugfest’. In fact, the term ‘slugfest’ became shorthand in these proceedings for the negotiation process leading up to the making of the current Agreement. The materials before me support the Company’s contention that every provision, indeed every line and every word, of the Agreement was analysed and argued over by the parties.

[58] The “Tahmoor EA Negotiation Summary” 25, and other documents before me, clearly show that the CFMEU resisted the use of the word ‘preferred’ in subclause 29.5 with vigour right up until negotiations were concluded. For its part, the Company insisted on the use of the word ‘preferred’ as an aid to workplace flexibility in manning of crews. An examination of the wording of subclause 29.5 of the current Agreement in comparison with the provisions in the two predecessor agreements reveals a significant downgrading in the obligations imposed on Tahmoor in relation to manning. There is little doubt in my mind that the resistance of the CFMEU over an extended period in negotiations to the use of the word ‘preferred’ is indicative of its awareness of the potential practical effects of subclause 29.5.

[59] I am unable to concur with Tahmoor that I should conclude that the inclusion of subclause 29.5 was a trade-off with the CFMEU in return for some other benefit(s). In the end, that does not matter as the Union signed up to a total package, which included subclause 29.5, for whatever reason(s) of its own. For its part, Tahmoor pursued the inclusion of the word ‘preferred’ with consistency. There could have been no doubt in the collective mind of the CFMEU negotiators that the Company was seeking a significant change in the way manning is prescribed in the Agreement.

[60] Mr Slevin drew my attention to the Macquarie Dictionary definition of ‘preferred’ (see paragraph 28 above). The definition provided by the New Shorter Oxford Dictionary 26 defines ‘preferred’ as “Favour (one person or thing) in preference to ... another ... like better.”. Relevantly the Oxford definition goes on to define ‘preferred’ as “Put in front or before”.

[61] The use of ‘preferred’ was intentional by the parties. The word itself cannot be read as being synonymous with, or analogous to, ‘actual’ or ‘normal’. Subclause 29.5 is not purely aspirational in nature but establishes that one situation is to be preferred over another. As noted in MaxiTRANS (see paragraph 48 above), it should not be taken that the use of ‘preferred’ is intended to impose an enforceable obligation on one party.

[62] Is the word ‘preferred’ ambiguous or uncertain in its use and context in subclause 29.5? In my view, the use of such non-prescriptive words can give rise to some uncertainty and possible ambiguity when they are applied to practical situations. However, I do not accept Mr Slevin’s submission that the existence of disputation at Tahmoor concerning subclause 29.5 is an argument in favour of the subclause being ambiguous or uncertain. The conduct of the Company subsequent to the making of the Agreement is not determinative but is important in showing the practical interpretation by the Company of subclause 29.5. The application of subclause 29.5 by Tahmoor shows, on the materials available to me, that the Company has used the provisions of that subclause to flexibly allocate labour and not to allocate such labour when circumstances do not require it. On the materials before me, I am unable to see that the Company has behaved unreasonably in its application of clause 29.

[63] The situation appears to have arisen where the parties have mutually agreed during negotiations to make significant changes to the way manning is to be determined at Tahmoor. Those changes did not occur in vacuo but rather, as part of the total package outcome which was acceptable to both sides.

[64] It is my determination that the terms of clause 29 in total and particularly in subclause 29.5 are not ambiguous or uncertain. What has really occurred here is that the CFMEU and its members are unhappy with the practical effect of clause 29 when applied by the Company in a manner which is open to it to do. The extraordinary thing is that union representatives began arguing over manning in the light of clause 29 one day after the proceedings before Vice President Lawler in which he approved the Agreement and some six days prior to the Agreement coming into effect.

[65] The proposed variation offered by the CFMEU would work to change the dynamics of the Agreement and I accept Tahmoor’s submission that this would give rise to a situation which it would not have countenanced in the process leading up to the making of the Agreement. The order sought by the CFMEU is not seeking to impose mandatory manning levels on Tahmoor but it would have the effect of recovering of some of the ground lost in the current Agreement. The terms of the CFMEU’s proposed variation themselves could lead to a level of ambiguity or uncertainty and in that sense would not be superior to the current provisions of subclause 29.5.

[66] All in all, I find that subclause 29.5 of the Agreement is neither ambiguous nor uncertain and I refuse and dismiss the CFMEU’s application. I also wish to note that if there were some ambiguity and/or uncertainty inherent in subclause 29.5, I would not be prepared to exercise my discretion to vary the subclause, given the history of this matter. There is no need, in my view, to strain to find ambiguity or uncertainty in a context where there is really only a dispute between the parties as to the application of subclause 29.5, not its meaning or its intent.

COMMISSIONER

Appearances:

A Slevin of counsel, for the Construction, Forestry, Mining and Energy Union.

J Murdoch SC, with A Morris for Tahmoor Coal Pty Ltd.

Hearing details:
2011.
Sydney:
August 3.

 1   Exhibit CFMEU 2.

 2   Exhibit Tahmoor 2.

 3   Exhibit Tahmoor 3.

 4   Exhibit CFMEU 1.

 5   PR917548, 9 May 2002 per Ross VP, O'Callaghan SDP and Foggo C.

 6   Exhibit Tahmoor 1.

 7   Attachment RD8 to Exhibit CFMEU 2.

 8   Attachment RD9 to Exhibit CFMEU 2.

 9   Transcript PN385.

 10   Transcript PN426.

 11   Transcript PN445.

 12   Transcript PN464.

 13 [2009] FCA 970.

 14 Ibid at [19].

 15 See above n 5 at [35].

 16   [2001] AIRC 420.

 17 Ibid at [7].

 18   PR954989.

 19   PR932468.

 20 Ibid at [23].

 21 [2011] FCAFC 67.

 22   Ibid at [14]-[18].

 23 (1982) 41 ALR 367.

 24   [2010] FWA 942.

 25   Attachment PV 9 to Exhibit Tahmoor 3.

 26   Volume Two, Oxford 1993 p.2331.

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