Construction, Forestry, Mining and Energy Union Northern Mining and NSW Energy District v Hitachi Construction Machinery (Australia) Pty Ltd

[2017] FWC 1829

[2017] FWC 1829

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.236—Majority support determination

Construction, Forestry, Mining and Energy Union – Northern Mining and NSW Energy District
v
Hitachi Construction Machinery (Australia) Pty Ltd
(B2016/1317)

COMMISSIONER SAUNDERS NEWCASTLE, 11 APRIL 2017

Application for a majority support determination – separate question – coverage of enterprise agreement. Application dismissed.

[1] The Muswellbrook branch of Hitachi Construction Machinery (Australia) Pty Ltd (Hitachi) supplies mining and construction equipment and related services, parts and technical support. Some of the service employees engaged by the Muswellbrook branch of Hitachi work predominantly at the service workshop at the Muswellbrook branch but most of them spend a significant amount of their working time at different coal mines around the Hunter Region. The Construction, Forestry, Mining and Energy Union (CFMEU) contends that 17 service employees 1 of Hitachi who work at the Liddell open cut coal mine (Liddell Mine) in the Hunter Valley (the Employees) are not covered by the Hitchachi Construction Machinery (Australia) Pty Ltd Service Enterprise Agreement 2014 (the Enterprise Agreement), and want to negotiate their own enterprise agreement with Hitachi.

[2] The CFMEU has applied for a majority support determination under s.236 of the Fair Work Act 2009 (Cth) (the Act) in relation to the Employees (the Application).

[3] By consent, the parties requested that I determine the following question as a threshold issue in these proceedings (the Separate Question):

“Does the Enterprise Agreement cover the Employees?”

[4] Three of the 17 Employees are covered by an Australian workplace agreement (AWA) or an individual transitional employment agreement (ITEA). The balance of the Employees are not covered by any such individual transitional instruments.

[5] The CFMEU accepts that if I answer the Separate Question in the affirmative, the Application should be dismissed. In my view, that is an appropriate concession, given that it would not be reasonable in all the circumstances to make a majority support determination at this time if the Enterprise Agreement, which has a nominal expiry date of 31 March 2018, covers the Employees. 2

[6] I heard evidence and submissions in relation to the Separate Question on 4 April 2017. Mr Drayton, District Vice President of the CFMEU, Mining & Energy Division, Northern Mining & NSW Energy District, gave evidence on behalf of the CFMEU. Hitachi called evidence from Mr Nigel Agnew, Hitachi Branch Manager – Muswellbrook/Gunnedah, and Mr Jason Gleeson, Hitachi Regional General Manager - Eastern.

Questions for determination

[7] I agree with submissions made on behalf of Hitachi that my determination of the Separate Question requires a two-step process:

(a) First, properly construe the coverage provisions of the Enterprise Agreement; and

(b) Secondly, determine, on the facts, whether the Employees, or some of them, are covered by the Enterprise Agreement, having regard to the proper construction of the coverage provisions.

Proper construction of the Enterprise Agreement

Relevant provisions of the Enterprise Agreement

[8] Clauses 3, 4 and 10 of the Enterprise Agreement are relevant to the coverage of the Enterprise Agreement:

“3. Application

3.1 This Agreement applies in relation to Employees of HCA who are employed in any of the classifications Class 4 S to Class 1 S referred to in this Agreement who work at and are based at the HCA Muswellbrook Branch 190, 27-35 Thomas Mitchell Drive, Muswellbrook and who perform work in the Branch 190 service workshop at 27-35 Thomas Mitchell Drive, Muswellbrook as well as at other locations in accordance with the needs of the business conducted from the Muswellbrook branch (“the Employees”)…

4. Persons Covered By This Agreement

4.1 This Agreement covers:

(a) Hitachi Construction Machinery (Australia) Pty Ltd (“HCA”);

(b) The Employees described in clause 3.1 above (the “Employees”);

(c) The “Australian Manufacturing Workers Union” (AMWU) as the employee representative.

…

10. Site Work

10.1 Considering the nature of HCA’s business, as well as working at HCA’s site at 27-35 Thomas Mitchell Drive, Muswellbrook, Employees will also be required to work on other sites designated by HCA from time to time (“Site Work”).”

[9] Pursuant to s.53 of the Act, “an enterprise agreement covers an employee … if the agreement is expressed to cover (however described) the employee”. It is apparent from clause 4.1 of the Enterprise Agreement that it is expressed to cover, inter alia, the employees described in clause 3.1. Accordingly, the issue in the present case is whether the Employees meet the description of employees in clause 3.1 of the Enterprise Agreement.

Principles of construction

[10] There is no dispute between the parties as to the principles that apply to the proper construction of an enterprise agreement. Those principles were summarised by the Full Bench in The Australasian Meat Industry Employees’ Union v Golden Cockrell Pty Limited: 3

“[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 aide 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.”

[11] Two further principles of construction are relevant:

(a) First, it is not permissible to take into account the conduct of parties which occurs after an industrial instrument is made as an aid to interpret that industrial instrument; 4 and

(b) Secondly, guidance as to the construction of industrial instruments may also be obtained by reference to principles which courts apply to the construction of commercial contracts. 5 An interpretation of a commercial contract which accords with business common sense will be preferred to one which does not.6 Put another way, a commercial contract will be construed so as to avoid it making commercial nonsense or working commercial inconvenience.7 However, the task of interpretation 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 the parties.8

[12] In addition, although the relevant principles are summarised in paragraph [41] of Golden Cockerel, it is relevant, in the context of the present dispute, to have regard to paragraph [12] of the decision of the Full Bench in SDA v Woolworths Limited: 9

“[12] It is undoubtedly the case that, in resolving a dispute as to the interpretation of a provision of an enterprise agreement approved under the Fair Work Act 2009, it is permissible to take into account the industrial context and purpose of the agreement. However, there are two important limitations upon this approach relevant to the determination of this appeal. The first is that the process of interpretative analysis must focus, first and foremost, upon the language of the agreement itself. For example, in Amcor Limited v CFMEU, the process was described by Gleeson CJ and McHugh J in the following terms: “The resolution of the issue turns upon the language of the particular agreement, understood in the light of its industrial context and purpose ...”. Or, as Kirby J put it in the same case, “Interpretation is always a text-based activity”. 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 re-write the provision in order to give effect to an externally derived conception of what the parties’ intention or purpose was. The oft-quoted statement of Madgwick J in Kucks v CSR Limited makes this clear:

‘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.’”

[13] In Kucks v CSR Limited Madgwick J also observed: 10

“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 … And meanings which avoid inconvenience or injustice may reasonably be strained for.”

Submissions

[14] The CFMEU contends that, in order to be covered by the Enterprise Agreement, an employee must:

(a) work at and be based at the Hitachi Muswellbrook branch 190, 27-35 Thomas Mitchell Drive, Muswellbrook; and

(b) perform work in the Hitachi branch 190 service workshop at 27-35 Thomas Mitchell Drive, Muswellbrook; and

(c) perform work at other locations in accordance with the needs of the business conducted from the Muswellbrook Hitachi branch.

[15] Hitachi submits that the Enterprise Agreement covers service employees engaged in its Muswellbrook operations, while they are performing work at the service workshop, as well as site work.

Consideration

[16] 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 construction of the relevant provisions of an enterprise agreement. 11

[17] In my view, there is ambiguity or uncertainty in the coverage clauses of the Enterprise Agreement. The ambiguity or uncertainty concerns whether service employees must perform work at each of the locations referred to in paragraph [14] above before they are covered by the Enterprise Agreement, as contended for by the CFMEU, or whether they are covered if they perform work either at the service workshop or a site location, as contended for by Hitachi. The ambiguity or uncertainty arises from the following:

(a) First, there is no dispute that Hitachi’s Muswellbrook branch, which is referred to internally as “branch 190”, is, and has been since at least when the predecessor enterprise agreement was made in 2010, comprised of a service workshop, a parts warehouse and administration offices. Accordingly, if an employee performs work in the service workshop, they perform work at the Hitachi Muswellbrook branch 190, 27-35 Thomas Mitchell Drive, Muswellbrook. That being the case, it is not clear what, if any, distinction is to be drawn in clause 3.1 of the Enterprise Agreement between working at the Hitachi Muswellbrook branch 190, 27-35 Thomas Mitchell Drive, Muswellbrook and performing work in the Hitachi branch 190 service workshop at 27-35 Thomas Mitchell Drive, Muswellbrook, or what the purpose is of requiring an employee to satisfy both conditions in order to be covered by the Enterprise Agreement;

(b) Secondly, regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity or uncertainty exists. The uncontested evidence of surrounding circumstances in this case demonstrates that:

● the Muswellbrook branch of Hitachi supplies mining and construction equipment and related services, parts and technical support. Some of the service employees engaged by the Muswellbrook branch of Hitachi work predominantly at the service workshop at the Muswellbrook branch but most of them spend a significant amount of their working time at different coal mines and/or other client sites around the Hunter Region;

● Hitachi has had maintenance and repair contracts with the Liddell Mine since around 2009. In order to service those contracts and undertake other work at the Liddell Mine, the Muswellbrook branch of Hitachi has, and has had for many years, service employees working at the Liddell Mine on a regular basis;

● the Hitachi Construction Machinery (Australia) Pty Ltd Enterprise Agreement 2010 (the 2010 EA) was used as a basis for negotiating and drafting the Enterprise Agreement. The coverage clause of the 2010 EA is the same as the Enterprise Agreement, save that the address of the Muswellbrook branch of Hitachi changed from 27-29 to 27-35 Thomas Mitchell Drive, as a consequence of the acquisition of a neighbouring property by Hitachi. The coverage clause was not the subject of any discussion during the negotiation of the Enterprise Agreement;

● the terms and conditions of the 2010 EA were applied to Hitachi service employees working at the Liddell Mine;

● Hitachi sent a notice of employee representational rights to each service employee working at the Liddell Mine in connection with the negotiation of the Enterprise Agreement. The notice of employee representational rights sent by Hitachi to its service employees described the coverage of employees of the enterprise agreement it was negotiating in slightly different terms to the coverage provisions of the Enterprise Agreement. 12 No explanation was given in these proceedings to explain that difference or whether it was intentional;

● one of the four employee bargaining representatives for the Enterprise Agreement represented the service employees working at the Liddell Mine in connection with the negotiation of the Enterprise Agreement;

● discussions were held at the Liddell Mine between members of Hitachi management and the service employees working at the Liddell Mine as part of the negotiations for the Enterprise Agreement;

● Hitachi had about 30 service employees working at the Liddell Mine during the negotiations for the Enterprise Agreement and at the time it was voted on; and

● the Hitachi service employees working at the Liddell Mine at the time of the vote for the Enterprise Agreement voted on the Enterprise Agreement. Those 30 (approximately) employees constituted a significant proportion of the 102 employees who were eligible to vote on the Enterprise Agreement. 93 of the 102 eligible employees cast a valid vote for the Enterprise Agreement and 90 of the 93 employees voted to approve the Enterprise Agreement.

The evidence summarised in these bullet points suggests that the objective intention of the parties was for the Employees to be covered by the Enterprise Agreement, which is at odds with the CFMEU’s contention that, on its construction of the coverage provisions in the Enterprise Agreement, the Employees are not covered by the Enterprise Agreement.

(c) Thirdly, clause 3.1 of the Enterprise Agreement uses “and” together with “as well as” to join the various elements of the clause. The word “and” is usually used conjunctively and “or” is usually used disjunctively. That is, words or elements joined by “and” are usually regarded as being cumulatives, but words or elements joined by “or” are usually regarded as being alternatives. However, in certain circumstances courts and tribunals have been prepared to read “and” for “or” and vice versa. The circumstances in which courts and tribunals have been prepared to modify the meaning of language in this way in the context of statutory construction are generally limited to two categories: 13 first, the court or tribunal may be persuaded that, if “and” was given its natural meaning, the result would be so extraordinary that in order to make sense of the provision the court or tribunal must read the word “and” as if it had been “or”. That is, the legislature has made a mistake in the statute and the wrong conjunction has been used; and the second circumstance where “and” is read as “or” (or vice versa) is because of the context in which it appears and the purpose of the provision. Although these are principles of statutory construction, they demonstrate how words such as “and” and “or” can have meanings other than their ordinary meaning. In addition, these principles of statutory construction have been applied when construing the terms of a contract.14 In light of the other matters to which I have referred in this decision, there is at least an arguable case that the words “and” and “as well as” in clause 3.1 do not have a cumulative effect. I consider this issue further in paragraph [22] below.

[18] The Enterprise Agreement must be construed as a whole. That includes clause 10 (Site Work). 15 It is plain from clause 10.1 of the Enterprise Agreement that part of the service work undertaken by Hitachi’s service employees is performed at its workshop in Muswellbrook, but other service work is undertaken “in the field”. That is unsurprising given that Hitachi’s business involves the sale and servicing of mining and construction equipment, much of which is very large and cannot easily be transported to Hitachi’s workshop for servicing or repairs. Having regard to clause 10.1 and the surrounding circumstances concerning the nature of the business conducted by Hitachi’s Muswellbrook branch, it would be very odd if Hitachi and its service employees engaged to work at its Muswellbrook branch objectively intended for the Enterprise Agreement:

(a) not to cover service employees who only worked at the service workshop or at a client’s site; and

(b) to cover service employees who worked at the service workshop and at a client site, but not until they had undertaken at least some work at each location.

[19] The construction for which the CFMEU contends would, in my view, give rise to commercial inconvenience and absurd outcomes. Because an employee cannot work at both the Muswellbrook branch and at a site location at the same time, the Enterprise Agreement, on the CFMEU’s construction, would not cover any employees immediately after it was approved by the Commission. Employees would only begin to be covered by the Enterprise Agreement once they had undertaken some work at the Muswellbrook branch and some work at a site location. In the result, employees would become covered by the Enterprise Agreement at different times. Indeed, based on the CFMEU’s case that some Hitachi service employees work almost all of the time at one or more client sites, such as the Liddell Mine, and rarely, if ever, perform work in the service workshop or elsewhere in the Muswellbrook branch, the CFMEU’s construction would mean that some service employees would never become covered by the Enterprise Agreement, some service employees would become covered by the Enterprise Agreement soon after it commenced operation, and other service employees would only become covered by the Enterprise Agreement in the third or fourth year of operation of the Enterprise Agreement when they undertook some work in the service workshop, having worked the rest of the time at one or more mine sites. This staggered approach to coverage would potentially result in Hitachi service employees working side by side at a mine site not being covered by the same industrial instrument, on the basis that one of the service employees had undertaken, say, one day work at the service workshop and the balance of their time at one or more mine sites while the other service employee had worked the whole time since the commencement of operation of the Enterprise Agreement at one or more mine sites. In my view, the foregoing analysis demonstrates how Hitachi’s interpretation of the coverage provisions of the Enterprise Agreement accords with business common sense, but the CFMEU’s does not.

[20] I am mindful that I cannot disregard or re-write the coverage provisions of the Enterprise Agreement in order to give effect to an externally derived conception of what the parties’ intention or purpose was. Interpretation is a text-based activity. In my opinion, the construction of the Enterprise Agreement which I prefer does not contravene these principles. As to the text of clause 3.1, there is a distinction in clause 3.1 of the Enterprise Agreement between the expressions “who work at and are based at” (in the second line of clause 3.1) and “who perform work in” (in the third line of clause 3.1). In my view:

(a) the words “who work at and are based at the HCA Muswellbrook Branch 190, 27-35 Thomas Mitchell Drive, Muswellbrook” in clause 3.1 describe the Hitachi branch at which the relevant service employees work, namely the Muswellbrook branch, together with the address where service employees working in that branch are based (27-35 Thomas Mitchell Drive, Muswellbrook). The Muswellbrook Hitachi branch is one of four branches in the Hitachi Eastern Region: the other three branches are the Brisbane branch, the Gunnedah branch and the Dalby branch. In this context of describing the relevant Hitachi branch at which the service employees covered by the Enterprise Agreement work, the expression “work at … the HCA Muswellbrook Branch” describes service employees who work at the Muswellbrook branch of Hitachi, as distinct from some other branch of Hitachi; and

(b) the words “and who perform work in the Branch 190 service workshop at 27-35 Thomas Mitchell Drive, Muswellbrook as well as at other locations in accordance with the needs of the business conducted from the Muswellbrook branch” in clause 3.1 direct attention to the places where work is actually performed, namely in the service workshop as well as at site locations.

[21] Construing clause 3.1 in this way overcomes the issue identified in paragraph [17(a)] above.

[22] There is an issue as to whether the words “as well as” in clause 3.1 are to be read conjunctively or disjunctively. That is, does an employee have to work in the service workshop and in site locations to be covered by the Enterprise Agreement, or are they alternatives? For the reasons set out in paragraph [17(c)] above, words such as “and” and “as well as” are usually read conjunctively, but they may be read disjunctively in particular circumstances, including having regard to the relevant context. The difficulties to which I have referred in paragraphs [18] and [19] above suggest that a construction in which the locations of the performance of work are treated as alternatives ought be preferred. Further, the context and surrounding circumstances to which I have referred above points to the use of the expression “as well as” in the performance of work part of clause 3.1 of the Enterprise Agreement to link a range of different and alternative locations at which service employees may be required to perform work from time to time, depending on where such work is available at different times during the operation of the Enterprise Agreement. This approach would result in the performance of work part of clause 3.1 being construed such that the Enterprise Agreement covers employees who perform work in the service workshop as well as employees who perform work in other locations in accordance with the needs of the business. In my view, this construction is available on the language used in the Enterprise Agreement.

[23] In my opinion, for the reasons set out in paragraphs [17] to [22] above, the Enterprise Agreement, on its proper construction, covers service employees (classifications 4 S to 1 S) who work at the Muswellbrook branch of Hitachi, are based at 27-35 Thomas Mitchell Drive, Muswellbrook, and who perform work in the service workshop or in locations designated by the Muswellbrook branch from time to time.

Are the Employees covered by the Enterprise Agreement?

[24] There is no dispute and I am satisfied on the evidence that each Employee is a service employee in one of the classifications 4 S to 1 S, and performs work in the service workshop and/or in locations designated by the Muswellbrook branch, such as the Liddell Mine. In light of my opinion as to the proper construction of the coverage clauses of the Enterprise Agreement, I do not need to make findings on the contested factual issues of which Employees, if any, work only in locations designated by the Muswellbrook branch, such as the Liddell Mine, and do not perform work in the service workshop and which Employees, if any, work only in the service workshop.

[25] As to the Hitachi branch at which the Employees work and where such Employees are “based”, each of the Employees is a party to a contract of employment, AWA or ITEA that contains one of the following clauses:

(a) first category of contractual clause:

“Your place of work is 27-35 Thomas Mitchell Drive, Muswellbrook NSW 2333. However, the Company may require you to work at other locations in accordance with the needs of the business. Additionally, from time to time you may be required to undertake intrastate, interstate or overseas travel in the course of your employment.” [emphasis added]

(b) second category of contractual clause:

“Your place of work is 27-29 Thomas Mitchell Drive, Muswellbrook NSW 2333. However, the Company may require you to work at other locations in accordance with the needs of the business. Additionally, from time to time you may be required to undertake intrastate, interstate or overseas travel in the course of your employment.” [emphasis added]

(c) AWA clause:

“You will be based at our Muswellbrook branch. The Company may require you to work at different locations to suit the needs of its business, including attending customers’ sites.”

(d) ITEA clause:

“You will be based at our Muswellbrook branch. The Company may require you to work at different locations to suit the needs of its business, including attending customers’ sites.”

[26] There is little difference between each of these clauses. In my view, the effect of each clause is to base each Employee at Hitachi’s Muswellbrook branch, 27-35 Thomas Mitchell Drive, Muswellbrook, but to require each Employee to work at other locations in accordance with the needs of the business. In addition, it is clear from these clauses that each of the Employees works at the Muswellbrook branch of Hitachi, as distinct from some other branch.

[27] It follows that each Employee is covered by the Enterprise Agreement, because they are service employees (classifications 4 S to 1 S) who work at the Muswellbrook branch of Hitachi, are based at 27-35 Thomas Mitchell Drive, Muswellbrook, and who perform work in the service workshop and/or in locations designated by the Muswellbrook branch from time to time.

Conclusion

[28] For the reasons set out above, the Application is dismissed.

COMMISSIONER

Appearances:

Short, J for the Applicant

Cruden, L for the Respondent

Hearing details:

2017.

Newcastle:

April 4.

 1   The Application refers to 26 employees, but by the time of the hearing on 4 April 2017 the number of employees had been reduced to 17.

 2   Section 237(2)(d) of the Act

 3   [2014] FWCFB 7447 at [41]

 4   Essential Energy v CEPU & Ors[2015] FWCFB 1981 at [23]

 5   TWU v Linfox Australia Pty Ltd [2014] FCA 829 at [34]

 6   Ibid

 7   Golden Cockerel at [27]

 8   Golden Cockerel at [41(10)]

 9   [2013] FWCFB 2814

 10   See, too, Amcor v CFMEU (2005) 222 CLR 241 at 271 & 282-3

 11   Re Tenix Defence Pty Limited (PR917548, 9 May 2002) at [31]

 12   The words “work at and” were omitted from the third line of the first paragraph of the NERR

 13   Gillespie v Ford (1978) 19 ALR 102; TWU v AIRC [2008] FCAFC 26 at [17]; Victims Compensation Fund v Scott Brown & Ors [2002] NSWCA 155; Reed Business Information v Seymour [2010] NSWSC 790 at [54]

 14   Reed Business Information v Seymour [2010] NSWSC 790 at [54]

 15   See paragraph [8] above

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