Construction, Forestry, Mining and Energy Union v CC Pty Ltd
[2017] FWC 1447
•13 MARCH 2017
[2017] FWC 1447
The attached document replaces the document previously issued with the above code on 13 March 2017.
Removal of incomplete footnote at paragraph [17].
Callum Young
Relief Associate to Commissioner Spencer
Dated 14 March 2017.
| [2017] FWC 1447 [Note: This decision has been quashed - refer to Full Bench decision dated 1 June 2017 [[2017] FWCFB 2749] |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.739 - Application to deal with a dispute
Construction, Forestry, Mining and Energy Union
v
CC Pty Ltd
(C2016/1848)
COMMISSIONER SPENCER | BRISBANE, 13 MARCH 2017 |
Alleged dispute concerning clauses 11, 16 and 22 – jurisdictional objection, disputes procedure.
Introduction
[1] This decision relates to a jurisdictional objection made by CC Pty Ltd (CC/the Respondent) with respect to an application by the Construction, Forestry, Mining and Energy Union (CFMEU/the Applicant) for the Commission to deal with a dispute, pursuant to s.739 of the Fair Work Act 2009 (the Act). The substantive application alleged a dispute in relation to provisions of the CC Pty Ltd Enterprise Agreement 2012 (the Agreement). The dispute related to the Respondent’s implementation of new roster arrangements at the Cook Colliery, pursuant to clause 16.2 of the Agreement.
[2] In raising the objection, the Respondent submitted that, whilst clause 32 (Grievance Procedure) of the Agreement may enable the Applicant to initiate the dispute, the Agreement does not confer jurisdiction on the Commission to arbitrate the dispute without the consent of the Respondent. The Respondent sought for this jurisdictional objection to be dealt with as a preliminary matter. This decision deals with the jurisdictional objection only.
[3] The matter was listed for a dispute conference before the Commission as currently constituted. At this conference, the dispute was not resolved by conciliation. The Respondent has objected to arbitration on the basis that the Commission does not have jurisdiction to progress the matter, as the Respondent had not consented to the arbitration of this dispute, pursuant to clause 32 of the Agreement.
[4] The Applicant submitted that on it, proper interpretation of the clause allows the Commission, where agreement has not be reached on the process, to exercise any of its broad powers to resolve the dispute.
[5] Directions were set for the filing of submissions in relation to the jurisdictional objection.
[6] The Respondent was represented by Mr Ian Humphreys of Ashurst Australia. The Applicant was represented by Mr William Ash of Hall Payne Lawyers.
[7] In relation to the progress of the substantive matter, Mr Humphreys confirmed that the parties have not agreed on the question for Arbitration and that the Respondent’s primary position is that the Commission does not have jurisdiction to arbitrate in the absence of the Respondent’s consent. Should the Commission find that jurisdiction exists to arbitrate, the Respondent has foreshadowedthat it would submit that the Commission should otherwise refrain from arbitrating, by exercise of its discretion. The parties agreed that this consideration would be relevant, dependent on the outcome of the present jurisdictional objection.
Relevant Act Provisions
595 FWC’s power to deal with disputes
(1) The FWC may deal with a dispute only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.
(2) The FWC may deal with a dispute (other than by arbitration) as it considers appropriate, including in the following ways:
(a) by mediation or conciliation;
(b) by making a recommendation or expressing an opinion.
(1) The FWC may deal with a dispute by arbitration (including by making any orders it considers appropriate) only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.
Example: Parties may consent to the FWC arbitrating a bargaining dispute (see subsection 240(4)).
(4) In dealing with a dispute, the FWC may exercise any powers it has under this Subdivision.
Example: The FWC could direct a person to attend a conference under section 592.
(5) To avoid doubt, the FWC must not exercise the power referred to in subsection (3) in relation to a matter before the FWC except as authorised by this section.
738 Application of this Division
This Division applies if:
(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or
(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or
(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or
(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.
739 Disputes dealt with by the FWC
(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.
(2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:
(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or
(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.
Note: This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).
(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.
(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.
Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).
(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.
(6) The FWC may deal with a dispute only on application by a party to the dispute.
Relevant sections of the Agreement
“11. Contract of Employment
11.1 Types of Employment
Employees will be engaged as full-time, part-time, casual, fixed term or fixed task employees. Employees will be notified in writing of the basis of their employment.
Full time
A full-time employee is an employee engaged by the week on a permanent basis whose ordinary hours will be an average of 35 hours per week. Those hours will be averaged over the roster cycle.
The wage package contained in Appendix 1 Wage Package of this Agreement will apply to employees.
It is recognised that the wage package contained in Appendix 1 consists of a number of components including the roster format. If other roster formats are worked alternative wage packages associated with that roster will be developed in accordance with the consultation provisions of this Agreement.
Part-time employment
A part-time employee is an employee who works less than 35 hours per week, has reasonably predictable hours of work; and receives, on a pro rata basis, equivalent pay and conditions to those of full-time employees who do the same kind of work.
At the time of engagement Cook Colliery and the part-time employee will agree in writing on a regular pattern of work, specifying at least the hours worked each day, which days of the week the employee will work and the actual starting and finishing times each day.
Any agreed variation to the regular pattern of work will be recorded in writing.
The wage package contained in Appendix 1 Wage Package of this Agreement will apply to employees provided that a part-time employee will be paid per hour 1/35th of the weekly rate prescribed for the classification, group or level on which the employee is engaged
It is recognised that the wage package contained in Appendix 1 consists of a number of components including the roster format. If other roster formats are worked alternative wage packages associated with that roster will be developed in accordance with the consultation provisions of this Agreement.
…”
“APPENDIX 1 -SALARY STRUCTURE
…
3. Roster Allowance
The Roster Allowance is paid in recognition for all social disruption factors and disabilities associated with the requirements of the role. This includes work on any rostered shift, weekends or public holidays and the working environment.
If the roster changes the roster allowance will be reviewed and amended accordingly from the date of change of roster.
…”
“16. Hours of Work and Rosters
16.1 Hours of Work
The ordinary hours of work will be an average of 35 hours per week. Those hours will be averaged over the roster cycle.
Employees will be required to work the hours that are reasonably necessary to perform their role and roster.
All employees may be available to work reasonable additional hours (ie is above the rostered average of 42 hours per week). All additional hours will be paid in accordance with Appendix 1Wage Package.
An employee may refuse to work unreasonable additional hours. Whether additional hours beyond the roster are reasonable or unreasonable will depend on:
(a) any risk to the employee's health and safety from working the additional hours;
(b) the employee's personal circumstances, including family responsibilities;
(c) the needs of Cook Colliery;
(d) whether the employee is entitled to receive overtime payments, penalty rates or other compensation for, or a level of remuneration that reflects an expectation of, working additional hours;
(e) any notice given by Cook Colliery of any request or requirement to work the additional hours;
(f) any notice given by the employee of his or her intention to refuse to work the additional hours;
(g) the usual patterns of work in the industry, or the part of an industry, in which the employee works;
(h) the nature of the employee's role, and the employee's level of responsibility;
(i) any other relevant matter. An indicative number of hours to be worked by full time employees is contained in the roster descriptions in Appendix 1, Clause 4.
16.2 Rosters
Employees may be required to work shifts of up to 121/2 hours duration.
At the time of making this Agreement the roster being utilised is a 12 hour shift
with a 5, 5, 4 pattern.
Cook Colliery may carry out all operations 24 hours per day on any day of the
week and implement roster systems that meet the needs of the site and takes
into account health and safety needs of employees. Prior to the introduction of
any new roster system, Cook Colliery will consult with affected employees and
provide employees with a minimum of 28 days written notice.
Cook Colliery can determine the shift length to be worked as long as the ordinary
hours do not exceed 10. Shifts of more than 10 ordinary hours can only be
implemented by agreement between Cook Colliery and the majority of employees
affected or, in the case of a dispute, as resolved in accordance with the Grievance
Procedure of this Agreement.
The start and finish times of shifts up to 10 ordinary hours may be determined by
Cook Colliery. Shifts in excess of 10 ordinary hours will be worked between the
starting and finishing times that are agreed between Cook Colliery and the
majority of employees affected or, in the case of a dispute, as resolved in
accordance with the Grievance Procedure ofthis Agreement.
The number and spread of ordinary shifts may be varied by Cook Colliery and, in
the case of dispute, as resolved in accordance with the Grievance Procedure of
this Agreement.
"Consult" in this Agreement means a process whereby Cook Colliery will seek the
advice or views of employees, and encourage an exchange of ideas. The outcomes
of these open discussions will be provided to Senior Management to assist them
in their decision making processes. Once Senior Management has made their
decision they will communicate and explain it to employees.
Employees may be required to change over on the job for communication and work
continuity. Recognition for this requirement is included in the Annualised Salary.
Cook Colliery may require an employee to change shifts within a roster or from one
existing roster arrangement to another. Employees will be given as much notice as
reasonably possible to any such change with a minimum of 7 days written notice.”
32. Grievance Procedure
The Grievance Procedure to be followed is: (emphasis added)
Overview | Cook Colliery and employees are responsible for attempting to resolve workplace issues as quickly as possible. Supervisors are responsible for making themselves aware of any unresolved workplace and or potential issues and should also seek to resolve them quickly. Cook Colliery or employee/s may appoint another person, organisation or association to accompany and/or represent them for the purposes of this clause. |
Step 1 | In the event of a dispute, in the first instance the parties must attempt to resolve the matter at the workplace by discussions between the employee/s concerned and the relevant immediate Supervisor. |
Step 2 | If these discussions do not resolve the dispute, the parties will endeavour to resolve the dispute in a timely manner by discussions between the employee/s concerned and the Shift Co-ordinator. |
Step 3 | If these discussions do not resolve the dispute, the parties will endeavour to resolve the dispute in a timely manner by discussions between the employee/s concerned and the Site Senior Executive. |
Step 4 | If such discussions do not resolve the dispute, the parties will endeavour to resolve the dispute in a timely manner and refer the dispute to FWA. |
Process | The parties may agree on the process to be utilised by FWA including mediation, conciliation and arbitration. |
Power of FWA | Where the matter in dispute remains unresolved, FWA may exercise any method of dispute resolution permitted that it considers appropriate to ensure the settlement of the dispute. |
Obligations | While the dispute resolution procedure is being conducted, work must continue in accordance with this Agreement and the Act. Subject to applicable occupational health and safety legislation, an employee must not unreasonably fail to comply with a reasonable direction by Cook Colliery to perform work, whether at the same or another workplace, provided that it is safe and appropriate for the employee to perform. |
Background
[1] The dispute application, in summary terms, relates to the introduction of a new roster and the associated consultation and roster allowance.
Summary of the Respondent’s submissions on jurisdiction
[2] The Respondent submitted that clause 32 of the Agreement does not confer jurisdiction on the Commission to arbitrate the dispute without the consent of the Respondent. The Respondent submitted that it did not consent to the arbitration of the dispute by the Commission. The Respondent stated the starting point is sections 738 and 739, and that the Commission must not exercise any powers limited by the term. In addition, as per s.595, the Commission is only able to arbitrate where expressly authorised. In those circumstances where, based on the relevant dispute resolution provision the Commission is not ‘expressly’ (explicitly) authorised to arbitrate, there is no authority for the Fair Work Commission to do so.
[3] The Respondent stated derived from ‘The Private Arbitration’ 1 case; the underlying principle being that the statute expressly authorises arbitration. The Agreement must expressly authorise arbitration. Relevantly, the Respondent submitted ‘The Private Arbitration’ case as follows;
“31. Where parties agree to submit their differences for decision by a third party, the decision maker does not exercise judicial power, but a power of private arbitration. Of its nature, judicial power is a power that is exercised independently of the consent of the person against whom the proceedings are brought and results in a judgment or order that is binding of its own force. In the case of private arbitration, however, the arbitrator’s powers depend on the agreement of the parties, usually embodied in a contract, and the arbitrator’s award is not binding of its own force. Rather, its effect, if any, depends on the law which operates with respect to it.
32. To the extent that s 170MH of the IR Act operates in conjunction with an agreed dispute resolution procedure to authorise the Commission to make decisions as to the legal rights and liabilities of the parties to the Agreement, it merely authorises the Commission to exercise a power of private arbitration. And procedures for the resolution of disputes over the application of an agreement made by parties to an industrial situation to prevent that situation from developing into an industrial dispute are clearly procedures for maintaining that agreement. Parliament may legislate to authorise the Commission to participate in procedures of that kind. Accordingly, s 170MH of the IR Act is valid.
33. Although it is by no means clear, it may be assumed, for present purposes, that cll 21 and 22 are designed to ensure more than the maintenance of the Agreement. That, however, does not have the consequence that those clauses are wholly invalid. Nor does it follow that they are wholly invalid because they extend beyond what is authorised by s 170MH of the IR Act.
34. The parties to an industrial situation are free to agree between themselves as to the terms on which they will conduct their affairs. Their agreement has effect according to the general law. If their agreement is certified, it also has effect as an award. To the extent that an agreement provides in a manner that exceeds what is permitted either by the Constitution or by the legislation which gives the agreement effect as an award, it cannot operate with that effect. But the underlying agreement remains and the validity of that agreement depends on the general law, not the legislative provisions which give it effect as an award. 2”
[4] The Respondent submitted that the statutory pre-requisites are not satisfied in this case. This is because clause 32 in the Agreement, which provides for dealing with disputes, does not authorise the Commission to deal with a dispute by way of arbitration unless the parties have agreed for arbitration to occur. The Respondent does not consent to the dispute being dealt with by arbitration.
[5] The Respondent submitted that the Commission only has jurisdiction to 'deal with a dispute' pursuant to s.739 of the Act if: the Agreement includes a term that provides a procedure for dealing with disputes, and the term requires or allows the FWC to deal with a dispute. The Respondent submitted that it was well established, however, that the Commission’s jurisdiction to deal with a dispute by way of arbitration is limited by s.595(3) of the Act, which states that 'the FWC may deal with a dispute by arbitration (including by making any orders it considers appropriate) only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act'. In addition, that s.739 of the Act provides that 'in dealing with a dispute, the FWC must not exercise any powers limited by the term'; and that s.739(4), stated 'if, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.' The Respondent submitted the word ‘permitted’ in the clause refers back to what the parties agreed on.
[6] The Respondent further submitted Justice Mason’s assessment, as widely adopted and by unanimous decision, in Toll (FGCT) P/L v Alphapharm P/L 3 that “attention should not be given to irrelevant information about the subjective understanding of the individual participants in the dealings between the parties.”4
[7] Mr Humphreys, on behalf of the Respondent, indicated that they had elected not to cross-examine Mr Powers on his affidavit. It was submitted that based on its content and relevance, it should not be given any weight, as it was only the subjective view of Mr Powers regarding the intention of the dispute resolution clause. In stating this, the Respondent submitted that Codelfa Construction Pty Ltd v State Rail Authority of New South Wales 5was authority for the proposition that the personal position of Mr Powers as to his intention or expectation of the clause could not be taken into account. Justice Mason’s stated in Codelfa:
“The true rule is that evidence of surrounding circumstances admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the Mason J. contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed. It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification. Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract. 6”
[8] The Respondent submitted that the following principles (as set out in Golden Cockerel 7) are relevant to construing clause 32 of the Agreement:
(a) The construction of an award (or an agreement), begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction, regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. 8
(b) A Court may look to a wider context when determining the meaning of an expression in an industrial instrument. Context may extend to the entire document of which it is a part, or to other documents with which there is an association. Context may also include, in some cases, ideas that gave rise to an expression in a document from which it has been taken. 9
(c) Context extends to first, the other provisions in the agreement; the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, the legislative background against which the Agreement was made and in which it was to operate. 10
(d) The task is exclusively to ascertain the actual meaning of the agreement, viewed objectively and not to assign a meaning that the FWC considers appropriate. 11
(e) Regard may be had to evidence of the surrounding circumstances to assist in determining whether an ambiguity exists. However, if the instrument has a plain meaning, extrinsic material cannot be used to contradict the language of the instrument. 12
[9] The Respondent submitted that the words in clause 32 should be given their ordinary meaning.
[10] The Respondent submitted that the Agreement proceeds on the basis that the parties must first complete Steps 1, 2 and 3 of clause 32 of the Agreement. Step 4 then provides that 'If such discussions do not resolve the dispute, the parties will endeavour to resolve the dispute in a timely manner and refer the dispute to FWA.’ With respect to the sub-clause titled 'Process', the Respondent submitted that this clause sets out the manner in which the referral to the Commission is to occur. That is, the parties may agree on the process to be utilised by the Commission, including mediation, conciliation and arbitration. Further, that the word 'may' is used in a variety of contexts and is defined to mean (among other things): 'to have permission to'; or 'to be possible'.
[11] The Respondent submitted that the use of the word 'may' in clause 32 of the Agreement, established a discretion on the parties to agree on the process to be used by the Commission to resolve the dispute. The Respondent stated that it was clear that the word 'process', in context, meant the method of dispute resolution which the parties may agree would be used by the Commission. The Respondent submitted that the words of the clause and in particular, the ordinary meaning of the word 'may', clearly and unambiguously, provided the parties with a discretion to agree on the process or processes that may be utilised by the Commission to deal with the dispute. The Respondent submitted that the Commission could only carry out a process which the parties agreed that it can.
[12] The Respondent submitted that if the parties do not agree that arbitration is the process to be used by the Commission, then the Commission is limited in the manner in which it can deal with the dispute, to another process agreed by the parties, such as mediation or conciliation.
[13] In regard to the sub-clause titled 'Power of FWA', the Respondent submitted that, if the sub-clause was read in isolation, then one might argue (as does the Applicant), that the clause should be interpreted so as to provide the Commission with a free and unfettered discretion to exercise any method of dispute resolution (including arbitration).
[14] The Respondent submitted that such a construction is not correct because it ignores the use of the word 'permitted'. The Respondent further submitted that when interpreting the sub-clause 'Power of FWA', the Commission must consider the sub-clause in context, having regard to the other provisions in clause 32 of the Agreement and the Agreement as a whole. The Respondent submitted that if the sub-clause 'Power of FWA' is read in context and having regard to the Agreement as a whole (including by reference to the preceding sub-clause 'Process'), then the reference to the word 'permitted' in 'Power of FWA', is a reference to the method of dispute resolution, that the parties have agreed, may be utilised by the Commission.
[15] The Respondent submitted that if clause 32 was interpreted in this way, the sub-clauses 'Power of FWA' and 'Process' work harmoniously and continue to have work to do. The Respondent submitted that if the clauses were to be read in any other way (and in particular, if it is the case that the Commission may determine to use 'any method it considers appropriate' notwithstanding what the parties have agreed), then sub-clause 'Power of FWA' would override sub-clause 'Process' in its entirety, such that the sub-clause 'Process' would be superfluous and have no work to do. The Respondent submitted that the Commission would avoid a construction which gave no meaning, to what is a significant part of clause 32 of the Agreement.
[16] The Respondent submitted that an alternative construction that could be advanced by the Applicant is that the reference to 'permitted' in the sub-clause 'Power of FWA', is a reference to forms of dispute resolution that are permitted by the Act. The Respondent submitted that this construction requires that additional words be inserted, that is "permitted by the Fair Work Act 2009". The Respondent submitted that, whilst it was possible to imply words into an agreement made and approved under the Act, there is a 'predisposition against the implication of such a term'. 13 The Respondent submitted that this was because 'a collective agreement is usually a carefully negotiated compromise between parties who have equal bargaining power, the tendency is to assume that the omission is intentional'.14 Further, the Respondent submitted that it is contrary to the statutory intention for rights and liabilities under an agreement to be made and approved under the Act to be 'other than certain and capable of determination by reference to the agreement itself'.15
[17] Finally, the Respondent submitted that given the language used in clause 32 of the Agreement is clear and unambiguous, the Commission would not have regard to extrinsic materials. The Respondent contended that when clause 32 of the Agreement is read as a whole and harmoniously, the construction for which it contends is the only available construction. 16
Summary of the Applicant’s submissions on jurisdiction
[18] The Applicant submitted that s.739 of the Act deals with the Commission’s jurisdiction to determine the relevant disputes. It will apply, relevantly, where an Enterprise Agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in s.186(6). The Applicant stated that s.738(b) refers to s.186(6) of the Act, which deals with the general requirements relating to the approval of Agreements.
186 When the FWC must approve an enterprise agreement—general requirements
(6) The FWC must be satisfied that the agreement includes a term:
(a) that provides a procedure that requires or allows the FWC, or another person who is independent of the employers, employees or employee organisations covered by the agreement, to settle disputes:
(i) about any matters arising under the agreement; and
(ii) in relation to the National Employment Standards; and
(b) that allows for the representation of employees covered by the agreement for the purposes of that procedure.
Note 1: The FWC or a person must not settle a dispute about whether an employer had reasonable business grounds under subsection 65(5) or 76(4) (see subsections 739(2) and 740(2)).
Note 2: However, this does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4).
[1] The Applicant submitted that the correct interpretation of an enterprise agreement will have regard to the context in which the Agreement was made, including what has been described as the ‘industrial context and purpose’ of the provision.
[2] The Applicant submitted that, whilst the provision of an Enterprise Agreement should be given its ‘ordinary meaning’, a ‘literal’ approach should be avoided where that would produce a result which was in opposition to the apparent intention of those who framed the provision. The Applicant referred to the decision of Kirby J in Amcor Ltd v CFMEU 17, and noted his Honour’s comments regarding the lack of precision in certified Agreements, and that this was to be taken into account in any consideration of the correct interpretation of an Agreement.
“[16] 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. (Original emphasis.)”
[3] The Applicant submitted that the grievance procedure in clause 32 of the Agreement consists of eight sub-clauses, within which there are four sequential steps. Step 4 provides that, once Steps 1 to 3 have been completed, ‘the parties will endeavour to resolve the dispute in a timely manner and refer the dispute to the FWA’. It is the Applicant’s submission that the parties may refer to the dispute to the Commission if the dispute remains unresolved. This power is to be understood in the context of the ‘Process’ and ‘Powers’ sub-clauses in the Agreement, but is not limited by it. Clause 32 further provides that, ‘the parties may agree on the process to be utilised by FWA including mediation, conciliation and arbitration’ (emphasis added). The Applicant submitted that the use of the word ‘may’ is an auxiliary to express a possibility, opportunity or permission. That is, it confers discretion. The Applicant submitted that the use of the word ‘may’ means that it is possible the parties will dictate the process to be used by the Commission, but it does not provide that only where there is agreement as to the process, will the Commission have the jurisdiction to determine the dispute.
[4] The Applicant further submitted that if agreement to a specific process was a pre-requisite to jurisdiction, that the ‘Process’ sub-clause would have used the word ‘must’, in lieu of the word ‘may’.
[5] With respect to the issue as to whether the Commission has the power to arbitrate a dispute, the Applicant referred to the decision Australian Municipal, Administrative, Clerical and Services Union v Royal Automobile Club of Victoria (RACV) Ltd 18as supporting the submission that the sub-clause in the Agreement titled ‘Power of FWA’ allowed the Commission to arbitrate. The Applicant submitted, on the wording, the Commission had discretion to exercise any permitted method of dispute resolution it considered appropriate.
[6] The Applicant disagreed with the Respondent’s submissions that clause 32 of the Agreement does not confer jurisdiction on the Commission to arbitrate the dispute without the Respondent’s consent. The Applicant submitted that the Respondent’s contention that the word ‘permitted’ refers to an agreed process 19, was an interpretation bound to fail. The Applicant submitted that this was the case because: it is mandatory to refer the dispute to the Commission if it is unresolved; and the dispute, once referred on that interpretation, could then be frustrated by a single party, not agreeing to any particular process and thereby rendering the application nugatory. It was submitted that the filing of an application which is not resolved by the FWC would result in wasted time and resources for the aggrieved party; and that these parties could not possibly have agreed to a disputes resolution clause that requires one party to take the significant step of filing a dispute with the Commission but not empower the Commission to do anything if the other party does not consent to the Commission’s jurisdiction.
[7] The Applicant further submitted that it would be absurd to construe the provision whereby the parties are at liberty to agree on a process as limiting what occurs, if no agreement is sought or reached. However, the Applicant agreed with the Respondent’s interpretation of ‘permission’, which empowered the Commission to use any method it considered appropriate, regardless of the agreement of the parties, and if this was not the case the ‘Process’ sub-clause would be superfluous.
[8] The Applicant’s submission is that the correct interpretation, reading the clause as a whole, is that the Commission has the power under the ‘Power of FWA’ clause to resolve a dispute in any way which it considers necessary (including arbitration) unless the parties have agreed on a specific process, in the prior step. The Applicant submitted that this interpretation allows both clauses to perform work and to operate harmoniously. The Applicant submitted that if agreement as to process was required, at the time of referral, the ‘Power of FWA’ clause would have no work to do.
[9] The Applicant then submitted that, in the alternative, consideration should be given to the intention of the framers of the document, if the Commission considered that the clause was ambiguous. However, the Applicant submitted that its primary argument is that, there is no ambiguity in the clause and that the plain ordinary meaning of the clause permits the Commission to arbitrate this dispute.
[10] The Applicant submitted, the approach to the interpretation of the current dispute procedure as per Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd 20, as the authority for the plain and ordinary meaning of the words, giving rise to a sensible industrial outcome in accordance with the context of this environment, and that an agreement to arbitrate is not essential.
[11] The Applicant referred to AMIEU v Golden Cockerel 21with respect to the principles to be applied when interpreting an enterprise agreement made under the Act. The Applicant submitted the following approach that should be taken to the interpretation of the provision22:
(b) it is first necessary to determine whether the agreement has a plain meaning or contains an ambiguity;
(c) in determining whether ambiguity exists, the FWC will look at the evidence of surrounding circumstances, including evidence of prior negotiations that establishes the objective background facts known to all parties, matters in common contemplation and notorious facts of which knowledge is presumed;
(d) if the agreement has a plain meaning, contradictory evidence of the surrounding circumstances will not be considered;
(e) if the agreement is ambiguous, the FWC can use evidence of the surrounding circumstances to assist in interpreting the agreement;
(f) the FWC will consider the language of an agreement, understood in light of its context and purpose, to resolve disputes over the interpretation of an agreement;
(g) ‘Context’ includes the text of the agreement as a whole, the place of the disputed provision in the agreement and the legislative context in which it was made;
(h) the common intention of the parties will be determined objectively by interpreting the language used in the agreement in a way that a reasonable person would; and
(i) the task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome.
[1] The Applicant submitted that in the event that the Commission found that there was ambiguity, the Applicant relied on the Statement of Mr Glenn Power, District Vice President of the CFMEUQueensland Branch, as evidence of the meaning of the clause. The Applicant stated that Mr Power, had been involved in the negotiation between the bargaining representatives for the Agreement, the history of the negotiations in relation to the dispute resolution clause and that it was Mr Power’s understanding that, as a bargaining representative, clause 32 of the Agreement permitted employees and their representatives to have a dispute arbitrated, if the parties did not agree to an alternative process.
[2] Mr Power stated he was responsible for representing members in the Rockhampton area, which includes the Cook Colliery. He provided a summary of the negotiations, with a focus on the dispute resolution procedure. Mr Power stated that in 2011 employees at the Cook Colliery prepared a log of claims which included the claim for a dispute resolution clause to be prepared. Mr Power stated that in January 2012, the Respondent circulated a draft Agreement. He said this was not accepted for a clause which provided for settlement of the dispute, including through arbitration. The union's proposed dispute resolution clause was included in the 28 February 2012 draft of the Agreement. Mr Power explained that the purpose of the CFMEU’s proposed clause was to ensure that arbitration would occur if resolution could not be reached through conciliation, and it sought to confer as many powers as possible on Fair Work Australia (as it was then known) to ensure that settlement would occur 23.
[3] Mr Power further stated that the CFMEU sought, at draft clause 32.4, to confer powers on the FWA that were additional to those under the Act to ensure that it was doing everything possible to protect the interest of its members 24.
[4] Mr Powers provided further evidence as follows:
“16. I recall that I had some concerns as to whether or not the reference to ‘permitted under the Act’ was sufficient as I believed that the FWA needed to be given the broadest powers possible to resolve disputes and I believed that the reference to the Act may limit its powers.
17. My main concern was that the FWA needed to have the power to arbitrate and consequently the CFMEU proposed to remove the word ‘consent’ from the process clause.
18. Whilst the final clause was not in the exact terms initially proposed by the CFMEU, the CFMEU’s priority at all times was in ensuring that if the matter could not be resolved, that FWA had all powers possible to resolve it, including through arbitration.
19. I understood that step 4 of clause 32, as it was certified, conferred power on the FWA to arbitrate.
20. I understood that arbitration could occur either through the consent of the parties, or if there was no consent, by the FWA using the broad powers conferred upon it under the clause.” 25
[5] Finally, the Applicant submitted that, consistent with the decision of Construction, Forestry, Mining and Energy Union v North Goonyella Coal Mines Pty Ltd 26, that it is appropriate for the matter to be dealt with by way of arbitration considering: the object of the Fair Work Act 2009 to provide accessible and effective procedures to resolve grievances and disputes; that arbitration is specifically contemplated by clause 32; s.595 and s.739 of the Act permit the Commission to deal with the matter by way of arbitration; the case is not a case where the claims are so obviously untenable that it could be said that they are unlikely to succeed; and the dispute has been unable to be resolved to date. The Applicant submitted that, in circumstances where the dispute has progressed to step 4, and remains unresolved, and the parties are unable to agree on a process to resolve the dispute, that the only reasonable way of resolution is by arbitration.
Conclusion
[6] The Commission’s general power to deal with disputes arises from s.595 of the Act. Section 595 provides that the Commission may only deal with a dispute if it is expressly authorised to do so under another provision of the Act. Section 595 provides that the Commission may mediate or conciliate, or make a recommendation or express an opinion as it considers appropriate to deal with a dispute. The Commission may deal with a dispute by Arbitration if expressly authorised to do so, in accordance with another provision of the Act.
[7] The Agreement was approved on 20 July 2012 and is one to which s.186(6) of the Act applied. That is, the Commission had to be satisfied that the Agreement contained a procedure requiring or allowing the Commission (or another person) to settle disputes identified in that subsection. This forms part of the context of the provision that is relevant to determination of the Respondent’s jurisdictional objection.
[8] Clause 32 of the Agreement is a term of an Enterprise Agreement that provides a procedure for dealing with disputes and is a term referred to in ss.186(6) and s.738 of the Act. As such, the Commission is expressly authorised to “deal with a dispute” by the term itself and s.739 of the Act.
[9] Section 739 of the Act provides that the Commission must not exercise any powers limited by the term but, if, in accordance with the term, the Parties have agreed that the Commission may arbitrate the dispute (however described), the Commission may do so. 27
[10] The issue in dispute in this matter is, does clause 32 limit the exercise of the Commission’s powers and, if not, have the parties agreed that the Commission may arbitration the dispute in accordance with the term. This requires a construction of the term to establish the powers given to the Commission by the Parties.
[11] The relevant portions of the procedure are contained in provisions relating to ‘Step 4’, ‘Process’ and ‘Power of FWA’. Step 4, on its plain meaning, applies where the prior steps have not resolved the dispute. Following this, Step 4 requires the parties to endeavour to resolve the dispute in a timely manner and “refer the dispute to FWA”. Step 4 itself does not provide any guidance on to what is to happen in conducting dispute resolution at Step 4.
[12] However, the next provisions provides for ‘Process’. That ‘Process’ provides that the parties ‘may’ agree on the process to be utilised by the Commission, which includes mediation, conciliation and arbitration. This clause on its face does not limit the powers to be exercised by the Commission but is rather an inclusive description of the “process” that the parties may agree is to be utilised by the Commission. It is of importance that this clause relates to “process” in the Commission, rather than the “power” of the Commission.
[13] Instead, the drafters have created a separate provision to do with the “Power of FWA”. This provision provides that “where the matter in dispute remains unresolved” the Commission “may” exercise “any method of dispute resolution permitted”. This is limited to any method that the Commission “considers appropriate” to ensure settlement of the dispute.
[14] In assessing the words of the provision, given that Step 4 already applies where “discussions do not resolve the dispute” in the preliminary stages of the grievance procedure, it is unclear then to what the provision outlining the “Power of FWA” is directed in that it also applies “[W]here the matter in dispute remains unresolved”.
[15] Taking into account the plain words of the provision, the Agreement as a whole and the context in which the provision was made, the Commission is unable to accept the Respondent’s contention. If the Respondent was correct in its construction then it must be that the provision operates in such a way that consent of both parties would also be needed for the Commission to mediate or conciliate the dispute. Section 186(6) of the Act requires that the Agreement contain a term providing a procedure allowing the Commission (or another person) to settle disputes. If the Agreement operated in the way contended for by the Respondent then clause 32 would not be such a provision.
[16] The applicable construction is that if a dispute remains unresolved at ‘Step 4’ then the parties can refer the dispute to FWA. In so referring, the parties ‘may’ agree on the process (as distinct from the power) to be utilised by the Commission. That process may include mediation, conciliation or arbitration. However, the parties have gone further in their agreement and have created a clause outlining the “Power of FWA”. That provision provides that the Commission is empowered to “exercise any method of dispute resolution permitted” that it considers appropriate to ensure settlement of the dispute. The clause is not clear on which methods of dispute resolution are permitted. The clause does not, on its face, limit the power of the Commission.
[17] The Respondent contends that the use of the word ‘permitted’ is limited to that process to be utilised by the Commission that has been agreed in the process stage of the procedure. The context of the provision read as a whole, the Agreement and the Act do not tend in favour of this construction. In this term, the parties have expressly empowered the Commission to exercise any method of dispute resolution permitted. Permitted must be read in conjunction with the words that follow being any method permitted that the Commission “considers appropriate to ensure the settlement of the dispute”. If the clause required consent of all parties prior to arbitration, then it would not be the case that the Commission could exercise any method of dispute resolution that it considered appropriate to ensure the settlement of the dispute.
[18] This construction leads to a sensible industrial outcome, is a construction that is consistent with the words of the provision read as a whole, the Agreement and context.
[19] The Applicant is at liberty to apply for the matter to be brought on for a Directions Conference.
COMMISSIONER
Appearances:
Mr W Ash, Lawyer, Hall Payne Lawyers, for the Applicant
Mr I Humphreys, Lawyer, Ashurst Australia, for the Respondent
Hearing details:
2017:
Brisbane
Tuesday, 21 February 2017
Final written submissions:
9 December 2016 for the Respondent
23 December 2016 for the Applicant
1 Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission (2001) 203 CLR 645
2 Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission (2001) 203 CLR 645 at [31] – [34]
3 (2004) 219 CLR 165
4 [2004] HCA 52 at [35] – [38]
5 (1982) 149 CLR 337
6 Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission (2001) 203 CLR 645
7 [2014] FWCFB 7447
8 City of Wanneroo v Australian Municipal, Administrative, Clerical And Services Union (2006) 153 IR 426 at [53] per French J; See also Amcor Limited v CFMEU (2005 222 CLR 241).
9 Short v Hercus (1993) 40 FCR 511 at 518 - 519 per Burchett J (Drummond J agreeing).
10 Amcor v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [31] per Gummow, Hayne and Heydon JJ.
11 Oceanic Coal Australia Pty Ltd v Parker (2010) 198 IR 445 at [44] – [46].
12 AMIEU v Golden Cockerel Pty Limited[2014] FWCFB 7447 at [30] per President Ross, DP Gostencnik and Commissioner Johns.
13 Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v Skilled Engineering [2003] FCA 260 at [18].
14 Ibid.
15 Construction, Forestry, Mining and Energy Union v Henry Walker Eltin Contracting Pty Ltd (2001) 108 IR 409 at [44].
16 Amcor v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [98].
17 (2005) 222 CLR 241.
18 [2014] FWC 5652.
19 Submissions of the Respondent at [25].
20 [2011] FCAFC 67
21 [2014] FWCFB 7447.
22 Applicant’s Submissions at [29]
23 Affidavit of Glenn William Power dated 23 February 2017 at [11]
24 Ibid at [12]
25 Ibid at [16] – [20]
26 2014] FWC 6731.
27 See section 739(4) of the Act
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