Crosthwaite v National Jet Systems Pty Ltd (No.4)
[2010] FMCA 965
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CROSTHWAITE v NATIONAL JET SYSTEMS PTY LTD (No.4) | [2010] FMCA 965 |
| INDUSTRIAL LAW – Alleged underpayment of pilots under Australian Workplace Agreements – whether applicant estopped from exercising statutory discretion to enforce obligation to pay increases under Australian Workplace Agreements. INDUSTRIAL LAW – Alleged duress – whether illegitimate pressure applied by employer to pilots to enter into Australian Workplace Agreements. WORDS AND PHRASES – “currency” – “continue”. |
| Workplace Relations Act 1996 (Cth), ss.170VD, 170VF(1), 170VJ(2), 170VL, 170VM(2), (3) and (4), 170VO(1)(a) and (3)(a), (4)(a) and (5)(a), 170VV, 170WG(1), 170WGG, 176, 400(5), 407(1)(b) and (2)(zi), 719(1) and (6), 720, 841 Workplace Relations Regulations 2006 (Cth), reg.2.14, Chapter 7 |
| AFMEPKIU v Ardmona Foods Ltd (2006) 155 IR 211; [2006] FCA 1039 Canturi v Sita Coaches Pty Ltd (2002) 116 FCR 276; [2002] FCA 349 CEPU v ACCC (2007) 242 ALR 643; [2007] FCAFC 132 |
| G E Dal Pont, Law of Agency (Chatswood, NSW: Butterworths, 2001) The Oxford English Dictionary (2nd Edition) (Volumes III and IV) (Oxford: The Clarendon Press, 1989) |
| Applicant: | KERREN MAREE CROSTHWAITE |
| Respondent: | NATIONAL JET SYSTEMS PTY LTD |
| File Number: | PEG 109 of 2007 |
| Judgment of: | Lucev FM |
| Hearing dates: | 7-11 April, 22-24 July 2008 |
| Date of Last Submission: | 7 August 2008 |
| Delivered at: | Perth |
| Delivered on: | 13 December 2010 |
| Applicant: | KERREN MAREE CROSTHWAITE |
| Respondent: | NATIONAL JET SYSTEMS PTY LTD |
| File Number: | PEG 122 of 2007 |
| Judgment of: | Lucev FM |
| Hearing dates: | 7-11 April, 22-24 July 2008 |
| Date of Last Submission: | 7 August 2008 |
| Delivered at: | Perth |
| Delivered on: | 13 December 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr M Bromberg SC and Mr R L Hooker |
| Solicitors for the Applicant: | Corrs Chambers Westgarth |
| Counsel for the Respondent: | Mr H J Dixon SC and Mr A B Gotting |
| Solicitors for the Respondent: | EMA Legal |
PEG 109 of 2007
ORDERS
The parties confer with respect to appropriate declarations and orders.
Matter be adjourned to 9.00am on 24 December 2010.
Costs, if any, reserved.
PEG 122 of 2007
ORDERS
The parties confer with respect to appropriate declarations and orders.
Matter be adjourned to 9.00am on 24 December 2010.
Costs, if any, reserved.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 109 of 2007
| KERREN MAREE CROSTHWAITE |
Applicant
And
| NATIONAL JET SYSTEMS PTY LTD |
Respondent
PEG 122 of 2007
| KERREN MAREE CROSTHWAITE |
Applicant
And
| NATIONAL JET SYSTEMS PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant, Kerren Maree Crosthwaite, is a Workplace Inspector appointed under s.176 of the Workplace Relations Act 1996 (Cth)[1] as that Act stood when these two applications were made on 25 May 2007 and 15 June 2007 respectively.[2] The applicant has standing to bring the proceedings for the imposition of the penalties sought in the applications.
[1] “WR Act”.
[2] In matters PEG 109 of 2007 and PEG 122 of 2007.
The respondent is a contract aviation service provider which employed a number of pilots the subject of the proceedings. A member of the Cobham Group of companies, the respondent operated, at the material times, a fleet of approximately 25 jet aircraft with a combination of freight and passenger options. The Cobham Group employs approximately 1000 employees Australia-wide. There is no dispute that the respondent is a trading corporation. The respondent has a human resources department and ready access to industrial relations advisers including lawyers.
The applicant’s claims
The claims made by the applicant in the proceedings include the following:
a)the 33 pilots concerned were each employed by the respondent under a pre-reform Australian Workplace Agreement,[3] that is a workplace agreement entered into under the provisions of the WR Act as in force at 26 March 2006;[4]
b)the respondent was required to adjust each pilot’s salary on 1 July each year to reflect any upwards CPI movement whilst the AWAs were current, and in accordance with the provisions of the AWA;
c)each of the 33 pilots were denied a 3% salary increase from 1 July 2006, and 24 of those pilots were denied a 2.4% salary increase from 1 July 2007, in breach of the Pre-Reform AWA;
d)the respondent contravened s.719(1) of the WR Act by its failure to pay the two salary increases referred to above, and in respect of each contravention there arose an underpayment under s.719(6) of the WR Act;
e)the respondent breached s.170WG(1) of the Pre-Reform WR Act by applying duress to two pilots, King and Kruger, in connection with the making of a new Pre-Reform AWA; and
f)the respondent breached s.400(5) of the WR Act by applying duress to King and to Kruger in connection with the making of a new AWA.
[3] “Pre-Reform AWA”.
[4] “Pre-Reform WR Act”.
Orders sought
The applicant seeks orders in the following terms for the imposition of a penalty on the respondent for each breach of an applicable provision in each of the Pre-Reform AWAs made between the respondent and:
a)the 33 pilots, relating to the alleged non-payment of the 3% salary increase on and from 1 July 2006;
b)the 24 pilots, relating to the alleged non-payment of the 2.4% salary increase on and from 1 July 2007.
The above orders are sought under s.719(1) of the WR Act. Orders for the underpayments to be made were not sought, because the underpayments have subsequently been paid (without admission of liability) to each pilot.[5]
[5] Transcript, page 417; see para.11 below, and in particular para.6 of the Statement of Agreed Facts.
In respect of each of Kruger and King, the applicant seeks orders for the imposition of a penalty:
a)under s.170VV of the Pre-Reform WR Act and reg.2.14 of Chapter 7 of the Workplace Relations Regulations 2006 (Cth) for a breach of s.170WG(1) of the Pre-Reform WR Act concerning duress applied to King and Kruger in connection with a new Pre-Reform AWA with the respondent; and
b)under s.407(1)(b) and (2)(zi) of the WR Act for a breach of s.400(5) of the WR Act concerning the duress applied to King and Kruger in connection with the making of a new AWA with the respondent.
An order is also sought under s.841 of the WR Act that any penalty imposed be paid to the relevant individual pilot affected by the breach, alternatively to the Commonwealth.
The issues
There are two primary issues in relation to this matter:
a)the claims concerning underpayments; and
b)the claims concerning duress.
In relation to the underpayment claims the issues are:
a)whether, by reason of the construction of the Pre-Reform AWAs, the respondent was not obliged to pay the CPI increases with effect from 1 July 2006 and 1 July 2007, because those dates were not “[d]uring the currency of this agreement” under clause 27.3 of the Pre-Reform AWAs; and
b)whether the applicant is estopped from exercising a statutory discretion to enforce obligations on the respondent to pay the pilots the CPI increases with effect from 1 July 2006 and 1 July 2007 under the Pre-Reform AWAs by reason of the matters relied upon as constituting an estoppel and set out at paragraph 122[6] of the Further Amended Points of Defence.[7]
[6] “Estoppel Defence”.
[7] “Points of Defence”.
In relation to the duress claims the issues are:
a)whether the respondent applied illegitimate pressure upon each of King and Kruger in order to secure with each of them a Pre-Reform AWA and an AWA in the terms sought by the respondent; and
b)whether the applicant is estopped from pursuing the duress claims by reason of the Estoppel Defence claims.
Alleged underpayment claims
The alleged underpayment claims are summarised above.[8]
[8] See para.3(a)-(d) above.
Summary of agreed facts
In respect of the alleged underpayment claims the following are agreed facts:
1.Each of the persons (“the employees”) listed in the first column of “GMR 96” to the Affidavit of Geoffrey Michael Roberts sworn 26 March 2008 (“GMR 96”) were employees of the Respondent over the period identified in the second column of GMR 96 (“the relevant period of employment”)
2.Each of the employees was a party with the Respondent to a pre-reform AWA which regulated the employment of the person and bound the Respondent (“the pre-reform AWAs”) over the relevant period of employment.
3.Each of the pre-reform AWAs required the Respondent to pay the employee a salary and contained a clause in the following terms:
“During the currency of this agreement the gross annual salary of each Pilot as tabled (sic) Schedule 1 of the Agreement shall be adjusted with effect 1 July each year to reflect any positive annual movement in the March All Groups Consumer Price Index (“CPI”) as determined by the Australian Bureau of Statistics. Salaries will not be reduced by any negative movement to the CPI.”
4.The annual movement in the 2006 March All Groups CPI was 3 percent and the annual movement in the 2007 March All Groups CPI was 2.4 percent (“the CPI increases”).
5.The application of the CPI increases to the salaries of each of the employees over the relevant period of employment results in the amount shown in the third column of GMR 96.
6.On or about 15 November 2007 the Respondent paid to each of the employees without admission the amount shown in the third column of GMR 96 in respect of salary referable to the CPI increases over the relevant period of employment.[9]
[9] “Statement of Agreed Facts”.
Quantum of alleged underpayment claims
The employees, periods and amounts referred to in points 1 and 5 of the Statement of Agreed Facts set out above are as follows:
Name
Period
Amount
J Adams
1/7/06 – 31/10/07
$4108.48
S Carter
1/7/06 – 31/10/07
$3899.04
J Coldhill
1/7/06 – 31/10/07
$3672.36
D Deckert
1/7/06 – 7/7/06
$59.81
S De Legh
1/7/06 – 31/10/07
$5963.24
R Dyson
1/7/06 – 4/8/07
$2676.78
C Edmunds
1/7/06 – 31/10/07
$4089.51
A Edwards
1/7/06 – 31/10/07
$3849.78
M Free
1/7/06 – 31/10/07
$5026.96
A Funnell
1/7/06 – 30/9/06
$733.95
L Galletti
1/7/06 – 18/7/06
$282.93
A Godfrey
1/7/06 – 31/10/07
$6861.67
A Hardy
1/7/06 – 31/10/07
$4556.96
R Holgate
1/7/06 – 31/10/07
$3650.38
G Inness
1/7/06 – 31/10/07
$4006.03
I Johnson
1/7/06 – 31/10/07
$6378.24
A King
1/7/06 – 15/12/06
$1102.54
L Kruger
1/7/06 – 15/12/06
$1307.56
M London
1/7/06 – 31/10/07
$6471.77
D Martin
1/7/06 – 31/10/07
$6085.05
D McKillop
1/7/06 – 31/10/07
$6094.72
S McLean
1/7/06 – 30/9/06
$611.38
C Milenkovic
1/7/06 – 31/10/07
$4076.29
M Millar
1/7/06 – 31/10/07
$6669.10
J Murdoch
1/7/06 – 19/10/06
$1337.73
R Park
1/7/06 – 31/10/07
$7337.80
V Rayner
1/7/06 – 31/10/07
$6582.92
P Saario
1/7/06 – 11/9/06
$556.21
N Schmidt
1/7/06 – 28/9/06
$627.54
J Speed
1/7/06 – 31/10/07
$6307.06
R Stevens
1/7/06 – 1/6/07
$2241.10
B Stevenson
1/7/06 – 25/1/07
$880.20
G Whitbread
1/7/06 – 31/10/07
$5318.36
[10]
[10] Affidavit of Geoffrey Michael Roberts, sworn 26 March 2008 (“Mr Roberts’ March 2008 Affidavit”) at Annexure GMR 96.
The respondent’s construction argument
The respondent’s position is that it was not obliged to make the CPI Payments because of the construction of the phrase “[d]uring the currency of this agreement” in clause 27.3 of the Pre-Reform AWAs.
The respondent argues that:
a)the parties drew a distinction between the “currency” of the Pre-Reform AWAs and the “continuation” of the Pre-Reform AWAs, as it says is apparent from a comparison of clauses 3 and 27 of the Pre-Reform AWAs;
b)clause 3 of the Pre-Reform AWA sets out the parties’ contemplation that after the nominal expiry date the applicable terms and conditions, or the type of agreement, could be different to that during the currency of the Pre-Reform AWA. That is, the bargain agreed upon extended for the nominal term of the AWA, and the parties were free to enter into differing arrangements thereafter, notwithstanding that the Pre-Reform AWA continued to apply after the nominal expiry date by reason of the provisions of the Pre-Reform WR Act and the WR Act;
c)in clause 27 of the Pre-Reform AWA the parties chose not to refer to the continued application of the AWA beyond its nominal term but gave effect to a different formulation which the respondent says should be given effect to by the Court so as to preclude an obligation arising to make the CPI Payments from 1 July 2006 and 1 July 2007; and
d)the Pre-Reform AWAs were in “currency” during the nominal term only, even though they may have “continued” in operation after the expiration of the nominal term by reason of the operation of the Pre-Reform WR Act and the WR Act.
Therefore, the respondent submits it was only obliged to make the CPI Payments during the nominal term of the Pre-Reform AWAs and not thereafter. The respondent submits that it proceeded to pay the pilots on this basis.
The applicant argues that the provisions of the Pre-Reform AWAs for each of King and Kruger make it clear that the parties intended the Pre-Reform AWA to operate until it was replaced, and that until it was replaced it remained current. Thus, the purport and intent of the Pre-Reform AWA is that whilst the agreement continues to operate there will be a salary increase on 1 July each year referable to the CPI Payments. It is argued that the word “currency” means the operative period of the Pre-Reform AWA, which is covered by clause 3 of the Pre-Reform AWA. The applicant argues that this does not and cannot mean that the Pre-Reform AWA only applies until the nominal expiry of the agreement, because the parties have expressly provided otherwise, and in any event the Pre-Reform WR Act and WR Act operate to extend the Pre-Reform AWA beyond its nominal expiry date by reason of the provisions of s.170VJ(2) of the Pre-Reform WR Act.
King’s Pre-Reform AWA
King’s Pre-Reform AWA provides as follows:
3.Period of Operation of AWA
This AWA has a nominal term ending on 30 June 2004. After this time the parties can agree to extend this AWA or, make a new AWA or make another type of agreement to cover the terms and conditions of employment. The Act provides that an AWA continues to apply after the end of its nominal term unless it is replaced.
27.Remuneration
…
27.3During the currency of this agreement the gross annual salary of each Pilot as tabled [in] Schedule 1 of the Agreement shall be adjusted with effect [from] 1 July each year to reflect any positive annual movement in the March All Groups Consumer Price Index (“CPI”) as determined by the Australian Bureau of Statistics. Salaries will not be reduced by any negative movement of the CPI.
Kruger’s Pre-Reform AWA
Kruger’s Pre-Reform AWA contains the following relevant terms:
3.Period of Operation of AWA
This AWA will operate to 31 July 2002. After this time the parties can agree to extend this AWA or, make a new AWA or make another type of agreement to cover the terms and conditions of employment.
27.Remuneration
…
27.3During the currency of this agreement the gross annual salary of each Pilot as tabled [in] Schedule 1 of the Agreement shall be adjusted with effect [from] 1 July each year to reflect any positive annual movement in the March All Groups Consumer Price Index (“CPI”) as determined by the Australian Bureau of Statistics. Salaries will not be reduced by any negative movement of the CPI.
Pre-Reform WR Act provisions
Section 170VJ of the Pre-Reform WR Act provided that:
(1)An AWA for a new employee starts operating on the later of:
(a) the day after a filing receipt is issued for the AWA; or
(b)the day specified in the AWA as the starting day; or
(c)the day the employment commences:
and stops operating at the earlier of the following times:
(d)the end of the day when a refusal notice is issued in relation to the AWA;
(e)the time when a termination under section 170VM takes effect;
(f)the time when another AWA between the employer and employee starts to operate.
(2)An AWA for an existing employee starts operating on the later of:
(a)the day after an approval notice is issued for the AWA; or
(b)the day specified in the AWA as the starting day;
and stops operating at the earlier of the following times:
(c)the time when a termination under section 170VM takes effect;
(d)the time when another AWA between the employer and employee starts to operate.
Section 170VL of the Pre-Reform WR Act provided that:
(1)An employer and employee may make a written agreement varying an AWA.
(2)The variation takes effect on the later of:
(a)the day after an approval notice is issued for the variation agreement; or
(b)the day specified in the variation agreement as the date of effect.
(3)Section 170 VG applies to the AWA as varied in the same way as that section applies to the original AWA.
Section 170VM of the Pre-Reform WR Act provided that:
Termination by a termination agreement
(1)The employer and employee may at any time make a written agreement to terminate the AWA.
(2)A termination under subsection (1) takes effect at the end of the day on which an approval notice is issued for the termination agreement or at such later time as is specified in the termination agreement.
Termination by the Commission.
(3)After the nominal expiry date of an AWA, the Commission may, on application by either party, terminate the AWA if the Commission considers that it is not contrary to the public interest to do so.
(4)The Commission must issue a copy of its determination to the parties and to the Employment Advocate.
(5)A termination under subsection (3) takes effect at the end of the day on which the Commission issues copies of its determination, or at such later time as is specified in the determination.
Termination in accordance with the AWA
(6)After the nominal expiry date of an AWA, the employer or the employee may file a termination notice, stating that the AWA is to be terminated in a manner provided for in the AWA.
(7)A termination under subsection (6) takes effect at the end of the day on which an approval notice is issued for the termination notice, or at a later time specified in the termination notice.
The meaning of “currency” and “continue”
“Currency” has been defined as “the course (of time); the time during which something is current”, whilst “current” is defined as “running in time; in the course of passing; in progress.”[11]
[11] The Oxford English Dictionary (2nd Edition) (Volume IV) (Oxford: The Clarendon Press, 1989) page 150 (“Oxford English Dictionary”).
In relation to the currency of the policy of insurance on a ship the following has been said:
“The policy contained the following provision: “Returning one guinea per cent should the vessel be employed in the Eastern trade during the whole currency of this policy.” The vessel was lost sometime before the 12 months expired and from April 1, 1899, to the date of her loss she was employed only in the Eastern trade .... The question is as to the meaning to be put upon the expression, “the whole currency of the policy.” The plaintiffs say the currency of the policy ends when the ship is lost; the defendant says the expression means the 12 months for which the vessel was insured. I think the plaintiff’s contention is the right one. The risk no longer exists after the ship is lost; the amount insured is immediately payable, and, being paid, the policy, and all obligations created by it, are at an end; the policy is no longer in any sense current.”[12]
[12] Gorsedd SS Co Ltd v Forbes (1900) 16 TLR 566 at 566 per Bigham J.
In EJ Eager & Son Ltd v Jaenke[13] an agreement to let a motor vehicle with an option to purchase contained a provision that the respondent would execute promissory notes by way of collateral security for the payment of instalments, with a proviso that, in the event of the vehicle being seized by the company or returned by the respondent the promissory notes which were current became void and ineffectual. The Full Court observed that:
“As to whether “current” (in the clause providing that in the event of a seizure of the car by the company, promissory notes then current are to be delivered to the respondent and are to be void) refers to promissory notes unpaid though due, we think it refers to promissory notes which still have time to run – ie, which are running – and not to those of which the due date for payment has arrived or passed. Mr Walsh, for the respondent, contended that “current” meant “outstanding.” That is not the ordinary meaning of the word “current” and there is no reason why the ordinary meaning should not be adhered to.”[14]
[13] [1931] St RQd 257 (“Eager”).
[14] Eager at 263 per Webb J.
“Continue” has been defined as “to carry on, keep up, maintain, go on with, persist in (an action or usage) etc”,[15] whilst “continued” has been defined as “carried on or kept up without cessation, continual, constant.”[16]
[15] Oxford English Dictionary (Volume III) page 828. “Continue” appears in cl.3 of the King Pre-Reform AWA, but not in the Kruger Pre-Reform AWA, but the effect of the Pre-Reform WR Act in respect of the latter is the same.
[16] Oxford English Dictionary (Volume III) page 829.
In relation to a lease which provided for an “option of continuing for an extension of 7 or 14 years” it has been held that:
“The plain meaning of “continuing” is “carrying on” or “not ceasing to be”, and reading “carrying on” for “continuing”, the clause reads “the tenant has the choice of carrying on for an extension of 14 years with a break at 7 years”; or reading “not ceasing to be”, the clause reads, “the tenant has the choice of not ceasing to be the tenant for an extension of 14 years with a break at 7 years”.
It was held that the lease meant that no notice was necessary because the option was said to have been exercised.[17]
[17] Gardner v Blaxill & Anor [1960] 2 All ER 457 at 460-461 per Paull J.
If the CPI increase provisions of King and Kruger’s Pre-Reform AWAs are set aside, there is no suggestion that other provisions of King’s and Kruger’s Pre-Reform AWAs that impose obligations on each of the parties did not continue beyond the nominal expiry date of those AWAs. For example, the work-wage bargain continued, and the obligation on the respondent to pay Mr King and Kruger continued (albeit with a dispute about how much). With service comes the right of the pilot to accrue certain types of leave, and the obligation on the respondent to grant and pay for that leave, upon the fulfilment of certain conditions.
No obligations were pointed to which were not current, and not continuing, in King and Kruger’s Pre-Reform AWAs, save for the dispute concerning the CPI increase provisions. It suffices in any event to point to matters of substance, such as the work-wages bargain and the accrual of leave entitlements to demonstrate that the Pre-Reform AWAs still contained maintainable obligations, on the part of both parties.
So long as obligations continue to arise, and work is performed and entitlements continue to accrue, as occurred here with King and Kruger continuing to work, the arrangements founding those obligations, in this case the Pre-Reform AWAs, are current. They are also continuing: the two words – “currency” and “continue” – are not in this context mutually exclusive – far from it – because the continuing obligations arise out of the current arrangement, in this case the Pre-Reform AWAs. In that sense it does not matter that different words – “continues” and “currency” - are used in clauses 3 and 27 of King’s Pre-Reform AWA. In any event, the suggested distinction involves a very fine distinction between two words, which to the ordinary person, might convey the same or a similar meaning. AWAs, like industrial awards, ought not to be interpreted with a fine-tooth comb.[18] The correctness of that approach is reinforced by the errors, both textual and grammatical in clause 27.3 of Mr King’s and Mr Kruger’s Pre-Reform AWAs which demonstrate that the Pre-Reform AWAs have not been drafted with precision, or particular attention to detail.
[18] Van Efferen v CMA Corporation Ltd (2009) 183 IR 319 at 328 per Tracey J; [2009] FCA 597 at paras.33-36 per Tracey J.
If the parties had intended to limit the CPI Increase Provisions to 1 July in each year prior to the nominal expiry date of the Pre-Reform AWA, then it would have been easy to draft a simpler version of clause 27.3 of King’s and Kruger’s Pre-Reform AWAs to say so, for example:
Each year on 1 July until the nominal expiry date of this agreement the gross annual salary of the Pilot shall be adjusted with effect from 1 July to reflect any positive annual movement in the March All Groups Consumer Price Index (“CPI”) as determined by the Australian Bureau of Statistics. Salaries will not be reduced by any negative movement of the CPI.
or, adopting a slightly different opening:
On each 1 July prior to the nominal expiry date [etc].
The Court therefore considers that on the ordinary meaning of the words “the obligations” contained in clause 27.3 of Mr King and Mr Kruger’s Pre-Reform AWAs those AWAs were still current after the nominal expiry date. Therefore 1 July 2006 and 1 July 2007 were, on the plain meaning of the provisions of the AWAs, dates “during the currency” of Mr King and Mr Kruger’s Pre-Reform AWAs, and the respondent was obliged to pay the 3% and 2.4% increases from those dates.
The Court’s view is reinforced by the provisions of ss.170VJ(2) and 170VM of the Pre-Reform WR Act. Under s.170VJ(2) of the Pre-Reform WR Act an AWA for an existing employee starts to operate on the day an approval notice is issued or the day specified in the AWA as the starting day, and stops operating, for the purposes of this matter, when a termination under s.170VM of the Pre-Reform WR Act takes effect. During the time that the AWA is operating the AWA is current, in the sense that the period of operation is “running in time; in the course of passing; in progress.”[19]
[19] See definition of “current” and “currency” in para.22 above.
There is no dispute that Mr King and Mr Kruger’s Pre-Reform AWAs came to an end on a date specified, after the nominal expiry date, by order of the Australian Industrial Relations Commission[20] on the application of the respondent. That termination took effect at a date specified by the AIRC in accordance with s.170VM(5). That was the time, when for the purposes of s.170VJ(2)(c) the Pre-Reform AWAs for Mr King and Mr Kruger stopped operating. That was also the date, where for reasons set out above, they ceased to be current. Until their termination by reason of s.170VM(3) and (5) and the cessation of operation under s.170VJ(2)(c) of the Pre-Reform WR Act Mr King and Mr Kruger’s Pre-Reform AWAs were current.
[20] “AIRC”.
The Court concludes therefore, that both on the plain meaning of Mr King and Mr Kruger’s Pre-Reform AWAs, and on the basis of the provisions of s.170VJ and 170VM of the Pre-Reform WR Act, the Pre-Reform AWAs for Mr King and Mr Kruger were current as at 1 July 2005 and 1 July 2006. The consequence of that conclusion is that, subject to the Estoppel Defence, Mr King and Mr Kruger were entitled to any increase in their gross annual salary due by reason of the provisions of clause 27.3 of their Pre-Reform AWAs.
Underpayments – estoppel
The respondent argues that the factual basis in relation to the estoppel argument applying to the underpayments is as follows:
a)Qantas invited the respondent to bid to operate and maintain eight Boeing 717 aircraft in October 2004, with the maintenance contract to commence from July 2005. The respondent put in a bid for the Qantas maintenance contract as a result of accepting the invitation.[21] The respondent was in competition against Jetstar in relation to the Qantas maintenance contract;
[21] “Qantas Bid”.
b)sometime in late 2004 both King and Kruger became aware of the Qantas Bid, but it is not clear whether they did so at precisely the same time;
c)the success of the Qantas Bid for the respondent was regarded as essential for the respondent’s future success and prosperity, and the National Jet Systems Pilot Group[22] also regarded the Qantas Bid as essential for the ongoing employment of pilots within the respondent;
[22] “NJSPG”. The NJSPG was an association representing the interests of pilots employed by the respondent which acted principally through its committee, the Pilots Group Committee. The NJSPG was not at any time registered as an organisation under any workplace relations legislation, Federal or State. The Court has, for the sake of consistency used “NJSPG” throughout these Reasons, even where the relevant acts were those of the Committee.
d)the NJSPG were informed of the Qantas Bid by the respondent in or about November 2004, and at that time a meeting was organised between representative pilots and the NJSPG to consider terms upon which the respondent might respond to the Qantas Bid, including any concessions in terms of employment that might be made by the respondent’s pilots;
e)on 17 November 2004, the NJSPG confirmed an offer to increase the overtime threshold for B717 pilots from 75 hours to 77 hours in July 2006 and to reduce salaries for Captains by $1,002 per annum and for First Officers by $601 per annum, and accepted that the respondent’s Qantas Bid would reflect that offer. The offer was said to be made on behalf of the respondent’s pilots, and not just members of the NJSPG, and recognised that the offer would be reflected in the respondent’s response to the Qantas Bid;
f)the Qantas Bid was submitted by the respondent in early December 2004 and included costings reflecting salary reductions of $1,000 per annum for Captains and $600 per annum for First Officers, plus reduced overtime cost due to an increase in the overtime trigger for B717 pilots from 75 hours to 77 hours;
g)because of the uncompetitiveness of the respondent’s Qantas Bid, the respondent was invited to submit a Best and Final Offer[23] in mid-December 2004;
[23] “BAFO”.
h)the respondent’s representatives met with the NJSPG on 30 December 2004 to discuss the BAFO. The meeting was attended by representatives of the respondent’s pilots;
i)the NJSPG conducted a ballot concerning contribution towards B717 endorsement training on 3 January 2005 in which approximately 83% of the respondent’s pilots based at Cairns, Darwin and Perth voted in favour of the contribution;
j)at the time of the vote the B717 endorsement training contribution was coupled with a performance bonus of $7,500 payable after three years and $7,500 payable after four years;
k)in early January 2005 Siebert:[24]
[24] Mr Siebert who at the relevant times was General Manager, Air Transport Operations had previously held positions at a senior managerial and executive level with the respondent and had been employed by them since 1994.
i)was informed that the respondent’s pilots had agreed to contribute 50% of the B717 endorsement training costs by way of salary sacrifice;[25]
[25] “Training Contribution”.
ii)was not informed that the pilots had assumed that the Training Contribution was coupled with the performance bonus totalling $15,000;
l)the respondent included in its costing for the BAFO a 50% contribution towards the B717 training costs by pilots training on the B717 aircraft;
m)King appreciated that:
i)a majority of the respondent’s pilots had voted in favour of the Training Contribution;
ii)the NJSPG was to advise the respondent of the view of the majority;
iii)the respondent was including in its costing a 50% contribution to the B717 training costs by pilots training on the B717 aircraft; and
iv)the training costs were significant, although Mr King did not know the actual amount of the costs;
n)the respondent prepared the BAFO on the basis of a 50% contribution to the B717 training costs by pilots training on the B717 aircraft and submitted the BAFO to Qantas on 10 January 2005; and
o)Qantas awarded the contract to supply pilot labour to operate the B717 aircraft to the respondent on 11 February 2005.[26]
[26] “Qantas Contract”.
An alleged agency arrangement
The respondent asserts that an agency existed between the pilots King and Kruger (as well as 29 of the respondent’s other pilots) and the NJSPG (or two NJSPG Committee members, Der Kinderen and Ward), which was expressly contained in both the NJSPG Constitution and in clause 10 of the 1999 AWA (for the Kruger AWA, the AWAs for two other pilots, Millar and Free) or clause 6 of the 2003 AWA (for the King AWA and the AWA for the other 27 of the respondent’s pilots).
Alternatively, the respondent argues that an agency existed between King and Kruger (as well as the 29 other respondent’s pilots) and the NJSPG (or Der Kinderen and Ward), and that it was implied from the conduct of the NJSPG and the respondent in the period from 1 November 2004 to 24 May 2005.[27]
[27] See generally Further Amended Points of Defence, para.122(a) and particulars thereto; G E Dal Pont, Law of Agency (Chatswood, NSW: Butterworths, 2001) para.4.5, page 93.
The respondent argues that the agency of the NJSPG (or Der Kinderen and Ward), implied from conduct, was not confined to negotiating an AWA, but extended to negotiating with the respondent over terms and conditions of employment. This is said to be reflected in the fact that the NJSPG attended and discussed matters unrelated to the negotiation of an AWA with the respondent in November and December 2004, and specifically discussed the Qantas Bid. It is also argued by the respondent that the NJSPG communicated the position of the respondent’s pilots, including concessions incorporated in the Qantas Bid and the BAFO to the respondent, and made those communications after consultation with the pilots who were aware that the NJSPG was conveying their position to the respondent. It is also argued that NJSPG correspondence did not limit its role to its members, but rather, on some occasions, addressed the position of the “whole pilot community”, as opposed to just members of the NJSPG. Further, and in any event, King and Kruger were members of the NJSPG in the period from, at least, September 2004 to June 2005.
The respondent rejects any suggestion that the NJSPG were only acting as part of a consultative mechanism with respect to conveying the views of the NJS pilots to the respondent. The respondent says that the role of the NJSPG was broader, and that it balloted all the respondent pilots not just its members in relation to the Qantas Bid proposals as well as the Qantas BAFO proposals.
The lack of an express statement as to agency by officers of the NJSPG is not, the respondent submits, a bar to their being agents, because:
a)it is argued that the 2003 AWA and the 1999 AWA established the agency; and
b)by way of practice, the NJSPG and the officers were agents; and
c)the lack of an express statement as to agency is not inconsistent with the NJSPG acting as agent.
Estoppel by virtue of actions of NJSPG
The respondent says that the making of an order under s.719(6) of the post-reform WR Act is discretionary, and that a matter relevant to the exercise of the discretion is the existence of estoppels binding the pilots the subject of the proceedings.[28]
[28] “Pilot Principals”. As to the discretionary nature of the order under s.719(6) of the post-reform WR Act see Claveria v Pilkington Australia Limited (2007) 167 IR 444 at 478-479 (para.147); AFMEPKIU v Mechanical Engineering Services Pty Limited [2007] FCA 1736 at para.21 (“Mechanical Engineering Services”); Flattery v Italian Eatery (2007) 163 IR 14 at 29 (para.71).
The respondent says that the issue of estoppel does not arise in relation to all of the Pilot Principals. Two Pilot Principals were not employed by the respondent at the time of the negotiations for the 2005 AWA: Adams commenced employment on 19 May 2005 and Milenkovic commenced employment on 9 May 2005. The respondent says that NJSPG conducted negotiations over the terms of the 2005 AWA on behalf of all the respondent’s pilots, including the Pilot Principals. The respondent says there has been no evidence led from the Pilot Principals (other than King, Kruger and Rayner) despite all 33 pilots being named in the Further Amended Points of Defence as Pilot Principals, and as having used the NJSPG as its agents to negotiate the terms and conditions of their employment, and thus 30 pilots have not challenged the position that the NJSPG was their agents.
The respondent says that the factual position in Ryan v Textile Clothing and Footwear Union of Australia[29] is distinguishable because:
[29] [1996] 2 VR 235 (“Ryan”).
a)NJSPG did not purport to participate in the negotiations for the 2005 AWA as a principal;
b)the NJSPG was appointed expressly as bargaining agent for the purposes of negotiating a new AWA by all pilots (except Adams and Milenkovic) by reason of:
i)clause 6.1 of the 2003 AWA, applicable to all but Adams, Milenkovic, Kruger, Millar and Free; and
ii)clause 10.1 of the 1999 AWA, which was applicable to Kruger, Millar and Free;
c)the NJSPG was expressly appointed as agent in relation to dealings with the respondent by each member of the NJSPG by reason of clause 26 of the Constitution of the NJSPG;
d)the majority of the pilots were members of the NJSPG during the time of the negotiations for the 2005 AWA and had agreed to be bound by the terms of the Constitution of the NJSPG, and there is therefore no difficulty over authority or withdrawal of authority;
e)at least some of the pilots understood that the role of the NJSPG was to obtain the general agreement of the respondent’s pilots as to the conditions that pilots would accept in a new AWA; and
f)there is no suggestion that the actions of the NJSPG were only intended to have industrial, as opposed to legal, consequences.[30]
[30] Ryan at 239-243, 251, 254 and 267-268.
The respondent argues that there is no reason in theory why the general principle recognised in Ryan, namely that a trade union cannot make an agreement with an employer addressing terms and conditions of employment as agent for its members is applicable by analogy to the estoppels which arise in the present case.
In relation to the suggestion that no estoppel is capable of arising at law or in equity due to the alleged inability of an employer to contract out of an AWA, the respondent says that:
a)neither the 1999 AWA nor the 2003 AWA had in contemplation conversion training to a new aircraft, the B717 aircraft or dealt with that subject matter;[31]
b)neither the 1995 AWA nor the 2003 AWA were expressed to be intended to deal comprehensively with all matters pertaining to the employer – employee relationship;[32]
c)the AWAs only address some issues relating to upgrading or conversion training and do not evince an intention to address all issues relating to upgrading or conversion training, including for example allowances payable during the course of training, and therefore the estoppel relating to the Training Contribution is outside the scope of the 1999 AWA and the 2003 AWA and is not inconsistent with those AWAs and does not amount to contracting out of those AWAs;[33]
d)any estoppel relating to the salary reduction will not amount to contracting out of the 1999 AWA or the 2003 AWA as the AWAs only address the maintenance of salary during the course of training and the date of payment of the appropriate salary upon successful completion of the training.[34] Therefore, the estoppel relating to salary reduction is outside the scope of the AWAs and is not inconsistent with them because neither the 1999 AWA nor the 2003 AWA dealt with the salary for pilots flying B717 aircraft, and the subject matter, namely, terms and conditions applicable in respect of a different aircraft type was not addressed;
e)the estoppels relating to the Training Contribution and the salary reduction do not seek to vary the terms of the AWAs in a way contrary to the specified means of variation in the WR Act;[35]
f)even if there is a contracting out of the AWA, there is no barrier to estoppels operating in relation to an AWA.[36]
[31] Citing CEPU v ACCC (2007) 242 ALR 643 at 684-685 (paras.164-165).
[32] Contrast McLennan v Surveillance Australia Pty Ltd (2005) 142 FCR 105 at 111 (para.13) (“McLennan”).
[33] See cl.15.1-15.4 of the AWAs and cl.29 of the AWAs.
[34] See cl.15.1 of the AWAs with the appropriate salaries specified in Schedule 1 of the AWAs in relation to an aircraft type not including the B717.
[35] McLennan at 125 (para.48); Regional Express Holdings Ltd v Clarke (2007) 165 IR 251 at 263-264 per Gordon J; [2007] FCA 957 at paras.49-51 per Gordon J (“Regional Express Holdings”).
[36] Jackson v Monadelphous Engineering Associates Pty Limited (1997) 42 AILR 3-658; (unreported, Industrial Relations Court of Australia, No. 281 of 1997, 17 October 1997, Moore J); Moshirian v University of New South Wales [2002] FCA 179 at para.53 per Moore J; Metropolitan Health Service Board v Australian Nursing Federation (2000) 99 FCR 95 at 114 (para.62) per Lee and Carr JJ (“Metropolitan Health Service Board”); Metropolitan Health Service Board FCR at 106-107 per French J; FCA 784 at paras.22-24 per French J; TCFUA v Givoni Pty Limited (2002) 121 IR 250 at 258-259 per Goldberg J; [2002] FCA 1406 at paras.32-33 per Goldberg J; AFMEPKIU v Ardmona Foods Ltd (2006) 155 IR 211 at 222-223 per Ryan J; [2006] FCA 1039 at paras.30-31 and 34 per Ryan J.
The respondent argued that an estoppel can operate in the face of a statute and that whether it does so or not depends upon the nature of the enactment, the purpose of the provision and the social policy behind the statute, and therefore:
a)an estoppel can operate to create rights or provide a defence where a statute renders unenforceable an agreement to the same effect; and
b)an estoppel will not operate where a statute would deprive the party said to be estopped of rights or protections of which the law, as a matter of public policy, will not allow the party to be deprived.[37]
[37] Kell & Rigby Pty Ltd v Flurrie Pty Ltd (2006) 67 NSWLR 113 at 131 per Brereton J; [2006] NSWSC 906 at para.57 per Brereton J; Beckford Nominees Pty Ltd v Shell Company of Australia Ltd (1986) 73 ALR 373 at 378 per Pincus J; Metropolitan Health Service Board FCR at 104 per French J; FCA at para.20 per French J.
The respondent also argues that the position of an AWA is different to that of an Award, and it does not follow that, because an Award cannot be contracted out of, an AWA cannot be contracted out of because both the Pre-Reform WR Act and the WR Act contemplate and permit:
a)the making of an AWA the terms of which could meet the particular circumstances of the employer and employee, with certain limitations such as the no disadvantage test applying pre 26 March 2006,[38] and the protected Award conditions which are taken to be included in the AWA after 26 March 2006;[39] and
b)variations to any existing AWA or the making of another AWA which varies an earlier AWA thus allowing for the alteration of a range of entitlements, rights or protections, including their being traded away or foregone.
[38] Section 179 VPC read with s.170XA.
[39] Section 354.
The respondent therefore argues that it was within the power of an employee and an employer to agree, and then sign the necessary documentation to give effect to their intentions to vary or alter the terms of an existing AWA or to make a new AWA which has the same effect. It is argued that the public policy behind each of the Pre-Reform WR Act and the WR Act does not preclude individual employees giving up certain rights and protections, and it was therefore open at all material times to the Pilot Principals to vary their AWAs or to make a new AWA reflecting the three concessions made in favour of the respondent, or any one of those concessions.
The respondent therefore argues that King and Kruger, and the other Pilot Principals, are estopped from departing from representations or promises made on their behalf, and that there is no authority precluding an estoppel operating in relation to an AWA and no reason in principle for an estoppel not to so operate.
The respondent also argues that King and Kruger ought not be permitted to avoid the effect of the estoppels by relying on the fact that the action is brought by the applicant in her capacity as a Workplace Inspector. The respondent says that if King and Kruger had brought the actions themselves then the respondent would have been able to seek a set-off of the alleged losses suffered by King and Kruger from the non-payment of CPI increases against the losses suffered by the respondent from the breach of the King contract and Kruger contract.[40]
[40] Mechanical Engineering Services Pty Ltd at para.21 per Finkelstein J; see also s.720 of the WR Act.
The respondent says that even if, contrary to its earlier submissions, an entitlement to pay CPI salary increase arose under the Pre-Reform AWAs then that CPI salary increase is inconsistent with the concession that the pilots would take a salary reduction with effect from 1 July 2005, and therefore the pilots (other than Adams and Milenkovic) are estopped from asserting a right to a CPI salary increase. Furthermore, it is argued that it was unconscionable for King and Kruger to depart from the representations and promises made. Notwithstanding that Siebert and Roberts gave evidence to the effect that to make the concessions made to enable the respondent to bid for the Qantas Contract legally effective they knew that those concessions had to go in to an AWA, does not detract from the operation of the estoppels pleaded in the respondent’s argument because it was open to the pilots to give effect to their promises or representations by signing the AWAs offered. The respondent argues that the estoppels operate in such a way that the pilots ought not be allowed to depart from concessions by refusing to make what was in their power legally effective. It is said that in McLennan it was held that the particular AWA, which by its terms expressed an intention that the instrument deal comprehensively with the matters addressed in the AWA, and perhaps all other matters,[41] did not effect a variation to those matters by way of a collateral agreement. It is argued by the respondent that McLennan does not therefore operate to preclude the operation of estoppels because that was not a matter considered by the Court in that case.
[41] McLennan at para.54.
The applicant argues that the respondent’s Estoppel Defence is misconceived for a number of reasons, including the following:
a)(i) estoppel cannot defeat the statutory obligation not to breach an AWA, which arises by reason of s.719(1) of the WR Act, and even if each requisite element of an estoppel were made out (which is denied by the applicant) the estoppels are unenforceable or ineffectual, because each of the estoppels is inconsistent with the requirements of a statutory instrument, namely the Pre-Reform AWA which required the respondent to pay the salaries of the pilots as prescribed in the Pre-Reform AWA;
(ii)the protective legislative framework of Part VID of the Pre-Reform WR Act renders it unlikely that the parliament intended that the parties to an AWA could reach agreement in compliance with that statutory scheme, yet thereafter bargain without a similar protection to reach a collateral agreement imposing additional burdens on an employee in relation to matters dealt with by the AWA. By implication therefore the Pre-Reform WR Act prohibits the alteration of rights and obligations which might disadvantage an employee by means other than those provided in the Pre-Reform WR Act, and renders ineffective any agreement which purports to do so;
(iii)Put shortly, the applicant argues that it is not possible to contract out of an AWA and says that this position is consistent with the position with respect to other statutory industrial instruments, in relation to which an employment contract might validly confer additional benefits over and above those conferred by the statutory instrument, but in relation to which it is not otherwise possible to contract out of the statutory industrial instrument, and long-standing authority dictates that inability to contract out of an Award militates against the proposition that parties may be estopped from enforcing the provisions of an AWA;[42]
b)it has not been established that even if the estoppels were made out that the sum referable to the estoppel is, in each case, equal to or more than the claimed underpayment;
c)there can be no estoppel against the applicant in her capacity as a Workplace Inspector and there has been no suggestion in the respondent’s case, nor any evidence, that any representation of fact or undertaking made by the applicant has caused the respondent to alter its position to its detriment. And just as a registered organisation is not estopped from pursuing an Award breach even if the member of the registered organisation was estopped, the applicant cannot be estopped from pursuing these matters.[43] Estoppel does not run against the exercise of discretion reposed in the executive and regulated by statute;[44]
d)no estoppel is made out because the assumptions pleaded at paragraphs 122(b) and (q) of the Points of Defence have not been made out and the respondent did not receive or rely upon the representations pleaded at paragraph 122(k). The applicant argues that the respondent and the NJSPG were doing no more than negotiating a draft AWA offer which would be put to pilots for their consideration, and that as Mr Siebert acknowledged, any concessions in order to be made legally effective needed to be included in an AWA made with each pilot and that the concessions were conditional upon the pilots making the AWAs with the respondent that reflected those conditions. Thus, the concessions were always contingent upon acceptance by the making of individual AWAs with each pilot. Thus, all that the evidence establishes, the applicant argues, is that the NJSPG was prepared to endorse for consideration by pilots a draft AWA which included the concessions, and that was the limit of any agreement reached between the respondent and the NJSPG, and that in order to make effective the concessions each individual pilot needed to make a choice to enter into a new AWA incorporating the concessions and satisfying all of the other applicable pre-conditions to registration of an AWA enacted in Part VID of the Pre-Reform WR Act;
e)the assertion that the NJSPG was the agent of the pilots for the purposes of negotiating terms and conditions of employment is not established on the evidence according to the applicant. The applicant says there was no authority given to the NJSPG by the terms of the 1999 AWA or the 2003 AWA as is asserted at paragraph 122(a) of the Points of Defence. The applicant points to clause 6 of the 2003 AWA being headed “Consultation” and providing that the respondent shall consult with the NJSPG in relation to any variation and the negotiation of a successful agreement, whilst clause 10 of the 1999 AWA was more limited and applied only to consultation relating to a variation of the AWA. Further, the applicant says that the provisions of clause 6 of the 2003 AWA and clause 10 of the 1999 AWA are not provisions made in an agreement between a pilot and the NJSPG, and are provisions dealing only with AWAs and do not contemplate the NJSPG having a capacity to bind the pilot in relation to the terms of an AWA because an AWA can only be made, or varied, by an employer and an employee, the relevant statutory provisions requiring a written document personally signed by the employee.[45] The applicant submits that no agent can make or vary an AWA on behalf of an employee and in the statutory context no agency relationship can arise in which an agent is authorised to bind an employee in relation to the making or variation of an AWA, whether the asserted agency is express or implied.[46]
[42] Regional Express Holdings IR 251 at 262 (para.44) per Gordon J; Givoni at paras.23-33 per Goldberg J; Metropolitan Health Services Board FCA at paras.20-24 per French J.
[43] Kidd v Savage River Mines (1984) 6 FCR 398 at 410 per Gray J (“Kidd”), cited with approval in Metropolitan Health Services Board at para.22 per French J as authority for the proposition that statutory rights, especially where created for the benefit of the public or a section of the public, should not be estopped.
[44] Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193 at 207-211 (“Kurtovic”); Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 17-18.
[45] Pre-Reform WR Act, ss.170VD; 170VF(1); 170VO(1)(a); 170VO(3)(a); 170VO(4)(a) and (5)(a).
[46] Thomson v McInnes (1911) 12 CLR 562.
The applicant says that insofar as the respondent asserts that the alleged agency did not relate to dealing with the terms and conditions of pilots through the making or variation of AWAs that that assertion is contrary to the evidence, and contrary to what would be required by law to effectively deal with the variation of terms and conditions dealt with in an AWA, and if that is the respondent’s position then clause 6 of the 2003 AWA and clause 10 of the 1999 AWA cannot be the source of any authority for an agency and are confined to changes to conditions made through an AWA.
The applicant submits that any notion of implied agency faces insurmountable difficulties, essentially because the NJSPG was not, and there is no evidence that it was, the agent of all of the pilots, and there was no authority given by the entire pilot body. What the evidence discloses are communications between the NJSPG and the respondent, or communications from NJSPG to one or more pilots, whereas the source of any authority of an agent must mean communication from the asserted Pilot Principals, and that is the whole pilot body, to the agent, the NJSPG. This is a matter about which the applicant says there is no particularisation and no evidence, and in particular no evidence of any resolution or other consent by the entire pilot body authorising the NJSPG to do anything at all. The applicant says that evidence of meetings of pilots in ballots and representations made by the alleged agent are hearsay and cannot be used as evidence of authority given by an individual pilot, nor does any of that evidence demonstrate that the whole pilot body participated let alone gave the necessary authority asserted by the respondent. The applicant notes that many pilots voted against the propositions in the meetings and ballots and says that the evidence in this case falls well short of establishing the agency relationship contended for by the respondent.
An AWA is, like any other industrial instrument under the Pre-Reform WR Act or the WR Act, given the force of law (even though it is not a law itself) by reason of the relevant statute. Until an AWA is varied under the appropriate provisions of the Pre-Reform WR Act, or WR Act, it is intended to apply in its terms. Variation requires, in this case, the consent of the pilot employee party to the AWA, not the consent of a third party representative body. Termination of an AWA entered into by a pilot employee of the respondent requires compliance with one of the processes set out under s.170VM of the Pre-Reform WR Act. Unless, and until, the AWA is varied or terminated, in accordance with the relevant statutory provisions, it must be complied with. The AWA, and in particular the specific mechanisms for the variation and termination of an AWA, form part of a legislative public policy which prescribes how employees’ entitlements are to be established and maintained, and which does not allow them to be diminished, or indeed varied or terminated, by means other than those prescribed by the relevant statute.
The Court is therefore of the view that estoppel does not apply in this case, and that the obligation not to breach an AWA, and the protective legislative framework imposed, render the concept of estoppel inapplicable in this case. Furthermore, estoppel cannot run against the applicant in her statutory capacity,[47] and the applicant has done nothing which would enable the Court to find, in any event, that there was any representation on her part imposing a detriment on the respondent which could estop the applicant from exercising her discretion.
[47] Kidd; Kurtovic.
Put simply, not being paid the salary that the pilots were entitled to under their AWA during the period of the AWA means that the AWA has not been complied with. It is that right, the right to be paid salary and for salary to be increased for CPI Increases which cannot be compromised, and as those are entitlements under the AWA, they are matters pertaining to the subject matter of the AWA, which cannot be the subject of an estoppel.[48]
[48] McLennan; Regional Express.
The above analysis also precludes the NJSPG having the capacity to bind a pilot in relation to an individual AWA. Neither general principles of agency, nor the provisions of clause 6 of the 2003 AWA or clause 10 of the 1999 AWA assist the respondent in this regard. The latter are more consultative provisions. The respondent always recognised, as Mr Siebert conceded, that entry into the AWAs was, ultimately, a matter for individual pilots. Whatever consultations had taken place with the NJSPG, and whatever agreements had been reached with the NJSPG by the respondent, those consultations and agreement were ultimately not binding on any individual pilot. Furthermore, and in any event, there is no evidence that the NJSPG was the agent of any individual pilot, or if so, which individual pilots, and there is certainly no evidence that the NJSPG was the agent of the pilots collectively, because there was no evidence of the:
a)necessary approval in general meeting as far as NJSPG members were concerned; and
b)agreement by the respondent’s pilots collectively to have the NJSPG represent them all, whether member or not.
For all of the above reasons the Estoppel Defence with respect to underpayment must fail.
Alleged duress claims
The pilots, their AWAs and the Award
King was a pilot employed by the respondent on a permanent full-time basis from 15 January 2002 until 31 December 2006. On 5 November 2003 King signed the 2003 AWA offered to him by the respondent.
Kruger was a pilot employed by the respondent on a permanent full-time basis from 19 October 2000 to 3 August 2007. On 3 April 2001 he signed the 1999 AWA which had been offered to him by the respondent.
The 2003 AWA and the 1999 AWA entered into by King and Kruger respectively continued in operation until they were terminated by the AIRC, effective 15 December 2006. After 15 December 2006 the employment of King and Kruger was regulated by the National Jet Systems Pilot Award until the cessation of their employment.
The respondent
AWAs
The respondent had a policy of seeking to employ pilots under AWAs from 1997 until the end of 2007. Consequently, it entered into the 1999 AWA, the 2003 AWA and the 2005 AWA with individual pilots. The respondent understood that the effect of the 2003 AWA and the 1999 AWA was that the liability for the payment of all costs of endorsement training, or any related training to equip or convert a pilot to fly different aircraft, lay with the respondent as the pilots’ employer.[49]
[49] See cl.15 of the 2003 AWA and the 1999 AWA which are in common form.
NJSPG and negotiations for a new AWA
Mr Kruger was a member of the NJSPG throughout his employment with the respondent whilst Mr King was a member for the final three years of his employment. Importantly, neither pilot authorised the NJSPG to make a new AWA on his behalf.[50]
[50] Affidavit of Mr Kruger, sworn 5 October 2007, paras.18-21; Affidavit of Mr King, affirmed 5 October 2007, paras.10-11.
The course of negotiations between the respondent and Qantas concerning the Qantas Bid and the BAFO are set out above.
Mr King was aware that the NJSPG was negotiating with the respondent over the terms of a new AWA to be offered to pilots at the time of the Qantas negotiations. In November 2004 he had understood that the NJSPG had agreed to concessions regarding a salary reduction and increase in the overtime threshold for inclusion in the proposed AWA to be offered to pilots. In late December 2004 he learned of further discussions about the possible contribution by individual pilots to the costs of the B717 endorsement training. He became aware in early January 2005 of a ballot being conducted by the NJSPG to gauge the support of pilots to the proposed contribution to training costs.[51] The Ballot required pilots to indicate whether they supported the proposal of paying 50% of B717 endorsement costs on the understanding that the costs could be salary sacrificed over two years, and that by way of repayment, pilots would receive two performance bonuses of $7,500 after three and four years respectively. No conditions upon the repayment of the Training Contribution were expressed. Mr King voted “yes” in the Ballot, he says reluctantly, and on the understanding that the Training Contribution was proposed to be repaid in two instalments after three and four years.
[51] “Ballot”.
Mr Kruger was aware from early 2005 of negotiations between the respondent and the NJSPG over the terms of a new AWA to be offered to pilots and of possible conditions concerning salary reduction, increase in the overtime threshold, and the Training Contribution to be repaid after three and four years. Mr Kruger was on leave at the time of the Ballot and did not participate in the vote.
The respondent’s revised bid to Qantas of 10 January 2005 was made on the basis that repayment to pilots of the Training Contribution was unconditional. By the time that the contract for the operation of the B717 aircraft was awarded by Qantas to the respondent on 11 February 2005, the respondent had begun a process for obtaining and processing expressions of interest by its pilots in flying B717 planes and commencing the necessary training courses. Appointment to a B717 position was highly regarded and pilots considered it in the nature of a promotion.[52]
[52] Transcript, page 287; Affidavit of Mr Siebert, sworn 11 October 2007, paras.34-35.
Further extensive negotiations occurred between the respondent and the NJSPG concerning a draft AWA for presentation to individual pilots. These negotiations eventually concluded and a draft AWA was sent out to individual pilots from 23 May 2005. The respondent did not communicate in writing to any of the pilots’ proposed changes in relation to the B717 conditions from the time negotiations began until draft AWAs were sent to the pilots on 23 May 2005. Rather, it placed drafts of the AWAs on its intranet site for potential inspection by individual pilots.
Neither Mr King nor Mr Kruger saw the NJSPG as negotiating an AWA on their behalf. They saw the position as one whereby the NJSPG was negotiating a proposed AWA with the respondent, but one that was to be presented to each of them with each of them having the choice to enter into the AWA or not.
The 2005 AWA Packages
The respondent prepared documents which included the following:
a)draft 2005 AWAs;
b)memoranda from:
i)Mr Siebert dated 30 April 2005;
ii)the NJSPG; and
iii)the Australian Federation of Air Pilots;[53]
c)material from the Office of Employment Advocate explaining aspects of entry into an AWA, including its voluntary nature, the need for genuine consent on the part of each individual employee and other pre-conditions to an AWA’s commencement so as to bind the parties to the AWA.[54]
[53] “AFAP”.
[54] “AWA Packages”.
The AWA Packages were sent out on 23 May 2005. Mr King received his AWA Package sometime after his return to Perth on or around 14 August 2005 after completing B717 line training, and Mr Kruger received his Package on 30 June 2005 whilst in Brisbane attending B717 endorsement training.
The 2006 AWA Offer
The 2005 AWA Offer contained in the AWA Packages was modified by the respondent in June 2006 to reflect mandatory changes required by amendments to the WR Act. As amended, the draft AWA was offered to pilots under cover of a memorandum from the respondent dated 30 June 2006.[55]
[55] “2006 AWA Offer”.
Mr King received his 2006 AWA Offer on 24 July 2006 and Mr Kruger HIS 2006 AWA Offer on 15 August 2006, in both cases after their return from leave.
AWA pre-conditions
The respondent knew that AWAs required certain pre-conditions to be fulfilled including:
a)genuine consent on the part of the individual employee concerned;
b)signing by both the employer and employee of an AWA made in writing;
c)a process of checking by the employment advocate; and
d)the employment advocate’s satisfaction of the AWA passing the no disadvantage test.
The respondent also knew that any proposed variation in the terms or conditions of an AWA required formal variation which needed to satisfy the same pre-conditions as required for a new AWA. Therefore, the respondent knew that a proposed new term or condition dealt with in a pilot’s AWA could not be changed without the pilot’s consent. The applicant says that the respondent knew that the existing AWAs of both Mr King and Mr Kruger dealt with the issues of salaries, the overtime trigger and endorsement training, and the respondent therefore knew that those conditions could not be altered without Mr King or Mr Kruger making either a new AWA or varying an existing AWA.
The applicant argues that despite the respondent understanding the above position it adopted a position vis-a-vis Mr King and Mr Kruger that the outcome of the negotiations with the NJSPG legally bound those individual pilots to the terms and conditions in that document as finalised by 28 April 2005. Those terms and conditions included the B717 conditions which the respondent regarded as having been agreed in principle since late 2004 and which formed the basis of the 2005 AWA. The applicant argues that the respondent’s position was:
a)to portray the 2005 AWA Offer, not as an offer, but as an agreement that had been struck with the NJSPG which individual pilots were legally bound to honour;
b)that Mr King’s and Mr Kruger’s exercise of choice in refusing to sign the proposed 2005 AWA and the 2006 AWA was a reneging on an agreement that bound them, a dishonouring of that agreement; and
c)that Mr King and Mr Kruger’s conduct was conduct which the respondent regarded as dishonourable and indefensible, and which “had to be rectified”.[56]
[56] Transcript, page 296. See also Transcript, pages 293, 295, 297 and 356.
B717 Training and Endorsement – April to June 2005
In April 2005 Mr King and Mr Roberts had a conversation in which Mr King conveyed to Mr Roberts that he wished to have the opportunity to fly B717s.
Mr King says that at no stage did Mr Roberts make any mention of either the then proposed AWA or any conditions attaching to B717 training.
The applicant invites the Court to reject the account given by Mr Roberts of his conversation with Mr King on 14 April 2005. Alternatively, even if the account of Mr Roberts is accepted, and Mr King is found to have expressed agreement to undertaking B717 training on the conditions said by Mr Roberts to have been explained, the applicant argues that the respondent was aware that no variation of employment conditions could be made without the variation of Mr King’s AWA or the making of a new AWA, and that in any event, no such agreement arising from any discussion on 14 April 2005 was legally enforceable.
Mr King completed his endorsement training on the B717 by 6 June 2005 and on 14 June 2005 returned to Brisbane to begin his induction and line training for the B717 with Jetstar.
In a telephone conversation in April or May of 2005 Mr Kruger expressed to Mr Roberts an interest in flying B717 aircraft in Darwin. Consequently, it would appear that he was allocated to the respondent’s Darwin base to fly B717 aircraft and allocated a slot in the B717 endorsement training. Mr Kruger’s intention to fly B717 aircraft was confirmed in a further telephone call from Mr Roberts about a fortnight later when Mr Roberts, notwithstanding the earlier conversation, asked Mr Kruger if he wanted to fly B717 aircraft in Perth. Mr Kruger says he reluctantly agreed to move to Perth on the understanding that he could return to a position in Darwin in the future. Mr Kruger agreed to have his B717 endorsement training brought forward to commence on 10 June 2005.
Mr Kruger says that at no point during his telephone conversations with Mr Roberts did Mr Roberts tell Mr Kruger that B717 endorsement training came with conditions such as:
a)the signing of a new AWA;
b)reduction in salary;
c)a change to the overtime trigger; or
d)a contribution to the costs of B717 endorsement training,
and at no stage was any commitment sought from him in those respects, and at no stage was any such commitment given.
The applicant says that Mr Roberts’ accounts of his conversations with Mr Kruger in relation to this issue ought to be rejected and the evidence of Mr Kruger accepted. Alternatively, even if Mr Roberts’ account is accepted it is said that it provides no justification for the respondent’s subsequent conduct, and in particular that the respondent was aware that no variation of the terms of Mr Kruger’s employment conditions could be made without variation of his AWA or the making of a new AWA, and that therefore any variation of his employment agreement was not legally enforceable.
In the Court’s view it is more likely than not that in discussions with Mr King and Mr Kruger, Mr Roberts at least raised the prospect of Mr King and Mr Kruger signing a new AWA in relation to their employment consequent upon B717 endorsement training. It is not necessary to make any finding with respect to whether or not particular conditions were discussed, for it is apparent that the respondent, through Mr Roberts, was aware that variation of an existing AWA or entry into a new AWA, required Mr King and Mr Kruger to agree to a variation or entry into a new AWA.
There is nothing in the circumstances surrounding the initial discussions concerning the B717 training and endorsement which constitutes the application of illegitimate pressure by the respondent, and it is not suggested by the applicant that that is the case. Indeed, the fact that both Mr King and Mr Kruger were allowed to proceed to undertake B717 training and endorsement without signing or entering into a variation of their existing AWA or a new AWA is indicative of a lack of pressure by the respondent.
The Letter of Offer
At about that time Mr King completed his B717 endorsement training he received a letter of offer from Mr Siebert dated 24 May 2005 seeking his acceptance of conditions asserted as the terms and conditions of the B717 training.[57] What was sought was a $15,000 contribution from Mr King for the cost of endorsement training, but with repayment conditional on an extension by Qantas of the original B717 leases. The Letter of Offer referred to the $15,000 payment as an interim matter agreed with the NJSPG pending the making of the 2005 AWA which would govern terms and conditions of employment from 1 July 2005. The applicant argues that Mr Roberts acknowledged that the Letter of Offer had the purpose of making it clear to Mr King that the 2005 AWA would govern his employment once issued, and was inevitable. Mr King says that this was the first suggestion that he had heard that repayment of the $15,000 Training Contribution was to be conditional, and for that reason he chose not to sign the Letter of Offer.
[57] “Letter of Offer”.
Mr Kruger subsequently received the 2005 AWA Package, containing the 2005 AWA Offer, which contained significant differences from Mr Kruger’s then current AWA, including a reduction in conditions dealing with endorsement training, the overtime trigger and salary. There is a minor dispute about the date of receipt of the 2005 AWA Package but the Court does not consider that to be material for present purposes.
Around the same time Mr Kruger also received a letter dated 27 June 2005 from Mr Siebert containing the Letter of Offer. The Kruger Letter of Offer was in substantially identical terms to the King Letter of Offer and there is no dispute that it made clear that the 2005 AWA would govern Mr Kruger’s employment once issued. The applicant says that the purpose of the Kruger Letter of Offer was to make the 2005 AWA appear to be a fait accompli.
Mr Kruger did not sign either the 2005 AWA Offer or the Letter of Offer because:
a)he disagreed with the dispute settlement procedure in the 2005 AWA Offer;
b)he wanted to negotiate his own AWA; and
c)he disagreed with a new condition which he understood would mean that he would lose entitlement to days off at his home base whilst undergoing training.
The respondent says that insofar as the applicant alleges that the Letter of Offer to Mr Kruger, which stated that “your employment, as a B717 pilot with [the respondent], is conditional upon your acceptance of the terms and conditions detailed in the [2005] AWA” constituted duress in respect of Mr Kruger, that:
a)the Letter of Offer was simply referring back to the lack of mention of the B717 aircraft in the Award and Mr Kruger’s AWA, and the fact that the only industrial instrument that referred to the B717 aircraft was the 2005 AWA;
b)Mr Kruger does not assert that he felt threatened or pressured upon receiving the Letter of Offer, and communicated no concern to any person over the receipt of the Letter of Offer at or about the time that it was received;
c)at the time of receipt by Mr Kruger of the Letter of Offer, his major concern was the form of dispute resolution clause in the 2005 AWA, and that concern, together with a wish to negotiate the actual form of his new AWA, accounted for his non-execution of the Letter of Offer; and
d)Mr Kruger’s conduct reveals the ability to exercise choice.
At this stage, the receipt of the 2005 AWA Package and the Letter of Offer could not, of themselves, constitute illegitimate pressure. They were no more than offers to King and Kruger to be employed on certain terms, which they were free to reject, and did reject. Their conduct is, in the Court’s view, consistent with how the reasonable employee would have acted in the circumstances.
6 July 2005 Letter to Mr King
On 6 July 2005 Mr King was sent an email requesting him to sign and return the 24 May 2005 Letter of Offer. He did not access this until his return to Perth on or around 1 August 2005. Shortly thereafter Mr King received the 2005 AWA Package. The 2005 AWA Offer was in significantly different terms to Mr King’s existing AWA, and included a reduction in conditions dealing with endorsement training, the overtime trigger and salary. Mr King elected not to sign the 2005 AWA Offer because of the conditions contained concerning repayment of the $15,000 Training Contribution. The sending of the 6 July 2005 Letter was not of itself the application of pressure to Mr King, and the applicant did not, in reality, assert that it was.
The Plan – 25 July 2005
Officers of the respondent met on or about 25 July 2005. Mr Roberts and Mr Siebert were included in that meeting. A plan[58] was formulated to deal with pilots, including Mr King and Mr Kruger, who had taken up a B717 position but had not accepted the 2005 AWA offer. The respondent’s objective was to have those pilots accept the terms and conditions of B717 endorsement training as contained in the 2005 AWA Offer and later the 2006 AWA Offer. A number of steps were involved in the Plan, including the “ramping up the nature of the communications from … [the respondent] and ending with an application to terminate the extant AWAs of those pilots”.[59] The Plan was formulated and implemented against Mr King and Mr Kruger. The individual steps in relation to both Mr King and Mr Kruger are set out below.
[58] “Plan”.
[59] Transcript, page 298.
Duress may be constituted by conduct which is otherwise legal. In this case, the Plan reveals nothing other than an intention on the part of the respondent to engage in conduct which was legal. The fact that the Plan involved putting pressure upon those pilots who had not accepted the 2005 AWA Offer, and later the 2006 AWA Offer, does not of itself constitute duress. Nor does the fact that the Plan ends with an application to terminate the pilots existing AWAs. The Plan was consistent with the respondent not intending to continue to pay pilots upon their existing AWAs if they did not accept the terms and conditions of the B717 endorsement training. For reasons set out below, there is nothing in the evidence which would indicate that the respondent’s application and pressure, which in the circumstances was legal, went beyond the boundaries of legitimate pressure and became duress. Therefore, there was nothing in the Plan, in and of itself, which constituted duress in relation to Mr King and Mr Kruger.
6 September 2005 Letter to Mr King
Mr Roberts wrote to Mr King on 6 September 2005, a letter not received by Mr King until 26 September 2005.[60] The applicant asserts that the letter was a further step in the Plan, and was designed to place pressure on Mr King. The applicant argues that the 6 September 2005 Letter falsely asserted that:
a)Mr King had agreed to the terms and conditions which would allow him to be endorsed to fly B717s;
b)Mr King had verbally agreed to the Letter of Offer as a basis for the respondent’s approval for Mr King to commence training; and
c)that a signed AWA was “required” before Mr King could fly the B717, in circumstances where Mr Roberts knew that there was nothing in Mr King’s existing AWA that would disallow Mr King from flying B717s.
[60] “6 September 2005 Letter”.
On about 18 September 2006 Mr Siebert, Mr Richards and Mr Kruger agreed during a telephone conversation on the wording of a dispute resolution clause for an AWA for Mr Kruger. A proposed AWA was forwarded to Mr Kruger on about 25 September 2006 by Mr Roberts. That proposed AWA contained the agreed dispute resolution clause, but also contained a bonding and return of service clause which had not been in the 2005 AWA Offer. The salary, overtime trigger and payment of endorsement training clauses of the AWA reflected those in the 2006 AWA Offer, which the respondent refused to amend. Mr Kruger, however, was not prepared to sign the amended AWA containing the new bonding and return of service clause that was being offered by the respondent.
The fact that Mr Kruger was able to reach agreement with respect to the wording of the dispute resolution clause demonstrates, like nothing else, that the respondent did not in fact have a completely entrenched position, and that it was capable and desirous of reaching an agreement with respect to an AWA with either Mr Kruger or Mr King. It demonstrates that the respondent’s position was not so intransigent as to amount to illegitimate pressure, assuming that intransigence can amount to illegitimate pressure. In that regard, it should be noted that the issue in this case is whether the pressure amounted to duress, not whether the respondent refused to negotiate in good faith. As is evidenced by their conduct those involved were free to bargain, in any mode they chose, provided it did not constitute duress.
From September 2006 and thereafter Mr Kruger made attempts to negotiate a new AWA with the respondent, and did so with the assistance of another employee of the respondent, Mr Roper-Campbell. Several approaches were made but no agreement resulted. On 12 April 2007 Mr Kruger sent Mr Richards a letter enclosing a draft AWA that he would be prepared to sign. Mr Richards responded saying that he would respond further shortly, but no further response was made. This response by Kruger shows a genuine negotiation, with proposals from both sides, and not illegitimate pressure.
Termination of the King AWA and the Kruger AWA
The applicant argues that the respondent’s conduct in pursuing the termination of Mr King’s and Mr Kruger’s 2003 AWAs was intended to apply pressure on Mr King and Mr Kruger in connection with an AWA, and that it:
a)applied substantial financial pressure leading directly to Mr King’s resignation from the respondent;
b)involved conduct which was deliberate, premeditated and tainted with the purpose of pressuring Mr King and Mr Kruger to make an AWA in the terms offered by the respondent;
c)was designed to punish Mr King and Mr Kruger for dishonouring an agreement they never made; and
d)was designed to recoup monies relating to endorsement training costs that the respondent was never entitled to seek payment of from Mr King and Mr Kruger,
and constituted illegitimate pressure directed at Mr King and Mr Kruger’s expectations of employment, and in particular, salary.
In response to the allegation that the termination of the King AWA and the Kruger AWA constituted duress, the respondent says that:
a)Mr King resigned his employment with the respondent on 30 November 2006, having applied for alternative employment in the first week of November 2006 with another organisation, and at a time when the termination of his AWA had not yet occurred, that termination taking effect on 15 December 2006;
b)Mr King did not know that his salary would be decreased to the level specified in the Award until he received correspondence from the respondent on 13 December 2006;
c)as Mr King resigned on 30 November 2006 he could not have felt any pressure such as financial pressure from any change in his industrial instrument from his AWA to the Award;
d)the delay in the termination of the King AWA and the Kruger AWA by the AIRC for a period of three months was to allow the parties to endeavour to reach an agreement on a new AWA shows otherwise;
e)the AFAP, through Mr Cox their industrial advocate, participated in discussions with the respondent over the terms of a new AWA for Mr King, and Mr King then participated in discussions with the respondent over the terms of a new AWA including the removal of the repayment conditions; and
f)Mr Kruger:
i)was unsure of what action the respondent would take following the publication of the AIRC Decision in relation to the termination of his AWA;
ii)discussed with the respondent in September 2006 amendments to the 2005 AWA concerning the dispute resolution clause, and reached agreement over that clause, thereby indicating a lack of pressure being applied by the respondent; and
iii)received a modified 2005 AWA with an amended dispute resolution clause, but decided not to execute it due to the inclusion of a bonding clause, thereby indicating that he was able to exercise choice over entry into a modified 2005 AWA.
The termination of the AWAs was part of the Plan. Of itself, this is not illegitimate pressure. The termination was lawful. The termination occurred after a delay of three months in accordance with the AIRC Decision, which was to allow King and Kruger and the respondent to make some other arrangement to resolve the issue, including a new AWA, if that were possible, which it was not. In all the circumstances, the termination was not the application of illegitimate pressure by the respondent, and did not amount to duress.
Resignations
Insofar as the applicant alleges that the resignations of Mr King and Mr Kruger were caused by the respondent’s application of duress, the respondent says that:
a)Mr King did not complain to the respondent at the time of his resignation about the circumstances leading up to his resignation;
b)Mr King commenced seeking alternative employment with Oz Jet in the first week of November 2006, and resigned his employment with the respondent on the same day that he received an offer of employment with Oz Jet, and all before he was aware of the impact of the termination of his AWA on his remuneration or other benefits;
c)Mr King was not forced into an unfair bargaining position as he had already resigned;
d)Mr Kruger was not negotiating a new AWA and had not communicated to the respondent a willingness to sign a new AWA at the time of his resignation; and
e)at the time of resignation the respondent was not seeking that Mr Kruger enter into a new AWA.
The respondent further says that:
a)in the above circumstances the decisions by Mr King and Mr Kruger to resign, made at their own initiative, do not constitute pressure in connection with an AWA, let alone illegitimate pressure; and
b)as the resignations were at the initiative of Mr King and Mr Kruger, there can be no suggestion that the resignations were intended to place pressure on Mr King or Mr Kruger or that the respondent appreciated that the resignations would place pressure on Mr King or Mr Kruger.
The respondent notes that there was no cross-examination of witnesses for the respondent to suggest that they engaged in conduct designed to induce a resignation.
The evidence does not establish that the resignations were a result of duress applied by the respondent to Mr King or Mr Kruger, or duress applied in relation to an AWA.
Mr King – other relevant matters
The respondent asserts that there are a range of other factual matters relevant to the claim of duress in respect of Mr King, including the following:
a)as at May 2005 he was a 45 year old with English as his first language, who was well experienced in reading and interpreting documents, including the reading of manuals and materials, and particularly those necessary to complete his aviation training;
b)he had access to members of the committee of the NJSPG who were able to be consulted on matters relating to the making of the repayment conditions and who could assist him in negotiations over the 2005 AWA, and whom he actually consulted in relation to the 2005 AWA;
c)access to representatives of the AFAP through its industrial advocate Mr Cox who were able to be consulted on employment matters, and from whom Mr King sought and obtained assistance from time to time, including on matters relating to negotiations over the 2005 AWA and the repayment conditions, and representation in relation to the AIRC application to terminate his AWA;
d)advice from the Office of Workplace Services in relation to the negotiations over the 2005 AWA, the non-payment of the CPI salary increase and the AIRC application to terminate his AWA;
e)that he was able to demand from the respondents a copy of minutes of meetings between the respondent and the NJSPG so he could obtain proof of discussions or concessions on the repayment conditions, in the course of indicating that he was not prepared to compromise on the repayment conditions until he had received those minutes, thereby indicating that he was capable of making demands as part of the process of negotiating with respect to the overall process;
f)Mr King reiterated his position to the respondent, namely his willingness to enter into the 2005 AWA provided the repayment conditions were removed, on a number of occasions, including in late 2006, thereby indicating the presence of choice on the part of Mr King;
g)Mr King understood that the 2005 AWA was the subject of choice on his part as to whether he executed it or not;
h)Mr King understood at all times that his AWA continued to operate and applied to his employment, thus indicating that he understood that the salary and conditions of the AWA continued to apply to him if he did not enter into the 2005 AWA; and
i)Mr King was aware throughout 2005 and 2006 about disagreement between members of the NJSPG in respect of matters concerning the 2005 AWA, and he sought to utilise that disagreement in two ways, by waiting and seeing the outcome of attempts to re-negotiate the 2005 AWA and as a basis personally for attempting to negotiate the removal of the repayment conditions.
The Court considers each of the above matters to be relevant to the final, overall objective assessment of whether there was duress in relation to Mr King’s AWAs or proposed AWAs.
Mr Kruger – other relevant matters
The respondent asserts that there were a number of other matters relevant to Mr Kruger’s claims, as follows:
a)he was a 40 year old, as at 2005, with tertiary qualifications in science and civil aviation, having passed a series of exams for his flying qualifications and being required to study manuals and sit written tests;
b)in May 2006 he felt suitably comfortable in delaying articulating his position on the AWA until he obtained advice, which he subsequently obtained from the AFAP;
c)Mr Kruger was aware that he had a choice whether to sign an AWA irrespective of who had negotiated the AWA and he subsequently maintained that he would not sign an AWA unless there was a preparedness to negotiate its terms, a view that was reinforced for him by the AFAP;
d)Mr Kruger had access to representatives of the AFAP and obtained its assistance in representing him in the AIRC hearing;
e)Mr Kruger understood at all times that his AWA continued to apply to his employment, thereby indicating that he understood that the salary and conditions of that AWA continued to apply to him if he did not enter into the 2005 AWA;
f)at no stage did Mr Kruger advise the respondent of a dispute by him over the existence of an agreement on the terms and conditions on which training was provided, thus explaining why it was that the respondent wished to learn of the position of Mr Kruger in relation to the 2005 AWA; and
g)critically, that Mr Kruger was willing to enter into a modified 2005 AWA containing a dispute resolution clause negotiated by him as at September 2006, but refused to sign the modified 2005 AWA because of the inclusion by the respondent of a further clause, the bonding clause, thus exercising a choice not to sign the modified 2005 AWA.
The Court considers each of the above matters to be relevant to the final, overall objective assessment of whether there was duress in relation to Mr Kruger’s AWA or proposed AWA.
Respondent’s conduct – additional factors
The applicant argues that additional factors which need to be considered in considering whether the respondent’s conduct constituted duress include:
a)the fact that Mr Roberts:
i)was in a dominant position as the applicable manager of the respondent vis-à-vis Mr King and Mr Kruger as subordinate employees, and that in that capacity Mr Roberts had the capacity to materially affect the work arrangements of Mr King and Mr Kruger including in relation to issues such as location of flying base and approval of annual leave; and
ii)was aware, either expressly or by objective inference, that the subject matter of the proposed alterations to employment conditions in the 2005 AWA Offer and the 2006 AWA Offer were of real sensitivity to Mr King and Mr Kruger;
b)the fact that Mr Siebert also held a senior position vis-à-vis Mr King and Mr Kruger and was sometimes in direct communication with Mr King and Mr Kruger on issues of importance in relation to the 2005 AWA Offer and the 2006 AWA Offer, and endeavoured to make Mr King and Mr Kruger understand that the matter was a matter of importance to the respondent; and
c)that when communicating with Mr King and Mr Kruger concerning the AWA offers, and associated subject matter, both Mr Roberts and Mr Siebert chose their words carefully and deliberately, intending their words to have the natural and ordinary consequences in the setting in which they were made.
On the basis of the evidence, the Court cannot conclude that the seniority of the positions occupied by Mr Roberts and Mr Siebert, or their conduct and demeanour, including what was said by them, resulted in the application of duress to Mr King or Mr Kruger. In the Court’s view the conduct of all those involved in this matter, when objectively assessed, was robust, and designed to persuade the other side to a point of view. The negotiations and interactions between them were long, hard and tough, consistent with their robust nature. They were not, however, particularly by reason of the seniority of the positions occupied by Mr Roberts and Mr Siebert, overbearing or a successful exercise of any power disparity arising from their respective positions. Indeed, it is fair to observe that both Mr King and Mr Kruger essentially maintained their respective positions throughout these negotiations, although Mr Kruger did come to an agreement with the respondent at one point with respect to the dispute resolution procedure, which agreement dissipated in the face of additional demands by the respondent for a bonding clause.
It is significant that both Mr King and Mr Kruger had access to external advice, not only from the NJSPG, but more particularly from the AFAP and its industrial advocate. These were professional men engaged in serious negotiations with their employer. Mr King and Mr Kruger suffered no disadvantage from the point of view of professional expertise, maturity or language. As the Court has observed above, as often as not, they resisted positions put to them by the respondent, gave as good as they got in response, and maintained their ultimate position. In those circumstances there was no duress arising from any disparity in power in the relationship between Mr King and Mr Kruger and the respondent.
Witnesses – credibility
The Court was invited to make adverse findings with respect to the credibility of the principal witnesses in this matter arising from their conduct both at the time of the relevant events and in the witness box. All of the witnesses, in the Court’s view, gave their evidence in a proper and straightforward manner, and none of them resiled from the conduct and positions that they had adopted during the events that led to these proceedings. Some of that conduct, particularly on the part of Mr Roberts and Mr King, involved their putting positions which were not necessarily consistent with the facts. Nevertheless, the Court does not consider that this affected their evidence, it merely means that the Court has to assess that evidence having regard to the positions that they adopted at the time, and from which they did not (and because they were telling the truth in the witness box could not) resile. The Court therefore finds that each of the witnesses was a credible witness, but that their evidence needs to be assessed, and has been assessed, in light of what was said and done at the time of the events which led to these proceedings, with some of those events and some of that evidence not necessarily reflecting the true factual position as it was at that time.
The Court has therefore considered all of the evidence, and weighed it having regard to the relevant facts, without having to resort to reliance upon adverse credibility findings.
The respondent’s conduct overall
The applicant argues that the respondent’s conduct “constitutes illegitimate pressure because it is the antithesis of free bargaining.”[68] This is said to be cogent evidence of the application of duress in connection with an AWA or proposed AWA. This is because it is argued that the policy underlying the statutory regime of AWAs is that they be negotiated openly and freely, and be completed by way of a process of free bargaining which does not disadvantage the employee. The applicant argues that the respondent’s intransigence went beyond maintaining a particular negotiating position, and that it refused to sensibly or seriously consider the position of the other side to a potential AWA and take that position into account, and it did so because it falsely characterised Mr King as a recalcitrant and dishonourable person who refused to honour a deal. For reasons set out above, there was no necessity for the respondent to bargain in good faith in relation to the 2005 AWA Offer or the 2006 AWA Offer. In any event, the failure to bargain in good faith does not necessarily constitute the application of pressure amounting to duress. Freedom to bargain includes the freedom to refuse to bargain. There is, for reasons set out comprehensively above, no evidence that, in relation to each of the matters set out, there was pressure amounting to duress, whether or not the bargaining was in good faith or bad faith.
[68] Applicant’s Written Submissions, para.80.
In any event, the respondent’s preparedness to compromise on a dispute resolution clause with Mr Kruger negates the submission on behalf of the applicant. There was some preparedness by the respondent to negotiate.
Although the Court has examined each element of the alleged duress above, it has done so by reference to the facts of the matter as they pertain to each of those elements overall, and with a view to objectively determining whether or not duress was involved. Some regard has been had to intent, where it is relevant, because is some instances the intent of the parties is relevant to an overall objective assessment of the conduct, and whether that conduct constituted duress.
Finally, it is necessary to consider the respondent’s conduct overall. Having examined the evidence, and in particular the various allegations of duress made by the applicant, the Court is unable to conclude that the conduct of the respondent in relation to Mr King and Mr Kruger constituted duress in connection with the making of an AWA. There was no doubt pressure applied by the respondent, but in the Court’s view it did not cross the line so as to constitute illegitimate pressure. In any event, Mr King and Mr Kruger also applied pressure by reason of their negotiating tactics with the respondent. Although the respondent did apply pressure it was not constant, and it was often the subject of a disparate and delayed approach to these matters, inconsistent with illegitimate pressure amounting to duress.
For all of the above reasons the Court has concluded that the respondent did not apply duress to King and Kruger in connection with the making of any AWA.
Conclusions and orders
The Court has concluded that:
a)the respondent was required to adjust a pilot’s salary on 1 July each year to reflect upward CPI Movements whilst the AWAs were current, and that the AWAs were current until such time as they were terminated in accordance with the provisions of s.170VM of the Pre-Reform WR Act, and to the extent that salary increases were not paid to reflect any upward CPI movement with effect from 1 July 2006 and 1 July 2007 there would be underpayments in relation to any Pre-Reform AWAs containing a clause in the terms of clause 27.3 of the Pre-Reform AWA for Mr King and the Pre-Reform AWA for Mr Kruger; and
b)the respondent did not apply duress to King and Kruger in connection with the making of any AWA.
The Court will, consistent with the request of the parties at hearing, order that:
a)the parties confer with respect to the terms of declarations and orders to reflect the above conclusions;
b)otherwise adjourn the matter to a directions hearing at 9.00am on 24 December 2010;
and, in the circumstances the Court will hear the parties as to costs, if any.
I certify that the preceding two hundred and two (202) paragraphs are a true copy of the reasons for judgment of Lucev FM
Date: 13 December 2010
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