Lend Lease Building Pty Ltd (LLB) v Construction, Forestry, Mining and Energy Union

[2015] FWC 1966

[2015] FWC 1966 [Note: An appeal pursuant to s.604 (C2015/2550 was lodged against this decision and the order arising from this decision - refer to Full Bench decision dated 8 September 2015 [[2015] FWCFB 5081] for result of appeal.]

FAIR WORK COMMISSION

DECISION

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

Lend Lease Building Pty Ltd (LLB)
v
Construction, Forestry, Mining and Energy Union
(C2014/6756)

COMMISSIONER RIORDAN SYDNEY, 26 MARCH 2015

Alleged dispute about any matters arising under the enterprise agreement and the NES;[s186(6)].

[1] This decision relates to an application by Lend Lease Building Pty Ltd (LLB) in relation to the interpretation of a provision of the Lend Lease Project Management & Construction / CFMEU Joint Development Agreement Mark 8 2012 - 2016 (JDA-8).

[2] The Construction, Forestry, Mining and Energy Union (CFMEU), made an application on the same issue last year which was heard by Deputy President Gooley on 26 May and 6 June 2014 (C2014/4292) (the first proceeding). Deputy President Gooley published her decision on 19 June 2014.

[3] Mr Ward sought leave to appear for LLB. Mr Docking sought leave to appear for the CFMEU. Leave to appear was granted in accordance with section 596(2) of the Fair Work Act, 2009 (the Act).

[4] Both parties provided written submissions for the matter, which was heard on 19 February 2015.

[5] Also the parties sought to rely on the written and verbal submissions of the first proceeding as well as an agreed bundle of documents which included the transcript and the decision of the matter. Ms Amanda Hughes attested a supplementary statement to the primary and reply statements from the first proceeding.

[6] The issue to be determined relates to clause 11 of JDA-8, which states:

“11.1 General

(a) The Company, as a wholly owned subsidiary of Lend Lease Corporation limited, is currently able to provide a comprehensive benefits package in consideration for work performed.

(b) This package aims to provide meaningful income and security in the event of sickness, accident, cessation of employment, retirement, disablement or death for Employees and further links benefits for Employees to Company performance via profit share and ownership of Lend Lease shares.

(c) The Parties recognise and agree that Company obligations and Employees' rights in respect of these benefits (except for superannuation) are not granted or regulated by the terms of this Agreement, but by separate Trust Deeds, Rules and Agreements. It is recognised that the terms of those benefits may be altered by the Lend Lease Group or the respective Trusts from time to time, without reference to this Agreement.

11.2 Superannuation

(a) The Company will make superannuation contributions to a fund of the Employee's choice, the Lend Lease Superannuation Plan (LLSP), or the Construction and Building Industry Superannuation Fund (Cbus).

(b) If the Employee does not choose a fund, then by default the Employee will remain (or become) a member of the LLSP.

(c) If the Employee is a member of LLSP:

(i) For Employees joining the Company after 1 January 1999, the Company will pay its employer contributions and any member contributions that the Employee decides to make to the Accumulation Plan of the LLSP. The Company's employer contributions to the LLSP shall be in accordance with Appendix C or superannuation guarantee rate of 9% of the Employee's Ordinary Times Earnings, whichever is the greater.

(ii) Employees of the Company prior to 1 January 1999 may be members of the Defined Benefit Plan of the LLSP. The Defined Benefit Plan is non-contributory, and provides a Company Benefit calculated at 12.75% (after Federal Government contributions tax) from the date of operation of this Agreement, for each year of membership, multiplied by the Employee’s Ordinary Times Earnings over the previous three years of service.” 1

Background

[7] The Defined Benefit Plan (DBP) of the Lend Lease Superannuation Plan (LLSP) is a Defined Benefit Scheme which is administered by Plum Superannuation Fund acting as the Trustee. Lend Lease Corporation Limited (LLC) provides a suite of benefits for employees within the Lend Lease Group of wholly owned subsidiaries, including access to the DBP of the LLSP. It is not in dispute that LLB is a wholly owned subsidiary of LLC and is the employer in these proceedings, not LLC.

[8] It is also not in dispute that LLC’s payment into the DBP satisfies the S.G.L. requirements for LLB as per clause 32.4.j of the Building and Construction General On-Site Award 2010 2:

“ 32.4 Superannuation fund

Unless, to comply with superannuation legislation, the employer is required to make the superannuation contributions provided for in clause 32.2 to another superannuation fund that is chosen by the employee, the employer must make the superannuation contributions provided for in clause 32.2 and pay the amount authorised under clauses 32.3(a) or 32.3(b) to one of the following superannuation funds or its successor:

(j) a superannuation fund or scheme which the employee is a defined benefit member of.”

[9] It is also not in dispute that LLC initially makes the contributions on behalf of the LLB employees who are members to the DBP. It is disappointing that Ms Knox was not able to clarify either in the first or in these proceedings whether LLB reimbursed LLC for these contributions or that the payments were just a notation in the accounting records of the Companies. Whichever is the correct answer, it shows that LLB is in fact responsible for the contributions, even in an accounting sense.

[10] LLC has made a decision to close the DBP of LLSP. Mr Ward took me to the relevant provisions of the Participation Schedule of the LLSP, which allows this process to occur:

“This participation schedule is made on 29 June 2011 between

1. PFS NOMINEES PTY LTD ABN 16 082 026 480, Level 9, 90 Collins Street Melbourne, in the state of Victoria (“Trustee”)

and

2. Lend Lease Corporation Limited ACN 000 226 228, Level 4, 30 The Bond, 30 Hickson Road, Millers point in the state of New South Wales (“Principal Employer”).

11 Notice of Termination of contributions and other payments

11.1 Without limiting any Power vested in any Employer (including the Principal Employer) to terminate Employer contributions or determine the amount or rate of Employer contributions, but subject to clause 36, an Employer (or Principal Employer in respect of an Employer) may terminate, reduce or suspend for any period any payment in respect of the Plan relating to all or some of the Members, by notice to the Trustee.

11.5 If all contributions to the Plan or a Division are terminated the Trustee may wind-up the Plan or Division in accordance with clauses 33 to 35.

33 Termination of Plan or Division

33.1 The Trustee may, with the consent of the Principal Employer, terminate the Plan or a Division in its absolute discretion.” 3

[11] Until recently, there were less than 240 employees who were members of the DBP. Only 19 were covered by JDA-8. The other 200 odd members of the DBP were simply moved to the accumulation scheme, without being given a choice. The rationale for the closure of the DBP is to provide equity and consistency of superannuation benefits across all employees.

[12] The 19 employees who are covered by JDA-8 have resisted all attempts to encourage or incentivise their transfer to an accumulation scheme.

[13] It is accepted that the Fair Work Commission (FWC) has the authority to arbitrate this dispute in accordance with the provisions of JDA-8.

[14] In the first proceeding, Deputy President Gooley found that the Dispute Procedure had not been followed which resulted in the FWC not having jurisdiction to determine the matter. However, the Deputy President determined that if she was wrong on the jurisdictional issue, then LLB did have an obligation under JDA-8 to provide the benefits contained in section 11.2(c)(ii).

[15] In relation to this issue, Mr Ward referred me to the decision of the Full Bench of the FWC in TWU v Coles Supermarkets 4 where they stated:

“...In other words, by making a finding as to the application of the 2008 Agreement to CSAs his Honour purported to determine the very issue which he decided he had no jurisdiction to determine. Hence not only was his Honour’s finding obiter, it was made without jurisdiction. In such circumstances the finding cannot adversely affect the rights or interests of the appellants in the subsequent proceedings.”

[16] Mr Ward advised me that I could not be influenced by the decision of the Deputy President in any respect because that would mean that LLB was adversely affected by the decision in the first proceeding.

[17] I have taken this into account.

[18] AMIEU v Golden Cockerel Pty Ltd 5 is a recent decision of the Full Bench of the FWC which has conveniently provided a useful summary of the relevant tests to be applied when interpreting enterprise agreements. They are:

“1. The Acts Interpretation does not apply to the construction of an enterprise agreement made under the Act.

2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.

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

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

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

6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;

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

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

7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.

8. Context might appear from:

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

(b) the disputed provision’s place and arrangement in the agreement;

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

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.

10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.”

Consideration

[19] In determining this matter, I have taken into account all of the contentions, evidence and submissions of the parties from both this and the first proceeding.

[20] In applying the Golden Cockerel rules, the question at hand is whether the relevant provisions of JDA-8 have a plain meaning or contain ambiguity.

[21] Clause 11.1.c identifies that the benefits of the LLC benefits package are not governed by the terms of the Agreement, “except for superannuation.”

[22] The Macquarie Dictionary defines the term “except” to mean:

“1. With the exclusion of; other than”

[23] This is a universally accepted meaning of the term and provides absolute clarity to the provision. I find that the superannuation entitlements of LLB employees are determined by JDA-8, at clause 11.2.

[24] It therefore follows that members of the DBP of the LLSP employed by LLB are entitled to remain members of the fund for the life of JDA-8.

[25] Ultimately, LLB pays contributions on behalf of its employees into the DBP of the LLSP, either by transferred money or by an accounting note to reimburse LLC. The way that the Lend Lease Group deal with this issue is a matter for them but LLB has an obligation under the Superannuation Guarantee Legislation, the Award and JDA-8 to make superannuation contributions for its employees.

[26] I do not accept the submission that it would be unfair for LLB to be penalised due to the unilateral actions of LLC. I support the proposition of Mr Docking that LLC are fully aware of these proceedings and the ramifications and consequences of any decision that they make in relation to the DBP. LLB are a wholly owned subsidiary of LLC. If LLC proceed to close the DBP and LLB is successfully prosecuted for breach of JDA-8 by the CFMEU or any one of the 19 affected employees, then LLC will eventually wear the consequences through the financial return of LLB.

[27] I note the correspondence from Mr Murray Colemen to the affected employees on 9 February 2015 where he said:

“...As we have already discussed with the CFMEU, we flag in advance that:

(a) if the Commission determines that LLB is required to maintain a defined benefit as set out in the JDA-8 (ie, the CFMEU ‘wins’) - then, pending the determination of any appeals, LLB will take what steps it can to maintain the DB Division for the life of the JDA-8. If and when an employee leaves the DB Division (eg, if an employee retires in 2015, or if the DB Division is closed after JDA-8 and is not replaced in 2016) then:

(1) the employee will receive (into his or her accumulation account) their Vested Benefit; but
(2) the employee will not receive the Bonus amount (ie, $2000 or 1%) or the Settlement Amount ($1000);

b) if the Commission determines that LLB has no obligation to provide a defined benefit as set out in the JDA-8 (ie, LLB ‘wins’) - then, it is LLC’s intention to close the DB Division and:

(1) the employees will receive (into their accumulation account) their Vested Benefit; but

(2) the employees will not receive the Bonus amount (ie, $2,000 or 1%) or the Settlement Amount ($1,000).

As part of the previously announced program of closing the (former) Defined Benefits Division, the non JDA-8 employees were transferred out of the DB Division and the Bonus was paid at the direction of LLC. LLC has also to date directed that the Bonus be paid in respect of JDA-8 employees who have retired prior to resolution of the current dispute...” 6

[28] I do not accept Mr Docking’s argument that this correspondence identifies any concession on the part of LLB.

However, the correspondence gives me a great deal of confidence that LLB will do everything possible to ensure that the DBP will remain open for the life of JDA-8. What happens after that is in the hands of the parties via the next enterprise bargaining process.

[29] I also note the ambiguity which exists in the Plum Superannuation Plan Participation Schedule 7 in relation to the role and capacity of the Principal Employer and an Employer. This ambiguity has resulted in the real scenario where LLC could simply advise Plum to close the DBP of the LLSP and leave LLB in breach of its obligations under JDA-8 and the Building Construction General On-Site Award. I doubt that this was the intent of the Participation Schedule.

I do note though that section 11.1 of the Participation Agreement vests powers in “any employer”. In this scenario, the “employer” is LLB.

Conclusion

[30] I find that employees of LLB who are members of the DBP of the LLSP are entitled to remain members of the DBP in accordance with JDA-8.

[31] I note that Deputy President Gooley came to the same conclusion.

[32] In its correspondence of 9 February 2015 8 LLB broke the nexus between the 200 odd employees that have been transferred to the accumulation scheme and the remaining 19 employees covered by JDA-8, by removing the incentives that had been offered from any future transfer.

[33] I would encourage the parties back to the negotiating table to see if there is any capacity to now improve these incentives and deliver a pragmatic solution to satisfy the interests of LLC, LLB and the 19 affected employees.

[34] An Order will be issued.

COMMISSIONER

 1   Exhibit L1 page 12

 2   MA000020

 3   Exhibit AH-3

 4   [2013] FWCFB 276

 5   [2014] FWCFB 7447

 6   Exhibit C1

 7   Exhibit L1 - CB339

 8   Exhibit C1

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