Lend Lease Building Pty Ltd v Construction, Forestry, Mining and Energy Union
[2015] FWCFB 5081
•8 SEPTEMBER 2015
| [2015] FWCFB 5081 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
v
Construction, Forestry, Mining and Energy Union
(C2015/2550)
SENIOR DEPUTY PRESIDENT DRAKE | SYDNEY, 8 SEPTEMBER 2015 |
Appeal against decision [[2015] FWC 1966] and Order [PR562458] of Commissioner Riordan at Sydney on 26 March 2015 at Sydney in matter number C2014/6756.
[1] This is an application by Lend Lease Building Pty Ltd (LLB) for permission to appeal and, if granted, an appeal pursuant to s.604 of the Fair Work Act 2009 (the Act) from a Decision 1 and Order2 of Commissioner Riordan issued on 26 March 2015. The Decision of Commissioner Riordan subject of the appeal concerns a dispute about the proper construction of the Lend Lease Project Management & Construction/CFMEU Joint Development Agreement Mark 8 (JD-8) with respect to superannuation entitlements of certain LLB employees who are members of a Defined Benefit Plan (DBP) of the Lend Lease Superannuation Plan (LLSP). Commissioner Riordan found that employees who are members of the DBP are entitled to remain so for the life of JD-8.
[2] In the Appeal, Mr Ward of counsel, instructed by Ms Anderson from Herbert Smith Freehills, appeared with permission for LLB. Mr Docking of counsel, with Mr Maxwell from the Construction, Forestry, Mining and Energy Union (CFMEU), appeared with permission for the CFMEU.
[3] The appeal was heard in Sydney on 21 May 2015. The Grounds of Appeal are set out below:
‘1. The Commissioner erred in failing to provide adequate reasons for his conclusion (at [24]) 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".
The Commissioner appears to have found that this conclusion necessarily follows from his finding (at [23]) that "superannuation entitlements of LLB employees are determined by JDA-8, at clause 11.2". Whilst the Appellant does not seek to challenge the finding at [23], a significant (indeed the central) aspect of the Appellant's case at first instance concerned the proper construction of clause 11.2 of the Lend Lease Project Management & Construction/CFMEU Joint Development Agreement Mark 8 2012-16 (JDA-8) - in particular, whether or not clause 11.2 properly construed requires LLB to maintain the Defined Benefit Plan (DBP) for the life of the JDA-8. The Commissioner's reasons neither address LLB's first instance submissions on this point, nor otherwise articulate how the Commissioner applied the relevant legal test (set out at [18]-[20] of the Decision) to the construction of clause 11.2.
2. The Commissioner erred in failing to properly take into account relevant considerations, namely the matters raised by LLB supporting its preferred construction of clause 11.2 of the JDA-8:
a. at paragraphs 5 to 18 of its Outline of Submissions dated 7 November 2014; and,
b. at PN278-PN291 and PN372-PN407 of the transcript of the hearing before Commissioner Riordan on 19 February 2015.
At [19] of the Decision, the Commissioner notes that he has "taken into account all of the contentions, evidence and submissions of the parties from both this and the first proceeding". However, save for this passing reference the Decision does not engage with LLB's submissions on the question of the proper construction of clause 11.2 (nor indeed does it engage with the Respondent's submissions on the same question). In the absence of even cursory considerations of each party's submissions on this question, this passing reference alone is insufficient to establish that the Commissioner took these submissions into account (which are plainly relevant considerations).
3. The Commissioner erred in constructively failing to exercise the jurisdiction conferred upon the Commission to deal with the dispute.
The Commission's jurisdiction to deal with the dispute stems from section 739 of the FW Act in conjunction with clause 19 of the JDA-8. The scope of the particular dispute (assuming it remains within the bounds of section 739 and clause 19) is determined by the Application - it is this jurisdiction which the Commission is required to exercise.
In its Application dated 14 October 2014, LLB submitted (at paragraph 26) that "clause 11.2 does not require it to maintain access to a defined benefit plan for JDA Members". LLB then set out what it considered to be the correct construction of clause 11.2 and its reasoning for so considering. In opening LLB's case before Commissioner Riordan, counsel for LLB noted (with reference to the earlier dispute proceedings before Deputy President Gooley which resulted in findings being made regarding the proper construction of clause 11.2 without jurisdiction) that "this application is now brought by my client seeking resolution of essentially the same underlying point of construction of the relevant enterprise agreement".
A plain reading of the Application and the written and oral submissions of both parties makes clear that the extant dispute did not concern whether or not clause 11.2 determines the superannuation entitlements of LLB employees, but rather concerned how clause 11.2 ought properly be construed in ascertaining those entitlements. The Commissioner's reasons concern themselves with the former question rather than the latter. In so doing, the Commissioner misunderstood the nature of the opinion he was required to form and the jurisdiction he was required to exercise.’
[4] An appeal pursuant to s.604 of the Act may only proceed with the permission of the Fair Work Commission (Commission). Permission to appeal may be justified by appealable error, or other relevant considerations. The Commission must grant permission to appeal if it is in the public interest to do so. If permission to appeal is granted, an appeal proceeds before the Full Bench by way of rehearing. A Full Bench only exercises its powers on appeal if there is an appealable error identified at first instance.
[5] The dispute has some background. A previous application involving this issue 3 was lodged by the CFMEU on 2 May 2014. That application was briefly before the Presiding Member and was then referred to Deputy President Gooley who heard it and published Decisions on 28 May and 19 June 2014.4 Deputy President Gooley found that she did not have jurisdiction to deal with the dispute on the basis that requisite steps in the Dispute Notification Procedure under JD-8 had not been followed. Despite her conclusion in this regard, the Deputy President set out what her determination of the dispute would have been if she was in error concerning jurisdiction, and had power to determine it. In doing so she determined that LLB had an obligation under the Agreement to provide the benefits in clause 11.2(c)(ii). In the appeal, no objection was taken to the Presiding Member continuing to preside on this Full Bench.
[6] Following the Decision of Deputy President Gooley, the application was referred to Commissioner Riordan, who had before him for consideration material from the earlier proceedings before Deputy President Gooley comprising the oral and written submissions of the parties, an agreed bundle of relevant documents, the transcript of those proceedings and the Decision of Deputy President Gooley.
[7] Commissioner Riordan's decision concerns Clause 11 of JD-8. It is as follows:
‘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.’
[8] The findings of Deputy President Gooley in relation to the question of whether LLB had an obligation under JD-8 to provide the benefits in clause 11.2(c)(ii) were as follows:
‘[36] Clause 11.2 imposes obligations on LLB. Clause 11.2(a) sets out the funds to which a superannuation contribution can be made. Clause 11.2(b) defines the default superannuation fund. Clause 11.2(c)(i) sets the contribution level for members of the LLSP accumulation fund and clause 11.2(d) sets the contribution level for any other accumulation fund.
[37] LLB submitted that clause 11.2(c)(ii) of the Agreement does not impose obligations on LLB and merely sets out that some employees may be members of the defined benefit fund. It does so it was submitted, to make clear that LLB does not have to make contributions to an accumulation fund on their behalf.
[38] LLB contrasts the use of the word “will” in clause 11.2(c)(i) with the words in clause 11.2(c)(ii). It also submitted that as clause 11.1 refers to benefits LLB “is currently able to provide” this supports its submission that the benefits can be changed.
[39] The word “may” in clause 11.2(c)(ii) is not used in a permissive sense. It simply acknowledges that some employees are members of the DBD but as they are not compelled to be, their status may change.
[40] It submitted, without explaining why, that it would be commercially inconvenient or commercial nonsense to treat the clauses as “guaranteeing or warranting to employees that LLB will provide continuing membership of the DB division or in the alternative, LLB would procure LLC to maintain the DB division.”
[41] It also points to the surrounding circumstances, in particular LLC’s right to terminate the DBD; the fact that LLB does not contribute the defined benefits fund; and that changes have been made without reference to the Agreement.
[42] I do not accept these submissions. I accept that the Agreement does not compel LLC to maintain a defined benefits fund. LLC is not party to the Agreement. The Agreement addresses LLB’s obligations and employees’ benefits.
[43] Clause 11.2(c)(ii) describes the level of the benefit provided to members of the DBD. Because the DBD is non-contributory, the clause does not define the level of contribution. It simply sets out the method of calculation of the benefit payable to employees. It is LLB’s obligation to ensure that there is sufficient money available to meet this obligation.
[44] Currently LLB meets its obligations under clause 11.2(c)(ii) through its arrangement with LLC. LLC pays the contributions to the trustee and LLB reimburses it. However the obligation in clause 11.2(c)(ii) is LLB’s obligation, not LLC’s. If LLC decides that it no longer wants to maintain the DBD, it is of course able to do so and the Commission does not have the power through the dispute resolution procedure of the Agreement to make orders preventing it from doing so. As I said in my earlier decision, the LLC has not agreed to have disputes about its obligation, if any, to maintain the DBD resolved by the Commission. However, if LLC closes the DBD this does not absolve LLB of its obligations under the Agreement.
[45] I therefore find that LLB has an obligation under the Agreement to provide the benefits set out in clause 11.2(c)(ii).
[46] However given my decision that the Commission does not have the jurisdiction to resolve this dispute, it is not necessary to consider what orders could be made to resolve the dispute.’
[9] In determining the application before him, Commissioner Riordan accepted Deputy President Gooley’s analysis and agreed with her conclusion that LLB has an obligation under JD-8 to provide the benefits set out in clause 11.2(c)(ii). He issued an Order consistent with that analysis and conclusion.
[10] LLB does not dispute that JDA-8 governs the relevant superannuation entitlement. What LLB submits is that there is no express obligation in the words of clause 11.2(a) of JDA-8 to maintain in perpetuity a defined benefit division of the superannuation plan to which LLB employees participate. It submits that, in the absence of an obligation expressed by the natural and ordinary meaning of the clause, there is no basis to impose the obligation contended for by the CFMEU. It asserts that Commissioner Riordan did not deal with the meaning of and obligations arising from the wording of clause 11.2(c)(ii) of JDA-8.
[11] We are not persuaded that there is any obligation arising from the clause to provide an entitlement to employees “in perpetuity”. The clause states that employees may be members of the defined benefit division of the superannuation plan in which they participate for so long as the Agreement remains in operation.
[12] We are satisfied and find that, contrary to the submission of LLB, that JD-8 by the natural and ordinary meaning of the words in clause 11.2(c)(ii), confirms the entitlement of employees to be members of the defined benefit division of the superannuation plan for the term of JD-8. We are satisfied that the natural and ordinary meaning of the words “…may be members” is that the relevant employees - those employees who were members of the defined benefit plan prior to 1 January 1999 - may continue to be members for the term of the operation of JD-8.
[13] LLB criticises the Commissioner's decision for its reliance on Deputy President Gooley's reasoning and conclusion. It contends that the Commissioner did not deal with the relevant question himself. We disagree. We consider his own conclusion concerning clause 11.2(c)(ii) of JDA-8 is as clear as is his agreement with the analysis and reasoning of Deputy President Gooley. Deputy President Gooley stated what her findings would be had she had jurisdiction. Her findings were not obiter. They were made after she had determined that she did not have jurisdiction. However, we are not persuaded that, even if the Commissioner had entirely adopted a previous consideration of this issue which had been articulated by another Member that such an approach would demonstrate any appealable error.
[14] This Full Bench also agrees with the reasoning and conclusion of Deputy President Gooley and can identify no error in the Commissioner’s adoption of those reasons. We can identify no appealable error in the decision of Commissioner Riordan. We can identify no public interest in the question for determination which involves the entitlements of 19 employees for the balance of the term of the Agreement. Permission to appeal is refused.
SENIOR DEPUTY PRESIDENT
Appearances:
C. Ward of Counsel and E. Anderson for the Appellant
B. Docking of Counsel and S. Maxwell for the Respondent
Hearing details:
2015.
Sydney:
21 May.
1 [2015] FWC 1966
2 PR562458
3 C2014/4292 Construction, Forestry, Mining and Energy Union v Lend Lease Building Pty Ltd (formerly known as Lend Lease Project Management and Construction Australia Pty Ltd)
4 [2014] FWC 3547 and [2014] FWC 4032
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