Nylex Industrial Products Pty Ltd v TCFUA
[2007] FMCA 2084
•17 December 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| NYLEX INDUSTRIAL PRODUCTS PTY LTD v TCFUA | [2007] FMCA 2084 |
| INDUSTRIAL LAW – Interpretation of certified agreement – dispute over redundancy – intention of the parties. |
| Workplace Relations Act 1996 (Cth), ss.170LY, 170LX, 170MW Workplace Relations Regulations 2006 (Reg) 2.20 Ch 7, Part 2 Div 14 Workplace Relations Amendment (Work Choices) Act 2005 (Cth) |
| AFMEPKIU & Ors v Qantas Airways Limited (2001) FCA 547 Australian Liquor, Hospitality and Miscellaneous Workers Union v Prestige Property Service Pty Ltd [2006] FCA 11 Australasian Meat Industry Employees Union v Coles Supermarkets Australia Pty Ltd (1998) 80 IR 208 Mills v Meeking (1990) 169 CLR 214 Moshirian v University of NSW (2002) FCA 179 QBE Insurance Co Ltd v Dean (1985) 3 ANZ Insurance Cases 60-658 Quickenden v O’Connor [2001] FCA 303 Shop Distributive & Allied Employees Association v Woolworths [2006] FCA 616 Short v F W Hercus Pty Ltd (1993) 40 FCR 511 | ||
Applicant: | NYLEX INDUSTRIAL PRODUCTS PTY LTD ACN 053 301 296 | |
| Respondent: | TEXTILE, CLOTHING & FOOTWEAR UNION OF AUSTRALIA |
| File Number: | MLG 717 of 2007 |
| Judgment of: | O'Sullivan FM |
| Hearing date: | 16 August & 15 October 2007 |
| Date of Last Submission: | 15 October 2007 |
| Delivered at: | Melbourne |
| Delivered on: | 17 December 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr O'Grady |
| Solicitors for the Applicant: | Rigby Cooke Lawyers |
| Counsel for the Respondent: | Mr Irving |
| Solicitors for the Respondent: | Textile, Clothing & Footwear Union of Australia |
ORDERS
The matter be adjourned to a date to be fixed for the purposes of making orders to give effect to these reasons.
NOTE:
(a)The parties provide a copy of the agreed minute of orders by email to the Associate to Federal Magistrate O’Sullivan at: [email protected].
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 717 of 2007
| NYLEX INDUSTRIAL PRODUCTS PTY LTD |
Applicant
And
| TEXTILE, CLOTHING & FOOTWEAR UNION OF AUSTRALIA |
Respondent
REASONS FOR JUDGMENT
Introduction
This decision concerns a dispute between Nylex Industrial Products Pty Ltd (“the Employer”) and the Textile, Clothing and Footwear Union of Australia (“the Union”) and its members about a redundancy agreement.
The Employer made an application pursuant to Regulation 2.20 Chapter 7, Part 2 Division 14 of the Workplace Relations Regulations 2006 (“the Regulations”) which so far as is relevant provides:
“WORKPLACE RELATIONS REGULATIONS 2006 – REG 7.2.20
Interpretation of transitional instruments
(1)The Court or the Federal Magistrates Court may give an interpretation of a transitional instrument on application by:
(a)the Minister; or
(b)an organisation or person bound by the transitional instrument; or
(c) an employee whose employment is subject to the transitional instrument.
(2)The decision of the Court of the Federal Magistrates Court is final and conclusive and is binding on:
(a) the organisations and persons bound by the transitional instrument; and
(b)the employees whose employment is subject to the transitional instrument;
who have been given an opportunity of being heard by the Court or the Federal Magistrates Court.
(3) In this regulation:
transitional instrument means any of the following:
(a)a pre reform certified agreement within the meaning given by clause 1 of Schedule 7 to the Act;
(b) a notional agreement preserving State awards within the meaning given by subclause 1(1) of Schedule 8 of the Act;
(c)a preserved State agreement within the meaning given by subclause 1(1) of Schedule 8 to the Act.”
The application sought the interpretation of the Nylex Industrial Products Pty Ltd (Melded Fabrics) – TCFUA Certified Agreement 2005 (“the Agreement”). The Agreement was certified by the Australian Industrial Relations Commission (“AIRC”) on 22 March 2006 and has a nominal expiry date of 31 August 2008.
The Agreement is a pre-reform certified agreement as defined in clause
1 of Schedule 7 of the Workplace Relations Act 1996 (“the Act”). It was made under Division 2 of Part VIB of the Act before 27 March 2006 and was certified under Division 4 of Part VIB of the Act before
27 March 2006 when the amendments to the Act made by the Workplace Relations Amendment (Work Choices) Act2005 commenced.The Employer is a party to the Agreement as is the Union (which is a registered organisation under the Act) along with the employees of the Employer covered by that agreement.[1]
[1] see Clause 3
Application
The application as filed sought the following order:
“1.An order under Regulation 2.20 of Chapter 7 Part 2 Division 14 of the Workplace Relations Regulations 2006 that on its proper construction the effect of paragraph 2(c) of Attachment D – “Redundancy Agreement between Melded Fabrics – Dandenong and its employees” of the Nylex Industrial Products Pty Ltd (Melded Fabrics) – TCFUA Certified Agreement PR969345 (the Certified Agreement) is that an employee who has or will become surplus to the labour requirements of Nylex Industrial Products Pty Ltd (Melded Fabrics)(the Company) who is offered reasonable alternative employment by the Company or by another member of the Austrim Nylex Limited Group of companies, is not a retrenched employee for the purpose of Attachment D of the Certified Agreement, including paragraph 10 of that Attachment and does not become entitled to the service payments provided for in paragraph 13 of that attachment, irrespective of whether the offer of alternative employment is accepted.”
Initially the Union had contended that the relevant regulation had been made beyond power. However, at the hearing Counsel for the Union confirmed that it was agreed the Court had jurisdiction to interpret the Agreement.
On 1 June 2007, directions were made for both parties to file outlines of contentions and affidavit material on which they sought to rely.[2]
The application as against the second respondent was struck out.[2] Applicant’s Outline of Contentions and Contentions in Reply filed 22 June 2007 & 11 August 2007 respectively. Respondent’s Outline of Contentions filed 30 July 2007
The Employer and the Union in submissions acknowledged the Court, in interpreting the Agreement, was not confined to the construction of the Agreement put forward by either party.
In its contentions in reply filed 11 August 2007 the Employer advanced the following alternative interpretation to that set out at paragraph 6 above:
“An employee who has or will become surplus to the labour requirements of Nylex Industrial Products Pty Ltd who is offered reasonable alternative employment by the company or by another member of the Austrim Nylex Limited Group of companies, irrespective of whether the offer of alternative employment is accepted or not, (“the Relevant Employee”):
(i)is not a retrenched employee for the purposes of Attachment D of the Certified Agreement; and
(ii)paragraph 10 of that Attachment has no application in respect of the Relevant Employee; and
(ii)the Relevant Employee does not become entitled to the service payments provided for in paragraph 13 of that attachment.”
The application was heard on 16 August 2007 and 15 October 2007. The Employer was represented by Mr O’Grady of Counsel. The Union was represented by Mr Irving of Counsel.
On 16 August 2007, the Employer led evidence from Mr Dal Bon, the Human Resources Manager for the Nylex Group. The Union led evidence from Ms O’Neil, its National Assistant Secretary.
At the conclusion of the hearing of evidence on 16 August 2007, directions were made for the filing of submissions by both parties.[3]
[3] Applicant’s submissions and submissions in reply filed 23 August & 11 October 2007 respectively. Submissions of the Respondent filed 30 August 2007
The Court was assisted on 15 October 2007 by Counsel for each of the parties who developed arguments based on the detailed submissions that had been filed.
The Agreement
The Agreement, which was made pursuant to Part VIB of the Act as it stood prior to the amendments that commenced on 27 March 2006, binds the organisations (such as the Union in this case) that made the Agreement with the Employer and all persons whose employment is subject to it. [4]
[4] See Quickenden v O’Connor [2001] FCA 303 at 6-11 for an overview of the statutory framework
The Agreement was, amongst other things, required to have been approved by a valid majority of employees before coming into operation and whilst in operation, prevails over an award to the extent of any inconsistency. Section 170LX of the Act, as it stood prior to the amendments that commenced on 27 March 2006, provided that an agreement ceases to be in operation if its nominal expiry date has passed and it is replaced by another certified agreement.[5]
[5] Ibid
The Agreement contains a clause that provides for how it relates to other awards and agreements. Clause 5 of the Agreement provides:
“Relationship to Award and Agreements
5.1 Incorporation of Textile Industry Award 1994 in Agreement
5.1.1 It is agreed between the parties that the Textile Industry Award 1994 as at 30 June 1994, other than clause 45, contained in Attachment A to this Agreement (“Attachment A), is expressly incorporated into and forms part of this agreement, and subject to 5.1.3 and 5.2.3 below, constitutes the minimum conditions to apply to all employees covered by this Agreement.
5.1.2 A reference in Attachment A to “an employer” or to “a respondent to this award” or to a “respondent employer” shall be construed as a reference to the Employer party to this Agreement.
5.1.3 Where a provision contained in Attachment A (“Attachment A Provision”) is inconsistent with any other provision in the body of this Agreement (“Agreement Provision”), then the Agreement provision will prevail over Attachment A to the extent of any inconsistency.
5.2 Incorporation of Textile Industry Award 2000 in Agreement
5.2.1 It is agreed between the parties that the Textile Industry Award 2000, as it stands at the date of certification of this Agreement, contained in Attachment B to this Agreement (“Attachment B”) is expressly incorporated into, and forms part of this Agreement.
5.2.2 Subject to sub clause 5.2.3 below, an Agreement Provision or an Attachment A provision will prevail over a provision contained in Attachment B (“Attachment B Provision”) to the extent of the inconsistency.
5.2.3 An Attachment B provision which is more beneficial to an employee than an Attachment A provision will apply to and bind the parties to this Agreement in respect of that employee as if it were an Attachment A provision, and will prevail over the corresponding Attachment A provision to the extent of any inconsistency.
5.3 Continuing operation of Textile Industry Award 2000 or replacement award
5.3.1 Independent of its incorporation into this Agreement as Attachment B, the Textile Industry Award 2000 (“the Award”), and any Award intended to replace the Textile Industry Award 2000 (“Replacement Award”), as varied from time to time, will continue to apply and bind the parties to this Agreement.
5.3.2 Subject to 5.3.3 and 5.3.4 below, an Agreement Provision, Attachment A Provision or Attachment B Provision will prevail over an award or Replacement Award provision to the extent of any inconsistency.
5.3.3 An Award or Replacement Award provision which is more beneficial to an employee than an Attachment A Provision or Attachment B Provision will apply to and bind the parties to this Agreement in respect of that employee as if it were an Attachment A Provision or an Attachment B provision, and will prevail over the corresponding Attachment A provision or Attachment B Provision to the extent of any inconsistency.
5.3.4 Any reduction or removal of wages, entitlements or conditions of employment in an Award or Replacement Award will not apply to employees to whom this Agreement applies. To avoid doubt, no employee shall suffer any loss of wages, entitlements, employment conditions or other benefit as a result of amendments made to the Award or Replacement Award that are made subsequent to the date of this Agreement.
5.4 Relationship to Other Agreements
5.4.1 To the extent permissible by law this Agreement operates to the exclusion of all other Agreements under the Workplace Relations Act 1996 (as varied from time to time).
5.4.2 To the extent permissible the Employer agrees not to enter into, offer or negotiate any Australian Workplace Agreements (A.W.A’s) during the life of this Agreement.”
There were several clauses in the Agreement dealing with redundancy. Clause 15 of the Agreement provides:
“Redundancy
If during the life of this agreement, agreement is reached for an enhanced redundancy package to apply at other Nylex sites, such enhanced provisions will form part of this agreement and apply to Melded Fabrics Dandenong employees.
Agreement in relation to redundancy shall be as per Attachment D in addition to the commitments contained in clause 16.”
Clause 16 dealt with “Redundancy-Outplacement Support” the details of which it is not necessary to set out in full for the purposes of this matter. The terms of the Agreement make clear that:
“[A]greement in relation to redundancy shall be as per Attachment D in addition to the commitments contained in clause 16”.
Given this, the relevant section of the Agreement is headed “Attachment D – Retrenchment Agreement Between Melded Fabrics – Dandenong and Its Employees” and provides as follows:
“1. SCOPE OF AGREEMENT
This Agreement covers all permanent employees who are members of the TCFUA and AMWU, employed by Melded Fabrics at 3 Healey Road, Dandenong Victoria. The items and conditions of this Agreement are not cumulative upon the terms and conditions of any award or legislation and stand alone.
The need for retrenchments would be the direct result of a general downturn in the economy, and that has a significant effect on the production levels at Melded Fabrics.
2. DEFINITION
(a) Company: Melded Fabrics.
(b)Union: The Textile, Clothing and Footwear Union of Australia. The Australian Manufacturing Workers Union.
(c) Retrenchment: A situation whereby employees have or will become surplus to the labour requirements of the Company. An employee shall not be considered retrenched if the Company offers alternative employment within the Company or in other Austrim Nylex Limited Groups, within reason.
(d)Retrenched Employee: A person who is employed on a permanent basis by the Company and whose services have become surplus to the Company requirements.
(e) This Retrenchment Agreement Does Not Cover:
(i) Resignation by an employee.
(ii) Ordinary dismissal under the appropriate Award.
(iii) Termination of casual or subcontract employees.
(iv) Any service prior to the most recent date of commencement of employment, but where service has been deemed to be continuous under the Award, such service will be taken into account re retrenchment consideration. Prior service shall not be eligible for retrenchment consideration.
(f)Rate of Pay: The hourly rate at the date employment ceases.
(g) Employee: person engaged in permanent hire.
3. NOTICE
Subject to any Award provisions to the contrary, the notice of retrenchment by the Company to be a minimum of four (4) weeks, plus an additional one (1) week’s pay for employees forty-five (45) years of age and over in lieu of notice.
4. ANNUAL LEAVE
Annual leave loading of 17½ will be paid on all accrued Annual Leave, including current pro-rata entitlement.
5. ACCUMULATED SICK LEAVE
Accumulated Sick Leave will be paid on retrenchment with current year entitlement to be paid pro-rata.
6. EMPLOYEE SELECTION FOR RETRENCHMENT
(a)Prior to retrenchment being considered, all other measures to avoid retrenchment were considered by the Company.
(b)When retrenchments are inevitable, the Company reserves the right to determine the selection of employees for retrenchment with consideration for the future of the Company to ensure a sound business base and continued employment for the remaining employees. The Company acknowledges that length of service will be a major factor, other factors being equal.
(c) The Company will discuss with Union Representatives, the number of retrenchments, those proposed for retrenchment, and any voluntary retrenchments prior to retrenchments being finalised.
(d)Voluntary retrenchments will be considered where reason exists for the substitution by a voluntary retrenchment employee for an employee selected to be retrenched with a minimum period of forty-eight (48) hours to apply for receipt of voluntary retrenchments.
(e)During this process, no industrial action will be taken in relation to the matters being discussed.
7. ITEMISED STATEMENT OF ALL WAGES DUE
Retrenched employees shall be given an itemised statement of all retrenchment monies at the time of retrenchment.
8.CERTIFICATE OF SERVICE
All retrenched employees will be supplied with a Certificate of Service at time of retrenchment.
9.SUPERANNUATION
All Superannuation payments will be as provided in the appropriate Superannuation Trust Deed and Rules.
10. TRANSFER TO OTHER COMPANY OPERATIONS
Where an employee is retrenched and at the time is offered and accepts employment at another Austrim Nylex plant, he/she will be entitled to continuity of service for the purpose of normal Award entitlements in lieu of any retrenchment considerations under this Agreement, providing he/she may terminate his/her new employment within three (3) months of commencement and still be eligible for the benefits set out in this Agreement, provided the termination is not the result of misconduct or a dismissal in accordance with the appropriate Award.
11. TRANSMISSION OF BUSINESS
The Agreement dated 3 December 2003 between the parties regarding transmission of business and placed on the AIRC file is incorporated into and forms part of this Agreement.
12. LONG SERVICE LEAVE
Employees with a minimum of five (5) years service will be paid pro-rata long service leave.
13. SERVICE PAYMENTS
Four (4) weeks payment for each year of service, calculated on a pro-rata basis. (Note: This service payment does not include the payment due in lieu of notice as highlighted in item no. (3) above).
Employees who have completed five (5) or more years of service will receive a service payment of $150 per year of service.”
Approach to interpretation of the Agreement
The principles that should guide the Court’s approach to interpretation of the Agreement were not in dispute between the parties.[6]
[6] see paragraph 6(f)-(i) Applicants Contentions filed 22 June 2007 and Submissions of Respondent filed 30 August 2007
Those principles are usefully summarised in City of Wanneroo v Holmes (1989) 30 IR 362 at 378.
“43. The interpretation of an award begins with a consideration of the natural and ordinary meaning of its words - The Clothing Trades Award (1950) 68 CAR 597 (Aust. Indus. Ct. F.C.).
The words are to be read as a whole and in context - Australian Timber Workers Union v W. Angliss & Co. Pty Ltd (1924) 19 CAR 172. Ambiguity if any, may be resolved by a consideration, inter alia, of the history and subject matter of the award - Pickard v John Heine & Son Ltd (1924) 35 CLR 1. Resort to such matters as prefatory statements and negotiations is of dubious assistance if admissible at all - Seymour v Stawell Timber Industries Pty Ltd (1985) 9 FCR 241, 244 (Northrop J.), 254 (Keely J.) cf. 265 (Gray J.).
The logs of claim and arbitrator's reasons for decision may be referred to to determine the ambit of the dispute which led to the making of the award so that where there are two possible interpretations, one within the ambit and one without, the former may be preferred. Evidence of the conduct of the parties subsequent to the making of the award however, cannot be relied upon to construe it. - Seamen's Union of Australia v Adelaide Steamship Co. Limited (1976) 46 FLR 444, 446, disapproving Merchant Seamen's Guild of Australia v Sydney Steam Collier Owners and Coal Stevedores Association (1958) 1 FLR 248. That is not to say the words must be interpreted in a vacuum divorced from industry realities. As Street J. said in Geo. A. Bond & Co. Ltd (in liq.) v McKenzie (1929) AR(NSW) 498 at 503:‘...it must be remembered that awards are made for the various industries in the light of the customs and working conditions of each industry, and they frequently result ... from an agreement between the parties, couched in terms intelligible to themselves but often framed without that careful attention to form and draughtsmanship which one expects to find in an Act of Parliament. I think, therefore in construing an award, one must always be careful to avoid a too literal adherence to the strict technical meaning of words, and must view the matter broadly, and after giving consideration and weight to every part of the award, endeavour to give it a meaning consistent with the general intention of the parties to be gathered from the whole award." - see also Re Crown Employees (Overtime) Award (1969) AR(NSW) 60, 63; Re Hospital Employees Administrative and Clerical (State) Award (1982) 2 IR 123.’
It is of course no part of the Court's task to assign a meaning in order that the award may provide what the Court thinks is appropriate – Australian Workers Union v Graziers Association of New South Wales (1939) 40 CAR 494. Indeed it has been said that a tribunal interpreting an award must attribute to the words used their true meaning even if satisfied that so construed they would not carry out the intention of the award making authority – Re: Health Administration Corporation; Re: Public Hospital Nurses (State) Award (1985) 12 IR 122; Rogers Meat Co. Pty Ltd v Howarth (1960) AR (NSW) 291; Re: Government Railways and Tramways (Engineers etc) Award (1928) AR 53, 58 (Cantor J.).”
The Employer and the Union both agreed that the rules applicable to the construction of contracts also applied to awards and certified agreements.[7] This recognises what Finkelstein J in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Skilled Engineering Pty Ltd (2003) FCA 260 said was:
“the prevailing view [that] seems to be that the rules applicable to the construction of contracts should be applied to both awards and certified agreements.”
[7] see AMWU v Skilled Engineering (2003) FCA 260 at 15, see also Australasian Meat Industry Employees Union v Coles Supermarkets Australia Pty Ltd (1998) 80 IR 208 at 212 and Ambulance Service Victoria (South Western Region) v Australian Liquor Hospitality and Miscellaneous Workers Union (1998) 80 IR 275 at 281
Although made in the context of the interpretation of awards, the approach of His Honour Justice Madgwick in Kucks v CSR Ltd (1996) 66 IR 182 (“Kucks”) is also applicable in the interpretation of agreements.[8] The relevant passage from Kucks reads:
"It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading.
And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning."
[8] Finkelstein J in AMWU v Skilled Engineering [2003] FCA 260 at 15
In City of Wanneroo v Australian Municipal, Administrative, Clerical And Services Union [2006] FCA 813 His Honour French J referred again to the decision extracted at paragraph 22 above and at [57] said:
“It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities – City of Wanneroo v Holmes (1989) 30 IR 362 at 378-379 and cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned – see eg Geo A Bond and Co Ltd (in liq) v McKenzie [1929] AR 499 at 503-4 (Street J). It may be that this means no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or logicality or apparent inconsistencies.
But while fractured and illogical prose may be met by a generous and liberal approach to construction, I repeat what I said in City of Wanneroo v Holmes (at 380):
‘Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.’
Submissions filed on behalf of the Union on this issue referred to the decisions extracted above. The Employer’s submissions were to the effect that:
a)a narrow or pedantic approach to the interpretation is misplaced. The search is for the meaning intended by the framer(s) of the document bearing in mind that such framer(s) were likely of a practical bent of mind;[9]
b)a court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award;[10]
c)the construction of an award begins with a consideration of the ordinary meaning of its words;[11]
d)the general principle is that the conduct of parties to an agreement cannot be taken into account in construing the agreement and that evidence of the historical background to an agreement, including evidence of antecedent negotiations, is irrelevant in so far as it is relied upon simply to demonstrate the subjective intentions of the negotiating parties.[12]
[9] Paragraph 6(f) of contentions filed 22 June 2007
[10] Paragraph 6(g) of contentions filed 22 June 2007
[11] Paragraph 6(h) of contentions filed 22 June 2007
[12] Paragraphs 6(i) & (j) of contentions filed 22 June 2007
The application before the Court concerns a dispute over the interpretation of a redundancy provision contained in a certified agreement made under the Act. In NTEIU v University of Wollongong [2002] FCA 31 at 27 Branson J said:
“The proper construction of sub-clause 19.6.1 is not to be determined by reference only to the ordinary meaning of the individual words of the sub-clause. As Mason J pointed out in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 348:
‘…it has frequently been acknowledged that there is more to the construction of the words of written instruments than merely assigning to them their plain and ordinary meaning.’
The proper construction of the subclause is to be derived from a consideration of the meaning of the words of the subclause read in the context of the Agreement, and having regard to the nature and purpose of certified agreements under the WR Act. The critical question is what is the meaning reasonably to be attributed to the words of the subclause in all the circumstances.”
In Amcor Limited v. CFMEU [13] the High Court considered the meaning of a redundancy clause in a certified agreement. Gleeson CJ and McHugh J said:
`The resolution of the issue turns upon the language of the particular agreement, understood in the light of its industrial context and purpose, and the nature of the particular reorganisation.'[14]
[13] [2005] HCA 10 ,9 March 2005, Full Court of the High Court of Australia, Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ.
[14] Ibid at Paragraph 2.
Gummow, Hayne and Heydon JJ said of clause 55.1.1, the redundancy clause at issue in that case, that:
`Clause 55.1.1 must be read in context. It is necessary, therefore, to have regard not only to the text of cl 55.1.1, but also to a number of other matters: first, the other provisions made by cl.55; secondly, the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the Agreement was made and in which it was to operate.'[15]
[15] Paragraph 3
The principles set out in the above authorities, distilled for the purposes of this matter, are to:
· ascertain the `natural and ordinary' meaning of the words used; and
· read the words in the context of the clause in which it is contained and the agreement as a whole; and
· do so having regard to the nature and purpose of certified agreements under the Act.
Evidence
In the course of the hearing on 16 August 2007, objections were made to the admissibility of affidavit material filed by both parties.
Mr Dal Bon
Mr Dal Bon is the Human Resources Manager for the Nylex Group (to which the Employer belongs).
The Union objected to paragraphs 7 to 12 of the affidavit of Mr Dal Bon. The objections were:
a)the material was not relevant to the question before the Court in the context of the current application; and/or
b)canvassed disputed questions of fact;
The Employer submitted that the entire affidavit should be read, as the material was relevant to proceedings for the purposes of establishing there was a live and genuine dispute as to the interpretation of the Agreement.
The Union agreed that there was a live and genuine dispute as to the interpretation of the Agreement. Accordingly, the Union submitted that as paragraphs 7 to 12 of Mr Dal Bon’s affidavit canvassed matters that were in dispute it was therefore not appropriate that they be admitted.
Ultimately, the Employer did not press for the admission of paragraphs 7-12 of the affidavit.
Mr Dal Bon’s evidence canvassed the various business units in the Nylex Group.[16] Mr Dal Bon confirmed he was not involved in the negotiations for the Agreement (or its predecessors).
[16] Exhibit A1
Ms O’Neil
Ms O’Neil is the National Assistant Secretary of the Union.
The Employer objected to paragraph 5 and 7-10 of the affidavit of Ms O’Neil being admitted. In doing so, the Employer relied on amongst others the decision of Moore J in Moshirian v University of NSW (2002) FCA 179 (“Moshirian”) at 24.
The Union provided a written outline of submissions pressing for its admission to the effect that:
“1.It is permissible to have regard to the history of an award provision for the purposes of its interpretation: Short v Hercus. This applies whether there is ambiguity or not.
2.The approach to the construction of certified agreements is the same as that adopted to the construction of contracts: AFMEPKIU v Skilled Engineering [2003] FCA 260 at [15].
3.When interpreting a contract, evidence can be received to enable the court to “place itself in thought in the same factual matrix as that” of the parties when the contract was negotiated: Carter v Harland at [713]. Where there is ambiguity the court can receive evidence of:
a)the circumstances surrounding the making of the contract;
b)the object of the contract;
c)the aim of the parties.
4.Evidence can be led to determine the objective intention of the parties: see the approach in AFMEPKIU v Qantas [2001] FCA 547 at [21] to [58].
5.The employer was under a statutory obligation to explain the effect of the agreement of the employees: section 170 MC(1)(f) of the Industrial Relations Act 1988.
The approach to the admissibility of that evidence was outlined in Codelfa Construction Pty Limited v State Rail Authority of New South Wales (1982) 149 CLR 337 (“Codelfa”) at 352 as follows:
“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.
It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, through admissible in action for rectification.
Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting. We do not take into account the actual intentions of the parties and for very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.”
At the hearing and for the reasons set out in Codelfa (supra), in the event the Court found that the words in the Agreement were unclear it was indicated that save for the last sentence in paragraph 5 and several sentences in paragraph 8 that the affidavit ought be admitted.[17]
[17] second, third and fourth sentences in paragraph 8
Ms O’Neil’s evidence concerned her involvement in negotiations for previous agreements under the Act with the Employer. Ms O’Neil’s evidence was that in the mid 1990’s there had been concerns about changes in the industry and the Nylex Group. Ms O’Neil gave no evidence about clause 2(c) of Attachment D to the Agreement but did give evidence about a clause said to be similar to clause 10 of Attachment D of the Agreement, albeit in an earlier agreement.
Ms O’Neil’s evidence went to how she said it was explained to employees of the Employer the provision in that agreement would work.
Use of extrinsic material
As is clear from the above Ms O’Neil’s evidence concerned antecedent negotiations. The comments of Mason J in Codelfa (supra) have been frequently applied in matters concerning the interpretation of certified agreements particularly as to the manner in which ambiguities are resolved.
In Moshirian (supra), Moore J did not consider that reference to extrinsic material extended beyond matters regarded as part of the factual background to an agreement to encompass evidence of the subjective intentions of the parties. At paragraph 24 of the decision His Honour said:
“Evidence of the historical background to an agreement can be a permissible extrinsic aid to interpretation at least to the extent that it illuminates the objective background facts that were known to both parties and/or the subject matter of the agreement or award.”
His Honour went on to cite the decision in Codelfa (supra) and to observe that the principles concerning the interpretation of awards apply also to certified agreements. He continued:
“However, as I understand the present state of the authorities, evidence of the historical background to an agreement, including evidence of antecedent negotiations, is irrelevant in so far as it is relied upon simply to demonstrate the subjective intentions, aspirations or expectations of the negotiating parties. That is because the interpretation of an ambiguous word or phrase turns not on the actual or stated objectives of the negotiating parties but on their presumed intentions, as inferred from the words chosen by the parties in the context of the facts and circumstances known to them.”
In Moore J’s view there was no inconsistency between this principle of interpretation and the approach adopted in Short v F W Hercus Pty Ltd (1993) 40 FCR 511 at 517, His Honour at paragraph 27 said:
“Evidence of antecedent negotiations, including drafts and correspondence exchanged between negotiating parties, may establish background facts which were known to both parties and to that extent such materials are relevant. However, they are also likely to reveal inadmissible and irrelevant evidence of “the terms of the contract which the parties intended or hoped to make... [which are] are superseded by, and merged in, the contract itself”: see Codelfa per Mason J at 353.”
In support, he quoted Lord Wilberforce in Prenn v Simmons [1971]
1 WLR 1381:
“…it may be a matter of degree, or of judgement, how far one interpretation, or another, gives effect to a common intention. The parties, indeed, may be pursuing that intention with differing emphasis, and hoping to achieve it to an extent which may differ, and in different ways.
The words used may, and often do, represent a formula which means different things to each side, yet may be accepted because this is the only way to get “agreement” and in the hope that disputes will not arise.”[18]
[18] [1971] 1 WLR 1381, 1385
In Royal Botanic Gardens & Domain Trust v South Sydney City Council[19] the High Court approved the statement of Mason J in Codelfa[20] that evidence of surrounding circumstances is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking such extrinsic material will not be receivable unless the language is ambiguous or susceptible of more than one meaning.
[19] Royal Botanic Gardens & Domain Trust v South Sydney City Counsel (2002) 186 ALR 289 at paragraphs 39 and 104
[20] (1982) 149 CLR 337 at 352
In AFMEPKIU & Ors v Qantas Airways Limited (2001) FCA 547 (a decision referred to in Moshirian (supra) as a “recent example of how and why evidence of antecedent negotiations often proves unenlightening”[21]) North J dealt with a dispute concerning the interpretation of a protocol in a certified agreement.
[21] AFMEPKIU & Ors v Qantas Airways Limited [2001] FCA 547 at 27
By agreement of the parties His Honour considered the circumstances surrounding the making of the agreement in order to ascertain the presumed intentions of the parties.[22] At paragraph 58 of that decision His Honour, on the balance of probabilities, concluded that “the evidence of the background facts is equivocal as to the intention of the parties at the time of the agreement.”
[22] Ibid at 21
Having reflected on the authorities set out above, this approach to extrinsic material is relevant to the evidence adduced by the Union. To the extent that evidence went to the intention/s of the Union and its members it is irrelevant. As was submitted on behalf of the Employer [23] the evidence that was led by the Union:
a)was about negotiations for a predecessor agreement to the Agreement;
b)did not explain the function of clause 2(c) of Attachment D of the Agreement;
c)did not reconcile the statements alleged to be made with the words the parties agreed to include in clause 2 (c); and
d)should be given little weight as “memories fade. Interests cloud memories. Oral conversations recounted to the courts years later by litigants may be less reliable than the contemporary written instrument by which parties memorialised their agreement.”[24]
[23] Paragraphs 24-31 Submissions filed 23 August 2007 and Paragraph 16 Submissions filed 11 October 2007
[24] QBE Insurance Co Ltd v Dean (1985) 3 ANZ Insurance Cases 60-658
The Union submission’s in reply were that Ms O’Neil’s evidence was uncontradicted, went to the “substantive provision” (i.e. clause 10) and that clause 2 (c) was “merely a definition clause”.[25]
[25] Paragraph 18 Submissions filed 30 August 2007
As the authorities set out above make clear, evidence may be led to establish background facts but this is likely to reveal inadmissible evidence. The bulk of Ms O’Neil’s evidence such as it was, went to the subjective intention/s or belief of the Union and its members in the course of negotiations and before an agreement was made. To the extent it went beyond this it did not address the issue of clause 2(c) of Attachment D to the Agreement.
As was said in Codelfa (supra) at 352:
“…when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.”
In so far as the evidence went to the background in Prenn v Simmonds (supra) it was said:
“[B]y the nature of things, where negotiations are difficult, the parties’ positions, with each passing letter, are changing and until the final agreement, although converging, still divergent. It is only the final document which records a consensus…nothing is gained by looking back; indeed something may be lost since the relevant surrounding circumstances may be different. And at this stage there is no consensus of the parties to appeal to.”[26]
[26] Prenn v Simmonds op cit
Applying the principles set out above and accepting for present purposes that the meaning of the clause, the subject of this application, is susceptible to more than one meaning it is necessary to resolve the ambiguity by reference to the context of the Agreement, the entirety of the clause and in so far as it would assist any extrinsic material which may indicate the mutual intention of the parties at the time the Agreement was made.
However, in this case, as in Re: The Federal Firefighters Union & The Minister of State for the Capital Territory (1982) 62 FLR 341, the material by way of extrinsic evidence “was of interest but not of assistance in considering [the] clause”.[27]
[27] Re: The Federal Firefighters Union & The Minister of State for the Capital Territory (1982) 62 FLR 341 at 344-345
As the evidence unfolded it did not in any event demonstrate a common understanding of how clause 2(c) was to be applied in the Agreement, went to a clause (similar to clause 10 of Attachment D) in a previous agreement, was “equivocal” at best, “unhelpful” at worst and will be given little weight.
Discretion to refuse relief
The power to make an order by way of the declaratory relief sought by the Employer is discretionary. The relevant part of the Regulations extracted at paragraph 2 above make this clear.
Both parties acknowledged the Court retained the discretion to refuse the relief sought by the Employer.
The Employer submitted there were a number of factors that weighed in favour of the Court exercising the discretion to interpret the Agreement.[28]
[28] Paragraph 9 of Contentions filed 22 June 2007; Paragraphs 22-25 Submissions in Reply filed 11 October 2007
In summary, those were that the application did not involve a hypothetical question, that there was a live dispute between the parties which did not depend on disputed facts and that the applicant had a right to expect the Court to exercise its jurisdiction when it was properly invoked. [29]
[29] Ibid
The Employer relied on the decision of Moore J in CFMEU v Mt Thorley Operations Pty Ltd (1997) 79 FCR 96 at 113 wherein His Honour after referring to the observations of Deane J in Re: Queensland Electricity Commission; Ex parte Electrical Trade Union of Australia (1987) 61 ALJR 393 (at 399) regarding the prima facie right to insist upon the exercise of the jurisdiction invoked, said:
“It may be accepted, however that there is now a well established line of authority indicating that the power to make an order of interpretation is a discretionary one at least in the sense that certain circumstances might justify no order being made.
The scope of the discretion remains an open question: see Victoria v Australian Teachers Union (1993) 49 IR 149 at 151 and 161. I earlier referred to authorities which establish that the power to give an order of interpretation is not one to be exercised where the interpretation depends upon disputed questions of fact. Other considerations which bear more upon the exercise of such discretionary power as exists, include: that the controversy over the meaning of the award is being considered by the Commission: see Victoria v Australian Teachers Union, and that the application for interpretation is, in substance, being brought for purposes of enforcement when prosecutions are on foot or in prospect: see Re Graphics Arts Award (1957) 1 FLR 22.
The Union submitted there were three reasons the application should be refused as a matter of discretion. The Union submitted that the Court ought to refuse to interpret the Agreement as it contained a clause that provided for the AIRC to settle disputes about matters arising under the Agreement, that Attachment D of the Agreement had been superseded and that there were similar clauses in other agreements.[30]
[30] Paragraphs 36-42 of Submissions filed 30 August 2007
The Employer submitted in reply that the Union’s submissions ignored the different role of the AIRC (under what was section 170LW of the Act) as opposed to that of the Court in the context of this application. The Employer also submitted there was no evidence before the Court that the relevant section of the Agreement had been superseded and any interpretation would only bind parties who had had an opportunity to be heard.[31]
[31] Paragraphs 22-25 of Submissions in Reply filed 11 October 2007
As set out at paragraph 4 above, the Agreement was in force prior to the amendments to the Act made by the Workplace Relations Amendment (Work Choices) Act 2005. Pursuant to Schedule 7 of the Act section 170W of the unamended Act is given continued operation.
Section 170LW relevantly provides that procedures in a certified agreement for preventing and settling disputes may empower the AIRC to settle disputes over the application of the agreement.
Subject to the words of the relevant clause, there is no reason why parties cannot submit to the AIRC, in an alternative dispute resolution process, a question of interpretation of the terms of an agreement.
There is no dispute provision in Attachment D of the Agreement. However, Clause 6 of the Agreement provides as follows:
“Disputes Settlement Procedure
(a)If an employee or shop steward has any grievance or complaint concerning any matter connected with employment or job conditions, they should first submit it to a supervisor or manager.
(b)If the matter is not resolved to the satisfaction of the employee or the TCFUA representative, the grievance or complaint should be referred to the manufacturing or human resources manager.
(c)The matter will be discussed between the union representative and the appropriate manufacturing or human resources manager.
(d)If the matter is not settled between the union representative and the appropriate executive of the employer the matter may then be referred by the Shop Steward to the Secretary of the TCFUA and a meeting will be arranged between the employer and if the employee so desires his or her Association and the TCFUA and a conference will take place as soon as possible.
(e)If the matter is not settled in accordance with sub-clause 6(d) of this clause the matter may be referred by either party to the Australian Industrial Relations Commission for conciliation and/or arbitration. Where the dispute is arbitrated by the Commission, both parties will accept the decision of the Commission as final determination of the dispute, subject to normal appeal rights under the Act
(f)Where the above procedures are followed work will continue as normal. No party will be prejudiced as to the final settlement by the continuance of work in accordance with this sub-clause.
(g)Notwithstanding anything contained elsewhere in the preceding sub-clauses of this clause, the parties will be free to exercise their rights if the dispute is not finalized without reasonable delay.
(h)This clause will not apply to any dispute as to a bona fide safety issue.”
Whilst reference was made in submissions before the Court to proceedings in the AIRC, there was no evidence the dispute over the interpretation of Attachment D had been referred for arbitration by the AIRC. The Union which is a party to the Agreement could presumably given the provisions referred to above have done so.
In Australian Licensed Aircraft Engineers’ Association v Ansett [2003] 127 FLR 487 a case which also concerned a dispute over a redundancy clause in a certified agreement made under the Act Gyles J said:
“As there is a live genuine dispute as to the interpretation of the relevant instruments, the jurisdiction should be exercised (cf Finance Sector Union of Australia v Commonwealth Bank of Australia (2000) 106 IR 158 at [42]; Finance Sector Union of Australia v Commonwealth Bank of Australia (2001) 106 IR 172 at [20].”[32]
[32] Australian Licensed Aircraft Engineers Association v Ansett Australia Limited (2003) 127 FLR 487 at 16
Given the submissions of the parties and on what is before the Court there is plainly a controversy between the Employer and the Union about the meaning of Appendix D of the Agreement and the jurisdiction should be exercised.
Analysis
In both the contentions, submissions and in argument before the Court the parties provided little evidence regarding the history of the Agreement and none regarding the practices adopted by the parties in applying the provisions of Attachment D.
It was however not at issue that the provisions of Attachment D of the Agreement had been in the same terms for several iterations of agreements between the parties prior to being included in the Agreement. However, the absence of definitive evidence on this issue including the number of iterations meant it was of little assistance.
As set out at paragraph 18 above, the Agreement deals with redundancy in clauses 15 and 16. As is clear from the relevant terms of the Agreement, Attachment D concerns and deals exhaustively with the subject of redundancy.
Cognisant of the approach taken in Amcor (supra) and the other authorities referred to above I now turn to apply those rules to construction of the relevant part of the Agreement.
The ordinary meaning
Given the position of the Union that the clause in the Agreement was “undeniably a mess”[33] it is probably dangerous to subject the language in Attachment D of the Agreement to overly close analysis.
[33] Transcript of hearing 15 October 2007 P-57 at 20
Be that as it may, the words in the relevant clause of Attachment D of the Agreement are the starting point. The natural and ordinary meaning of the words used should therefore be taken into consideration. Given this, it is instructive to set out the provisions of clause 2 in Attachment D to the Agreement at least in full again:
“2. DEFINITION
(a)Company: Melded Fabrics.
(b)Union: The Textile, Clothing and Footwear Union of Australia. The Australian Manufacturing Workers Union.
(c) Retrenchment: A situation whereby employees have or will become surplus to the labour requirements of the Company. An employee shall not be considered retrenched if the Company offers alternative employment within the Company or in other Austrim Nylex Limited Groups, within reason.
(d)Retrenched Employee: A person who is employed on a permanent basis by the Company and whose services have become surplus to the Company requirements.
(e)This Retrenchment Agreement Does Not Cover:
(i) Resignation by an employee.
(ii) Ordinary dismissal under the appropriate Award.
(iii) Termination of casual or subcontract employees.
(iv)Any service prior to the most recent date of commencement of employment, but where service has been deemed to be continuous under the Award, such service will be taken into account re retrenchment consideration. Prior service shall not be eligible for retrenchment consideration.
(f) Rate of Pay: The hourly rate at the date employment ceases.
(g) Employee: Person engaged in permanent hire.”
The Employer contended that:
“…on its proper construction the effect of paragraph 2(c) of Attachment (D) is that an employee who has or will become surplus to the labour requirements of Nylex Industrial Products Pty Ltd (Melded Fabrics) (the Company) who is offered a reasonable alternative employment by the Company or by another member of the Austrim Nylex Ltd group of companies, is not a retrenched employee for the purposes of Attachment D of the Nylex Melded ENA.”[34]
[34] Paragraph 13 Outline of Contentions filed 22 June 2007
The Employer’s position was “…it is difficult to ascribe meaningful content to [the] deeming provision in the second sentence of the definition of retrenchment in paragraph 2(c) unless…”[35] the Agreement was interpreted in this way.
[35] Ibid at paragraph 14
The Employer’s submissions contained reference to the dictionary definitions of “retrench” and “retrenchment”.[36] In contrast the Union relied on the placement of the words in clause 2(c) of Attachment D to the Agreement and submitted that the words in the Agreement should be construed in such a way as to give effect to its evident purpose.
[36] Paragraphs 6-15 of Submissions filed 23 August 2007
The Employer made a number of submissions in support of its contention that the construction it advanced was “strongly supported by the ordinary meaning of the words used by the parties”:
“Firstly, the definitions of ‘reason’ and ‘reasonable’ are consistent with the Court equating an offer which is ‘within reason’ and a ‘reasonable offer’. As to the suggestion in paragraph 13(c) of the Respondent’s Contentions that the phrase ‘within reason’ qualifies the class of offerors, the Applicant submits that whilst the identity of the offeror is a matter which can legitimately be taken into account in determining whether or not the offer is a reasonable one, there is nothing in clause 2(c) that suggests that the requirement that the offer be ‘within reason’ is confined in this way. The coma (sic) between the words ‘Groups’ and the phrase ‘within reason’ is consistent with the requirement applying to the offer as a whole.
Secondly, the definitions of ‘retrench’ and ‘retrenchment’ expose the artificiality of attempting to confine the second sentence of clause 2(c) by virtue of it being located within the definition of ‘Retrenchment’. An employee is retrenched if they are made redundant, sacked or dismissed as part of an effort to economise. The effect of the second sentence of clause 2(c) is that the employees there described, are specifically deemed not to have been made redundant, sacked or dismissed for the purposes of Attached (sic) D.”[37]
[37] Paragraphs 14-15 Submissions filed 23 August 2007
The position of the parties on this issue can be reduced to:
a)The Employer’s position being:
i)the interpretation it sought was strongly supported by the ordinary meaning of the words and there was nothing to warrant a departure from the plain and ordinary meaning of the words used; and
ii)the comma between the words “Groups” and the phrase “within reason” is consistent with the requirement applying to the offer as a whole; and
iii)the parties had agreed not to have included within the scope of the term “retrenched” employees who had been offered reasonable alternative employment within the “Company or in other Austrim Nylex Limited Groups.”
b)The Union’s position being:
i)the Agreement should be construed to give effect to its evident purposes, having regard to the context in which it was made despite mere inconsistencies or infelicities of expression; and
ii)the words “within reason” in clause 2(c) of Attachment D to the Agreement do not qualify the phrase alternative employment but rather qualify the phrase “within the company or other Austrim Nylex Groups.”
Put simply, the Employer’s position was that the effect of a plain and literal reading of the words in the definition section of Attachment D at paragraph 2(c) of Attachment D of the Agreement was to “carve out” employees who would otherwise be considered “retrenched” for the purposes of that Agreement.
In contrast the Union’s position was to focus not on the definitions section but on clause 10 of Attachment D of the Agreement. In relation to the words “within reason” in clause 2(c) of Attachment D to the Agreement the Union’s position was these do not qualify the phrase “alternative employment” but rather qualify the phrase “within the company or other Austrim Nylex Groups.”
The Union contended this position was supported by:
·the placement of those words in the Agreement;
·a purposive approach to the evident purpose of the Agreement;
·the context in which the Agreement was made;
·the submission that such an interpretation avoided inconvenience and injustice and, in contrast to the Employer’s position, was not narrow and pedantic; and
·the submission the agreement contained a contrary intention which need not appear in the words.
Agreements such as the one before the Court should not be approached in a way that “makes too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogically or apparent inconsistency.”[38]
[38] City of Wanneroo v Australian Municipal, Administrative, Clerical And Services Union op cit at 57
Whilst enjoining the Court to prefer an interpretation that gives effect to the Agreement’s evident purpose, the Union criticised the Employer’s preferred interpretation as narrow and pedantic.[39]
The Employer accepted that a purposive approach should be adopted but submitted that such an approach did not empower the Court to ignore the words in which the parties have chosen to express their agreement.[40] In the submission of the Employer, the meaning contended for by the Union would render clause 2(c) a “dead letter.”[41]
[39] Paragraph 1 of Submissions filed 30 August 2007
[40] Paragraph 5 of Submissions in Reply 11 October 2007
[41] Ibid
Where called upon to construe an agreement a Court should strive to give operation to a provision rather than leave it with no operation at all. In the circumstances where there is no reason not to apply the same rule of interpretation to commercial agreements to agreements made under the Act, the Court should be more inclined to adopt an interpretation that gives a provision operation rather than one that does not.
To paraphrase the Employer’s submission, the parties should be taken to have intended that each part of the Agreement and Appendix D have force and effect. The interpretation urged upon the Court by the Employer gives force and effect to both clause 2(c) and clause 10.
The difficulty with the Union’s submission on the issue of what “within reason” refers to (or qualifies) is illustrated if the words “within the Company or in other Austrim Nylex Limited Groups” are read as either/or. In that case the interpretation urged on the Court by the Union (that the words “within reason” qualify “alternative employment”) would deliver a reading of the clause that would render it meaningless.
Another difficulty with the interpretation urged upon the Court by the Union was addressed directly by the Employer as follows:
“More fundamentally, there is no reason why the parties should be taken to have confined the requirement of reasonableness to the identity of the prospective employer and not extended it to the offer of employment as a whole. This would include, of course, the identity of the prospective employer. Whilst Nylex accepts that the identity of the prospective employer is capable of rendering the offer not one that is ‘within reason’, it is not readily apparent why the parties would address this issue and yet take out of the class of persons ‘considered to be retrenched’ employees in receipt of an [offer of] alternative employment that was unreasonable for some other reason.” [42](emphasis added)
[42] Paragraph 11 Submissions in Reply 11 October 2007
It is appropriate for the Court to read the Agreement to give effect to its evident purposes and a meaning which avoids inconvenience or injustice may be strained for. However, there are limits. The Court should not undertake the exercise to achieve “some result that might be considered fair or desirable according to some a priori standard of fairness or proper employment practice.”[43]
[43] Australian Communication Exchange Ltd v Deputy Commissioner of Taxation (2003) 77ALJR 1806 at 1826 per Hayne J
As the Employer submitted:
“[A] purposive reading must still produce a meaning that can be adequately stated and that is reasonably conformable with the text of the statute, taken as a whole: see, for example Dawson J in Mills v Meeking (1990) 169 CLR 214. The meaning contended for by the TCFUA cannot be so described. It would for practical purposes, render clause 2(c) a dead letter.”[44]
[44] Paragraph 5 Submissions in Reply filed 11 October 2007
Words in the clause and the Agreement
As was said in Short v F.W. Hercus Pty Ltd (1993) 40 FLR 511 at 518 in many cases the clearest guide to the meaning of a particular expression will be its immediate context or the entirety of the document in which it is found.
Turning then to the clause in the context of the Agreement. It is clear from the provisions of the Agreement set out at paragraph 20 above that the parties to the Agreement intended Appendix D to deal comprehensively with the issue of redundancy and that it represents a stand alone element of the Agreement.
By reference to other provisions of the Agreement the parties made detailed submissions in support of their respective positions.[45]
[45] Paragraph 15 of Union’s Submissions filed 30 August 2007 & Paragraph 7 of Employer’s Submissions in Reply filed 11 October 2007
The meaning of the definition clause should be determined not only by the words used but by its structure. The structure of the Agreement makes clear that the parties also dealt with other issues comprehensively in attachments to the Agreement.[46]
[46] See Attachment C- Overtime Policy or Attachment F Heat Policy
The Union pointed to the differences between clause 2(c) and 2(d). Whilst it is a generally accepted principle of interpretation that where different terms are used a different meaning is intended the inconsistent use of terminology in an agreement of this nature is not determinative of the matter.[47]
[47] See Shop Distributive & Allied Employees Association v Woolworths [ 2006] FCA 616 at 27
The Union submitted that the meaning given to ‘retrenchment’ in clause 2(c) should not be used if a contrary intention is indicated.[48]
The Union submitted that clause 10 evinces a contrary intention and:
“…if it is apparent, as it is here, that the parties had a certain intention about the benefits to be provided to employees, then that evidence will be sufficient to indicate a contrary intention.”[49]
[48] Paragraph 25 of Submissions filed 30 August 2007
[49] Ibid
The Employer accepted that a definitional clause can be subject to a contrary intention. However it was submitted:
“there is no warrant for holding that the limitation contained within the second sentence of clause 2(c) is subject to a contrary intention. Clause 10 deals with a specific situation namely:
‘Where an employee is retrenched…’
The second sentence of clause 2(c) provides that the class of employees that it describes :
‘shall not be considered retrenched’.
The language used by the parties is perfectly consistent with clause 2(c) being the mechanism through which they have agreed to remove certain types of employees from the operation of clause 10.”[50]
[50] Paragraph 19 of Submissions filed 23 August 2007
Moreover, as the Employer submitted where the parties have already informed the reader who is considered to be retrenched in clause 2(c):
“…the submission that clause 10 evinces a contrary intention is simply circular. The reason why clause 10 does not need to draw on any ‘reasonable/unreasonable offers’ distinction is that the effect of clause 2(c) is that an employee is not considered to be ‘retrenched’ where a reasonable offer is made.”[51]
[51] Paragraph 17 of Submissions in Reply filed 11 October 2007
The Union also submitted that the Employer’s interpretation was contrary to the scheme of clause 2:
“Clause 2(e) is titled: ‘This Retrenchment Agreement Does Not Cover’. It then sets out four situations; resignation, ordinary dismissals; termination of casuals and subcontractors; certain prior service. The effect of the Applicant’s argument is that [sic] to add a fifth category to that list. If the parties had intended to exclude from Attachment D employees who had been offered reasonable alternative employment within the Austrim Nylex group, then they would have listed that category in clause 2(e). Further the interpretation sought by Nylex ignores the effect of the definition of ‘retrenched employee’ in clause 2(d).”[52]
[52] Paragraph 26 Submissions filed 30 August 2007
The clause which is the subject of the Employer’s application influences the intended operation of Attachment D of the Agreement. Clause 2(c) of Attachment D, set as it is in the definition section of that appendix, clarifies the scope, or to adopt the Employer’s submission, limits the scope of its application.
The Employer’s response to the submission of the Union at paragraph 104 above was as follows:
“It is submitted that the fact that the limitation contained in clause 2(c) is found in clause 2(c) rather than clause 2(e) is readily explained by the fact that the Nylex Melded EBA was drafted not by lawyers but by persons of a practical bent of mind more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon Kucks v CSR Limited (1996) 66 IR 182 at 184 Madgwick J; Ambulance Service Victoria (South Western Region) & Ors v Australian Liquor, Hospitality & Miscellaneous Workers Union [1998] 196 FCA Northrop J.
Whilst it may be legitimate for the Court to have regard to the structure of Attachment D, this structure should not, absent the clearest indication, be used to deprive the second sentence in clause 2(c) of force and effect.”
I accept the thrust of the Employer’s submission on this issue that in effect clause 2(c) sets out those employees of the Employer who would not be considered to be “retrenched” for the purposes of Appendix D.
That there are also provisions in the Attachment (such as those at clause 2(e)) is consistent with the Agreement being the product of people who:
“…were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon.”[53]
[53] Kucks op cit at 182
The Union’s further submission that clause 2(c) is “merely a definition clause” and the Court should interpret the Agreement to give clause
10 its full and natural operation in accordance with its terms faces the difficulty that the parties must have intended clause 2(c) to have an operation. It is not to point to say the definition clause can only have operation in a substantive clause such as clause 10. As the Employer contended the Union’s submissions “fail[s] to engage with clause 2(c)…one only gets to clause 10 where there is a retrenchment for the purposes of the [Attachment D to the] Agreement.”[54]
[54] Paragraph 3 of Submissions in Reply filed 11 October 2007
Further, I accept the Employer’s submission, in response to that of the Union that the meaning of clause 2(c) the Employer contended for rendered clause 6(a) in the Attachment otiose, that there is no tension between the meaning of clause 2(c) it contended for and clause 6 having full operation given the parties agreed to take out of the class of persons who would otherwise be considered to be retrenched those in respect of whom a reasonable offer of alternative employment has been made.
In response to the Union’s submissions (made with reference to other provisions of the Agreement) that the construction the Employer contended for would lead to unjust results the Employer contended:
“[T]here is nothing perverse or capricious in…construction advanced by the Applicant [which] contains within it the significant protection afforded by the requirement that before an offer of employment will be one which results in the employee not being considered ‘retrenched’, that offer must be a reasonable one. The terms and conditions associated with the offer…and the like are all matters which can be taken into account in determining whether the offer is reasonable…”[55]
[55] Paragraph 15 of Outline of Contentions filed 22 June 2007
Ultimately as the Employer submitted having defined retrenchment and:
“[W]here the parties have then gone to use the term ‘retrenched ‘ in the body of the Attachment (as they do in clauses 2(d) and 10) on a plain reading of the words they have used, they should be taken not to have included within the scope of that term the class of employees excluded by the second sentence of the definition in paragraph 2(c).”[56]
[56] Paragraph 12 of Outline of Contentions filed 22 June 2007
Legislative context
Turning then to look at the Agreement in the context of the Act.
Under the Act as it stood prior to the amendments which took effect on 27 March 2006, section 170LY provided that the Agreement prevailed over an award or order of the AIRC to the extent of any inconsistency.
As set out above at paragraph 17 the Agreement provides that 2 prior iterations of the Textile Industry Award are incorporated into the Agreement.[57] Whilst clause 5 of the Agreement does set out how the Agreement (with the incorporated awards) is to be interpreted as against a provision in Attachment A or B to the Agreement it makes no reference to Attachment D.
[57] Copies of those awards (Textile Industry Award 1994 & Textile Industry Award 2000) were provided to the Court under cover of submissions filed on 23 August 2007. Those awards were Attachments A & B to the Agreement
Whilst each of the earlier iterations of the award contained provisions on redundancy clause 15 of the Agreement dealt specifically with redundancy and makes clear that the “agreement in relation to redundancy shall be as per Attachment D”.
Having regard to the test for inconsistency,[58] the intention manifested in the Agreement is that the provisions in Attachment D are intended to prevail over any other and deal with the issue of redundancy comprehensively.
[58] Ansett Transport Industries (Operations) Pty Ltd v Wardley (1980) 142 CLR 237
The objects of the Act include ensuring that primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace.
In this matter the Agreement was reached between the Employer, the Union and the majority of the employees of the Employer whose employment was subject to the Agreement (and who voted in a ballot) at the time it was certified by the AIRC.
As was observed in submissions by the Employer, and has already been referred to above, the Agreement contains provisions for the parties to refer disputes over the application of the Agreement to the AIRC for determination. The Employer submitted this supported the construction it contended for as:
“[I]t provides a mechanism (although not the exclusive mechanism) through which the reasonableness of any offer of alternative employment might be assessed on a case by case basis. There is nothing in this clause that divests the parties of their rights to seek an interpretation of the [Agreement].[59]”
[59] Paragraph 7.3 of Submissions in Reply filed 11 October 2007
As noted above on the evidence before the Court it was not possible to establish what the common understanding of the parties was at the time of the Agreement. As to events since both the prior iterations of Appendix D and the Agreement itself it appears as Gray ACJ said in Australian Liquor, Hospitality and Miscellaneous Workers Union v Prestige Property Service Pty Ltd [2006] FCA 11 at 44 “[T]here can be no meeting of minds, no consensus, if no-one has thought about the issue.”
The deficiencies in drafting identified by the parties in submissions before the Court in support of their respective positions can of course be remedied in the next agreement. However, given the Agreement should be looked at in the context of the Act, primacy should be given to the objective intention of the parties set out in the words of the Agreement.
Conclusion
Despite infelicities of expression, it seems to me that the terms of Agreement support the interpretation advanced by the Employer.
That is, clause 2(c) sets out the circumstances, or defines, the circumstances in which an employee shall not be considered retrenched. I say that not only for the reasons set out above but for these reasons:
a)the starting point is the words of the Agreement. The natural and ordinary meaning of the words in clause 2(c) of Attachment D support the position contended for by the Employer;
b)the parties must have included clause 2(c) of Attachment D to the Agreement for a reason;
c)the Employer’s interpretation gives meaningful effect to clause 2(c) in the context of the clause itself, the terms of Appendix D and the Agreement as a whole;
d)the Agreement itself shows an unequivocal intention that redundancy should be determined by Appendix D; and
e)the decision by the parties to treat the issue of redundancy in this way is consistent with the objects of the Act.
In my opinion the words used in the definitional clause in clause 2(c) demonstrate objectively that the parties intended that for the purposes of Attachment D of the Agreement employees who have been offered reasonable alternative employment within the Company or in another member of the Austrim Nylex Limited Group were not included within the scope of the term of “retrenchment” or “retrenched employee” in Attachment D of the Agreement.
For all the reasons set out above the interpretation contended for by the Employer and set out at paragraph 10 above, that an employee who is offered reasonable alternative employment by the Company or by another company in the Nylex Group, is not a retrenched employee for the purposes of Attachment D, should be preferred.
Orders
To give effect to these reasons I ask the parties to settle and bring in short minutes of orders on or before 18 January 2008.
I certify that the preceding one hundred and twenty-six (126) paragraphs are a true copy of the reasons for judgment of O'Sullivan FM
Deputy Associate: R. Lombardo
Date: 17 December 2007
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