The Australian Workers' Union v GrainCorp Operations Ltd

[2015] FWC 2335

[2015] FWC 2335

FAIR WORK COMMISSION

DECISION

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

The Australian Workers' Union
v
GrainCorp Operations Ltd
(C2014/6535)

COMMISSIONER JOHNS SYDNEY, 9 JUNE 2015

Alleged dispute concerning Appendix 3 of the GrainCorp Operations Ltd - AWU (Victorian Operations) Enterprise Agreement 2013 about the classification of a Grain Operator.

Introduction
[1] This decision is about whether, pursuant to the GrainCorp Operations Ltd - AWU (Victorian Operations) Enterprise Agreement 2013 (Agreement), David Pickering, a Grain Operator, should be paid at the rate of a Grade 4.1 or Grade 5.2 on those occasions when he is the most senior Grain Operator at the Warracknabeal site of GrainCorp Operations Ltd (Respondent).
[2] The application was brought by the Australian Workers’ Union (Applicant/AWU) on behalf of their member, Mr Pickering, under section 739 of the Fair Work Act 2009 (FW Act).
[3] The parties are covered by the Agreement which was approved by the Fair Work Commission (Commission) on 9 January 2014 and which has a nominal expiry date of 30 September 2015. The dispute arises out of the operation of Appendix 3 of the Agreement; it deals with the classification structure for Grain Operators. Clause 8 of the Agreement invests the Commission with jurisdiction to determine the dispute by arbitration.

The hearing

[4] The application was listed for hearing on 17 February 2015. At the hearing:

a) the AWU was represented by Mr C. Winter. Mr Winter called Ronald Hayden, AWU Organiser (Exhibit AWU3) and Mr Pickering, the affected AWU member (Exhibit AWU2), to give evidence; and
b) the Respondent was represented by Mr B. Murray, Solicitor (with permission, pursuant to s.596 of the FW Act). Mr Murray called Gerard Bibby, the Respondent’s Area Manager for the Horsham East cluster and Peter Johnson, the Respondent’s Regional Manager for North West Victoria, to give evidence.

Background

[5] The following matters were either common ground between the parties or not otherwise contested:

a) GrainCorp Operations Ltd provides a grain handling and storage services throughout Australia. 1
b) Mr Pickering has been employed by the respondent or its predecessors since 1986. For the past 10 years Mr Pickering has been employed as a Grade 4.2. 2
c) The matter in dispute relates to whether or not Mr Pickering has been incorrectly classified and whether he should be classified as a Grade 5.1. 3
d) The dispute does not concern other employees and only concerns Mr Pickering. 4
e) The Job descriptions for pay Grades 4 and 5 are not in dispute. 5 The descriptions were agreed to by the AWU when the Agreement was negotiated.
f) When negotiating the Agreement, there were variations made to the job description for a Grade 5.1 employee (as compared to the description in the previous 2010 version of the Agreement). The job description for a Grade 5.1 employee changed:
i. from ‘Acts in a Senior Supervisory Capacity’;
ii. to ‘Acts in a Site Manager Capacity’. 6
g) In the matter of The Australian Workers Union v GrainCorp Operations [2014] FWC 5777, the Respondent’s Area Manager, Scott Whitmore, have evidence that the change to the Grade 5.1 descriptor was introduced because:

i. The role of Senior Supervisor did not adequately distinguish level 5 employees from level 4 employees; and

ii. The term “Site Manager” was consistent with relevant employees being able to set up to take on certain GSM responsibilities as required, including planning and operational leadership responsibilities; and

iii. The term “Site Manager” rather than “Senior Supervisor” was being used in practice. 7

h) Mr Pickering has, on numerous occasions, acted in a supervisory capacity in the absence of the Site Manager. 8

i) A record of a meeting held between Mr Pickering and Mr Bibby on 8 September 2014 recorded Mr Pickering’s position title as a “Designated - W, Beal Site Manager”. 9 The Respondent says this was an incorrect designation.10

Issue in dispute

[6] The principal issue in dispute was whether the duties being performed by Mr Pickering mean he should be remunerated as a Grade 5.1 level employee. 11 In the alternative, the applicant submitted that the duties performed by Mr Pickering should allow him to be remunerated in accordance with Clause 16 (Mixed function) of the Agreement.12 The respondent argued there was considerable ‘overlap’ in the role definitions given to Grade 4 and Grade 5 employees.13 Moreover, the respondent contended that the role description given to a Grade 4 employee, contemplated a Grade 4 employee undertaking supervisory duties in the absence of a Site Manager.14

[7] The table below demonstrates the nature of the overlap between the two classifications and the marginal difference between the two. Differences have been underlined.

Descriptor	Grade 4	Grade 5
Role definition
General description	An employee at this grade works as a site supervisor who manages and Leads multiple workgroups, functions and/or activities.	Same descriptor, but add: An employee at this grade is capable, willing and appointed to leave the duties of a GSM/GPS/T&EC on a temporary basis
Supervision (own and others)	Is capable of performing efficiently without supervision any tasks reasonably required of them Act in a supervisory capacity of site operations and employees exercises extensive skills, knowledge and decision-making Communicate clearly with team members	Same descriptor
Responsibility	Is responsible for all site operations Takes personal responsibility for achieving results	Same descriptor, but add: Proactively manages site operations, staff and results
Discretion	May require individual judgement and initiative within established operational guidelines or with minimal guidance	May require Is required to exercise individual judgement and take initiative within established operational guidelines or with minimal guidance and communicate reasoning for decisions made
Degree of autonomy	Is required to work alone, lead work teams and/or coordinate, supervise and/or train new employees Exercises extensive skills, knowledge and decision-making	Same descriptor
Quality	Understands and undertakes high level quality control/assurance procedures including the ability to recognise and resolved quality deviations/faults	Same descriptor
Communication, customer service & relations	Is able to receive and provide information to internal and external customers with clarity and precision Is able to communicate clearly and follow-up in providing information Works cooperatively with internal and external stakeholders Provides team members with feedback as to performance and behaviour	Same descriptor, but add: Proactively seeks out relationships and resolve issues through continuous improvement
Safety	Provide safe work practices and can report workplace hazards Develop and implement SWIs and WRACs Role models of safe work practices Ensures team adheres to safe work practices Proactively identifies and eliminate workplace hazards Leads safety meetings	Same descriptor
Indicative tasks	4.1	5.1
General	Is able to conduct the present training programs to employees Acts in a Site Supervisor capacity	Is able to conduct the present training programs to employees Acts in a Site Supervisor Manager capacity
Grain Handling	Acts as a Site Supervisor at uploading and general site activities	Is multi skilled in grain handling competencies
Fumigation	Holds the position PCO/team leader Maintains pest control documentation Is capable of fumigating all storages Conduct hygiene inspections Conduct bunker inspections Is capable of transporting pesticide safety Collecting grain samples for residue testing Performs all pest control tasks listed in Grades 2.2 and 3.2	Is competent in the use of fumigation equipment following require training from the manufacturer Is able to perform all pest control tasks listed in Grades 2.2 and 3.2 & 4
Indicative jobs…	Site Supervisor	Site Manager

[8] The question for the Commission to answer is whether, from time to time, Mr Pickering is entitled to the payment of higher duties 15 and is as follows:

When Mr Pickering, is the most senior Grain Operator at the Respondent’s Warracknabeal site is he performing the tasks of a:

a) Site Supervisor; or

b) Site Manager? 16

Evidence

[9] In this decision the Commission does not seek to set out in detail all of the evidence presented in the proceedings. In brief terms, the evidence was, to that effect, set out below.
Applicant
[10] Mr Pickering provided a witness statement and gave evidence at the hearing. Mr Pickering’s evidence was to the effect that:

a) During his time with GrainCorp he has performed a wide variety of work on GrainCorp sites in Queensland, South Australia and Victoria. On the Queensland site he operated as a Site Manager. 17

b) In accordance with Grade 4.2 he involved in harvest planning, seg plans, the equipment coordination, staff appointments and consumables. 18

c) When the current Site Manager is not on site, on a number of occasions he has been asked to fill his position whilst he has been absent due to annual leave or sick leave. Whilst the Site Manager has been away he has performed the following tasks:

i. Training;

ii. Attending meetings;

iii. Signing pay sheets;

iv. Checking on stock availabilities;

v. Engaging contractors;

vi. Providing OHS training to staff;

vii. Employing and laying off casual staff;

viii. Organising out loading;

ix. Organising daily staff activities;

x. Attending harvest grower meetings. 19

d) He has also run the Jeparit site as there is no manager there. 20

e) When his manager has been away he had been told he is the acting Site Manager on numerous occasions; 21

f) On most occasions he was expected to take the position when the GSM or Site Manager was away. He was expected to take on extra roles needed to get the job done at Warracknabeal; 22

g) He performed different roles during this time, like working on the “I drive” on the computer, doing stock notes, weekly work reports, hiring staff to harvest and laying staff off, organising transfer trucks, organising contractors to come on site and do other jobs; 23

h) In respect of hiring and firing he reported to the Area Manager; 24

i) The work crews he worked with were told he was the acting Site Manager. 25

[11] At the hearing, under cross-examination, Mr Pickering gave the following evidence:

a) Any time he employed or laid off staff, or arrangeed a contractor to do work on site, or organised transfer trucks on site there were monetary values attached to those matters. Consequently he considered himself as having a delegated financial authority; 26
b) He helps to run training courses on induction days; 27
c) However, he concedes that Mr Bibby told him that that he does not have any financial delegation and that he does not have any delegation in relation to human resource matters, nor any delegation in relation to Occupational Health and Safety accountabilities. 28

[12] At the hearing, under questioning by me, Mr Pickering gave the following evidence:

a) Mr Bibby is at the Warracknabeal site sometimes once a week, sometimes twice a week, at varying hours; 29
b) When Mr Bibby is not at the Warracknabeal site, he makes the decision about staff levels and what duties are undertaken to the day; 30
c) He calls contractors to ask if they are available at work at certain hours of the day. If they work he does the paperwork to ensure they get paid. He does not arrange the rates to be paid to the contractors. This is negotiated between the contract and the company; 31
d) All the work he does on the “I drive” is work he does not have to do when the Site Manager is in attendance; 32
e) When the Site Manager was not around, it was he who participated in the phone ‘hook-ups’ on Tuesdays to let the stock department know what grain was available to go out the following week. Although Mr Bibby or another manager has taken over this; 33
f) He assists in organising what happens at the Jeparit site in addition to the Warracknabeal site; 34
g) He contacts casual employees (from a pool of casuals) to determine if they can work. He no longer has any responsibilities in relation to the pays or pay-slips of casuals; 35
h) He does not discipline staff. 36

[13] Mr Paul Hayden (an AWU organiser) provided a witness statement and gave evidence at the hearing. Mr Hayden’s evidence was to the effect that:

a) Mr Pickering had informed him that on approximately 40 occasions he had performed the task of Site Manager; 37
b) He believed Mr Pickering was capable and willing to relieve the duties of the General Site Manager, had done so on numerous occasions and should, consequently, be classified as a Grade 5.1 Employee. 38

[14] Mr Hayden gave greater explanation as to the difference between a ‘site supervisor’ and a ‘site manager’ in the following terms:

‘Commissioner, I believe that a site supervisor as per the agreement when it was negotiated was an employee who would supervise the employees on the site for a non-primary site. So there’s differences between sites with GrainCorp. There’s primary sites and, I guess, secondary sites, and a site supervisor was someone that would supervise a secondary site under the supervision of a GSM or a site manager.’ 39

[15] Mr Hayden gave evidence that Warracknabeal is a “primary site”. 40
[16] The applicant, through its written submissions, sought to rely upon (and attached) a witness statement by Scott Whitmore, Regional Manager for GrainCorp which was produced in proceedings before Deputy President Hamilton in [2014] FWC 5777. In that witness statement, Mr Whitmore acknowledged participating in the formation of the current Agreement and disclosed the reasons for the change in the indicative role for a grade 5 employee as follows:

‘I was involved in the negotiations leading up to the approval of the Current Agreement. In the Current Agreement, the 'Senior Supervisor' indicative role for the grade 5 level was replaced with the indicative role of 'Site Manager'. This change was introduced because:

(a) The role of ‘Senior Supervisor' did not adequately distinguish level 5 employees from level 4 employees;
(b) The term 'Site Manager' was consistent with relevant employees being able to step up to take on certain GSM responsibilities as required, including planning and operational leadership responsibilities; and
(c) The term 'Site Manager' rather than 'Senior Supervisor' was being used in practice.’ 41

[17] There was no objection from the Respondent to the AWU relying upon the witness statement by Mr Whitmore.
Respondent
[18] Mr Bibby provided a witness statement and gave evidence at the hearing. Mr Bibby’s evidence was to the effect that:

a) As an area manager he is responsible for the Murtoa, Warracknabeal and Jeparit sites; 42
b) While Mr Pickering assumes some of the duties of his former Site Manager when he is away, Mr Pickering is not required to perform the full range of Site Manager duties and has no delegation of financial authority, human resources authority or Occupational Health and Saftey accountabilities; further, that he has informed Mr Pickering of the same; 43
c) When on, 8 September 2014, he had recorded Mr Pickering as the Site Manager, it was an error; 44
d) He attends the Warracknabeal site at least once, if not, twice a week; 45
e) When he is not at the Warracknabeal site Mr Pickering makes the decisions about how the site operates; 46
f) Mr Pickering runs the day-to-day operations of the site. He deals with customers, deals with the “end users”, looks after the budgets, and supports the site managers and site supervisors. He looks after the logistics side of the cluster; 47
g) He undertakes ‘time slotting’, but he is in the process of sharing that with his staff (including Mr Pickering). 48

[19] Mr Johnston provided a witness statement and gave evidence at the hearing. Mr Johnston’s evidence was to the effect that:

a) ‘Graincorp has not requested Mr Pickering to perform work carrying a higher rate than his ordinary classification of Grade 4.2’; 49
b) The duties that GrainCorp expected Mr Pickering to perform during the period of absence of a Site Manager, and at all other times, were all tasks that come within the scope of the duties of a Grade 4.2 under the Agreement;
c) While GrainCorp does not expect that a Grade 4.2 is to perform all of the range of duties of a Grade 4 at all times, persons who are at Grade 4.2, including Mr Pickering, may be expected to perform duties within the range of Grade 4.2 when the need arises, including supervisory duties as described; 50

[20] In his witness statement Mr Johnston responded specifically to the duties that Mr Pickering relied upon in his claim to be classified as a Grade 5 employee in the following manner:

‘[32] These duties, as identified by Mr Pickering, and my responses to each, are as follows:
(a) 'weekly-fortnightly plans': Weekly/fortnightly planning is part of the duties that a Grade 4 may be required to perform as a site supervisor managing and leading multiple work groups, functions and/or activities. The indicative tasks of a Grade 4.2 include harvest planning.
(b) 'sign pay sheets': Signing pay sheets is not a function of a Grade 4. GrainCorp management does not require Mr Pickering to sign pay sheets. Mr Pickering does not have the required delegation to do so.
(c) 'staff lists for harvest, ring and inform if they are successful or not': Compiling staff lists is a function that comes within the indicative task of a Grade 4.2 in harvest planning. It is a feature of the requirement in the Grade 4 role definition to communicate clearly with team members, provide information and lead work teams.
(d) 'hire and lay off staff: GrainCorp does not require Mr Pickering to hire and/or fire permanent staff. The duties of a Grade 4.2 include responsibility for determining the number and identity of casual staff required as part of day to day grain handling and harvest planning, which are included in the Grade 4.2 indicative tasks.
(e) 'arrange staff to work at our site as well as other areas': This is a function that comes within the Grade 4 role definition of acting in a supervisory capacity for site operations and employees.
(f) 'talk to farmers committees about new grades for harvest': This is a function that comes within the Grade 4 role definition that includes an ability to receive and provide information to internal and external customers with clarity and precision and to work cooperatively with internal and external stakeholders.
(g) 'organise outside contractors for work needed to be done on site': Again, performing this function is part of the role of a Grade 4 in supervising site operations, although the work does not involve any financial delegation for a Grade 4 as that function is performed by Site Managers, which does not include Mr Pickering.’

Principles of construction of agreements
[21] A Full Bench of the Commission has recently gone to great lengths to set out the relevant principles. In Golden Cockeral, the Full Bench set out the relevant authorities,

General approach
[19] The general approach to the construction of instruments of the kind at issue here is set out in the judgment of French J, as he then was, in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union 51 (Wanneroo):

“The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to ‘...the entire document of which it is a part or to other documents with which there is an association’. It may also include ‘... ideas that gave rise to an expression in a document from which it has been taken’ - Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518 (Burchett J); Australian Municipal, Clerical and Services union v Treasurer of the Commonwealth of Australia (1998) 80 IR 345 (Marshall J).” 52

[20] To this we add the oft-quoted observations of Madgwick J in Kucks v CSR Limited  53 that a narrow pedantic approach to interpretation should be avoided, a search of the evident purpose is permissible and meanings which avoid inconvenience or injustice may reasonably be strained for, but:

“. . . the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some interiorly 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.” 54

[21] Although their Honours were each dealing with the proper interpretation of an award, the same principles are apt to apply to the interpretation of enterprise agreements 55.  For example, similar observations were made in Amcor Limited v CFMEU56 (Amcor):

“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.” 57

[22] The fact that the instrument being construed is an enterprise agreement is itself an important contextual consideration. As French J observed in Wanneroo:

“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 George A Bond and Co Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503-504 (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 illogicality 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.” 58

Use of extrinsic material as an aide to interpretation
[23] As is often the case in disputes that involve the construction of an enterprise agreement, parties will seek to place reliance of a variety of extrinsic material as an aide to interpreting the provisions of an agreement in issue. The use to which extrinsic material of the surrounding circumstances may be put to assist in the interpretation of an instrument is set out in the judgement of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales  59 (Codelfa). In Codelfa his Honour said:

“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 and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.” 60

[24] Although Justice Mason’s reasoning in Codelfa has commonly been applied as meaning that ambiguity in an instrument must first be identified before extrinsic material may be admitted as an aide to interpretation, this has not been universally accepted. So much is apparent from the following discussion of Codelfa by Nicholson J in BP Australia Pty Limited v Nyran Pty Limited: 61

“In Ray Brooks Pty Ltd v NSW Grains Board [2002] NSWSC 1049 Palmer J said the effect of dicta from the majority in Royal Botanic is to leave it to inferior Courts to puzzle out whether the decision in Codelfa is consistent or inconsistent with the contextual approach adopted in West Bromwich. Palmer J had earlier drawn a distinction between `the two competing schools of thought’ as to the point in time at which the Court may look at extrinsic evidence in order to construe a contract. One, `the literal approach’, gives primacy to the words of the document so that the starting point in the task of construction is always the text. The competing approach he described as `the contextual approach’ which holds that the words of a document, being no more than symbols of language, can never be reliably understood in isolation from the context in which the words were used. After analysing the reasoning of Mason J in Codelfa , Palmer J concluded that the approach of Mason J would be in complete sympathy with the contextual approach promoted by Lord Hoffman in West Bromwich. He said at par [59]:

`His Honour is not saying: evidence of surrounding circumstances is admissible only if it first appears that the language of the contract is ambiguous. His Honour is saying: evidence of surrounding circumstances is admissible only for the purpose of explaining ambiguous language in the contract and not for the purpose of changing the meaning of clear words.’

On the issue of the point of time in the exercise of construction at which reference to extrinsic evidence is permissible, Palmer J was of the view that Mason J agreed with Lord Wilberforce’s approach in Prenn v Simmonds [1971] 1 WLR 1381 and in Reardon Smith Line Ltd v Yngvar Hansen-Tangen (The Diana Prosperity) [1976] 1 WLR 51, the pith of which he considered was that the time has passed when contracts are isolated from the matrix of facts in which they were set and interpreted purely on internal linguistic considerations. Palmer J also referred to the trend of authority on the issue in New Zealand which he considered showed an endorsement and application of the approach in West Bromwich: cf. DW McLauchlan, `A contract contradiction’, Victoria University of Wellington Law Review, vol 30, 1999, p 175.
I am unable to agree with Palmer J that Codelfa and the passages in West Bromwich can be viewed as entirely consistent. That is not the way in which I understand the relevant portions of Codelfa have been understood and applied in relation to the issue of whether ambiguity is not to be found until the contract in issue has been considered in the matrix of facts in which it is set. In LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 the New South Wales Court of Appeal accepted that Australia had kept while England had discarded the concept that ambiguity is necessary to be shown before one looks at the surrounding circumstances: per Young CJ in Eq, Meagher JA and Hodgson JA agreeing. Academic writing has regarded Codelfa as falling far short of Lord Wilberforce’s apparent position in Prenn on the issue of admission of surrounding circumstances to determine ambiguity: H King, `The admissibility of extrinsic evidence as an aid to contract interpretation: pushing objectivity to absurd limits’, Corporate and Business Law Journal, vol. 6(2), 1994, p 187. Yet the law on this is arguably not clear-cut given that in Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 185 ALR 152 at 155 at par [11] Gleeson CJ, Gummow and Hayne JJ relied upon the statement by Lord Hoffman in Investors Compensation at 912 that the interpretation of a written contract involves `the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract’ and referring by footnote in that context to the reasons of Mason J in Codelfa at 350-352 and Lord Bingham in Bank Credit at 739. Furthermore, it has been said by one Australian text author that `the practice of the courts is to have regard to surrounding circumstances in the form of the factual matrix in virtually all cases’ on the ground that most English words are susceptible of more than one meaning so that difficulty of interpretation is sufficient for that reference to be made: JW Carter, Carter on Contract, Butterworths looseleaf, 2002 at p 28,096 at 12-050.
In LMI the Court of Appeal accepted, however, that the Codelfa doctrine appeared `to be not only that a court uses the surrounding circumstances to aid its interpretation and to put itself in the armchair of the parties to look to see what each knew when it was making the contract, but also that inferences can be drawn from the surrounding circumstances virtually to add terms’: at par [45] citing Codelfa at 353. Of such circumstances the Court of Appeal stated at [44] that `the approach in the Royal Botanic Gardens case itself shows that there is, in fact, a tendency to glean much more from negotiations as surrounding circumstances in Australia than would be permitted in England.’ It may be that there is good reason for the approach in Codelfa to be re-examined both in terms of the appropriateness of the approach and in the light of developments in other common law jurisdictions on the issue. However, given the unequivocal statement by the majority in the High Court in Royal Botanic and the factors I have just referred to, I consider I should proceed on the basis there is not consistency between Codelfa and West Bromwich.” 62

[25] His Honour then summed up the relevant principles to be distilled from Codelfa as follows:

“At the risk of repeating what is said in Codelfa, it follows that the issues arising in this matter should be approached in the following manner. It is necessary firstly to determine whether the contract has a plain meaning or contains an ambiguity. If the contract has a plain meaning, evidence of `surrounding circumstances’ will not be admissible to contradict the language of the contract. If the language of the contract is `ambiguous or susceptible of more than one meaning’ evidence of `surrounding circumstances’ is admissible to assist in the interpretation of the contract. The concept of `surrounding circumstances’ is to be understood to be a reference to `the objective framework of facts’. It will include evidence of prior negotiations so far as they tend to establish objective background facts known to both parties and the subject matter of the contract. It will also include facts so notorious that knowledge of them is to be presumed. Additionally it will include evidence of a matter in common contemplation and constituting a common assumption. From the evidence of that setting the parties’ presumed intention may be taken into account in determining which of two or more possible meanings is to be given to a contractual provision. What cannot be taken into account is evidence of statements and actions of the parties which are reflective of their actual intentions and expectations. Objective background facts can include statements and actions of the parties which reflect their mutual actual intentions. That is, evidence of the mutual subjective intention of the parties to a contract may be part of the objective framework of facts within which the contract came into existence. It is the mutuality which makes the evidence admissible.” 63

[26] That the view of Nicholson J about the proper application of Codelfa and its binding of authority was correct seemed to be confirmed by the High Court of Australia in its refusal to grant special leave to appeal in Western Export Services Inc v Jireh International Pty Ltd 64 (Jireh). The decision in Jireh concerned an application for special leave to appeal. In refusing special leave the High Court said:

“The primary judge had referred to what he described as "the summary of principles" in Franklins Pty Ltd v Metcash Trading Ltd. The applicant in this Court refers to that decision and to MBF Investments Pty Ltd v Nolan as authority rejecting the requirement that it is essential to identify ambiguity in the language of the contract before the court may have regard to the surrounding circumstances and object of the transaction. The applicant also refers to statements in England said to be to the same effect, including that by Lord Steyn in R (Westminster City Council) v National Asylum Support Service.
Acceptance of the applicant's submission, clearly would require reconsideration by this Court of what was said in Codelfa Construction Pty Ltd v State Rail Authority of NSW by Mason J, with the concurrence of Stephen J and Wilson J, to be the "true rule" as to the admission of evidence of surrounding circumstances. Until this Court embarks upon that exercise and disapproves or revises what was said in Codelfa, intermediate appellate courts are bound to follow that precedent. The same is true of primary judges, notwithstanding what may appear to have been said by intermediate appellate courts.
The position of Codelfa, as a binding authority, was made clear in the joint reasons of five Justices in Royal Botanic Gardens and Domain Trust v South Sydney City Council and it should not have been necessary to reiterate the point here.” [Endnotes omitted] 65

[27] However, more recently in Electricity Generation Corporation (trading as Verve Energy) v Woodside Energy Ltd 66 (Woodside) the High Court made the following observation in relation to the construction issue before the Court:

“Both Verve and the Sellers recognised that this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable business person would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding ‘of the genesis of the transaction, the background, the context [and] the market in which the parties are operating’. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption ‘that the parties ... intended to produce a commercial result’. A commercial contract is to be construed so as to avoid it ‘making commercial nonsense or working commercial inconvenience’.” 67 [Endnotes omitted]

[28] A Full Court of the Federal Court of Australia in Stratton Finance Pty Limited v Webb 68 (Stratton) very recently considered whether there was any inconsistency between Jireh and Woodside. In so doing the Full Court said:

“The above reasons are presupposed upon legitimate contextual surrounding circumstances being available for consideration in the process of contractual construction and interpretation before ambiguity is demonstrated from the words of the agreement alone. That proposition was denied as legally permissible by three justices of the High Court in remarks in the disposition of an application for special leave in Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; 86 ALJR 1. In those remarks, criticism was made of the reasons in Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; 76 NSWLR 603, and in particular the reasons at [14]-[18] concerning the lack of need for ambiguity before resort to legitimate surrounding circumstances in the above-mentioned task. The articulated criticism was that the Court in Franklins (and the courts in the other intermediate appellate decisions referred to at [16] in Franklins) had failed to follow the judgment of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; 149 CLR 337, especially at 352.

As the reasons in Franklins stated, the conclusion that ambiguity need not be discovered before any resort to legitimate surrounding circumstances in the relevant task was drawn only from existing High Court authority: Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; 210 CLR 181 at 188 [11]; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at 461 [22]; Zhu v Treasurer of the State of New South Wales [2004] HCA 56; 218 CLR 530 at 559 [82]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 at 179 [40] and International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; 234 CLR 151 at 160 [8] and 174 [53]. The Court’s view was reached in the light of the totality of Sir Anthony Mason’s judgment in Codelfa, and considering the clear words of those later binding High Court authorities. After Jireh, and until this year and the publishing by the High Court of reasons in Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; 306 ALR 25; 88 ALJR 447, there was a degree of uncertainty as to whether courts (trial courts and intermediate appellate courts) should follow a clearly articulated position expressed by a number of intermediate courts of appeal around the country as to the proper content and significance of binding High Court authorities, or the view of three justices of the High Court in remarks on a special leave application. In 2013, McLure P called it a “heated controversy” in Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66; 298 ALR 666 at [107]; and see also the remarks of Pullin JA in McCourt v Cranston [2012] WASCA 60 at [14]- [22], and the article by the Hon K Lindgren: ‘The ambiguity of “ambiguity” in the construction of contracts’ (2014) 38 Australian Bar Review 153. In the notice of appeal, Stratton relied, in effect, on the essential proposition from Jireh: see para 3. This was confirmed at a directions hearing. Jireh however, played no substantive part of the argument, because the question, by the time of submissions being filed, had been settled by the High Court in Woodside. This most recent statement by French CJ, Hayne, Crennan and Kiefel JJ of the principles of contractual construction and interpretation was as follows at [35]:

Both Verve and the Sellers recognised that this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding ‘of the genesis of the transaction, the background, the context [and] the market in which the parties are operating’. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption “that the parties ... intended to produce a commercial result’. A commercial contract is to be construed so as to avoid it ‘making commercial nonsense or working commercial inconvenience’. (Footnotes omitted)
Recently, in Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184, the New South Wales Court of Appeal (Leeming JA, with whom Ward JA and Emmett JA agreed) expressed the view (at [71]) that [35] of Woodside was inconsistent with Jireh. We agree with that conclusion, and with the reasons in elaboration at [72]-[86], and in particular with the comments concerning Codelfa at [78]-[80].
The resolution of this issue, in the terms of [35] of Woodside, may not, however, resolve all issues as to what are legitimate surrounding circumstances: see, for example, the argument dealt with in QBE Insurance Australia Ltd v Vasic [2010] NSWCA 166 at [20]- [35]; and the comments in Kimberley Securities Ltd v Esber [2008] NSWCA 301 at [4]- [5].” 69

[29] As is apparent from the above, the Full Court in Stratton concluded that Woodside was inconsistent with Jireh at least to the extent that Jirah supports the proposition that ambiguity can be evaluated without regard to the surrounding circumstances and the commercial purpose or objects of the instrument being constructed. In doing so, the Full Court expressly endorsed the explanation of Codelfa by the NSW Court of Appeal in Mainteck Services Pty Ltd v Stein Heurtey SA. 70 It is worthwhile therefore to set out that explanation below:

“To the extent that what was said in Jireh supports a proposition that ‘ambiguity’ can be evaluated without regard to surrounding circumstances and commercial purpose or objects, it is clear that it is inconsistent with what was said in Woodside at [35]. The judgment confirms that not only will the language used “require consideration” but so too will the surrounding circumstances and the commercial purpose or objects. Although the High Court in Woodside did not expressly identify a divergence of approach, Jireh was notoriously controversial in precisely this respect. In Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66; 298 ALR 666 at [107] McLure P referred to the “heated controversy” created by Jireh; see further Kevin Lindgren’s analysis in ‘The ambiguity of “ambiguity” in the construction of contracts’ (2014) 38 Aust Bar Rev 153 at 161-167. It cannot be that the mandatory words ‘will require consideration’ used by four Justices of the High Court were chosen lightly, or should be ‘understood as being some incautious or inaccurate use of language’: cf Fejo v Northern Territory [1998] HCA 58; 195 CLR 96 at [45].

The general issue is important, such that it may be useful to state the position in some little detail. First, in principle, every legal text requires legal interpretation, in order to ascertain its legal meaning, although there is no real scope for dispute about the interpretation of many legal texts. Professor Wigmore long ago wrote that ‘the process of interpretation, then, though it is commonly simple and often unobserved, is always present, being inherently indispensable’: JH Wigmore, A Treatise on the Anglo-American System of Evidence in Trials at Common Law (3rd ed 1940, Little Brown & Co, Boston), Vol 9 p 180; see now §2459 Chardourne Revision, 1981. Lord Steyn said, in the first John Lehane Memorial Lecture, that ‘it is a universal truth that words can only be understood in relation to the circumstances in which they are used’: J Steyn, ‘The Intractable Problem of The Interpretation of Legal Texts’ [2003] SydLawRw 1; (2003) 25 Syd L Rev 5 at 5. His Lordship regarded this as a ‘fundamental principle of linguistic jurisprudence and legal logic’. I do not think there is any understatement in that statement. McHugh J made substantially the same point in Manufacturers’ Mutual Insurance Ltd v Withers (1988) 5 ANZ Ins Cas 60-853 at 75-343:
‘Until a word, phrase or sentence is understood in the light of the surrounding circumstances, it is rarely possible to know what it means.’

Lord Hoffmann, in a passage adopted by the joint judgment in Marley v Rawlings [2014] UKSC 2; [2014] 2 WLR 213 at [20], had said in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2004] UKPC 6; [2005] 1 All ER 667 at [64] that:

‘No one has ever made an acontextual statement. There is always some context to any utterance, however meagre.’ Secondly, very often, language when considered in its context will have a single, clear meaning. Very often, there is no dispute as to the ordinary grammatical or literal meaning of a sentence, and no dispute that that is the legal meaning. Very often, nothing in the context will come close to displacing the ordinary grammatical meaning of the legal text. ‘But not always’: Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [78]; Taylor v Owners - Strata Plan No 11564 [2014] HCA 9 at [65]. The legal meaning may diverge from its literal or grammatical meaning, especially in the (self-selectingly contestable) cases that reach courts. Words do not have a ‘natural’ meaning that can be determined in isolation. As Lord Hoffmann said in Charter Reinsurance Co Ltd v Fagan [1997] AC 313 at 391, approved in Campbell v R [2008] NSWCCA 214; 73 NSWLR 272 at [48] (Spigelman CJ, Weinberg AJA and Simpson J agreeing) and Dale v The Queen [2012] VSCA 324 at [73] (Weinberg, Harper and Whelan JJA):
‘[I]n some cases the notion of words having a natural meaning is not a very helpful one. Because the meaning of words is so sensitive to syntax and context, the natural meaning of words in one sentence may be quite unnatural in another. Thus a statement that words have a particular natural meaning may mean no more than that in many contexts they will have that meaning. In other contexts, their meaning will be different but no less natural.’ What is the legal meaning of a promise to sell ‘my Dürer drawing’, if the vendor’s wife owns a Dürer drawing which is on display in their home, and the vendor keeps another secretly in his study? What is the meaning of a gift ‘to my niece Eliza Woodhouse during her life’ in a will, if the testator had no such niece, but a grandniece of that name, and another grandniece, who was illegitimate, who lived with him: cf In re Fish; Ingham v Rayner [1894] 2 Ch 83? What is the meaning of cl 7 of the Wild Dog Destruction Regulation 1999, which provided ‘The Wild Dog Destruction Regulation 1994 is repealed’? Contracts, wills and statutes are very different legal texts, to the process of ascertaining whose legal meaning different rules apply, yet all are based on language, and language is unavoidably contextual. If I may repeat what I wrote of the uncertain meaning of the Wild Dog Destruction Regulation in Resolving Conflicts of Laws (Federation Press 2011), p 13, ‘The meaning of even the seemingly clearest legal text can be unclear, hence the importance of attending to context in the first instance.’ For those reasons, to say that a legal text is “clear” reflects the outcome of that process of interpretation. It means that there is nothing in the context which detracts from the ordinary literal meaning. It cannot mean that context can be put to one side; otherwise the three legal texts mentioned in the previous paragraph would be “clear”. Thirdly, I would not regard anything in the foregoing as inconsistent with the passage in Mason J’s reasons in Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337 at 352 (which was the focus of Jireh):‘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.’ There is no inconsistency because whether contractual language has a ‘plain meaning’ is (a) a conclusion and (b) a conclusion which cannot be reached until one has had regard to the context. That accords with what was said by Allsop P in Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; 76 NSWLR 603 at [17]: ‘the phrase used by Mason J in Codelfa Construction (at 352) ‘if the language is ambiguous or susceptible of more than one meaning’ does not mean that the susceptibility of the language to more than one meaning must be assessed without reference to the surrounding circumstances ...’ Mason J was indicating that there are very real limits to the extent to which grammatical meaning can be displaced by contextual considerations. However, in order to determine whether more than one meaning is available, it may be necessary first to turn to the context. Fourthly, what I have called “context” was formerly described as the ‘surrounding circumstances’, and then, influenced by Lord Wilberforce in decisions such as Prenn v Simmonds [1971] 1 WLR 1381 at 1384 and Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 at 997, as the ‘matrix of facts’. See Byrnes v Kendle [2011] HCA 26; 243 CLR 253 at [98]- [100] (Heydon and Crennan JJ) and J Carter, The Construction of Commercial Contracts (Hart Publishing, 2013), pp 8-9. Although Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28; [1998] 1 All ER 98 at 114 referred to a ‘fundamental change’ in the approach espoused by Lord Wilberforce, the “modern” contextual approach had nineteenth century precursors, at least in relation to commercial contracts. Without seeking to be exhaustive, the Earl of Selborne had deprecated and rejected the ‘extreme literalism’ in the mercantile contract construed in McGowan v Baine [1891] AC 401 at 403 (contrast the (dissenting) speech of Lord Bramwell, who had required ‘necessity, or [something] approaching to it’ in order to displace the ‘primary and natural meaning of the words’: see at 409). To the same effect was Lord Herschell’s rejection of a process of construction by reference to dictionary meaning, and insistence that contractual language must be ‘construed in a business fashion’ and “interpreted in the way in which business men would interpret them” in Southland Frozen Meat and Produce Export Company Ltd v Nelson Brothers Ltd [1898] AC 442 at 444. The approach adopted by Lords Selborne and Herschell anticipated what was popularised by Lord Wilberforce in the following century. Professor Carter has examined the evolutionary process at pp 17-20 of his book referred to in the previous paragraph. 
Fifthly, the approach endorsed in Woodside avoids the difficulty of identifying what is meant by ‘ambiguity’, itself an ambiguous term, whose perception ‘differs from one judicial eye to the other’: B & B Constructions (Aust) Pty Ltd v Brian A Cheeseman & Associates Pty Ltd (1994) 35 NSWLR 227 at 234. The various meanings of ‘ambiguity’ in this context are described by M Walton, ‘Where now ambiguity?’ (2011) 35 Aust Bar Rev 176 and D Wong and B Michael, ‘Western Export Services v Jireh International: Ambiguity as the gateway to surrounding circumstances?’ (2012) 86 ALJ 57 at 67-69. Sixthly, the approach to construction of written commercial contracts reflected in Woodside at [35] accords with what had been said in familiar passages in Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at [22] (construction “requires consideration, not only of the text of the documents, but also the surrounding circumstances known to Pacific and BNP, and the purpose and object of the transaction”); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 at [40] (‘The meaning of the terms ... normally requires consideration not only of the text but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction’); and the endorsement in Wilkie v Gordian Runoff Ltd [2005] HCA 17; 221 CLR 522 at [15] of the proposition that ‘Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure’. It means also that the Australian approach mirrors that adopted in England, New Zealand, Singapore and Hong Kong: Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38; [2009] 1 AC 1101; Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5; [2010] 2 NZLR 444; Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] SGCA 27; 3 SLR(R) 1029 (where the Court’s reasons delivered by V K Rajah JA for the Court survey much of the English decisions and academic literature); Fully Profit (Asia) Ltd v Secretary for Justice [2013] HKCFA 40; 6 HKC 374. Seventhly, although evidence of context and purpose expands the scope of the litigation, none of the foregoing should be seen as opening the door to lengthy litigation in commercial causes. As will be seen below, the evidence of ‘surrounding circumstances’ sought to be relied on by Mainteck was lengthy, contested, vague, and divorced - by many months in time, and a markedly different commercial position - from the execution of the Second Consortial Agreement. This makes it quite distinct from evidence which is apt to assist the process of construction. Indeed, I would infer that the primary reason for adducing the evidence was to support Mainteck’s (now abandoned) misrepresentation case, rather than so as to assist in construction. 71

[30] Regard may therefore be had to evidence of the surrounding circumstances before the existence of ambiguity in an agreement is identified as an aide to interpreting the agreement for the purposes of determining whether an ambiguity exists. If thereafter ambiguity is not identified extrinsic material cannot be used to contradict the language of the instrument. If ambiguity is identified the material may be used as contextual material to aide in the interpretation of the instrument. In this context we would make the observation that the law in relation to the interpretation of commercial contracts (Codelfa; Metcash and Stratton) has now aligned with the approach to the construction of awards and enterprise agreements as espoused by Burchett J in Short v FW Hercus Pty Ltd 72 and confirmed by French J, as he then was, in Wanneroo.
Application of the Acts Interpretation Act 1901 to enterprise agreements approved under the Act
[31] Both at first instance and before us the Appellant maintained that the Agreement must be interpreted in accordance with the Acts Interpretation Act 1901 (AI Act). That proposition is made on the basis that an enterprise agreement is an agreement that is made by the Commission pursuant to a power conferred by the Act to make the agreement. 73 To make good the proposition the Appellant at first instance relied on the following passage from the judgement of French J in Wanneroo:

“The interpretation of legislative instruments is dealt with in the Legislative Instruments Act 2003 (Cth). Awards and agreements made under the Act are declared, by s 7(1) of the Legislative Instruments Act, not to be legislative instruments – see Item 18 in the table set out in s 7(1). This leaves such awards and agreements within s 46 of the Acts Interpretation Act 1901 (Cth) which provides, inter alia:

‘(1) If a provision confers on an authority the power to make an instrument that is neither a legislative instrument within the meaning of the Legislative Instruments Act 2003 nor a rule of court, then, unless the contrary intention appears:
(a) this Act applies to any instrument so made as if it were an Act and as if each provision of the instrument were a section of an Act; and
(b) expressions used in any instrument so made have the same meaning as in the enabling legislation; and
(c) any instrument so made is to be read and construed subject to the enabling legislation, and so as not to exceed the power of the authority.

An award is an instrument made by an authority, in this case the Australian Industrial Relations Commission, and so attracts the application of the Acts Interpretation Act for the purposes of its interpretation.” 74
[32] The decision in Wanneroo does not support the proposition contended by the Appellant. In Wanneroo Justice French was concerned with the construction of an award under the Workplace Relations Act 1996 (WR Act) and not an enterprise agreement made under the Act. Relevantly, the award in question was an instrument that was not a legislative instrument but was an instrument made by the Australian Industrial Relations Commission pursuant to a power under the WR Act to make the instrument. Consequently French J concluded that the award was “an instrument made by an authority, in this case the Australian Industrial Relations Commission, and so attracts the application of the Acts Interpretation Act (AI Act) for the purposes of its interpretation”. 75
[33] The Appellant also relied on a decision in Cape Australia Holdings Pty Ltd v Construction, Forestry, Mining and Energy Union 76 (Cape Australia). In Cape Australia the issue whether the AI Act applied was not in contention and the parties proceeded on the basis that the AI Act applied.77
[34] Similarly in DP World Brisbane Pty Ltd v Maritime Union of Australia 78 a Full Bench of the Commission made obiter observations based on the parties’ acceptance that the AI Act applied to the relevant agreement. The Full bench observed that if the AI Act applied it would allow the consideration of particular extrinsic material, but ultimately proceeded to decide the construction question without regard to the AI Act as no relevant extrinsic material had been identified.79
[35] It follows that the question of whether the AI Act applies to the interpretation of enterprise agreements has not been the subject of a previous Full Bench decision in which the issue has been contested and determined. It is also relevant to observe that the two Full Bench decisions to which we have referred were decided prior to the recent decision of the Full Court of the Federal Court in Toyota Motor Corporation Australia Limited v Marmara 80. We refer to that decision later.
[36] It seems to us that the Act does not confer a power on the Commission to make an enterprise agreement. An enterprise agreement is made in the circumstances described in sections 172 and 182, which are reproduced below;

172 Making an enterprise agreement
Enterprise agreements may be made about permitted matters
(1) An agreement (an enterprise agreement) that is about one or more of the following matters (the permitted matters) may be made in accordance with this Part:

(a)  matters pertaining to the relationship between an employer that will be covered by the agreement and that employer’s employees who will be covered by the agreement;
(b)  matters pertaining to the relationship between the employer or employers, and the employee organisation or employee organisations, that will be covered by the agreement;
(c)  deductions from wages for any purpose authorised by an employee who will be covered by the agreement;

(d)  how the agreement will operate.
Note 1:       For when an enterprise agreement covers an employer, employee or employee organisation, see section 53.
Note 2:       An employee organisation that was a bargaining representative for a proposed enterprise agreement will be covered by the agreement if the organisation notifies the FWC under section 183 that it wants to be covered.

Single-enterprise agreements
(2)  An employer, or 2 or more employers that are single interest employers, may make an enterprise agreement (a single-enterprise agreement):

(a)  with the employees who are employed at the time the agreement is made and who will be covered by the agreement; or
(b)  with one or more relevant employee organisations if:
(i)  the agreement relates to a genuine new enterprise that the employer or employers are establishing or propose to establish; and
(ii)  the employer or employers have not employed any of the persons who will be necessary for the normal conduct of that enterprise and will be covered by the agreement.

Note:          The expression genuine new enterprise includes a genuine new business, activity, project or undertaking (see the definition of enterprise in section 12).
Multi-enterprise agreements
(3)  Two or more employers that are not all single interest employers may make an enterprise agreement (a multi-enterprise agreement):

(a)  with the employees who are employed at the time the agreement is made and who will be covered by the agreement; or
(b)  with one or more relevant employee organisations if:
(i)  the agreement relates to a genuine new enterprise that the employers are establishing or propose to establish; and
(ii)  the employers have not employed any of the persons who will be necessary for the normal conduct of that enterprise and will be covered by the agreement.

Note:          The expression genuine new enterprise includes a genuine new business, activity, project or undertaking (see the definition of enterprise in section 12).
Greenfields agreements
(4)  A single-enterprise agreement made as referred to in paragraph (2)(b), or a multi-enterprise agreement made as referred to in paragraph (3)(b), is a greenfields agreement.
Single interest employers
(5)  Two or more employers are single interest employers if:

(a) the employers are engaged in a joint venture or common enterprise;
or
(b) the employers are related bodies corporate; or
(c) the employers are specified in a single interest employer authorisation that is in operation in relation to the proposed enterprise agreement concerned.

Requirement that there be at least 2 employees
(6)  An enterprise agreement cannot be made with a single employee.
182 When an enterprise agreement is made
Single-enterprise agreement that is not a greenfields agreement

(1) If the employees of the employer, or each employer, that will be covered by a proposed single-enterprise agreement that is not a greenfields agreement have been asked to approve the agreement under subsection 181(1), the agreement is made when a majority of those employees who cast a valid vote approve the agreement.

Multi-enterprise agreement that is not a greenfields agreement

(2) If:
(a) a proposed enterprise agreement is a multi-enterprise agreement; and
(b) the employees of each of the employers that will be covered by the agreement have been asked to approve the agreement under subsection 181(1); and
(c) those employees have voted on whether or not to approve the agreement; and
(d) a majority of the employees of at least one of those employers who cast a valid vote have approved the agreement;
the agreement is made immediately after the end of the voting process referred to in subsection 181(1).
Greenfields agreement
(3) A greenfields agreement is made when it has been signed by each employer and each relevant employee organisation that the agreement is expressed to cover (which need not be all of the relevant employee organisations for the agreement).

[37] An application to the Commission for the approval of an enterprise agreement must be made within the period specified in section 185(3) or (4) of the Act. The period within which an application is made is reckoned only after the agreement is made. The Commission’s role is in approving, subject to satisfaction of the statutory criteria, the enterprise agreement already made but there is no power conferred on the Commission by the Act to make an enterprise agreement.
[38] Where the statute intends to confer power on Commission to make an instrument it expressly so provides. 81 The power conferred on the Commission by the Act is limited to approval of agreements that have already been made. Although enterprise agreements made under the Act rely for their legal enforceability on the Commission’s approval, this is not the same as the Commission having power to make the enterprise agreement. An enterprise agreement is therefore not an instrument of a kind described in s.46 of the AI Act.
[39] As mentioned earlier this issue was recently considered by a Full Court in Toyota. Relevantly the Full Court said the following:

“Toyota’s final argument on the construction of cl 4 of the Agreement (ie aside from those that were interwoven with its case on the repugnancy point) was based on the provision of the Agreement that made it an objective to attain cost structures similar to those of other members of the Toyota group worldwide. It was contended that, pursuant to ss 46 and 15AA of the Acts Interpretation Act 1901 (Cth) (“the AI Act”), an interpretation of the Agreement which would best achieve that objective is to be preferred to each other interpretation. We do not, however, accept the premise from which this argument proceeds. Section 46 of the AI Act applies where ‘a provision confers on an authority the power to make an instrument’. There is no provision of the FW Act which confers on the Commission the power to make an enterprise agreement. Such an agreement is made by the employer and the relevant employees under ss 172(2) and 182(1). We consider, therefore, that the constructional questions which arise for resolution in this appeal must be addressed without assistance from the AI Act.” 82

[40] It follows that an enterprise agreement approved by the Commission must be interpreted without recourse to the AI Act.
Summary
[41] From the foregoing, the following principles may be distilled:
1. The AI Act does not apply to the construction of an enterprise agreement made under the Act.
2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.
3. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.
4. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.
5. If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aide the interpretation of the agreement.
6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

(a) evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
(b) notorious facts of which knowledge is to be presumed;
(c) evidence of matters in common contemplation and constituting a common assumption.

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

(a) the text of the agreement viewed as a whole;
(b) the disputed provision’s place and arrangement in the agreement;
(c) the legislative context under which the agreement was made and in which it operates.

9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.
10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a fair or just outcome. The task is always one of interpreting the agreement produced by parties.

[22] The Commission, as presently constituted, adopts the reasoning of the Full Bench in Golden Cockerel and the authorities it refers to.

Submissions

[23] In the present matter there is a dispute between the parties about whether Mr Pickering is entitled to higher duties when he is the most senior person at the Warracknabeal site.

Applicant

[24] The Applicant submitted that:

a) The duties performed by Mr Pickering were outside the scope of those duties required by a Grade 4.2 Employee. 83

b) Mr Pickering was performing the indicative tasks of a Grade 5.1 employee. 84

c) The respondent had classified Mr Pickering as a Grade 5.1 employee. 85

d) Mr Pickering was not remunerated in accordance with Grade 5.1 or the ‘Mixed Function’ Clause 16 of the Agreement. 86

e) Mr Pickering is entitled to be paid in accordance with Grade 5.1 or, in the alternative, the Mixed Function Clause, for the periods in which his duties met the indicative criteria for role classification Grade 5.1. 87

[25] At the hearing, Mr Winter summarised Mr Pickering’s position as follows:

‘We would say this, that he acts in relation to a certain degree of autonomy. He deals with growers which he doesn’t do as a 4.2. He has certain financial authority. We’ve heard in his evidence that, for instance, he would negotiate with contractors in regard to costs. Now, they might be fixed costs, because there’s a table of rates, if you like, for truck drivers that are negotiated across the board. So he’s not saying to a truck driver, “Well, we’re going to pay you this, this or this.” There’s set rates. So he decides on that. He is responsible for all site operations in regard to responsibilities. He proactively manages site operations, staff and results.’ 88

Respondent

[26] The Respondent submitted that:

a) The supervisory tasks performed by Mr Pickering were assumed within the job description given to a Grade 4.2 employee. 89

b) Mr Pickering was not given authority by GrainCorp management to undertake certain tasks which were outside the role description given to that of a Grade 4.2 employee. 90

c) GrainCorp had not classified Mr Pickering as a Grade 5.1 employee. The Meeting Record from 8 September 2014 had incorrectly described Mr Pickering’s position as a Site Manager. 91

d) If he so chooses, Mr Pickering may invoke a review of his Grade classification pursuant to clause 31(c) of the Agreement. 92

[27] In his closing submissions, Mr Murray outlined the respondent’s position in the following manner;

‘...It’s not remarkable that there is this overlap between grade 5 and grade 4. Under clause 27B of the Agreement it talks about, “Increase in training of staff personnel within each geographical area, expected to assume increased responsibility for activities and performance under their control.” …
The union has identified what it considers to be inadequacies in the differentiation of the two. Nevertheless, the union entered into this Agreement. If there are these inadequacies and deficiencies - and I don’t concede there are, but if there are, this is not the vehicle to correct them. The vehicle to correct them is through the negotiation of another agreement which will deal with, hopefully, a further demarcation, if that is deemed to be necessary, but the descriptors of a grade 4 are clear enough. They’re unambiguous. Mr Pickering has been doing those jobs and he is not entitled to a payment for higher duties accordingly.’ 93

Consideration

[28] The Commission, as presently constituted, apprehends that both parties contend that the Commission should have regard to the plain and ordinary meaning of the words in the Agreement. That is the correct approach.
[29] It is necessary therefore to apply the Golden Cockerel principles.
1. The AI Act does not apply to the construction of an enterprise agreement made under the Act.
[30] The AI Act is not to be and has not been applied to the Commission’s interpretation of the Agreement.
2. In construing an enterprise agreement it is first necessary to determine whether an agreement has a plain meaning or contains an ambiguity.
[31] The marginal differences between the Grade 4 Site Supervisor position and the Grade 5 Site Manager position are detailed in the table above. Those differences are of little assistance in the present matter and neither party took the Commission to evidence that would assist it to determine the issue in dispute based upon the differences in the descriptors.

[32] What is clear is that as between the 2010 agreement and the 2013 agreement, the parties turned their minds to and agreed upon a change in the wording relating to Grade 5 from “Senior Supervisor” to “Site Manager”. Some importance must be attached to the change consciously and deliberately made by the parties. No longer was the distinction to be drawn between a “Site Supervisor” and a “Senior Supervisor”, but rather between a “Site Supervisor” and “Site Manager”.
[33] Neither of the parties took the Commission to authorities that would assist it to understand the difference between a “Supervisor” and “Manager”. However, although in drafting the Agreement the parties could have more successfully made distinctions between the two positions, they are not ambiguous terms.
[34] The Macquarie Dictionary defines:

a) “Supervisor” to mean “someone who supervises; a superintendent”;

b) the verb “supervise” to mean “to oversee (a process, work, workers, etc.) during execution or performance; superintend; have the oversight and direction of”;

c) “Manager” to mean “someone who manages; a person charged with the management or direction of an institution, a business or the like;” and

d) the verb “manage” to mean “to bring about; succeed in accomplishing”.

[35] The Commission, as presently constituted, adopts the above definitions.
[36] Having adopted those definitions it is necessary to apply them to the work that is undertaken by Mr Pickering. The evidence of the work undertaken by him is set out above. In large measure there is little dispute about what Mr Pickering does; the dispute is about which classification he falls into.
[37] Having regard to all the evidence in this matter, there is little to establish that Mr Pickering is charged with the management and direction of the operations at Warracknabeal as opposed to being responsible for overseeing the performance of work at the site. Mr Bibby retains responsibility for what is properly to be characterised as ‘management’; he, not Mr Pickering, is invested with financial, human resources and Occupational Health and Safety delegations and authorities. It is Mr Bibby who sets the direction. It is Mr Pickering who, on a day-to-day basis, executes that work. Just because Mr Pickering is often the most senior person on site does not mean he is a “Site Manager”. Just because there is no person on site designated as “Site Manager” does not mean that, as the most senior person on site, Mr Pickering is the “Site Manager”. Simply, there is no “Site Manager” on site at that time. It is doubtful even if Mr Pickering’s former “Site Manager” ought properly to have been classified as such. Mr Pickering does not ‘step up’ to assume GSM responsibilities like planning and operational leadership responsibilities. Consequently, he is not performing at a management level.
3. Regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists.
[38] In coming to the conclusion that there is no ambiguity, the Commission, as presently constituted has had regard to the evidence of Mr Whitmore in C2014/5448. His evidence was as follows:

a) In 2005 GrainCorp introduced the Site Manager role into its regional operations. Site Manager employees were salaried managers, based at large (primary) sites;

b) In 2007 GrainCorp rebranded the Site Manager role. Existing Site Manager employees became known as “Grain Services Managers” (GSM). The reason for this rebranding was to increase the status of the GSM position with GrainCorp’s external customers. GSM employees continue to be salaried managers.

c) In 2009, during enterprise agreement negotiations, a new classification system was developed and introduced for the first time. Under the 2010 Agreement the highest grade level was a Grade 5 employee. This grade was described as a “Site Supervisor” and the role of “Senior Supervisor” was included as an indicative role at that level.

d) In the current Agreement the “Senior Supervisor” indicative role of a grade 5 level was replaced with the indicative role of “Site Manager”. 94

4. If the agreement has a plain meaning, evidence of the surrounding circumstances will not be admitted to contradict the plain language of the agreement.
[39] The Commission, as presently constituted, has determined that the Agreement has a plain meaning. Consequently, the Commission, as presently constituted, has not had regard to surrounding circumstances that would contradict the plain language of the Agreement.
5. If the language of the agreement is ambiguous or susceptible to more than one meaning then evidence of the surrounding circumstance will be admissible to aid the interpretation of the agreement.
[40] This element of the Golden Cockerel decision is not applicable because the Commission, as presently constituted, has determined that the Agreement has a plain meaning.
6. Admissible evidence of the surrounding circumstances is evidence of the objective framework of fact and will include:

a. evidence of prior negotiations to the extent that the negotiations tend to establish objective background facts known to all parties and the subject matter of the agreement;
b. notorious facts of which knowledge is to be presumed;
c. evidence of matters in common contemplation and constituting a common assumption.

[41] This element of the Golden Cockerel decision is not applicable because the Commission, as presently constituted, has determined that the Agreement has a plain meaning.
7. The resolution of a disputed construction of an agreement will turn on the language of the Agreement understood having regard to its context and purpose.
[42] This element of the Golden Cockerel decision is not applicable because the Commission, as presently constituted, has determined that the Agreement has a plain meaning.
8. Context might appear from:

a. the text of the agreement viewed as a whole;
b. the disputed provision’s place and arrangement in the agreement;
c. the legislative context under which the agreement was made and in which it operates.

[43] This element of the Golden Cockerel decision is not applicable because the Commission, as presently constituted, has determined that the Agreement has a plain meaning.
9. Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.
[44] The Commission, as presently constituted, has not had regard to the subjective intentions or expectations of the parties. It is evident from all the surrounding circumstances that the objective intention of the Agreement was to establish a distinction (however fine or marginal) between a “Site Supervisor” and “Site Manager”.
10. The task of interpreting an agreement does not involve rewriting the agreement to achieve what might be regarded as a ‘fair’ or ‘just’ outcome. The task is always one of interpreting the agreement produced by parties.

[45] No rewriting of the Agreement has been undertaken in coming to the decision in this matter. The Commission, as presently constituted, has interpreted the agreement produced by the parties.

Conclusion

[46] Having considered all that has been submitted in these proceedings, and for the reasons set out above, the Commission, as presently constituted, has determined that when Mr Pickering is the most senior Grain Operator at the Respondent’s Warracknabeal site is he performing the tasks of Site Supervisor (Grade 4) and not Site Manager (Grade 5).

COMMISSIONER

Appearances:

Mr C Winter, Industrial Officer of The Australian Workers’ Union for the Applicant.

Mr B Murray, from Minter Ellison for the Respondent.

Hearing details:

Melbourne.

17 February.

2015.

 1   Exhibit “AWU1”, para 4.

 2   Exhibit “AWU1”, para 6.

 3   Exhibit “AWU1”, para 7.

 4   Exhibit “G1”, para 8

 5   Exhibit “G1”, para 13.

 6   Exhibit “AWU1”, para 9 and Exhibit “G1”, para 33 -34.

 7   Exhibit “AWU1”, para 9.

 8   Exhibit”G1”, para 30 -31.

 9   Exhibit “AWU1” para 10.

 10   Exhibit “G1” para 36.

 11   Exhibit “AWU1” para 15, 17.

 12   Exhibit “AWU1” para 17.

 13   Exhibit “G1” para 27.

 14   Exhibit “G1” para 30.

 15   Transcript PN28-30 and confirmed by Mr Pickering at Transcript PN80.

 16   Transcript PN39-40.

 17   Exhibit “AWU2”, para 3.

 18   Exhibit “AWU2”, para 4.

 19   Exhibit “AWU2”, para 8.

 20   Exhibit “AWU2”, para 8.

 21   Transcript PN62.

 22   Transcript PN65.

 23   Transcript PN67.

 24   Transcript PN68-70.

 25   Transcript PN72.

 26   Transcript PN91-92,

 27   Transcript PN93.

 28   Transcript PN103-105.

 29   Transcript PN118,

 30   Transcript PN119-120.

 31   Transcript PN123-124.

 32   Transcript PN132-133.

 33   Transcript PN134-142.

 34   Transcript PN143.

 35   Transcript PN147-148.

 36   Transcript PN155.

 37   Exhibit “AWU3” para 10.

 38   Exhibit “AWU3” para 14.

 39   Transcript PN180

 40   Transcript PN181.

 41   Para 83 of the Whitmore Witness Statement.

 42   Exhibit “G2”, para 1.

 43   Exhibit “G2” para 4.

 44   Exhibit “G2” para 7.

 45   Transcript PN203.

 46   Transcript PN206.

 47   Transcript PN207-208.

 48   Transcript PN213-216.

 49   Exhibit “G3” para 26.

 50   Exhibit “G3” para 34.

 51 (2006) 153 IR 426.

 52   Ibid at 438.

 53 (1966) 66 IR 182.

 54   Ibid at 184.

 55   See Swire Cold Storage Pty Ltd v TWU [2008] AIRCFB 397 at [29] and AMWU v Silcar Pty Ltd [2011] FWAFB 2555 at [11].

 56 (2005) 222 CLR 241.

 57   Ibid at 253 per Gummow, Hayne and Heydon JJ.

 58 (2006) 153 IR 426 at 440.

 59 (1982) 149 CLR 337.

 60   Ibid at 352.

 61 [2003] FCA 520.

 62   Ibid at [28]-[31].

 63   Ibid at [32]-[34].

 64 [2011] HCA 45 per Gummow, Heydon and Bell JJ.

 65   Ibid at [2]-[4].

 66 [2014] HCA 7.

 67 Ibid at [35].

 68 [2014] FCAFC 110.

 69   Ibid at [36]-[41].

 70 [2014] NSWCA 184.

 71   Ibid at [71]-[85].

 72 (1993) 40 FCR 511 at 518.

 73 See section 46 of the AI Act.

 74 (2006) 153 IR 426 at 438 [52].

 75   Ibid.

 76   [2012] FWAFB 3994.

 77   [2012] FWAFB 3994 at [10].

 78 (2013) 237 IR 180.

 79   Ibid at 191.

 80 [2014] FCAFC 84.

 81   See for example 157(1)(b) which provides that the Commission may make a modern award, s.243 which provides that the Commission must make a low-paid authorisation in particular circumstances and s.269(1) which provides that the Commission must make a bargaining related workplace determination in particular circumstances.

 82 [2014] FCAFC 84 at [58].

 83   Exhibit “AWU1” para 15

 84   Exhibit “AWU1” para 17.

 85   Exhibit “AWU1” para 11

 86   Ibid.

 87   Exhibit “AWU1” para 17.

 88   Transcript PN480.

 89   Exhibit “G1” para 21

 90   Exhibit “G1” para 25.

 91   Exhibit “G1” para 36.

 92   Exhibit “G1” para 37.

 93   Transcript PN528 - PN529.

 94   Annexure “AWU3” to Exhibit “AWU1”, paras 80-83.

Printed by authority of the Commonwealth Government Printer

<Price code G, PR562766>