The Maritime Union of Australia v Boskalis Australia Pty Ltd
[2011] FWA 4619
•18 JULY 2011
[2011] FWA 4619 |
|
DECISION |
Fair Work Act 2009
s.602—Correcting obvious errors etc.
The Maritime Union of Australia
v
Boskalis Australia Pty Ltd
(AG2009/21581)
COMMISSIONER THATCHER | SYDNEY, 18 JULY 2011 |
Correction of nominal expiry date
[1] This matter concerns an application by the Maritime Union of Australia (MUA) for a correction to a decision to approve the Boskalis and MUA Contract Propelled Dredging Enterprise Agreement 2009 (the Agreement) under s.185 of the Fair Work Act 2009 (the Act).
Background
[2] The application to approve the Agreement was made by Boskalis Australia Pty Limited (Boskalis) and lodged with Fair Work Australia (FWA) on 8 December 2009. The MUA gave written notice pursuant to s.183 of the Act.
[3] Following an undertaking dated 15 March 2010 pursuant to s.190 of the Act, after becoming satisfied that the requirements of ss. 186, 187 and 188 of the Act had been met, on 7 July 2010 I approved the Agreement (the original decision). 1 (Unfortunately because of some difficulty within the FWA administration, the address to which the undertaking was forwarded had resulted in it not being received in my chambers. This did not come to attention until Boskalis raised the delay with my chambers on 5 July 2010.)
[4] The Agreement included subclause 8.1 which provided that:
“This Agreement shall operate on and from the date of its lodgement with FWA, such date to be confirmed by Fair Work Australia, and shall remain in force for two years from that date.”
[5] In my decision I indicated that the Agreement would operate from a date 7 days after the Agreement was approved by FWA, stating:
“[5] The Agreement is approved and, in accordance with s.54 of the Act, will operate from 14 July 2010. The nominal expiry date of the Agreement is 13 July 2012.”
[6] In its letter dated 25 January 2011, the MUA made application pursuant to s.602 (Correcting obvious errors etc. in relation to FWA’s decisions) of the Act that I amend paragraph [5] of my decision to reflect a nominal expiry date of 8 December 2011. The MUA stated:
“Whilst it is conceded that an enterprise agreement can only operate normally from 7 days after the enterprise agreement is approved it was the intention of the parties that the nominal expiry date be a date 2 years from the date of lodgement of the Agreement with Fair Work Australia for approval. That date was 8 December 2011 and not 13 July 2012.”
[7] The MUA forwarded a copy of its correspondence to Boskalis. My chambers sought Boskalis’ response.
[8] On 8 February 2011 Boskalis’ legal representative emailed my chambers in the following terms:
“Please find attached our written response to the MUA’s letter concerning the expiry date of the Boskalis & MUA Contract Propelled Dredging EA 2009.”
[9] The legal representative’s attached letter of the same date stated:
“Thankyou for providing us with a copy of the MUA’s letter of concern regarding the expiry date of the abovementioned Agreement determined in FWA’s Decision of 7 July 2010.
We have conferred with our client regarding the content of the Union’s letter and the history of this matter.
Our client’s instruction to us at this time is to advise FWA that it would not support or agree to any change to the Tribunal’s Decision of 7 July 2010.”
[10] After considering the MUA’s letter and the Boskalis response, I formed the view that my decision of 7 July 2010 had involved an obvious error. I had, unfortunately, overlooked the wording of subclause 8.1 of the Agreement which the employer and employees had made and on which the employees had voted. There was no provision of the Act that would have empowered me to override the wording of the Agreement in relation to a nominated expiry date. In making an error of law I had acted without jurisdiction.
[11] Being a creature of statute there is no slip rule applicable to FWA proceedings. Rather, s.602 of the Act prescribes:
“602 Correcting obvious errors etc. in relation to FWA’s decisions
(1) FWA may correct or amend any obvious error, defect or irregularity (whether in substance or form) in relation to a decision of FWA (other than an error, defect or irregularity in a modern award or national minimum wage order).
Note 1: If FWA makes a decision to make an instrument, FWA may correct etc. the instrument under this section (see subsection 598(2)).
Note 2: FWA corrects modern awards and national minimum wage orders under sections 160 and 296.
(2) FWA may correct or amend the error, defect or irregularity:
(a) on its own initiative; or
(b) on application.”
[12] On 14 February 2011, I issued a correction to my earlier decision (the correction decision), 2 the effect of which was to state that the nominal expiry date of the Agreement was:
“… two years from the date of lodgement of the Agreement with Fair Work Australia, namely 8 December 2011.”
[13] Subsequently, I received a letter dated 16 February 2011 from the legal representative of Boskalis seeking that I reverse the correction decision. It concluded:
“We would ask that you re-consider your actions of earlier this week and reverse your decision to amend the expiry date of the Agreement to 9 December 2011.
We would ask you to do this because:
• Given the above material, it is the right and correct thing to do.
• It will allow what we regard to be a mistaken decision to be reversed without the need for a full blown appeal process which will cost time, money and, we fear, some embarrassment.
• It would allow for a proper consideration and outcome based on the facts presented by all sides.
• (It may be that you may want to reverse your decision and then seek further input from the parties to the Agreement about alternative solutions to the MUA’s concerns.)
We would advise you that our client has instructed us to take no action in relation to the lodgement of an Appeal under Section 604 of the Act until the start of business on Monday next week i.e. Monday 21 February 2011, thus giving yourself a reasonable opportunity to consider our request for you to reverse your decision of 14 February 2011.
We genuinely hope to hear from you before Monday with positive news on our request.”
[14] The legal representative’s letter left me in little doubt that its letter dated 8 February 2011 had not contained all that Boskalis wanted to say on the MUA’s application. I listed the matter for hearing in order to provide Boskalis with the opportunity to be heard.
[15] The matter was initially listed for hearing on 22 February 2011, and then relisted for 3 March 2011 in order to allow the FWA file to be obtained from archives.
[16] At the hearing Boskalis’ legal representative:
(a) submitted that the letter dated 8 February 2011 had been written on the understanding that what he had been ‘asked to do quite informally was to try and glean from our client its view on the MUA’s letter’; 3
(b) sought to submit material that went to the intentions and behaviours of the parties, including the background and circumstances that surrounded the negotiation process. He stated:
“The company submits that it is important to appreciate that the negotiations with the MUA in establishing this agreement were extremely drawn out. It took over two and a half years of negotiations to establish this agreement. The negotiations I think by any party’s measure of assessment would be described as difficult and they were complex and that these realities of the particular negotiation process surrounding this agreement resulting in what we would describe as an agreement that on the face of it doesn’t necessarily in all respects reflect either what really was intended by the parties, what was happening or what the parties knew the agreement must prescribe in order to comply with the Act, especially in relation to the, at that stage, newly arriving requirements of the then Fair Work Act which came into effect on 1 July 2009, a date that occurred during the negotiations. In the context of these comments I would like to give the tribunal an appreciation of the negotiations and the issues surrounding in particular clause 8 of this agreement, but ...”; 4
and
“... given the fact that there is actually a documented chain of history relating to the debated wording of this document, there is some sense and I believe some justification in the tribunal being aware of that history and being aware of the views expressed by the parties in arriving at those various different formats of wording about this specific clause that would properly assist in our view the determination of the tribunal in responding to the union’s application ...” 5
[17] At the hearing the MUA:
(a) objected to Boskalis bringing evidence of extrinsic material in support of its interpretation of subclause 8.1;
(b) opposed the proposition that I should proceed as if I was resolving a dispute over the application of the Agreement and as if the wording of subclause 8.1 was ambiguous and uncertain.
[18] I alerted Boskalis to the principles governing the resort to extrinsic material in the construction of agreements which were stated by Mason J in Codelfa Construction Pty Limited v State Rail Authority of NSW (Codelfa), 6as 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 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.” 7
[19] Boskalis suggested that the proceedings continue by way of written submissions - an approach that was agreed to by the MUA.
Submissions
[20] The submissions of Boskalis can be summarised as follows:
(a) The original decision was correct. There was no error.
(b) It had been denied procedural fairness and natural justice prior to the making of the correction decision.
(c) It regarded the proceedings as a de novo hearing of the MUA application. In the alternative it made a s.602 application for the correction order to be revoked.
(d) The MUA has not demonstrated there was error in the original decision. In the absence of any evidence of error, defect or irregularity, FWA was unable to make the correction decision.
(e) The MUA has not shown any reason, whether obvious to it or not, that would substantiate a correction in accordance with s.602.
(f) FWA was functus officio when it purported to make the correction decision. The MUA’s application was made some 6 months after the original decision.
(g) If consideration is given to the words of subclause 8.1 ‘on their face’, the plain meaning of the words were as per paragraph [5] of the original decision. The important link is between:
• the words ‘such date to be confirmed by Fair Work Australia’ and the prescription for it to ‘remain in force for 2 years from that date’,
and not between:
• the non-compliant words of ‘operate on and from the date of lodgement’ and ‘remain in force for 2 years’.
(h) FWA does not have the power to interpret the terms of the Agreement simply in order to ‘make them work’. Courts only have powers to interpret words of a contract to give them effect. FWA should be mindful of the difference between a court’s jurisdiction and its jurisdiction and powers and how it is able to differently behave in the exercise of its jurisdiction. The correction decision had the effect of seeking to ‘make the contract work’ and not simply interpret the provisions as they are prescribed.
(i) The MUA is not seeking to rely upon the plain meaning of clause 8 but relies on what it describes as ‘the mutual intention of the parties’ for alleging an error in the original decision.
(j) If the wording of subclause 8.1 is ambiguous, Boskalis should be given opportunity to present extrinsic material in support of its interpretation. This was not permitted at the hearing on 3 March 2011.
(k) The wording in subclause 8.1 is ambiguous and susceptible to more than one meaning. Therefore it is not possible to determine its meaning without reference to the surrounding circumstances. I should consider the extrinsic material - which it submitted under the heading ‘History of negotiations.’
(l) Not everything on the face of the Agreement document necessarily properly reflects what was really the agreed intention of the parties. FWA should give weight to the actual intention of the parties over the presumed intention that FWA may have had when making the correction decision. During the negotiations, Boskalis had made a concession that:
“On the issue of the Operation provisions of the Agreement (Clause 8, Term of the Agreement), the clause was to ‘suggest’ that the Agreement would take effect from the date of lodgement - even though it was understood between the parties that in accordance with the Act the Agreement could not operate until a date after it had been approved by FWA.”
(m) Codelfa is authority that:
“There may perhaps be one situation in which evidence of the actual intention of the parties should be allowed to prevail over their presumed intention. If it transpires that the parties have refused to include in a contract a provision which would give effect to the presumed intention of persons in their position it may be proper to receive evidence of that refusal.” 8
The MUA had refused to include in the Agreement ‘provisions that would have given effect to the future presumed intention of the contract and as such, a clearer understanding of the intended operation of clause 8...’
(n) The effect of the correction decision was to shorten the nominal life of the Agreement by 7 months and hence, the 2 year duration provision would mean nothing.
(o) The Agreement was not ‘fully lodged’ prior to FWA receiving the necessary undertaking.
(p) An amendment of the original decision would have a harmful impact on its operations.
(q) As an alternative position, in the event that FWA considers there was an error, defect or irregularity in the original decision, as a compromise, the nominal expiry date be 21 March 2012. This had regard to the date on which Boskalis provided FWA with the undertaking.
(r) There is no requirement for FWA to specify the nominal expiry date of the Agreement in its decision - only an obligation under s.186(5) to be satisfied that an agreement has an expiry date that is not more than 4 years after FWA approves the agreement. As a further alternative position, should FWA consider it has grounds to amend the original decision, the nominal expiry date should not be specified. Rather subclause 8.1 should state that the nominal expiry date of the Agreement is:
“… two years from the date of lodgement of the Agreement with Fair Work Australia.”
[21] The submissions of the MUA can be summarised as follows:
(a) It is clear on the face of subclause 8.1 that the nominal expiry date of the Agreement is 2 years from the date of lodgement (namely 8 December 2009) which is 8 December 2011.
(b) Such a construction is consistent with the terms of the Agreement as the last pay increase took effect from 1 July 2010, and any delay in FWA’s approval of the Agreement.
(c) The problem with clause 8.1 goes not to the nominal expiry date, but to the date of operation of the Agreement.
(d) Paragraph 603(3)(b) of the Act prohibits FWA from reversing the correction decision. Section 603 relevantly prescribes:
“603 Varying and revoking FWA’s decisions
(1) FWA may vary or revoke a decision of FWA that is made under this Act (other than a decision referred to in subsection (3)).
...
(3) FWA must not vary or revoke any of the following decisions of FWA under this section:
...
(b) a decision under s.235 or Division 4, 7, 9 or 10 of Part 2-4 (which deal with enterprise agreements); ...”
(e) There is no ambiguity in subclause 8.1. Adopting the principles in Codelfa, there is no basis for the consideration of evidence of surrounding circumstances to assist in the interpretation of the provision.
(f) FWA is functus officio as it is no longer seized of the substantive application, which was one of seeking the approval of the Agreement. There can be no de novo hearing.
(g) The attempt by Boskalis to make its own s.602 application is fatally flawed, being a device to get around paragraph 603(3)(b). Having corrected an obvious error FWA cannot rely on another obvious error. The application is an attempt to, in effect, appeal the correction decision.
Consideration
[22] Since the commencement of the Act, it has generally been the practice of FWA to include the nominal expiry date of an enterprise agreement in its decisions to approve the agreement. Whilst there is no statutory obligation to do so, I can see no reason to depart from that practice in respect of the Agreement. In this case the inclusion provides certainty to persons who would not otherwise know the exact date of lodgement.
[23] At the time of making the correction decision I was satisfied that the term of the agreement was nominally due to expire 2 years after the date of lodgement of the Agreement with FWA for approval - that date being 8 December 2011. In being so satisfied, I considered the written response from Boskalis’ legal representative dated 8 February 2011.
[24] After giving Boskalis an opportunity to be heard on the matter and after taking all that has been submitted by Boskalis and the MUA into account, I remain so satisfied. So much is clear from the plain meaning of subclause 8.1. The mutual intention of the parties, objectively determined, is based on the words that have been agreed. There is no ambiguity or uncertainty as the two comas make it clear that the important link is between the words ‘operate on and from the date of its lodgement with FWA’ and ‘remain in force for two years from that date.’ Therefore it is not appropriate to consider extrinsic material or the principles in Codelfa.
[25] Having formed that view, it is not necessary for me to consider whether or how FWA would have power to alter the correction decision.
[26] If Boskalis’ written submissions were taken as an application under s.602, I would have dismissed the application on the grounds that it lacked merit.
[27] The matter is adjourned sine die.
COMMISSIONER
Appearances:
S. McCarthy for Boskalis Australia Pty Ltd.
P. Pasfield for the Maritime Union of Australia.
Hearing details:
2011.
Sydney:
March 3.
Final written submissions:
2011.
March 25.
1 [2010] FWAA 4953, PR998951.
2 [2010] FWAA 4953, PR506731.
3 PN39.
4 PN71.
5 PN85.
6 [1982] HCA 24; (1982) 149 CLR 337 (11 May 1982), per Stephen, Mason, Aickin, Wilson and Brennan JJ.
7 At 352.
8 Ibid.
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