Fair Work Act 2009
s.604—Appeal of decision

The Australian Workers’ Union as authorised representative of several employees covered by the Agreement
v
Orica Australia Pty Ltd
(C2022/1667)

Appeal against decision [2022] FWC 345 of Deputy President Beaumont at Perth on 17 February 2022 in matter number C2021/6643

[1] Clause 4.2.4 of the Orica Kalgoorlie Reserve Site Agreement 2013 (Agreement) provides that “Salary increases will be made throughout the lifetime of this Agreement on January 1 in accordance with the Orica Continuous Improvement policy (CI) or 3.0%, whichever is higher.” The Agreement passed its nominal expiry date on 31 March 2017 but continues to operate. The Agreement applies to Orica Australia Pty Ltd (Orica), and its employees employed in its Orica Kalgoorlie Manufacturing and Magazine Services, located at the Emin St Explosives Reserve in Kalgoorlie Western Australia in the classifications specified in the Agreement. The Australian Workers’ Union (AWU) is not covered by the Agreement but brought the dispute under s 739 of the Act in its own name. The issue in dispute concerned the construction of clause 4.2.4 of the Agreement and whether on its proper construction, clause 4.2.3 conferred on employees covered by the Agreement, an entitlement to salary increases of at least 3% at the commencement of each year until such time that the Agreement is terminated or replaced or until the nominal expiry date of Agreement.

[2] Deputy President Beaumont determined the dispute by arbitration and decided that, on its proper construction, clause 4.2.3 conferred on employees covered by the Agreement an entitlement to salary increases of at least 3% at the commencement of each year until the nominal expiry date of Agreement.¹ The AWU appeals that decision.

[3] The dispute application lodged by the AWU contended inter alia that the AWU is the representative of members employed by Orica who are covered by the Agreement. No member covered by the Agreement is identified in the application and there was no evidence about this below. The Statement of Agreed Facts filed by the parties in the proceeding below says nothing about the parties to the dispute.

[4] The dispute settlement term provides that “by agreement between the parties at that time, the parties may ask FWA to arbitrate to settle the dispute”. The reference to the “parties” is a reference to the parties to the “dispute arising in a workplace covered by this Agreement or in respect of the application of the National Employment Standards”. The proceeding below seems to have been conducted as though the parties to the dispute were the AWU and Orica and that these “parties” agreed to the Commission arbitrating the dispute.

[5] The AWU and Orica have since accepted that the AWU could not be a party to the dispute and could not bring the initial application, nor agree to an arbitration. The AWU might, however, nevertheless have standing to appeal given that its members are affected by the decision and so might properly be regarded as a person who is aggrieved by the decision. The AWU would require permission to appeal as it could not rely upon the right of appeal (which we later discuss) found in the dispute settlement procedure of the Agreement. However, for the avoidance of doubt, the AWU and Orica have agreed on a course of action to rectify the basis upon which the initial application was brought to avoid any debate about the persons upon whom the outcome of the arbitration is binding. Given the unusual circumstances, we consider the course proposed is appropriate. Orders will be made amending the title of the parties to the initial proceeding and those on appeal and some ancillary orders later described directed to protecting from disclosure the employees who are parties to the dispute and with which Orica agrees.

The decision

[6] The Deputy President set out some relevant background, the agreed questions to be determined and a summary of the submissions advance by the parties at [1]-[45] of the decision. Thereafter, the Deputy President discussed the source and nature of the Commission’s power to arbitrate the dispute and the principles applicable to the task of construing an enterprise agreement. At [52]-[54], the Deputy President notes that the expression “lifetime” used in clause 4.2.3 of the Agreement could have variable meanings, and that while expressions such as ‘term’, ‘nominal term’, ‘nominally expire’, and ‘nominal expiry date’ are also used in the Agreement, caution should be exercised in too readily concluding that inconsistent use of language means that different meanings were intended.

[7] At [55] of the decision the Deputy President observes that in construing an enterprise agreement, regard may be had to evidence of surrounding circumstances to assist in determining whether an ambiguity exists, and at [56]-[76] she discusses various materials related to the course of bargaining for the Agreement and their significance on the interpretive task. At [77], the Deputy President observes that admissible extrinsic material may be used to aid the interpretation of a provision in an agreement, but it cannot be used to disregard or rewrite the provision to give effect to an externally derived conception of the parties’ intention or purpose.

[8] At [78] the Deputy President observes that it is justifiable to read an enterprise agreement to give effect to its evident purpose, taking into account that persons drafting enterprise agreements were likely of a practical bent and expressed intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment, despite mere inconsistencies or infelicities of expression which might tend to some other reading.

[9] At [79] the Deputy President discusses the admissibility of post agreement conduct as an aid to construction, and thereafter at [80]-[86] she discusses the significance of conduct in subsequent bargaining which did not lead to a new agreement and the lack of action since the nominal expiry date of the Agreement by the AWU or employees to agitate dispute about salary increases. The Deputy President accepted that conduct during subsequent bargaining established that there was a meeting of minds and a consensus between the AWU and Orica that the entitlement to salary increases provided by subclause 4.2.3 ceased to apply after the nominal expiry date of the Agreement. The Deputy President also concluded that lack of action by AWU or employees to agitate dispute about salary increases is to be characterised as post-agreement conduct amounting to more than the mere absence of a complaint about the non-payment of such increases. It must be inferred from the conclusion at [86] that the Deputy President regarded this as evidence of a post agreement common understanding about the effect of subclause 4.2.3.

[10] At [87]-[88] and as we earlier noted, the Deputy President concluded that on its proper construction, subclause 4.2.3 of the Agreement confers on the employees an entitlement to salary increases of at least 3% at the commencement of each year until the nominal expiry date of the Agreement.

Appeal grounds

[11] The notice of appeal sets out six grounds of appeal variously contending error in the Deputy President’s conclusion as to the proper construction of subclause 4.2.3 and in her reasoning process. The grounds of appeal need not be reproduced. The essence of the AWU’s appeal is that the construction adopted by the Deputy President of subclause 4.2.3 was wrong with the consequence that her answer to the agreed question was also wrong.

[12] The decision against which the appeal has been brought concerns the proper construction of the Agreement. The decision did not involve the exercise of a discretion. The answer given by the Deputy President is either correct or it was not. The appeal is to be determined by reference to that which has previously been described as the ‘correctness standard’. Therefore, if the answer given by the Deputy President was correct, then any error made in the reasoning process will not result in the appeal being upheld.

Consideration

[13] Before turning to consider the proper construction of the Agreement, we wish to make some observations about aspects of the Deputy President’s reasoning as disclosed in the decision and raised in three of the appeal grounds (grounds 2, 5 and 6).

[14] First, by appeal ground 2, the AWU contends that the Deputy President erred in considering material to which objection had been taken on relevance grounds and which was not tendered as evidence.² That material was a record or minutes of a bargaining meeting on 21 June 2017 between the AWU, Orica and employees as part of the negotiations for a new agreement. The Deputy President referred to the material at [83]-[84] of her decision, and at [85]-[86], the Deputy President appears to rely on the material as establishing or supporting a conclusion that:

•  There was as a meeting of minds and a consensus between the AWU and Orica that the entitlement to salary increases provided by subclause 4.2.3 ceased to apply after the nominal expiry date of the Agreement; and

•  The absence of complaint about non-payment of the increase, ceases to be merely common inadvertence, because Orica alerted those present at the meeting on 21 June 2017 as to the approach it adopted in respect of subclause 4.2.3 and no action was taken then or for four years thereafter.

[15] Orica accepts that the meeting minutes were not in evidence and that the Deputy President was not at liberty to rely on the minutes. Orica also points out that the Deputy President records at [85] her agreement with its submission as to the effect of the minutes though it made no such submission. However, Orica contends that the Deputy President made no finding that the minutes reflected a mutual intention in relation to the interpretation of clause 4.2.3 when it was made and, in any event, it is unclear that the minutes and the lack of ‘agitation’ about the issue were of any central importance to the Deputy President’s conclusion about the proper interpretation of the clause. We do not agree. Paragraphs [85]-[86] of the decision immediately follow a discussion about the use to which “post-contractual conduct” may be put “as an aid to the construction” of the Agreement. It seems plain enough that the Deputy President regarded the content of the minutes as post contractual conduct evincing a common understanding as to the construction of clause 4.2.3.

[16] The error in reasoning disclosed is threefold.

•  The Deputy President’s reliance on the material not in evidence and on which Orica did not rely was an error, as was the Deputy President’s purported reliance on and acceptance of an Orica submission that it never made.

•  Even if post agreement conduct was admissible as an aid to construction (about which we say more below), the Deputy President relied on the conduct of the AWU. As we noted above, the AWU is not covered by the Agreement, and was not involved in bargaining for the Agreement. Its conduct says nothing about the parties’ common understanding – as self-evidently, the AWU is not a party. Similarly, even if the meeting minutes disclose a meeting of minds and a consensus between the AWU and Orica, that meeting of minds is not as between “parties” and thus cannot say anything about the parties’ common understanding. These matters also disclose error in the manner contended by ground 5 and the second part of ground 6 of the notice of appeal.

•  The Deputy President wrongly relied on the lack of complaint by employees (who are not identified), because as Gray J explained in Shop Distributive and Allied Employees’ Association v Woolworths Limited³ a difficulty in relying on evidence about the conduct of a party to establish a common understating is the absence of any explanation for the conduct. The reason for the conduct might have been ‘inadvertence’ or an ‘act of generosity’ from which persons has now resiled.⁴ The mere fact that something was done (or not done) in the past is not ‘evidence of a settled interpretation, of which the parties had a common understanding’.⁵ In the proceeding before the Deputy President, there was no evidence at all from any employee.

[17] Second, despite the suggestion in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union’ known as the Australian Manufacturing Workers Union (AMWU) v Berri Pty Limited⁶ that post agreement conduct may, in particular circumstances, be admissible as part of the surrounding circumstances to establish a common understanding of the parties,⁷ for the following reasons, we do not consider that evidence of post agreement conduct is admissible for that purpose.

•  As stated by the Full Court in Toyota Motor Corporation Australia Ltd v Marmara 8, an enterprise agreement is an agreement in name only and it obtains statutory force upon approval by the Commission. There is a real difficulty in seeking to assign post agreement conduct of persons covered by the agreement to “parties” since enterprise agreements are not made by parties but rather are made when one or more employers asks employees to vote to approve a proposed agreement and a majority of employees of a voting cohort of employees, vote to approve it. All the more so when persons now covered were not or might not have been employed when the agreement was made or as here where the conduct (or a large part of it) on which reliance was placed was conduct of the AWU which, as already noted was not a party.

•  More relevant, is that in Berri it was evident the Full Bench relied on the judgment in Spunwill Pty Ltd v BAB Pty Ltd⁹ in order to formulate the principle set out at [114, 15] of that decision.¹⁰ However, the NSW Court of Appeal in Magill v National Australia Bank Limited¹¹ expressly rejected the approach to post contractual conduct adopted in Spunwill and preferred the view of Bryson J in Sportsvision Australia Pty Limited v Tallglen Pty Limited.¹² In Magill, the Court of Appeal considered the reasoning of Lord Reid in James Miller & Partners Limited v Whitworth Street Estates (Manchester) Limited¹³ to be “unanswerable”. In Miller His Lordship said:

“I must say that I had thought that it is now well settled that it is not legitimate to use as an aid in the construction of the contract anything which the parties said or did after it was made. Otherwise one might have the result that a contract meant one thing the day it was signed, but by reason of subsequent events meant something different a month or year later.”¹⁴

•  Magill was not brought to the attention of the Full Bench in Berri. Magill is in our view a correct statement of the law. 15 Moreover, a focus on the text of the instrument made rather than the manner in which the parties actually conducted themselves in their relationship after it was made was also at the heart of the judgment of the plurality in ZG Operations Australia Pty Ltd v Jamsek.¹⁶

[18] The construction of provisions of an enterprise agreement begins with a consideration of the ordinary meaning of the words, read in context, taking account of the evident purpose of the provisions or expressions being construed. Context may be found in the provisions of the agreement taken as a whole, or in their arrangement and place in the agreement. The statutory framework under which the agreement is made or in which it operates may also provide context, as might an antecedent instrument or instruments from which a particular provision or provisions might have been derived. The industrial context in which an agreement is made and operates is also relevant. Thus, the language of an agreement is to be understood in the light of its industrial context and purpose, not in a vacuum or divorced from industrial realities. But context is not itself an end, and a consideration of the language contained in the text of the agreement remains the starting point and the end point to the task of construction. A purposive approach to interpretation is appropriate, not a narrow or pedantic approach.¹⁷

[19] Orica accepts that the Deputy President’s approach to some aspects of the evidence before her reveals error but says that such errors as are to be found in her reasons did not lead to an incorrect decision. We agree. The Deputy President correctly answered the agreed question.

[20] Although the phrase “the lifetime of this Agreement” is plainly ambiguous – as the Deputy President correctly concluded – there are several textual and contextual matters which make clear that subclause 4.2.3 of the Agreement confers the employees an entitlement to salary increases of at least 3% at the commencement of each year only until the nominal expiry date of Agreement.

[21] First to the text of the Agreement and the context found in its various provisions. Clause 1.3 provides that it “will nominally expire on 31 March 2017” and that at the “end of the nominal term” the Agreement “will continue until replaced by a new agreement or terminated in accordance with” the Fair Work Act 2009 (Cth) (Act). This provision reflects the approval requirement in s 186(5) and the effect of ss 54 and 58.

[22] Clause 1.6 of the Agreement deals with ‘no extra claims’ and provides that “[u]p to the nominal expiry date of this Agreement, the parties agree that they will not pursue any extra claims” of an identified kind and that “[u]p to the nominal expiry date of this Agreement, the parties agree that they will not engage in any form of industrial action”. Plainly, the commitment to no extra claims in clause 1.6 is a product of the fact that the Agreement reflects the settlement of all employment terms until the Agreement’s nominal expiry date, after which claims may be pursued.

[23] Subclause 4.2.3 of the Agreement is part of a substantive provision titled “Remuneration” and provides:

4.2.3 Salary increases will be made throughout the lifetime of this Agreement on January 1 in accordance with the Orica Continuous Improvement policy (CI) or 3.0%, whichever is higher. CI provides for automatic yearly adjustments on [sic] in a climate of continuous improvement. The principles of continuous improvement embody a commitment of continuous supply to customers and continuous implementation of improvements in customer service. The CI rate is set by the business.

[24] Clause 8 of the Agreement deals with a consultative committee and provides that during the “term of this Agreement a Consultative Committee with representation of the employees covered by this Agreement will be established” and that the Committee “will meet on an as required basis”, but “the first meeting will be held within three months of the commencement date” of the Agreement.

[25] As should be evident from the above, the Agreement uses different terms or phrases to describe a period of time. The fact that such terms are used at all suggested the various terms used are intended to operate as a limitation or as an out marker of time during which some obligations pertain or must be fulfilled (non-extra claims, no industrial action) and something must be done (establish a consultative committee). Once the time passes the obligations cease. Reading subclause 4.2.3 in the context of these other provisions of the Agreement suggests that the phrase “throughout the lifetime of this Agreement” is also intended as a limitation on the period the obligation to increase salaries on 1 January continues.

[26] Moreover, the phrase “throughout the lifetime of this Agreement” must be given work to do. If its intended purpose is to continue the obligation to increase salaries while the agreement is in operation, the phrase is superfluous. It may reasonably be presumed that those making the Agreement intended all words in the Agreement to have meaning and legal effect and that nothing is superfluous. This also suggests that the phrase is intended to operate as a limitation on the duration of the obligation to increase salaries annually. Indeed, were the opposite correct, a more apt phrase might have been “during (or throughout) the operation of this Agreement”.

[27] That the phrase in issue is intended as a limiting phrase also finds support in the ‘no extra claims’ provision. It would be an odd intended outcome, if employees are able to pursue extra claims for wage increases, supported by industrial action after the nominal expiry date of the Agreement had passed but also continue to be entitled to have their salaries increase on 1 January every year by a minimum of 3%. The more likely mutually intended quid pro quo, as reflected in the provisions of the Agreement, is that the Agreement contains improvements, including salary increases each year until the nominal expiry date of the Agreement and until that date, no extra claims or industrial action will be pursued.

[28] The Agreement is made in a statutory context. Part 2-4 of the Act contains an enterprise bargaining and agreement making framework. Under that framework, enterprise agreements that are made are to have a specified finite nominal duration of not more than 4 years (s 186(5)).

[29] Claims made by employees in connection with a new agreement may, subject to some preconditions, be supported by organising and taking protected industrial action (Div 2 of Part 3-3). However once an agreement has been approved by the Commission, no industrial action may be organised or taken by any person covered by the agreement, until the specified nominal duration of the agreement has passed (s 417).

[30] The Agreement was made in this context, and the provisions of the Agreement discussed above reflect this statutory context which is given expression in the ‘no extra claims’ provision. It is unsurprising that the Agreement would fix improvements in salaries to be made only during its nominal life and not beyond. Improvements to be made thereafter would be the subject of claims, may be bargained for, and may be supported by protected industrial action.

[31] Thus, the text of the Agreement read in context invariably leads to the conclusion that the phrase “lifetime of the Agreement” in clause 4.2.3 of the Agreement should be given a meaning which is informed by and directed towards achieving its evident purpose, which is a limiting purpose – to fix wage increases of at least 3% on 1 January every year but only during the nominal life of the Agreement.

[32] Clause 2.1 of the Agreement contains a dispute settlement procedure which relevantly provides:

(d) If the matter remains unresolved, either party may refer the dispute to Fair Work Australia (FWA) for assistance in resolving the matter via conciliation. If the matter still remains unresolved after conciliation, by agreement between the parties at that time, the parties may ask FWA to arbitrate to settle the dispute, with leave reserved for either party to appeal such arbitration decision to a Full Bench of FWA.

[33] The AWU contends that this provision allows an appeal as of right, whereas Orica contends to the contrary and says the provision confirms only that the procedure does not preclude an appeal. The phrase ‘leave reserved’ will take its meaning from the context in which it is used. An appeal under s 604 of the Act may only be brought with the permission of the Commission, including an appeal against a decision made in the exercise of power under s 739(4). In this context the conferral of “leave reserved for either party to appeal such arbitration decision” suggests more than mere confirmation of a capacity to appeal with permission. It confers a right of appeal. But if permission to appeal were necessary, we would grant it to allow us to take the corrective steps necessary to regularise the parties to the dispute and thus the parties bound by the exercise of private arbitration power and this appeal.

[34] For the reasons given, the Deputy President correctly answered the question posed and the appeal should be dismissed.

Orders

[35] We order:

1. The applicant identified in C2021/6643 be amended to “The Australian Workers’ Union as authorised representative of several employees covered by the Agreement”.

2. The appellant identified in C2022/1667 be amended to “The Australian Workers’ Union as authorised representative of several employees covered by the Agreement”.

3. The names and details of the employees referred to in orders 1 and 2 are only to be disclosed to the Commission and not the Respondent or its representatives.

4. The names and details of the employees referred to in orders 1 and 2 shall be kept confidential and will not be published or made available for inspection to any person.

5. The appeal is dismissed.

DEPUTY PRESIDENT

Appearances:

E Ong of the AWU for the appellant
D Williams, Solicitor for the respondent

Hearing details:

2022
Melbourne (by Video)
20 April

Printed by authority of the Commonwealth Government Printer

<PR742340>

1 The Australian Workers’ Union v Orica Australia Pty Ltd [2022] FWC 345 at [35]

2 Appeal Book 27-28 at Transcript PN47-PN56, PN72

3 [2006] FCA 616; (2006) 151 FCR 513

4 Ibid at [32]

5 Ibid

6 [2017] FWCFB 3005

7 Ibid at [101]-[108], and [114, 15]

 8   (2014) 222 FCR 152 at [88] – [89]

9 (1994) 36 NSWLR 290 at 304

10 See [2017] FWCFB 3005 at [106]-[107]

11 [2001] NSWCA 221

12 (1998) 44 NSWLR 103

13 [1970] AC 583

14 Ibid at 603

 15   See also Agricultural and Rural Finance Pty Limited v Gardiner (2008) 238 CLR 570; [2008] HCA 57 at [35] (Gummow, Hayne and Kiefel JJ), and Lederberger and Scheiner v Mediterranean Olives Financial Pty Ltd (2009) 38 VR 509; [2009] VSCA 262 at [26] (Nettle JA, Redlich JA, Beach AJA).

16 [2022] HCA 2

17 WorkPac Pty Ltd v Skene [2018] FCAFC 131 at [197] and the authorities referred to therein; see also King v Melbourne Vicentre Swimming Club Inc [2020] FCA 1173 at [122]-[130] and the authorities referred to therein (The analysis of the principles of construction set out therein were not disturbed on appeal: see King v Melbourne Vicentre Swimming Club Inc [2021 FCAFC 123, 308 IR 171 at [40]-[43])