[2010] FWAFB 4801 |
FAIR WORK AUSTRALIA |
REASONS FOR DECISION |
Fair Work Act 2009
s.604—Appeal of decision
SENIOR DEPUTY PRESIDENT KAUFMAN |
MELBOURNE, 9 JULY 2010 |
Appeal against decision - Position requirements - Construction of terms - Extrinsic evidence - Custom and practice - Intention of parties - Dispute resolution.
[1] On 7 April 2010, in Perth, we granted permission to appeal to the Australian Workers’ Union - West Australia Branch, against the decision of Commissioner Williams that weighbridge duties form part of the duties of plant operators employed by CBH Ltd. under the Geraldton Plant Operators Union Collective Agreement 2008 (agreement). These are our reasons for quashing the Commissioner’s decision and finding that the position requirements of plant operators in cl 8 of the agreement do not require plant operators to carry out weighbridge duties.
[2] The AWU had applied for a dispute resolution process to be conducted in relation to a dispute between it and CBH that, by the terms of the agreement, may be resolved using a dispute resolution process conducted by the Australian Industrial Relations Commission (now Fair Work Australia by virtue of the transitional legislation). By virtue of the provisions of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 the matter was conducted pursuant to s.709 of the Workplace Relations Act 1996.
[3] Clause 22 of the agreement deals with dispute settlement, and by cl 22.2, it is clear that the process applies to any question, dispute or difficulty arising out of the operation of the agreement. Clause 22.7 empowers the Commission to exercise powers of conciliation and, if necessary, arbitration. The decision under appeal was one that arose from an arbitration.
[4] The issue in question can be simply put - Are weighbridge duties part of the plant operators’ duties under the agreement?
[5] Plant operators at the Geraldton port who are covered by the agreement are involved in loading of grain for shipping. With some minor exceptions, they have not been required to carry out weighbridge duties. It is not disputed that weighbridge duties are within their skills and competencies.
[6] The Commissioner set out the relevant clauses in his decision. On a literal reading of the position requirements of plant operators at cl 8.1, weighbridge duties seem to fall within that position description. The Commissioner found to that effect because he was of the view that, in the absence of ambiguity as to the meaning of cl 8, he was not permitted to consider any extrinsic material such as past custom and practice or what had transpired in the negotiations for the agreement or its predecessors.
[7] The reason that the Commissioner adopted that approach was because he considered that he was bound by authority not to have regard to extrinsic material. In so holding, the Commissioner erred.
[8] The Commissioner applied what he understood to be the reasoning of a Full Bench of the Australian Industrial Relations Commission in Swire. 1 He considered that the first question to be resolved was whether the relevant terms of the agreement are ambiguous and susceptible of more than one meaning. Having found that they were not, the Commissioner held that “[c]onsequently I am not able to consider any of the extrinsic evidence and information that the applicant has asked the Commission to consider such as custom and practice of the parties in the past or the negotiations leading up to the making of the Agreement.”
[9] We note that at first instance neither party argued that regard could not be had to extrinsic material in aid of ascertaining the true meaning of the clause in question. Arguably the commissioner denied the parties natural justice in not giving them an opportunity to address him on this issue. This would have amounted to error.
[10] On the appeal we were taken, by Mr M Cox of counsel, who appeared for the appellant, to many authorities to demonstrate that the Commissioner had misconstrued his role in ascertaining what the meaning was of the disputed clause.
[11] Swire was decided shortly after a decision in Watson 2, where Vice President Lawler also considered the approach to be taken in interpreting certified agreements. The Full Bench in Swire did not refer to the decision of Watson.
[12] Neither Swire nor Watson is authority for the proposition that in resolving the question of whether terms of an agreement are ambiguous and susceptible of more than one meaning, regard may not be held to extrinsic material. In so holding the commissioner erred. Because the manner in which agreements should be construed is in issue in this appeal, it is worthwhile extracting, in full but omitting footnotes, the distillation of the law by Vice President Lawler in Watson:
“[8] There are well established principles under the general law for the construction of contracts. Those principles are generally applicable in the construction of certified agreements. For example, in Telstra Corporation Ltd v CEPU a Full Bench of the Commission was concerned with applications to vary a number of certified agreements and, in the course of its decision, summarised the principles governing the resolution of ambiguity in a certified agreement:
“[33] The judgment of the High Court in Codelfa Construction Pty Ltd v State Rail Authority of NSW established widely accepted principles for resolving ambiguity in contracts. In that case Mason J stated the rule thus:
‘The true rule is that evidence of surrounding circumstance 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’
[34] In BP Australia Pty Ltd v Nyran Pty Ltd, Nicholson J distilled, by reference to Codelfa, the following points of principle for resolving ambiguity in contracts:
• 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;
• facts so notorious that knowledge of them is to be presumed;
• evidence of a matter in common contemplation and constituting a common assumption.
[35] After referring to the foregoing points of principle Nicholson J continued as follows:
‘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’”
[9] In Kucks v CSR Limited Madgwick J held:
“It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.
But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.”
[10] These remarks were made in the context of construing an award. However, Madgwick J’s approach has been adopted in relation to the construction of certified agreements. In Australasian Meat Industry Employees’ Union v Coles Supermarkets Australia Pty Ltd Northrop J observed:
“The increase in the number of certified agreements gives rise to an area of possibly greater dispute as to the construction of provisions contained in the agreements. The parties may adopt a multitude of different structures and methods of terminology. No common pattern may develop. Nevertheless certified agreements are to be construed adopting the same methodology as that used in construing awards. In Kucks v CSR Limited (1996) 66 IR 182 Madgwick J, sitting as a judge of the Industrial Relations Court of Australia, at 184 expressed his opinion on the legal principles to be applied in construing awards under the Act. I agree with that statement of principles. They have even stronger application to certified agreements.”
[11] This view was approved by the Full Court of the Federal Court in Ansett Australia Limited v Australian Licensed Aircraft Engineers’ Association.
[12] In United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board the Full Court of the Federal Court, in the context of construing a dispute resolution clause in a certified agreement, noted:
“The parties agree that the proper approach to the construction of industrial instruments was stated by Madgwick J in Kucks at 184. His Honour’s statement of the principles was followed by a Full Court in Ansett Australia Limited v Australian Licensed Aircraft Engineers’ Association [2003] FCAFC 209 at [8] and by two Justices of the High Court in Amcor Limited v Construction Forestry Mining & Energy Union [2005] HCA 10 at [96] per Kirby J and at [130] per Callinan J. That was the approach which was adopted by the learned primary judge.
A narrow or pedantic approach is not to be taken. The intention of the framers of the document is to be ascertained objectively, bearing in mind that they are likely to have been people of a practical bent of mind. Their intention may well have been expressed in ways likely to have been understood in the relevant industry, rather than in “legal niceties or jargon.”; see Kucks at 184.
Clearly enough, the language of the instrument must be construed in its context, having regard to the subject matter and the wording of the entire agreement: Short v FW Hercus Pty Limited [1993] FCA 51; (1993) 40 FCR 511 at 518. The context will include the statutory context in which the agreement is made.” (emphasis added)
[13] In Short v FW Hercus Pty Ltd Burchett J, with whom Drummond J agreed, considered whether inter alia, with whether it is legitimate, for the purpose of construing a clause of an award, to look at the history of the provision. After considering a number of authorities, Burchett J observed:
“No one doubts you must read any expression in its context. And if, for example, an expression was first created by a particularly respected draftsman for the purpose of stating the substance of a suggested term of an award, was then adopted in a number of subsequent clauses of awards dealing with the same general subject, and finally was adopted as a clause dealing with that same general subject in the award to be construed, the circumstances of the origin and use of the clause are plainly relevant to an understanding of what is likely to have been intended by its use. It is in those circumstances that the author of the award has inserted this particular clause into it, and they may fairly be regarded as having shaped his decision to do so. The rules of construction, Mason and Wilson JJ. said in Cooper Brookes (Wollongong) Proprietary Limited v. The Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297 at 320, are really rules of common sense. Common sense would be much offended by a refusal to look at the facts I have summarized. As Isaacs J. said in Australian Agricultural Company v. Federated Engine-Drivers and Firemen’s Association of Australasia (1913) 17 CLR 261 at 272, citing Lord Halsbury L.C.: “The time when, and the circumstances under which, an instrument is made, supply the best and surest mode of expounding it.”
The context of an expression may thus be much more than the words that are its immediate neighbours. Context may extend to the entire document of which it is a part, or to other documents with which there is an association. Context may also include, in some cases, ideas that gave rise to an expression in a document from which it has been taken. When the expression was transplanted, it may have brought with it some of the soil in which it once grew, retaining a special strength and colour in its new environment. There is no inherent necessity to read it as uprooted and stripped of every trace of its former significance, standing bare in alien ground. True, sometimes it does stand as if alone. But that should not be just assumed, in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used. Very frequently, perhaps most often, the immediate context is the clearest guide, but the court should not deny itself all other guidance in those cases where it can be seen that more is needed. In literature, Milton and Joyce could not be read in ignorance of the source of their language, nor should a legal document, including an award, be so read.
...Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language. “Sometimes”, McHugh J. said in Saraswati v. R (1991) 172 CLR 1 at 21, the purpose of legislation “can be discerned only by reference to the history of the legislation and the state of the law when it was enacted”. Awards must be in the same position.
But even if the language, read alone, appeared pellucidly clear, the tendency of recent decisions - and this is the other answer to the argument put - would seem to require the court to look at the full context. Only then will all the nuances of the language be perceived. The judgment of Mason J. (with which Stephen and Wilson JJ. expressed agreement) in Codelfa Construction Proprietary Limited v. State Rail Authority of New South Wales (1982) 149 CLR 337 at 347-353 contains an extended discussion of the principles upon which a court may take account, when construing a contract, of the circumstances surrounding the agreement of the parties upon those particular terms. In the course of that discussion, Mason J. suggested (at 350) that “perhaps ... the difference ... is more apparent than real” between the view that evidence is admissible only to resolve an ambiguity, not to raise it, and the view that extrinsic evidence is receivable both to raise and to resolve an ambiguity. He concluded (at 352):
“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 ... if the facts are notorious knowledge of them will be presumed.” (emphasis added)
The fact is that words are frequently susceptible of more than one meaning. Paradoxically, ambiguity may be born of the reader’s clarity of thought which perceives a potentiality for an alternative meaning. But in many cases only evidence of extrinsic facts can show that the potentiality has substance. The old case Macdonald v. Longbottom (1859) 1 El and El 977 (120 ER 1177), to which Mason J. referred, is an example, since there is nothing necessarily ambiguous in the expression “your wool” (indeed Erle J. at 986 described it as “most explicit”) - only evidence that at the time the vendor had both wool of his own growing, and also wool which he had bought in from others, could raise an ambiguity, while at the same time solving it once the other party was shown to have known the facts.
Mason J. returned to the subject in his dissenting judgment in K. and S. Lake City Freighters Proprietary Limited v. Gordon and Gotch Limited (1985) 157 CLR 309 at 315, when he said:
“Problems of legal interpretation are not solved satisfactorily by ritual incantations which emphasize the clarity of meaning which words have when viewed in isolation, divorced from their context. The modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise.”
This is a broad proposition, applicable to problems of construction generally, although it was put forward in the context of statutory interpretation. ...”
[14] While Short v FW Hercus Pty Ltd was concerned with the proper construction of a clause in an award, it is clear it is equally applicable to the construction of certified agreements as illustrated by the reliance placed upon it by the Full Court in United Firefighters’ Union of Australia in the passage set out above.
[15] In summary, the general principles governing the construction of contracts laid down by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales apply to the construction of industrial agreements. However, consistent with the approach in Kucks and Short v FW Hercus Pty Ltd, an industrial agreement must always be construed in context: the context of particular provisions within the agreement as a whole and the context in which the agreement was made including any relevant statutory or historical context. Extrinsic evidence as to the context in which the agreement was made, including the statutory and historical context, will be admissible to demonstrate the existence of ambiguity and or to resolve ambiguity.”
[13] Recently, Logan, J, after citing the passage from Kucks succinctly stated:
“The starting point must always be the language employed by the parties to an industrial agreement but industrial context and purpose are always relevant when construing that language...” 3
[14] The extract from Watson and the approach of Logan, J, inform the manner in which we approach the test of construing the agreement and leads to the conclusion that regard must be had to extrinsic material in order that the meaning of the clause in question may properly be understood.
[15] Clause 8 of the agreement sets out the requirements for the position of a plant operator. It relevantly reads:
“8. POSITION REQUIREMENTS
8.1 This Agreement applies to employees employed as Plant Operators. The position requires the employees to carry out various functions and operations in co-operation with other plant operators, workshop personnel, shareholders, clients and the Manager of Geraldton Grain Terminal. These include the receival, storage, caretaking and out loading of grain and other products. The employees will also be required to perform other duties as necessary, within the employees classification level of competence as long as safe and not designed to de-skill for the efficient operations of the Geraldton Grain Terminal.
...
8.3 It is also desirable that employees undertake training and train other employees as required by the Company to ensure that the appropriate skills are acquired for the effective operation of the Geraldton Grain Terminal.
8.4 Working as a team is an ongoing commitment by all employees. Accordingly the employees will be responsible for assisting all team members and performing such duties and using such equipment as is relevant to the position and reasonably within the skills, competence and training of the employee.
...”
[16] It is readily apparent that no specific mention is made of the performance of weighbridge duties amongst the functions and operations required of plant operators as set out in cl 8. It is, however, common ground that weighbridge functions are within the skills and competencies of plant operators; indeed, operation of the weighbridge is a task that can be, and was until recently, performed by persons of a lower classification than that of plant operator. It is also common ground that it is necessary that weighbridge functions are performed in the “receival, storage, caretaking and out loading of grain and other products.”
[17] In the course of his reasons the Commissioner outlined some of the background materials to which he concluded he could not have regard in interpreting the clause in question. He noted that plant operators covered by the agreement have historically carried out work at the Geraldton port involving the loading of grain for shipping, but that customarily they have not been required to carry out weighbridge duties. The CBH training documentation and plant operators’ manual do not expressly refer to the performance of weighbridge duties by plant operators. Plant operators at Geraldton have occasionally carried out such duties, but only on an ad hoc basis, for a specific purpose and pursuant to specific arrangements made between the plant operators and CBH and which were recorded in memoranda. During the negotiations for the agreement the AWU offered to include in the proposed agreement provisions for plant operators to perform weighbridge duties (obviously at a price) but CBH did not agree to that. There was also evidence that in the 2004 negotiations for the predecessor agreement, CBH had proposed that plant operators take on weighbridge duties, but then withdrew that proposal. The Commissioner also noted that weighbridge work at the Geraldton port has been historically performed by other employees who are covered by the Clerks (Grain Handling) Award 1977. Further, grain cannot be received or out loaded without being weighed, and to do so would be contrary to the Bulk Handling Act 1967 (WA). The contentious words in cl 8 of the agreement also appear in other agreements covering plant operators at Kwinana, Albany and Esperance ports, at each of which ports weighbridge work is performed by plant operators covered by those agreements.
[18] Having regard to the matters to which we have alluded, we agree with the submissions of the appellant that it was the objectively discernable intention of the parties in the formation of the agreement that weighbridge duties would not form part of plant operators’ duties under the agreement. Considered objectively, the extrinsic material establishes that the intention of the parties was not to have weighbridge duties included in the scope of operators’ duties.
[19] CBH submitted that on the face of the agreement it clearly encompassed weighbridge duties because they are part and parcel of the receival and out loading of grain. CBH also placed considerable weight on the fact that plant operators perform weighbridge work at Kwinana, Albany and Esperance where the relevant clauses of the operative agreements are in similar terms to cl 8 of the agreement.
[20] Whilst the points made by CBH are sound, in our view they emphasize two things - the ambiguity of the clause, despite its superficial lucidity, and the importance of having regard to the context in which an agreement was negotiated. In our view, neither of the matters referred to by CBH derogates from the meaning of the clause as intended by the parties during their negotiations. The extrinsic material, particularly the negotiations in 2004, as well as for the present agreement, about weighbridge duties, inexorably leads to the conclusion that those duties are not contemplated by the agreement as being part of the duties of plant operators. That there is no specific reference to those duties at cl 8 is consistent with that intention. Here, as contemplated by Burchett, J in Short v FW Hercus Pty Ltd the extrinsic evidence is admissible both to raise and resolve an ambiguity. 4
[21] We formed the view that it was in the public interest to grant leave to appeal in circumstances where the Commissioner had misconceived his ability to have regard to extrinsic material and where it is at least arguable that there is no clear authority on the issue at full bench level. We also granted leave on the conventional ground of demonstrable error.
[22] CBH also argued that there was no competent appeal before us because the appellant had not complied with the Fair Work Australia Rules 2009 that require that three copies of a paginated appeal book be lodged at the same time as the notice of appeal is lodged. Although it is important that the rules be complied with, in the circumstances we dispensed with those requirements.
SENIOR DEPUTY PRESIDENT
Appearances:
M. Cox, of counsel, for the appellant.
A. Cameron for the respondent.
Hearing details:
2010
PERTH
7 APRIL
1 Swire Cold Storage Pty Ltd (Victorian Transport Workers) Agreement 2005 [2008] AIRCFB 397 at [33]
2 Kenneth Watson & ors v ACT Department of Disability Housing and Community Services (2008) 171 IR 392 at [8] - [14]; [2008] AIRC 29
3 Commonwealth, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited [2010] FCA 591 at [39].
4 (1993) 40 FCR 511 at p.519
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