[2017] FWCFB 2600

The attached document replaces the document previously issued with the above code on 11 May 2017.

Correction made to appearances at [3] and to the appearances listed on the final page.

Patrick Barkachi

Associate to Vice President Catanzariti

Dated 11 May 2017

[2017] FWCFB 2600 [Note: a correction has been issued to this document]


Fair Work Act 2009

s.604 - Appeal of decisions

Kentz Pty Ltd
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia


SYDNEY, 11 MAY 2017

Appeal against decision [2017] FWC 376 of Comissioner Bissett at Melbourne on 2 February 2017 in matter number C2016/4384.

[1] On 2 February 2017 Commissioner Bissett handed down a decision 1 in relation to an application by the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) to deal with a dispute in accordance with the dispute settlement procedure in the Kentz Pty Ltd Ichthys Onshore Construction Greenfields Agreement2 (Agreement).

[2] On 22 February 2017 a notice of appeal was filed by Kentz Pty Ltd (Appellant). The three grounds of appeal were that the Commissioner erred in interpreting cl.19(a) of the agreement in various respects. The Commissioner concluded that the Appellant can only comply with cl.19(a) by making the required payments into the insurance schemes described in cl.19(a), or by reaching agreement with the parties about a different scheme 3:

[3] We heard the appeal on 2 May 2017 and reserved our Decision. At the hearing Ms. C Howell, of Counsel, and Mr. L Tiley, solicitor, sought permission to appear for the Respondent. Mr R Dalton, of counsel, and Mr J Parkinson, solicitor, sought permission to appear for the Appellant. Given the complexity of the matter, and having regard to s 596 of the Act, permission was granted to both parties to be represented. Written submissions were filed in accordance with directions, and the matter was listed before us for permission to appeal, and the appeal.

The Appeal

Authorities on appeal

[4] In House v The King, Dixon, Evatt and McTiernan JJ stated that:

Authorities on interpreting an agreement

[5] We are guided by the most recent High Court authority on the interpretation of enterprise agreements, Amcor Ltd v. CFMEU which is binding on us. In that decision Gummow, Hayne and Heydon JJ considered the interpretation of an enterprise agreement and said: 5

[6] Kirby J said:

[7] Callinan J said that there was substance in the observations of Madgwick J in Kucks v CSR Limited Ltd  (Kucks). He then said:

[8] In Kucks, following the passage quoted above, Madgwick J went on to say:

[9] In AMIEU v Golden Cockerel Pty Ltd 7 (“Golden Cockerel”) a Full Bench of the Commission provided a useful summary of the authorities, which we follow8. It said:


[10] Both parties filed detailed submissions, which we have considered. By way of a brief summary, the appellant submitted that the Commissioner’s decision was in error in a number of respects, including the distinction drawn between ‘insurer and ‘insurance’ and advanced its preferable construction of ‘approved insurer’ in clause 19(a). It took issue with the construction of the term ‘such as’ taken by the Commissioner, and submitted that the construction advanced by the respondent and Commissioner would mean that the agreement of all the parties to a policy product would be required. The respondent submitted that permission to appeal should not be granted because the Commissioner’s decision was correct and there was no arguable error, and other matters.

Consideration – Permission to Appeal

[11] The FWC will grant permission to appeal only if it is in the public interest to do so. 9

The test of assessing whether a matter is in the public interest is discretionary and involves a broad value judgement. 10 In GlaxoSmithKline Australia Pty Ltd v Colin Makin,11 the Full Bench summarised the test for determining the public interest as follows:

[12] Alternately, the other grounds for granting permission to appeal is that the decision is attended with sufficient doubt to warrant its reconsideration or that substantial injustice may result if leave is refused. 12

[13] In determining whether permission to appeal should be granted we have reviewed and considered all material filed by the parties including all submissions, correspondence and relevant authorities.

[14] We consider it is in the public interest to grant permission to appeal. The Decision at first instance fails to consider all the relevant evidence admitted to the Commission and as a result, the Decision is attended with sufficient doubt to warrant its reconsideration.

Consideration – The Appeal

[15] An appeal under s.604 of the Act is an appeal by way of re-hearing, accordingly, we re-heard the submissions put by both parties, and have considered the evidence admitted by the Commission at first instance, but not relied upon in the Decision under appeal.

[16] The appeal turned on the interpretation of clause 19(a) of the agreement. That clause is contained in clause 19 which provides:

[17] Clause 19(a) is susceptible to a range of different interpretations. The clause refers to an ‘approved insurer’, but does not provide who approves the insurer or what determines the insurer to be ‘approved’, and the term ‘insurer’ is not defined. The Appellant interpreted the term ‘insurer’ as the party with whom the insurance contract is entered into 13. The Respondent interpreted the term in conjunction with other parts of the clause, to mean the agreed insurance policies which are listed, or other policies agreed upon by the parties14. The appellant interpreted the term ‘approved’ as approved by APRA15. The Respondent interpreted the term ‘approved’ as agreed by the trade union party or parties to the agreement. The term ‘such as’ was interpreted by the Appellant as examples of the kind of insurance policy offerings that may be taken out by Kentz16, while the Respondent interpreted the term as referring to insurers who were agreed on by the relevant parties17. There is something to be said for many of these interpretations, and overall the plain and ordinary meaning of the words, read properly in context, does not enable us to reach a conclusion as to the meaning of the clause. The clause is not a riddle, wrapped in a mystery, inside an enigma, although at some points in the proceedings it perhaps threatened to become so. It is fair to say that the parties and the Commission struggled to make sense of the ordinary meaning of the words. The clause is ambiguous.

[18] Given that the term is ambiguous, we have decided to refer to the evidence tendered by the respondent about the negotiations that led to clause 19(a), consistent with the guidance given in Golden Cockerel, which refers to the admission of evidence of the surrounding circumstances when the agreement was negotiated. Kentz made objections about this evidence, but did not elect to cross examine the witnesses called by the respondent, and did not call evidence itself. The evidence was admitted 18.

[19] Mr Peter Ong, Assistant Secretary of the CEPU (Electrical Division, Queensland and Northern Territory Divisional Branch) provided two witness statements, the first of which included the following:

[20] In his second witness statement Mr.Ong stated:

[21] Mr Sheldon Jacka, HR Manager for the Berries Category of the Costa Group, who was present at the time of negotiations with Kentz, said::

[22] The Appellant objected to this evidence. It submitted that Mr.Jacka’s and Mr.Ong’s evidence was “subjective understanding and expectations in prior negotiations”, hearsay, and other matters 19. The Appellant also submitted that the evidence was susceptible to other interpretations, and that there is no evidence as to the view of other unions which are party to the agreement.

[23] However the evidence of Mr.Ong and Mr.Jack was not tested in cross examination or by other evidence led by the employer. We see nothing implausible in the evidence on its face. On its face it is a statement as to the understanding of the parties about the operation of clause 19(a), and it is with respect relatively clear in nature. The evidence is limited to the understanding of Kentz and the respondent about the meaning of the clause, but this is of limited significance. There is no evidence from other unions to the contrary. In fact the respondent also announced an appearance on behalf of the AMWU, which is another party to the agreement. We are in the circumstances entitled to have regard to that evidence, and we do so.

[24] We conclude that the parties to the agreement referred to in the evidence understood while negotiating the agreement, that clause 19 provided that an employer had to take out income protection insurance using one of the insurance products referred to in clause 19(a)(1) – (3), unless agreement was reached between the parties to the agreement.

[25] We conclude that the proper interpretation of clause 19(a), which is ambiguous, is that the reference in clause 19(a) to ‘an approved insurer’ is a reference to an income protection insurance product of one of the named insurance bodies in clause 19(a)(1) – (3), or to another insurance product which is agreed between the parties to the agreement.

[26] We note that the Commission at first instance adopted a course of reasoning, based on the alleged ordinary meaning of clause 19(a), without reliance on the evidence of the surrounding circumstances when the agreement was negotiated. The decision does not clearly indicate that the clause is ambiguous and may have proceeded on the basis that it was not ambiguous, and that the meaning of the clause could be ascertained simply from consideration of the meaning of the words used 20. We respectfully disagree. We have not been able to adopt the reasoning taken at first instance. Further, the ultimate conclusions that we have reached are similar to those reached at first instance, but with respect we have not again adopted phrases such as ‘default products’, which are not used in the clause but is used in the decision under appeal. These are important differences, and we have decided that they are errors within House v. King.

[27] Finally, the problem of poor drafting of enterprise agreements is one that frequently occurs in Commission proceedings. The parties then quite naturally adopt interpretations which favour their interest, and a refusal to compromise leads to litigation of this sort. The evidence about negotiation of this agreement before us does not indicate that the obvious defects in drafting arose from difficult negotiations in which this was the last matter to be drafted, or where the parties attempted to paper over differences with language susceptible to mutually incompatible meanings, or some other similar explanation. Rather, the negotiations while genuine were, on the evidence before us, more in the nature of explanations of the meaning of an agreement clause or agreement which was a ‘pattern agreement’ applying to many employers in the industry. The parties to the agreement did not draft the clause for this enterprise but rather adopted it after discussions and explanation. The likely explanation for the poor drafting is that provided in Kucks as quoted earlier. It is perhaps regrettable that such an agreement is widespread in nature and that more attention was not focussed on clear drafting.


[28] Permission to appeal is granted. For the reasons given we quash the decision under appeal to the extent that it deals with clause 19(a).

[29] At appeal, we re-heard the material admitted by the Commission at first-instance and the submissions of both parties.

[30] We find that the reference to ‘approved insurer’ in clause 19(a), is a reference to an income protection insurance product of one of the named insurance bodies in clause 19(a)(1) – (3), or to another insurance product which is agreed upon by the parties to the Agreement.



R. Dalton, of Counsel, for the Appellant

J. Parkinson, Solicitor, for the Appellant

C. Howell, of Counsel, for the Respondent

L. Tiley, Solicitor, for the Respondent

Hearing details:

May 2



 1   [2017] FWC 376.

 2   [2014] FWCA 6641.

 3   Ibid paragraphs 33-48, 80.

 4   (1936) 55 CLR 499 at pp 504-5.

5 (2005) 222 CLR 241.

6 (1996) 149 CLR 337.

 7   (2014) 245 IR 394.

 8   The Bench also departed from previous Full Bench decisions in SDA v. Big W Discount Store PR924556, Cape Holdings Pty Ltd v. Total Corrosion Control Pty Ltd [2012] FWAFB 3994.

 9   Fair Work Act (Cth) s 604(2).

 10   Esso Australia Pty Ltd v AMWU; CEPU; AWU [2015] FWCFB 210, [6].

 11   [2010] FWAFB 5343, [27].

 12   Esso Australia Pty Ltd v AMWU; CEPU; AWU [2015] FWCFB 210, [7].

 13   Appellant submissions paragraph 13.

 14   Respondent submissions paragraph 36.

 15   Appellant submissions paragraphs 24-28.

 16   Appellant submissions paragraphs 29-32.

 17   Respondent submissions paragraph 36.

 18   PN27-43.

 19   Objections to the applicant’s evidence, p.3.

 20   Ibid PN34-36.

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