| FWCFB 338|
|FAIR WORK COMMISSION|
Construction, Forestry, Mining and Energy Union
Fair Work Act 2009
s.604 - Appeal of decisions
VICE PRESIDENT CATANZARITI
SYDNEY, 23 JANUARY 2017
Appeal against decision  FWC 7428 of Deputy President Asbury at Brisbane on 13 October 2016 in matter number C2015/6037 – permission to appeal refused
 This decision concerns an application by the Construction, Forestry, Mining and Energy Union (CFMEU) for permission to appeal and an appeal against a decision of Deputy President Asbury handed down on 13 October 2016 (the Decision). 1 The Decision relates to an application by Peabody Energy Australia Coal Pty Limited T/A Peabody Energy Australia PCI Mine Management Pty Ltd (Peabody) for the Fair Work Commission (the Commission) to deal with a dispute pursuant to the terms of the Peabody Energy Australia Coppabella Enterprise Agreement 2013 (the Enterprise Agreement).
 The Enterprise Agreement entitles Peabody to introduce new roster systems to meet the needs of the Coppabella mine. In the event of such a roster change, the Enterprise Agreement obliges Peabody to “review and amend accordingly” the Base Salary and/or Roster Allowance paid to employees pursuant to the Enterprise Agreement. 2 However, the Enterprise Agreement is silent in relation to the methodology to be used to review and amend accordingly the Base Salary and/or Roster Allowance.
 As a result of the falling commodity price of coal, Peabody made a decision to reduce its operating costs at the Coppabella mine by changing its rosters/hours of work for its production and maintenance employees. The CFMEU does not challenge Peabody’s right to change the rosters in this way and reduce the hours worked on those rosters by production and maintenance employees. However, the CFMEU does challenge Peabody’s reduction in the Total Fixed Remuneration (TFR), comprised of Base Salary, Superannuation and the applicable Roster Allowance, 3 paid to employees in connection with this roster change.
 The parties agreed on the following questions for arbitration in the dispute before the Deputy President:
“1. In the Applicant's review and amendment of base salary and/or roster allowance pursuant to clause 10.12 of the Peabody Energy Australia Coppabella Enterprise Agreement 2013 what is the appropriate base ordinary hourly rate to be used for the purposes of the review methodology?
2. Prior to the roster changes implemented from 12 August 2015, and in respect of employees working 12.5 hour shifts, were the employees being paid for 12 hours per shift or 12.5 hours per shift?
3. Having regard to the answers to questions (1) and (2):
(a) Is there a basis for overturning or modifying the methodology adopted by the Applicant in the review and amendment process?
(b) If so, what is the alternative methodology to be adopted?
4. Applying the appropriate methodology, what is the correct remuneration for each level for each relevant roster?”
 In summary, the Deputy President determined the dispute by finding that the methodology used by Peabody to reduce the TFR paid to employees as a consequence of the change in rosters was appropriate and should not be overturned or modified. The Deputy President rejected the methodology proposed by the CFMEU for reviewing the employees’ TFR.
Permission to appeal
 Clause 24 of the Enterprise Agreement provides as follows:
“24 Dispute Resolution Procedure
It is the intention of the parties that all issues arising out of the interpretation or application of this Agreement, in the course of employment, or in relation to the NES shall be dealt with at the local level to the maximum extent possible.
The following steps are to be used by employees to have their issues considered in a more formal process.
d) Where the matter remains unresolved, the Company or employee may refer the matter to the Fair Work Commission to conciliate. If conciliation fails, the matter may be referred to the Fair Work Commission to be arbitrated…”
 Because the Enterprise Agreement does not confer on the parties to it a right to appeal an arbitrated decision made pursuant to clause 24, the appeal provisions in s.604 of the Fair Work Act 2009 (Cth) (the Act) apply, including the requirement for permission to appeal. 4
 Section 604(2) of the Act provides that, without limiting when the Commission may grant permission to appeal, it must grant permission if it is satisfied that it is in the public interest to do so.
 The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment. 5 In GlaxoSmithKline Australia Pty Ltd v Makin6 a Full Bench of the Commission identified some of the considerations that may attract the public interest:
“... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters.” 7
 It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so, because an appeal cannot succeed in the absence of appellable error. 8 However, the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.9
 The CFMEU relies on three grounds of appeal:
(a) First, the CFMEU contends that the Deputy President erred in finding that Peabody’s review of the Base Salary and Roster Allowance was consistent with the terms of the Enterprise Agreement;
(b) Secondly, the CFMEU contends that the Deputy President erred in finding that the Black Coal Mining Industry Award (the Award) was relevant in determining the appropriate method for reviewing the Base Salary and Roster Allowance; and
(c) Thirdly, the CFMEU submits that the Deputy President erred in finding that there was no basis for overturning or modifying the methodology adopted by Peabody in reviewing the Base Salary and Roster Allowance.
 Each of these grounds of appeal shares a common theme: reliance on, or an otherwise underpinning on, the Award, which the CFMEU submits is inconsistent with the Enterprise Agreement.
Clause 7 of the Enterprise Agreement and the proper construction of the Enterprise Agreement
 Clause 7 of the Enterprise Agreement provides that:
“The provisions of [the Award] will only apply in relation to matters, which this Agreement specifically indicates, should be determined by reference to the Award.”
 Clause 10.12 of the Enterprise Agreement, which establishes Peabody’s right to undertake a review of its rosters and the TFR paid to employees, does not contain any specific indication that the Award may be applied.
 The CFMEU contends that the methodology preferred by the Deputy President for reviewing the TFR paid to employees consequent upon a change of rosters was not permitted by the Enterprise Agreement, because it was largely derived from the Award, and thus was inconsistent with clause 7 of the Enterprise Agreement. Further, because the Deputy President made a decision which was inconsistent with clause 7 of the Enterprise Agreement, the CFMEU submits that the Deputy President’s decision was contrary to s.739(5) of the Act.
 It is necessary to understand the competing review methodologies put forward by each of the CFMEU and Peabody in order to comprehend and assess this ground of appeal. The starting point is that it was common ground between the parties that, in order for Peabody to review and amend the Base Salary and/or Roster Allowance, it was necessary to deconstruct those amounts and convert them to an hourly rate. 10
 The CFMEU’s proposed review methodology involved taking the number of hours worked per week (either 42 or 43.5 hours), multiplying that by 52 to provide a yearly number of hours, then dividing that figure by the Base Rate to come up with an hourly rate of pay.
 Peabody’s review methodology worked on the assumption that the base ordinary hourly rate is half the non-rostered overtime hourly rate. That assumption was made because, first, the non-rostered overtime hourly rate in the Enterprise Agreement is the only relevant hourly rate specified in the Enterprise Agreement, and secondly, it is reasonable to presume that the intention was to provide for non-rostered overtime on a seven day continuous roster at double time, as is provided for in the Award. Whenever the Enterprise Agreement was silent on a particular matter, reference was had to the Award to underpin certain assumptions in the Peabody model.
 The CFMEU contends that the ordinary meaning of the words in clause 7 of the Enterprise Agreement excluded from consideration the Award as part of the review of TFR under clause 10.12 of the EA.
 The CFMEU also submits that evidence concerning the objective background facts known to both parties established that the Award did not apply in constructing the TFR when it was first agreed upon. It is submitted that the Deputy President failed to have regard to this objective background fact in construing the Enterprise Agreement.
 The CFMEU further relies on the fact that the Deputy President had regard to the better off overall test (BOOT) in arbitrating the dispute and submits that by placing reliance on or using the BOOT the Deputy President made a finding inconsistent with clause 7 of the Enterprise Agreement.
 The CFMEU submits that the Deputy President erred by giving preference to the Peabody model over the CFMEU’s model upon notions of fairness, because it was a result-oriented approach to interpretation and contrary to principles of construction.
 The CFMEU also contends that the Deputy President erroneously took into account an irrelevant consideration, namely notions of fairness, in arbitrating the dispute.
Clause 7 of the Enterprise Agreement and the proper construction of the Enterprise Agreement
 Peabody relies on the fact that clause 7 of the Enterprise Agreement states that the provisions of the Award may not be applied under the Enterprise Agreement, unless it is expressly stated otherwise. Peabody contends that neither it nor the Deputy President suggested the Award had direct application. Peabody contends that clause 7 does not prohibit or place limitations on consideration of the Award as part of the relevant objective background facts which may be taken into consideration in giving effect to the Enterprise Agreement.
 In approving Peabody’s methodology, the Deputy President did not, so it is contended by Peabody, purport to adopt any terms of the Award into the Enterprise Agreement. The Deputy President found the Award is relevant to the extent that it is “part of the context in which the 2013 Agreement was negotiated”. 11 In deconstructing the TFR, the Deputy President considered the objective fact that the TFR was intended to be more beneficial than remuneration provided under the Award.
 Peabody submits that the Deputy President did not fail to consider the plain and ordinary meaning of clause 7 of the Enterprise Agreement by using the Award as a contextual reference to deconstruct the TFR.
 Peabody also submits that the Deputy President’s decision cannot be inconsistent with the Enterprise Agreement because clause 10.12 of the Enterprise Agreement gave Peabody an express right to review and amend Base Salary and Roster Allowances as a result of its change to the employees’ rosters.
 It is also submitted by Peabody that the Deputy President’s approval of Peabody’s model was not dependant on consideration of the Award. In support of this submission, Peabody relies on the following part of paragraph  of the Decision:
“Even if the Award is not considered, the terms of the 2013 Agreement make it clear that the TFR is based on an even time roster comprising 35 ordinary hours per week and includes additional amounts for rostered overtime, weekend work, public holiday work disabilities associated with when work is performed and other disabilities associated with the environment in which it is performed. To find that rostered overtime hours should be given the same value as hours that are part of the 35 ordinary hours in a week, is inconsistent with the terms of the 2013 Agreement considered without reference to the Award.”
 Peabody submits that the Deputy President did not err by having regard to the BOOT and the fact that the entitlements under the Enterprise Agreement would have been compared to those under the Award at the time the Enterprise Agreement was approved as relevant objective background facts.
 Peabody contends that the evidence given by Mr Smythe and Mr Pierce in relation to their belief that the Award was not used to construct the TFR when it was first agreed upon is not part of the “objective background facts” contemplated by Justice Mason in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales. 12 Further, Peabody contends that the Deputy President was not persuaded by the evidence led by the CFMEU in relation to this issue and the Deputy President did not err by failing to have proper regard to the objective background facts.
 Peabody disputes the contention that the Deputy President adopted a result-oriented approach to construction in order to avoid an unfair outcome. Peabody also makes the point that the resolution of the dispute did not simply require interpretation of the Enterprise Agreement, because it is silent as to the methodology for reviewing remuneration following a roster change. In those circumstances, the Deputy President, so it is submitted by Peabody, had a broad discretion to arbitrate the dispute, which included the need to ensure the outcome was fair and reasonable.
Clause 7 of the Enterprise Agreement and the proper construction of the Enterprise Agreement
 In our view, the Deputy President did not err in finding 13 that the review methodology adopted by Peabody was consistent with the terms of the Enterprise Agreement. There is no doubt that regard was had to various provisions in the Award in deconstructing the TFR and making assumptions to develop the model used by Peabody and KPMG to review the Base Salary and Roster Allowances consequent upon the change in rosters. However, there is a distinction between considering provisions of the Award as part of the relevant objective background facts when engaging in the review and amendment process required by clause 10.12 of the Enterprise Agreement, on the one hand, and applying the provisions of the Award to determine a particular matter or entitlement by reference to the Award, on the other hand.
 We are satisfied that, by considering or having regard to the provisions of the Award in the way that it did when reviewing and amending the employees’ TFR, Peabody did not apply the provisions of the Award to determine a particular matter or entitlement by reference to the Award. Similarly, we are satisfied that it was appropriate for the Deputy President to have regard to the Award in the context of the BOOT as part of the relevant objective background facts. It follows that the decision of the Deputy President to, in effect, approve the methodology used by Peabody to review and amend the employees’ TFR was not inconsistent with clause 7 of the Enterprise Agreement. For the same reasons, the Deputy President did not err in finding that the Award was relevant in determining the appropriate method for reviewing the employees’ TFR.
 On the question of whether the Award was used to construct the TFR when it was first agreed:
(a) Mr Pierce gave evidence that he recalls the first enterprise agreement negotiated at the Coppabella mine with TFR rates was in 2007. Mr Pierce’s recollection is that employees were being offered individual contracts at that time and “the wages rates in these contracts were taken from an industry report … they were not based on the relevant award which applied” at the time. Mr Pierce also said the wage rates in the individual contracts were used as the basis for the TFR in the 2007 enterprise agreement. 14 Mr Pierce did not disclose the source of his knowledge in relation to these matters;
(b) Mr Pierce gave evidence that at the time the 2010 enterprise agreement was being negotiated there was an agreement between the parties that the base rate and roster allowance should be broken down, but “after several attempts by both parties to perform this task it was agreed that the task was too difficult as the Company could not find any information about how the TFR rates were calculated to determine an appropriate hourly rate”. As a result the parties negotiated the 2010 enterprise agreement on the basis of a percentage increase to current rates, without agreeing on an hourly rate or how the TFR rates were calculated; 15
(c) Mr Pierce was not involved in the negotiations for the Enterprise Agreement. However, he “believe[s] that the TFR rate has remained the same and still has not been quantified”. 16 Mr Pierce went on to express the following opinion in his witness statement:17
“ Given my knowledge of how the TFR was implemented by Mr Smallbone in 2006 and the 2007 agreement it is my view that the rates of pay and allowances in the current Coppabella agreement were formed with no reference to the Award provisions.”
(d) Mr Smythe gave the following evidence as to his recollection of the negotiations for the Enterprise Agreement:
“ Further, my recollection from the 2013 agreement negotiations was that both Peabody and the Union wanted to include in the agreement both an hourly rate of pay and an overtime rate of pay in the new agreement that was based on the base rate of pay at the time. However, my recollection was that after reviewing all the previous agreements and changes to base rate and TFR it was impossible to calculate what these rates were and neither party could agree on a base rate and overtime rate of pay.
 As a result both parties agreed to drop their claims regarding this rate and maintain the current wage structure.”
 The Deputy President referred to this evidence in some detail in paragraphs  to  and  of the Decision. The Deputy President also noted, as part of her consideration of a range of relevant objective background facts in paragraphs  to  of the Decision, that the parties had been unable to agree on how the TFR should be deconstructed.
 In circumstances where there was a dispute between the parties about how the TFR rates were calculated and no direct evidence was led in relation to the negotiations which resulted in the TFR rates being calculated or agreed on when they were first introduced, we are satisfied that the Deputy President did not fail to have regard to any objective background facts of the type contemplated by Justice Mason in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales.
 In any event, because the Enterprise Agreement is silent in relation to the methodology to be used to review and amend the Base Salary and/or Roster Allowance in accordance with clause 10.12, this was not a dispute which was, or could have been, resolved by reaching a conclusion in relation to the proper construction of a review methodology provision in the Enterprise Agreement. It follows that the Deputy President did not err in her construction of the Enterprise Agreement by failing to have regard to whether the Award was used to construct the TFR when it was first agreed upon.
 When undertaking the task of properly construing the provisions of an enterprise agreement, it would be erroneous to seek to give “effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the agreement”. 18 The Deputy President plainly had that principle in mind when she prepared the Decision, for it is recorded in paragraph  of the Decision and the Deputy President addressed the argument that she had contravened that principle in paragraph  of the Decision.
 We agree with Peabody’s submission that the Deputy President did not err in her construction of the relevant provisions of the Enterprise Agreement by either seeking to give effect to an anteriorly derived notion of fairness or taking a result-oriented approach to interpretation and contrary to principles of construction. The Deputy President properly construed the relevant provisions of the Enterprise Agreement and reached conclusions which were consistent with the terms of the Enterprise Agreement.
 However, the Deputy President’s function as the private arbitrator appointed by the parties to resolve their dispute under the dispute resolution procedures set out in the Enterprise Agreement did not cease when she formed an opinion as to the proper construction of the relevant provisions of the Enterprise Agreement and applied that opinion to the facts relevant to the dispute. That is because the Enterprise Agreement is silent as to the methodology to be used when conducting the review and amendment required by clause 10.12. We therefore agree with the Deputy President’s assessment that “the determination of the issues in dispute is not simply an interpretation of the 2013 Agreement”. 19
 The dispute resolution procedure in the Enterprise Agreement (clause 24) does not contain any limitation of the type envisaged in s.739(3) of the Act on the Commission’s power to arbitrate a dispute which falls within the scope of disputes which may be arbitrated pursuant to clause 24. In circumstances where a dispute such as the present one is not capable of being resolved by forming an opinion as to the proper construction of the Enterprise Agreement and applying that interpretation to the relevant facts in dispute, the unrestricted power given by the parties to the Commission under clause 24 to arbitrate the dispute confers on the arbitrator a broad discretion. 20
 In exercising the broad discretion conferred on her, we are of the view that the Deputy President did not err by having regard, as part of her consideration of the models for TFR review put forward by each of Peabody and the CFMEU, to whether the application of either or both of those models would give rise to an unreasonable or unfair outcome for Peabody and/or the employees covered by the Enterprise Agreement. 21 The Deputy President concluded that the methodology advanced by Peabody would avoid the “unjustice or inconvenience which would result from the methodology proposed by the CFMEU”. 22 We agree with that conclusion and the reasons given by the Deputy President for reaching it.
 Furthermore, we agree with Peabody’s contention that the Deputy President’s reasons for preferring Peabody’s model were not primarily based on notions of fairness. Rather, the Deputy President found that Peabody’s model was consistent with the terms of the Enterprise Agreement and with the intent of the parties as ascertained from the relevant objective background facts. 23
 For the reasons set out above, we are satisfied that the Deputy President did not err in any of the ways alleged by the CFMEU in the exercise of her broad arbitral function under the dispute settlement procedure in the Enterprise Agreement. We are also satisfied that there is no other proper basis to exercise our discretion to grant permission to appeal.
 Permission to appeal is not granted. The appeal is dismissed.
Mr P Madden, counsel for the Appellant;
Mr D Williams, solicitor from Minter Ellison, for the Respondent.
1  FWC 7428
2 Clause 10.12 of the Enterprise Agreement
3 Clause 10.1 of the Enterprise Agreement
4 DP World Brisbane Pty Ltd v The Maritime Union of Australia  FWCFB 8557 at -; DL Employment Pty Ltd v AMWU  FWCFB 7946 at 
5 O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at  per Gummow, Hayne, Heydon, Crennon, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others  FCAFC 54 at  – .
6 (2010) 197 IR 266
7 Ibid at 
8 Wan v AIRC  FCA 1803 at 
9 GlaxoSmithKline Australia Pty Ltd v Makin  FWAFB 5343 at -; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth  FWAFB 10089 at , affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler;  FCAFC 54; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office  FWCFB 1663 at 
10 Decision at 
11 Decision at 
12 (1982) 149 CLR 337 at 
13 Decision at 
14 Appeal Book at 280-1
15 Appeal Book at 281
16 Appeal Book at 281
17 Appeal Book at 281 
18 AMIEU v Golden Cockerel  FWCFB 7447
19 Decision at 
20 Lend Lease Project Management and Construction (Australia) Pty Limited v CFMEU  FWCFB 1889 at 
21 Ibid at -; CEPU v Utilities Management Pty Ltd  FWCFB 3240 at ; TWU v Qantas Airways Limited  FWAFB 6612 at 
22 Decision at 
23 Decision at 
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