DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

Mr Alan Paull and Ors
v
Linfox Australia Pty Ltd
(C2017/6488)

Appeal against decision [[2017] FWC 5751] of Commissioner Gregory in Melbourne on 3 November 2017 in matter number C2016/5976 and ors – custom and practice – application of decision in Con-Stan Industries to enterprise agreements –– new case run on appeal – appeal dismissed.

[1] This is an appeal by Mr Alan Paull and 32 other employees of Linfox Australia Pty Ltd (Linfox) from a decision of Commissioner Gregory concerning a dispute under the Linfox and Transport Workers Union Road Transport and Distribution Centres Agreement 2014 (Agreement). The employees are employed by Linfox at its distribution centre in Truganina, Victoria.

[2] The issue in dispute concerns a direction by Linfox that all employees at the distribution centre undertake the task of ‘order picking’ as part of their ordinary duties. The appellants contend that they cannot be required to undertake this work, because there is a custom and practice that applies to certain long serving employees at the site, to the effect that they perform only ‘particular roles’. The appellants rely on clause 5 of the Agreement, which states that the ‘Agreement is not intended to, nor shall it, alter a custom and practice applicable to the parties’.

[3] The dispute was referred to the Commission under clause 33.1(e) of the Agreement, which enables the Commission to arbitrate a dispute or grievance arising at the workplace about the Agreement or the employment relationship. It was common ground that the Commission at first instance had jurisdiction to determine the dispute.

[4] Before the Commissioner, the appellants contended that the question to be resolved was whether a custom and practice exists in relation to the duties they perform, based on the application of the propositions established by the decision of the High Court in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (Con-Stan). 1

[5] The Commissioner concluded, having regard to the decision in Con-Stan and the evidence and submissions before him, that he was not satisfied that the relevant custom and practice existed. He dismissed the application.

Permission to appeal

[6] Generally an appeal of a decision of a Commission member is not as of right and permission to appeal must first be obtained. Subsection 604(2) of the Act requires the Commission to grant permission to appeal if satisfied that it is ‘in the public interest to do so’; otherwise, the grounds on which the Commission may grant permission are not confined.

[7] In the present case however, clause 33.1(f) of the Agreement states that there shall be a ‘right of appeal’ to a Full Bench against a decision made under the disputes procedure. Therefore, consistent with previous Full Bench authority, 2 we consider that the appellants do not need the permission of the Commission to bring their appeal.

Grounds of appeal

[8] The notice of appeal contains a series of questions as to whether the decision in Con-Stan is relevant to the interpretation of clause 5 of the Agreement. They do not contain appeal grounds or allege error on the part of the Commissioner. Nevertheless, from the appellants’ written submissions, two grounds of appeal are apparent.

[9] First, it is contended that the Commissioner erred by applying the second to fourth principles set out in Con-Stan to the interpretation of clause 5 of the Agreement. They accept that the first principle is relevant, namely that whether custom and practice exists is a question of fact, but contend that the other principles are not applicable. Secondly (or alternatively), it is submitted that the Commissioner erred in the manner in which he applied the Con-Stan principles.

[10] It is convenient to set out the four principles enunciated by the High Court concerning the circumstance in which custom may form the basis for the implication of terms into a contract:

“The circumstances in which trade custom or usage may form the basis for the implication of terms into a contract have been considered in many cases. The cases have established the following propositions:

(1) The existence of a custom or usage that will justify the implication of a term into a contract is a question of fact: Nelson v. Dahl. The critical dependence of a finding of custom on the facts of the particular case means there is little to be gained by referring (as counsel for the appellant urged us to do) to the practices of the London marine market in the last century, notwithstanding that those practices formed the basis for the implication, in contracts of marine insurance, of a term similar to the first of the terms alternatively contended for in this case: see Power v. Butcher; Xenos v. Wickham; Universo Insurance Co. of Milan v. Merchants Marine Insurance Co. Ltd.

(2) There must be evidence that the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract: Young v. Tockassie; Summers v. The Commonwealth; Majeau Carrying Co. Pty. Ltd. v. Coastal Rutile Ltd. In the words of Jessel M.R. in Nelson v. Dahl, approved by Knox C.J. in Thornley v. Tilley:

“[The custom] must be so notorious that everybody in the trade enters into a contract with that usage as an implied term. It must be uniform as well as reasonable, and it must have quite as much certainty as the written contract itself.”

However, it is not necessary that the custom be universally accepted, for such a requirement would always be defeated by the denial by one litigant of the very matter that the other party seeks to prove in the proceedings.

(3) A term will not be implied into a contract on the basis of custom where it is contrary to the express terms of the agreement: Summers v. The Commonwealth; Rosenhain v. Commonwealth Bank of Australia. One explanation of this principle is that, in so far as it relates to written contracts, it is simply an application of the parol evidence rule, by which extrinsic evidence is generally inadmissible to add to, vary or contradict the express terms of a contract which has been reduced to writing: Bacchus Marsh Concentrated Milk Co. Ltd. (In liq.) v. Joseph Nathan & Co. Ltd.; Hoyt's Proprietary Ltd. v. Spencer. A more fundamental explanation is that the presumed intention of the parties, on which the importation of the custom rests. (Produce Brokers Co. Ltd. v. Olympia Oil and Cake Co. Ltd.; cf. Treitel, Law of Contract, 6th ed. (1983), p. 164, must yield to their actual intention as embodied in the express terms of the contract, regardless of whether the contract is written or oral.

It has sometimes been said that the implication of a term into a contract does not depend on the parties' intention, actual or presumed, but on broader considerations: Shell U.K. Ltd. v. Lostock Garage Ltd.; Lister v. Roniford Ice and Cold Storage Co. Ltd.; Liverpool City Council v. Irwin. But these statements are directed to situations in which the courts have been asked to imply terms amounting to rules of law applicable to all contracts of a particular class. The present case is of a different kind in which it may be necessary to speak of presumed intention. In matters of this kind, that phrase means no more than that the general notoriety of the custom makes it reasonable to assume that the parties contracted on the basis of the custom, and that it is therefore reasonable to import such a term into the contract.

(4) A person may be bound by a custom notwithstanding the fact that he had no knowledge of it. Historically the courts approached this question in a rather different way. It was said that, as a general rule, a person who was ignorant of the existence of a custom or usage was not bound by it. To this rule there was a qualification that a person would be presumed to know of the usage if it was of such notoriety that all persons dealing in that sphere could easily ascertain the nature and content of the custom. It would then be reasonable to impute that knowledge to a person, notwithstanding his ignorance of it: see Halsbury's Laws of England, 4th ed. vol. 12, pars. 467-468; Jones v. Canavan. In this way, the issue of notoriety discussed in (2) above came to be co-extensive with the question of imputed knowledge. The achievement of sufficient notoriety was both a necessary and sufficient condition for knowledge of a custom to be attributed to a person who was in fact unaware of it. The result is that in modern times nothing turns on the presence or absence of actual knowledge of the custom; that matter will stand or fall with the resolution of the issue of the degree of notoriety which the custom has achieved. The respondent's contention that industry practices unknown to the assured are incapable of forming the basis of an implied term of the contract cannot be sustained.” 3 [Footnotes omitted]

Ground 1: The relevance of Con-Stan

[11] The appellants’ primary contention is that, save for the first principle above, the decision in Con-Stan is not relevant to the task of establishing whether custom and practice exists for the purposes of a provision in an enterprise agreement. They contend that the Commissioner’s determination of the dispute by reference to the principles in Con-Stan was in error. The ‘questions of law’ put rhetorically in the notice of appeal variously advance the same contention.

[12] However, this position is fundamentally at odds with the way the appellants ran their case before the Commissioner. The appellants acknowledge that this is so and the transcript reflects this. 4 The function of the appeal process is not to provide an unsuccessful party with an opportunity to run a better case, and an appellant will ordinarily be held to the case it put below.5 We see no reason why this would not be the case when the appeal right being exercised is one derived from the agreement of the parties, as in the instant case, rather than one derived from statute. Further, we doubt whether it is meaningful to speak of an ‘appeal’ of a decision, for the purposes of s.604 or a step in a disputes procedure, insofar as it relates to a submission of the appellants that has been accepted by the member below – in this case, that the principles in Con-Stan should be applied to the task at hand.

[13] Where questions of law arise, such as whether jurisdiction exists, or whether the interpretation of an agreement is right or wrong, the position may be different. As noted, the appellants claim to raise questions of law in this appeal. However, the decision under appeal was one made under a dispute resolution procedure in an enterprise agreement, where the Commission was exercising a power of private arbitration. 6 The Commissioner was required to determine the dispute that was brought before him, in accordance with clause 33 of the Agreement and s.739 of the FW Act. This dispute was framed with reference to the decision in Con-Stan.

[14] In their written submissions in the proceedings before the Commissioner, the appellants framed the dispute specifically with reference to the decision in Con-Stan, and submitted as follows:

“The question before the Commission which remained unresolved is: Does a custom and practice exist (in relation to picking) that has not been reduced to writing, having regard to the principles in Con-Stan?” 7

[15] This is the question that the appellants asked the Commissioner to determine under clause 33.1 of the Agreement. Linfox, in its written submissions, put the question for determination differently, making no reference to Con-Stan; however it accepted in its submissions that the principles in Con-Stan should be applied to the question of whether custom and practice existed for the purposes of clause 5.

[16] The appellants framed the dispute in a particular way and asked the Commissioner to determine it, which he did. In this regard, we note that s.739(5) provides that the Commission ‘must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties’, which includes the Agreement. The Commissioner would have exceeded jurisdiction if he had resolved a dispute other than the one that was put before him in accordance with clause 33 of the Agreement.

[17] It is important to place the appellants’ submissions to the Commission, and their framing of the dispute, in context. In June 2016, the Commissioner dealt with a similar application dealing with the same provision in the Agreement. It concerned an application by the National Union of Workers (NUW) challenging Linfox’s right to require a large cohort of employees at the distribution centre to undertake order picking. 8 The Commissioner stated:

“[75] In conclusion, I am satisfied, firstly, that I am bound to follow the approach adopted by the Full Bench in regard to the application of Clause 5 in the 2014 Agreement, given it was dealing with matters closely aligned to those in the present application. Secondly, I am not satisfied the NUW has sought to deal with its claim of “custom and practice” on the basis of the principles established by the decision in Con-Stan, as the Full Bench decision requires. Thirdly, I am not satisfied, for the reasons indicated, that the Westgate contracts preclude Linfox from implementing the changes it now proposes. The application is accordingly dismissed.” 9

[18] The Full Bench decision referred to in this passage also concerned the Agreement. In Transport Workers Union of Australia v Linfox Australia Pty Ltd 10 where an application was made under the disputes procedure, the TWU contended that certain alternative payment arrangements had been incorporated into the Agreement. A secondary argument was put that these arrangements constituted ‘custom and practice’ for the purposes of clause 5 of the Agreement.11 At first instance, the Commission rejected both contentions, and the Full Bench dismissed the TWU’s appeal. In relation to clause 5 of the Agreement, and the question of custom and practice, the Full Bench said the following:

“[27] In relation to the Appellant’s contention that the Commissioner erred in finding that the system of work under the APMs did not constitute a “custom and practice” within clause 5 of the 2014 Agreement, the crux of the matter is an issue of construction. That is, whether the APMs are incorporated into the 2014 Agreement through the operation of clause 5 as a “custom and practice.” In Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (“Con-Stan”), the High Court of Australia provided four propositions to consider when determining whether a “custom and practice” exists:

•  The existence of a custom or usage that will justify the implication of a term into a contract is a question of fact;

•  There must be evidence that the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract. The custom must be so notorious that everybody in the trade enters into a contract with that usage as an implied term. It must be uniform as well as reasonable, and it must have quite as much certainty as the written contract itself;

•  A term will not be implied into a contract on the basis of custom where it is contrary to the express terms of the agreement; and

•  A person may be bound by a custom notwithstanding the fact that he or she had no knowledge of it.

[28] This approach has been taken in various other decisions of this Commission and is well-understood as the correct approach for the Full Bench to rely on in determining whether the procedures provided for in the APMs are a “custom and practice” in the relevant industrial context.” 12

[19] In our view, the Full Bench did not purport to lay down a general rule about how ‘custom and practice’ is to be ascertained, either for the purposes of clause 5 of the 2014 Agreement, or more broadly where ‘custom and practice’ is referred to in enterprise agreements. It concluded rather that the ‘approach’ in Con-Stan was the ‘correct approach for the Full Bench to rely on in determining whether the procedures provided for in the APMs are a ‘custom and practice’ in the relevant industrial context’. The conclusion was one made with respect to the particular circumstances of that case. If we are wrong about this, and the Full Bench was positing a more general proposition, it should be viewed with some caution.

[20] The proper approach of the Commission to the determination of a dispute referred to it under a disputes procedure depends on the terms of that procedure, and the nature of the dispute at hand. The question of whether ‘custom and practice’ exists for the purposes of clause 5.1 of the 2014 Agreement does not necessarily have to be determined by reference to the principles in Con-Stan. Recourse to Con-Stan would only be required if the relevant dispute is about whether custom and practice has led to implied terms in employees’ contracts. This was the case in the present matter. The dispute was not about whether there was an ‘industrial’ custom and practice unconnected with any contractual controversy. Rather, the dispute was whether there was custom and practice as described in Con-Stan.

[21] If the dispute had concerned ‘industrial’ custom and practice, it would not in our view have been necessary to apply the principles in Con-Stan; nor would it have been appropriate to apply, at least in an unmodified way, such contractual principles to a statutory instrument which is not (or would be unlikely to be) a contract at common law. We return further below to the use that might be made of Con-Stan in such cases.

[22] Given Commissioner Gregory’s earlier decision that he considered the Full Bench decision to be binding on him, the appellants may have believed that they were constrained to formulate the dispute in the manner they did, focusing on the application of the principles in Con-Stan and whether custom and practice had led to an implied term in employees’ contracts of employment. They were not so constrained. It was however open for the appellants to bring such a dispute to the Commission under clause 33 of the Agreement. 13 The Commissioner answered the question that was put to him. He applied the principles in Con-Stan and determined that he was not satisfied that there was a custom and practice in relation to order picking that would justify the implication of a term into employees’ contracts.14

[23] In the circumstances of the present case, the Commissioner did not err in applying the principles of Con-Stan. The appellants’ first ground of appeal is rejected.

Ground 2: Application of Con-Stan

[24] That which we have described as the second ground of appeal contends that, if the principles in Con-Stan were properly to be applied, the Commissioner erred in the manner in which he applied it.

[25] The appellants contend that the Commissioner erred in his conclusion that custom and practice could only arise in relation to all or the majority of employees at the distribution centre. In this regard, the Commissioner noted, in relation to the second principle in Con-Stan cited earlier, that only a small minority of employees working at the distribution centre were the subject of the alleged custom and practice, constituting some ten percent of the total numbers. He concluded that the small number of employees involved meant that it was not possible to conclude that the custom and practice was ‘so well-known and understood’ that all of the employees can be said to have that term to be implied into their contracts.  15

[26] As noted above, Con-Stan concerned the circumstances in which trade custom or usage may form the basis for the implication of terms into a contract. The industry in question was the insurance industry, and the question was whether an insurer is entitled to look only to the broker for payment of the premium. Con-Stan contended that there was an implied term to this effect in its contract with Norwich, arising from custom and usage in the industry. The second principle in Con-Stan reflects the industry focus of the case, noting that the custom must be so notorious that ‘everybody in the trade enters into a contract with that usage as an implied term’. 16

[27] There was no suggestion in the present matter that there is an industry-wide or trade custom and practice that exists in respect of distribution centres; the alleged custom and practice was confined to certain long-serving employees at the Truganina facility who had previously worked for Westgate Transport Industries, which was later acquired by Linfox. However, we accept for present purposes that, although Con-Stan was concerned with industry-wide custom, its reasoning could also apply to custom and practice at a particular worksite.

[28] As we understand the appellants’ argument, the custom and practice in question is said to have developed with the relevant cohort of employees over the period of their employment first with Westgate and then with Linfox. The alleged custom and practice is not said to have pre-dated their engagement by Westgate. Rather, it is put that an accepted norm developed whereby the employees in question would not be required to do pick work as part of their ordinary duties. It can be seen that this is quite a different setting from the one with which the High Court was concerned in Con-Stan, where a custom and practice in an industry was already established, and those making new contracts in the industry were presumed to be aware of it. There must therefore be some question about whether the appellants in this case could make good the requirements of the principles in Con-Stan.

[29] In any event, the error that is ascribed to the Commissioner in his application of Con-Stan is that he considered that custom and practice could only arise in relation to all or the majority of employees at the distribution centre. We accept that a custom and practice might arise within a particular group at a worksite, and that this group might only be a minority of the relevant workforce. The group would need to have enough in common for the alleged custom and practice to be notorious among them. However, we agree with the appellants that the 34 employee-appellants might have constituted such a group. The Commissioner’s preclusion of this possibility was an error. Just as the relevant custom need not necessarily exist at the industry level, it does not have to exist at the level of the entire worksite. Of course, the more fragmented the relevant group, the harder it might be to establish the notoriety of the practice.

[30] Nevertheless, in our opinion the error is of no consequence. The Commissioner correctly concluded that there was a term in the employees’ contracts that was inconsistent with the suggested implied term that was said to have arisen through custom and practice. Although their contracts stated that each employee was assigned a specific role, such as clerk or forklift driver, the employees’ contracts contained the following terms, noted at [78] in the Commissioner’s decision:

“Your duties were previously outlined during your interview, however duties and responsibilities of employees are regularly assessed by WL and may change from time to time point.

…

With fluctuations in operational requirements you may be required to work at another business site or in an alternative warehousing and distribution position. If this occurs you will be given reasonable notice.” 17

[31] The Commissioner concluded that the terms that the appellants sought to have implied into their contracts based on an alleged custom and practice were contrary to the above express terms in the contract, and that, applying the third principle in Con-Stan, the implication of such terms was not possible. In our view, this conclusion was correct. There was no basis to imply into the employees’ contracts of employment terms, reflecting the alleged custom and practice.

[32] Accordingly, the second ground of appeal fails, and the appeal must be dismissed.

An ‘industrial’ custom and practice

[33] We would however make the following observations about the meaning and application of clause 5. We do so in light of our comments above, which contemplate the possibility of a different dispute being brought to the Commission under clause 33 of the Agreement in relation to ‘industrial’ custom and practice which is not connected to any contention that implied terms exist in employees’ contracts of employment.

[34] First, a contention that there was in existence a custom and practice for the purposes of clause 5 would require consideration of that provision in the context of the Agreement as a whole, applying the principles summarised in “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited (Berri). 18 The expression ‘custom and practice’ is widely used in industrial instruments, but it does not have a set meaning. There is a fundamental conceptual question as to the ‘threshold’ that must be reached in order for an activity or state of affairs to be a ‘custom and practice’, in terms of uniformity, time and substance. In our view, a custom and practice is something more than simply anything that has been regularly done (or not done) in the past. The mere fact that employees have never previously performed a certain task is not likely to be sufficient to establish that there is a ‘custom and practice’.

[35] Further, in an industrial setting, it is often the case that a custom and practice is something that has emerged from an industrial arrangement or settlement, and which is acknowledged by those who were party to or involved in it. We note that the second principle in Con-Stan would probably capture many circumstances that could be described as a ‘custom and practice’ preserved through enterprise agreements – namely, adapting the words, something that is ‘so well-known and acquiesced in that everyone [voting to approve an enterprise agreement] in that situation can reasonably be presumed to have imported that term into [the enterprise agreement].’ This formulation has some appeal in the setting of enterprise agreements; unless the custom and practice is notorious, there will be doubt about whether employees (particularly more recently hired employees) voting on the agreement understood that it was embraced by any reference to ‘custom and practice’ in the instrument.

[36] In the present setting, clause 5.1 would need to be interpreted in the context of the entire provision and the Agreement as a whole. Clause 5 states:

“5. CUSTOM AND PRACTICE

5.1 This Agreement is not intended to, nor shall it, alter a custom and practice applicable to the parties.

5.2 It is the intention of the parties to this Agreement to, during the Term, attempt to reduce to writing any custom and practice applicable to Linfox and the Employees.

5.3 The parties will review and where agreed create a local agreement arising from the custom and practice in accordance with Clause 34.

5.4 Any dispute about the operation of this clause is to be dealt with in accordance with the disputes procedure in the Agreement.”

[37] Several textual considerations should be noted. First, clause 5.1 states that ‘this Agreement is not intended to, nor shall it, alter a custom and practice applicable to the parties.’ It would be necessary to ascertain precisely which clause or clauses in the Agreement were said to alter the alleged custom and practice. Perhaps clause 22 of the Agreement could be said to be such a provision. This requires employees to comply with reasonable and lawful instructions of management at all times. However, as discussed below, clause 22 has existed in the same terms in the past three enterprise agreements, unlike clause 5, which is a new provision. In our view it is not meaningful to speak of the Agreement ‘altering custom and practice’ in this way. Through clause 22 the Agreement does not appear to have altered anything.

[38] Secondly, there is some question as to the identity of the ‘parties’ referred to in clause 5.1. The term is not defined. Under the FW Act, there are, strictly speaking, no ‘parties’ to enterprise agreements, a point noted by the Full Bench in Berri. When clause 5.1 is read with clause 5.2, it appears that the ‘parties’ in question are ‘Linfox and the Employees’. This could include some of the employees at only one of the many sites covered by the Agreement. However, clause 5.3 calls up clause 34, which provides that new ‘local matters agreements’ must be agreed by a majority of employees at the worksite and the TWU, suggesting that the union might also be a ‘party’. We note that clause 5.2 refers to the ‘intention of the parties’ to attempt to reduce to writing any custom and practice applicable to them. The fact that they might not succeed in doing so does not affect the question of whether the custom and practice exists.

[39] We have earlier addressed the significance of clause 22.1(b), which requires that employees comply with lawful and reasonable instructions of management. Another contextually relevant provision is clause 15.1 of the agreement, which sets out the objectives of the Agreement. These include to ‘develop a highly motivated, multi-skilled, flexible and adaptable workforce’ and to ‘remove inefficient work practices and processes in all areas of Linfox’s operations’. 19 Furthermore, clause 17, which deals with continuous improvement, states that ‘flexibility in the deployment of labour is extremely important to ensure the long term future of Linfox and its employees’.20 In addition, the Agreement contains a consultation provision (clause 32) that requires the company to consult with employees about major workplace change likely to have significant effect on employees, including in respect of the restructuring of jobs. The company is required to give prompt and genuine consideration to matters raised by employees, but the changes do not require consent. Less significant changes do not require consultation at all under these clauses.

[40] In our view, these provisions are contextually relevant to the question of interpreting what is meant by ‘custom and practice’ for the purposes of clause 5.1 of the Agreement. An agreement that seeks to develop a flexible and adaptable workforce, specifically in relation to the deployment of labour, and requiring consultation (but not consent) about major change points in favour of a construction of clause 5.1 that would not too readily recognise prohibitions on changes to working arrangements and employees’ duties. Of course, the true extent of such changes would be relevant. However, returning to the judgment in Con-Stan as a source of interpretative inspiration (rather than formal application), we note the Court’s observation that the ‘presumed intention of the parties, on which the importation of the custom rests, … must yield to their actual intention as embodied in the express terms of the contract ..’ 21 As noted in Berri, there are no parties to enterprise agreements, and analogies with contract law should be approached with caution. But in respect of those who made the Agreement under s.182 of the FW Act, it is relevant to consider whether they really intended clause 5.1 to preserve the type of practice (or rather non-practice) that is said by the appellants to exist here, given the other provision to which we have referred above. We think this is unlikely.

[41] A further significant matter is that the custom and practice referred to in clause 5 must be one that existed at the time the Agreement was made, rather than one that developed after the Agreement was made. This seems to us clear from the ordinary meaning of the words in clause 5. The Agreement cannot alter that which did not exist when the Agreement was made. Further, were it otherwise, the clause would likely purport to authorise a variation to the Agreement otherwise than in accordance with Division 7 of Part 2-4 of the FW Act (see the decision of Full Court of the Federal Court in Toyota Motor Corporation Australia Ltd v Marmara. 22 Further, on the first day of the Agreement’s operation, ‘custom and practice’ could only refer to something that had become established prior to that point. This directs attention to the enterprise agreement that applied before the Agreement came into operation; and, as the custom and practice in the present matter is said to be one of long standing, to earlier predecessor agreements.

[42] In this regard, prior to the Agreement coming into operation, the employment of the employees in question was covered by the Linfox Road Transport and Distribution Centres National Enterprise Agreement 2011 (2011 Agreement). This instrument contained no provision relating to custom and practice. However, clause 29.1 of that agreement stated that ‘every employee must at all times comply with reasonable and lawful instructions of management’ (see clause 29.1(b), which is in the same terms as clause 22.1(c) of the 2015 Agreement).

[43] The collective agreement that applied to the relevant employees prior to the commencement of the 2011 Agreement was the Linfox Victoria (Coles RDC) Agreement 2008 (2008 Agreement). It too contained no custom and practice provision. Like the Agreement and 2011 Agreement, it contained a provision (clause 3.1.1(b)) that required employees to comply with reasonable and lawful instructions of management. It also incorporated the Transport Workers (Distribution Facilities) Award 2004 (2004 Award) at Appendix 2. Clause 14.1 of the incorporated Award stated that the employer may direct employees to carry out such duties as are within the limits of their skill, competence and training, consistent with the classification structure of the award, provided they are not designed to promote de-skilling.

The classification structure in clause 18 of the 2004 Award was based on skills and duties; it did not provide for designated roles, such as ‘forklift driver’. 23

[44] Accordingly, when the new ‘custom and practice’ provision appeared in the Agreement, it did so against a background of industrial regulation that afforded Linfox the right to direct employees to follow lawful and reasonable instructions and, at least from 2008 to 2011, additional discretion to have employees carry out such duties as were within the limits of their ‘skill, competence and training’.

[45] Any fresh dispute that might be brought to the Commission seeking to establish that there exists an ‘industrial’, rather than ‘contractual’, custom and practice for the purposes of clause 5 of the Agreement, to the effect that the employees in question do not do pick work as part of their ordinary duties, would need to explain how the alleged custom and practice developed or survived in the context of the industrial instruments discussed above, including in particular, the Agreement itself.

Conclusion

[46] Although we have identified one error in the Commissioner’s reasoning, it was of no consequence. The Commissioner reached the correct conclusion in relation to the question that he was asked to determine in the exercise of his function as a private arbitrator under clause 33 of the Agreement.

[47] The appeal is dismissed.

DEPUTY PRESIDENT

Appearances:

Mr P Willee and Ms G Jardine, Counsel for the Appellants

Mr Y Shariff, Counsel for the Respondent

Hearing details:

Melbourne.

6 March.

2018.

Printed by authority of the Commonwealth Government Printer

<PR601211>

 1   (1986) 160 CLR 226

 2   See Australian Manufacturing Workers’ Union (AMWU) v Silcar [2011] FWAFB 2555

 3   (1986) 160 CLR 226 at 236 to 238

 4   The transcript of proceedings before the Commissioner also makes this abundantly clear. See for example PN2120, where counsel for the appellants states: “Just in summary, we say there's been custom and practice that's been well and truly established. I've gone through the principles in Con-Stan. That's what our case is about…”

 5   Linfox Australia Pty Ltd v Terence Howell [2018] FWCFB 464

 6   See Construction Forestry Mining and Energy Union v Australian Industrial Relations Commission [2001] HCA 16; 203 CLR 645; 75 ALJR 670; 178 ALR 61 (15 March 2001) at [31]

 7   [2017] FWC 5751 at [11]

 8   National Union of Workers v Linfox Australia Pty Ltd [2016] FWC 3039

 9   Ibid at [75]

 10   Transport Workers Union of Australia v Linfox Australia Pty Ltd [2016] FWCFB 443

 11   Ibid at [15]

 12   Ibid at [27] – [28]

 13   Note the scope of the provision in clause 33.1, and the role of Commission at clause 33.1(e)

 14   [2017] FWC 5751 at [82] and [83]

 15   Ibid at [73] - [76]

 16   Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 236

 17   [2017] FWC 5751

 18   “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Berri Pty Limited [2017] FWCFB 3005

 19   Agreement at clauses 15(c) and (e)

 20   Agreement at clause 17.1

 21   Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 237

 22   (2014) 222 FCR 152

 23   It was suggested at the hearing before us that the provisions of the 2008 Agreement were incorporated into the 2011 Agreement, however that appears not to be the case: see clause 82.2(c), which identifies which provisions of the 2008 Agreement are ‘Incorporated Terms’ for the purposes of the 2011 Agreement. However, Linfox might have had implied contractual rights to this effect in any event