Dec 1253/95 M Print M2454

AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

Industrial Relations Act 1988

s.45 appeals against decisions [Prints L9550 of 16 February 1995, M0174 of 16 March 1995

and M0664 of 5 April 1995] issued by Hancock SDP

Victorian Public Transport Corporation

(C Nos 30836, 32210 and 32456 of 1995)

RAILWAYS METAL TRADES GRADES AWARD 1953

(ODN C No. 00169 of 1950)

[Print H5660 [R0009]]

VICTORIAN PUBLIC TRANSPORT ENTERPRISE AGREEMENT 1994

(ODN C No. 20619 of 1994)

[Doc L6219 [V0149]]

s.170MH notification of dispute

The Public Transport Corporation of Victoria

and

Australian Rail, Tram and Bus Industry Union and others

(C No. 20619 of 1994)

s.113 application for variation

The Public Transport Corporation of Victoria

(C No. 30181 of 1995)

Public transport employees Public transport industry

VICE PRESIDENT ROSS

SENIOR DEPUTY PRESIDENT POLITES

COMMISSIONER GRIMSHAW MELBOURNE, 7 JUNE 1995

Conditions of employment - variation of a certified agreement - ambiguity or uncertainty - s.170MK Industrial Relations Act 1988 - disputes settlement clause - appeal - determination under s.170MK objective - discretion as to variation exists - intent of parties at time of agreement to be considered - scope of matters to be determined by disputes settlement clause ambiguous - such matter referred back to Hancock SDP - decision to increase wages a recommendation - not a binding order or variation to agreement - appeals 1 and 3 dismissed - appeal 2 upheld.

DECISION

INTRODUCTION

The Commission has before it three related appeals - all from decisions of Senior Deputy President Hancock dealing with matters related to the Victorian Public Transport Enterprise Agreement (1994) [the Agreement].

The Agreement is between Victorian Public Transport Corporation (VPTC) and Australian Rail, Tram and Bus Industry Union (ARTBIU), Electrical, Electronic, Plumbing and Allied Workers Union of Australia (EEPAWU), Australian Municipal, Administrative, Clerical and Services Union (ASU), The Association of Professional Engineers, Scientists and Managers, Australia (APESMA), Association of Railway Professional Officers of Australia (ARPOA), Construction, Forestry, Mining and Energy Union (the CFMEU) and the Automotive, Food, Metals and Engineering Union (AFMEU). It was certified on 28 October 1994.

The Commission determined to deal with all of the appeals together and directed all parties to provide written submissions. The Commission sat in Melbourne on 22 May 1995 to enable parties to speak to their written submissions.

We shall deal with each of the appeals in turn.

THE FIRST APPEAL

The first appeal is against a decision of Hancock SDP dated 16 February 1995 [Print L9550], that he had jurisdiction under the dispute settling procedures contained in the Agreement to determine a difference of view between the parties as to the term "cost beneficial" used in the Agreement.

During his submissions Mr Tracey QC, appearing for the VPTC, argued that the jurisdictional arguments raised by the first and third appeals were essentially the same, the first appeal being against the decision of Hancock SDP that he had jurisdiction to make the decision the subject of the third appeal.

In addition, Mr Tracey QC, argued that the trigger for the Commission's involvement under the Agreement could only be if the matter in dispute arises as a result of the application of the Agreement. In his submission the dispute as to the meaning of terms in the Agreement predated the certification of the Agreement and could not arise as a result of the application of the Agreement.

Having regard to the decision we have reached in relation to the third appeal it is unnecessary to consider further the submissions in relation to the first appeal. Leave to appeal is refused.

THE SECOND APPEAL

The second appeal is against a decision [Print M0174], in which Hancock SDP rejected an application by the VPTC to vary the agreement to remove "ambiguity or uncertainty".

On 27 January 1995 the VPTC lodged an application under s.113(2) of the Industrial Relations Act 1988 (the Act) for the purpose of removing ambiguity or uncertainty from the agreement.

Paragraph 170MK(1)(e) allows an agreement to be varied under s.113(2) for the purpose of, among other things,:

"(i) removing ambiguity or uncertainty . . ."

Section 113 relevantly provides that:

". . . (2) The Commission may, and shall it if considers it desirable for the purpose of removing ambiguity or uncertainty, vary an award."

Senior Deputy President Hancock dismissed the application by the VPTC.

The appeal grounds advanced by the VPTC were, in summary, as follows:

i. His Honour applied the wrong test in determining whether there was an uncertainty or ambiguity. The existence of an ambiguity or uncertainty should be determined as a matter of objective fact and his Honour erred in applying a subjective test.

ii. His Honour should have found that there was an ambiguity or uncertainty and accordingly thereafter exercised his discretion as to how that ambiguity or uncertainty could be resolved.

iii. It is not a valid exercise of the SDP's power to deal with any ambiguity or uncertainty through the dispute settling procedure.

In our view the process envisaged by ss.70MK and 113(2) involves firstly determining whether or not an ambiguity or uncertainty exists and secondly whether it is desirable to vary the agreement for the purpose of removing the ambiguity or uncertainty.

The first part of this process involves an objective assessment as to whether or not an ambiguity or uncertainty exists.

In relation to the nature of the test to be applied in identifying an ambiguity or uncertainty, we note the following observation of Gray J in Printing & Kindred Industries Union & another v. Davies Bros Ltd (PKIU Case) [(1986) 18 IR 444 at 449]:

"There appears to be no clear test laid down for determining when an ambiguity exists. At one extreme is the statement of Isaacs ACJ in Pickard v. John Heine & Son Ltd (1924) 35 CLR 1, at 9, where his Honour said, in interpreting an award: `Personally I see no ambiguity. But as the interpretation I favour was disputed at the Bar, it must be because there is such ambiguity.' At the other extreme is the statement of Viscount Simonds in Kirkness v. John Hudson and Co Ltd [1955] AC 696, at 711-712, with reference to an earlier decision of the House of Lords interpreting a statute:

`In this case Lord Buckmaster was of opinion, as had been at least one of the members of the Court of Appeal, that the first contention of the Crown was right, and that the words of the earlier Act had the meaning they sought to put upon them. The other noble and learned Lords thought otherwise. It would have been easy then to say that, since judicial opinion differed as to the meaning of these words, there was such an ambiguity as to justify recourse to a later Act to resolve it. But the decision of this House was unanimously to the contrary. That means that each one of us has the task of deciding what the relevant words mean. In coming to that decision he will necessarily give great weight to the opinion of others, but if at the end of the day he forms his own clear judgement and does not think that the words are "fairly and equally open to divers meanings" he is not entitled to say that there is an ambiguity. For him at least there is no ambiguity and on that basis he must decide the case.'

Care must be taken, of course, not to create an ambiguity by bringing into consideration external factors which may be used legitimately to resolve an ambiguity if one exists. If I were to apply the test laid down by Viscount Simonds, I should hold that no ambiguity arises in the present case, because the word `employees' bears its ordinary, natural and unrestricted meaning in the context of the SEM Agreement and the Newspaper Printing Agreement 1979. On the other hand, if I were to apply the test applied by Isaacs ACJ, I should hold that an ambiguity arises because of the rival contentions of counsel. Perhaps in a case such as this I should hold that an ambiguity does exist, and to see where the application of extrinsic aids to interpretation leads in the construction of the document."

In our view the approach adopted by his Honour Gray J. in the PKIU case is a sensible one and should be applied by the Commission in dealing with applications to vary agreements for the purpose of removing ambiguity or uncertainty. Accordingly the Commission would generally err on the side of finding an ambiguity or uncertainty in circumstances where there are rival contentions advanced before it and an arguable case can be made out for more than one contention.

Once an ambiguity or uncertainty has been identified it is then a matter of discretion as to whether or not the agreement should be varied to remove the ambiguity or uncertainty. In exercising such a discretion the factors to which the Commission should have regard would include the intention of the parties at the time the Agreement was made. Such an intention may be discerned from the circumstances at the time and the subsequent conduct of the parties.

In dismissing the application by the VPTC his Honour concluded as follows:

"The principal effect of the alterations would be to resolve matters that were left unresolved by the EBA. The fact is that the parties, in the negotiations leading to the EBA, were unable to settle various issues, but chose nevertheless to conclude an agreement. In doing so, they relied upon further negotiations and the dispute settlement procedures to answer the as-then unanswered questions. This was a conscious and deliberate choice. I do not think that the terms of Section 170MK(1)(d)(i), quoted above, relate to this kind of `ambiguity or uncertainty'. Rather I see them as relating to a situation where the formal agreement fails to

capture fully and clearly the joint intentions of the parties. If I were of a different view about the construction of the Act, I would nevertheless not exercise a discretion to vary an ostensible agreement so as to impose on a party an outcome which it would not countenance when it entered the agreement." [Print M0174, at pp. 1-2]

We think this passage was clearly intended to express Hancock SDP's view that the agreement was not ambiguous or uncertain and that the parties had quite deliberately agreed on particular terms and those terms in fact reflected the intentions of the parties. In this regard his Honour seems to have decided that s.170MK(1)(e)(i) does not apply to the circumstance where the parties had quite deliberately agreed on particular terms and those terms in fact reflected the intentions of the parties, even if those terms were ambiguous or uncertain. In so far as his Honour's decision could be said to have sought to limit the scope of s.170MK(1)(e)(i) only to situations where the agreement fails to capture fully and clearly the joint intentions of the parties we are unable to agree with it. The relevant statutory provision applies to all ambiguities or uncertainties.

However the question of whether or not any ambiguity was intended by the parties is clearly a factor which is relevant to the exercise of the Commission's discretion in deciding whether or not to vary an agreement to remove an ambiguity or uncertainty. In this regard it is apparent from his Honour's decision that he was of the view that even if his construction of the Act was wrong he would nevertheless not have exercised his discretion to vary the agreement in a manner which would impose on a party an outcome which it would not have countenanced when it entered into the agreement.

The reason advanced for not exercising his discretion to vary the Agreement was that the variation would not have been within the contemplation of the other parties to the Agreement at the time they entered into the Agreement. In our view the reason given by his Honour is a factor which he was entitled to take into account in the exercise of his discretion.

Accordingly having regard to the fact that the proper construction of the relevant statutory provisions would not have led to a different result we are of the view that - save in relation to one matter - the decision does not warrant rectification on appeal. The one issue with which we have a reservation concerns that part of the VPTC's application dealing with the dispute settlement clause. It was apparent in the proceedings before us that this matter is at the heart of the issues between the parties.

In essence the appellant argued that the intention of the parties was to establish a process for the negotiation of the unresolved issues whereas the respondent unions characterise the Agreement as one whereby unresolved issues were to be dealt with by discussion or negotiation between the parties but if that was unsuccessful then the issue would be determined by the Commission.

In our view it is arguable that the scope of the matters capable of being determined by the Commission pursuant to the dispute settlement clause is ambiguous. There is also an ambiguity in relation to whether such a determination was intended to bind the parties. It is desirable that these ambiguities be removed. These proceedings demonstrate the need for parties to ensure that agreements are carefully drafted to ensure that they reflect the intentions of the parties.

Mr. Tracey QC, albeit in the context of his own argument on behalf of the appellant invited the Commission to say that Hancock SDP was wrong in saying that there was not ambiguity or uncertainty and then remit the matter back to him to determine whether the variations are appropriate to resolve the ambiguity. We think that this is the proper course given his Honour's knowledge of the circumstances surrounding the making of the Agreement. Accordingly we uphold the appeal is respect of his Honour's decision in relation to the dispute settlement clause only and remit this matter back to him for further consideration in the light of our decision. The second appeal is dismissed in all other aspects.

In remitting this matter back to his Honour we make three observations.

First, the resolution of the ambiguity in the dispute settlement clause should not be limited to a consideration of the variation proposed by the VPTC in it's initial application.

Second, a dispute settlement clause which envisages the resolution of unresolved issues by Commission determination is not inconsistent with the Commission's Statement of Principles. Indeed the Principles specifically allow for such a process - paragraph 2.1 of the Statement of Principles is in the following terms:

"A central feature of the Act is the promotion of enterprise bargaining and the Commission's obligation to facilitate agreements and promote bargaining.

The Commission may facilitate bargaining in both minimum rates and paid rates areas in four main ways:

. . . (b) By generally not arbitrating in favour of claims above or below the safety net of award wages and conditions, except:

(i) where arbitration is undertaken at the invitation of the parties, in which case the Commission's decision should be incorporated into an agreement . . ."

Third, in our view the Commission may, as a matter of jurisdiction, certify an agreement incorporating a process whereby unresolved issues are determined by the Commission. For example the parties may have agreed on the quantum of wage increases but have not been able to agree on their timing. In such circumstances the parties may agree to have the unresolved issues determined by the Commission. The parties may also agree that such a Commission determination is binding on them either through the making of an order or by a variation to the agreement. In circumstances where the Commission's determination is to result in a variation of the agreement care would need to be taken to ensure compliance with s.170ME and s.170ML.

The appellant sought to argue that s.170MH acts to limit the Commission's role pursuant to dispute settlement procedures in certified agreements. Section 170MH is in the following terms:

"Procedures in an agreement for preventing and settling disputes between employers and employees covered by the agreement may, if the Commission so approves, empower the Commission to do either or both of the following:

(a) to settle disputes over the application of the agreement;

(b) to appoint a board of reference as described in section 131 for the purpose of settling such disputes."

We do not agree that s.170MH acts to limit the Commission's involvement in the manner suggested by the appellant. We have reached this conclusion having regard to the language of the section and the context in which it appears. The use of the word "may" in s.170MH is not suggestive of an intention to limit the Commission's role in the manner proposed by counsel for the VPTC and can be contrasted with the more mandatory language of other sections in Part VIB. For example ss.170MC(1) provides that the Commission "must certify an agreement if, and must not certify an agreement unless, it is satisfied that . . ."

The interpretation of s.170MH must also have regard to the context in which it appears. The objects of Part VIB are, among other things, to facilitate the making and certifying of agreements under Division 2. [s.170LA(1)(a)(i)] The Commission is obliged, as far as practicable, to perform it's functions under Part VIB in a way that furthers the objects of the Part. [s.170LA(2)]

In our view it would facilitate the making and certifying of agreements under Division 2 if the Commission gave effect to an agreement whereby unresolved issues were determined by the Commission. Such a determination would only be limited by the ambit of the relevant dispute.

THE THIRD APPEAL

The third appeal is against a decision of Hancock SDP [Print M0664], in which Hancock SDP determined pursuant to the dispute settlement procedures in the agreement that:

· the wage increases of 3% should be paid with an operative date of 1 November 1994; and

· that further increases equal to 0.4% of wages in force on 31 October 1994 apply from 1 April 1995.

Hancock SDP went on to remark that there remained the possibility of a further increase amounting to 2.6% and suggested that parties should negotiate about cost beneficial measures commenced with increases of that magnitude. We shall refer to this appeal as the third appeal.

Mr. Tracey QC, submitted that the decision, the subject of the third appeal, must be characterised in one of the following ways:

· · a determination which is to be incorporated in clause 1 of the agreement and hence a variation of the agreement;

· determining provisions which should be reflected in a foreshadowed agreement; or

· a mere expressions of opinion which has no binding force.

For purposes of dealing with the first and third appeals it is convenient to discuss the matter in context of those alternative characterisations of the decision.

We do not accept that the first characterisation can be regarded as accurate. There is nothing in either the decision as to jurisdiction of Hancock SDP or his final decision in the matter which indicates in any way that he is purporting to vary the agreement. Rather, it is clear from a reading of both decisions, that Hancock SDP regards himself as exercising the disputes settlement procedures contained in the agreement. We will later in this decision discuss the issue of whether Hancock SDP was correct in taking the view that the procedures were applicable to the issue before him. That question aside, however, we think it is apparent that Hancock SDP did not regard himself as considering any application to vary the agreement nor did he purport to make any order or award having that affect.

The second suggested characterisation of what Hancock SDP did was that he was making a determination to be reflected in a foreshadowed agreement. This characterisation involves an argument by the VPTC that the agreement should be construed as an agreement setting up procedures for the negotiation of a further certified agreement. The relevant provisions of the agreement as follows:

"Arising from conciliation proceedings in the Commission today, and the Commission decision of 30.9.94, the parties have agreed to the following measures for the purposes of finalising an Enterprise Bargaining agreement, pursuant to Part VIB, Division 2 of the Act

1. That wage increases shall be paid in three (3) installments of two (2) percent for implementation of agreed cost beneficial productivity measures within each business unit and/or the Peak Co-ordinating Committee. The first payable on and from 1 November 1994 for agreed cost beneficial measures that are available for and subject to progressive implementation. The second and third payable on and from 1 January 1995 and 1 April 1995 subject to substantial implementation of the agreed measures provided that in the event of cost beneficial measures (including any additional savings arising from Clause 3) being implemented earlier than the above operative dates, such earlier dates shall become the operative date.

2. That the productivity and efficiency measures that shall be incorporated in the Enterprise Bargaining Agreement shall include any additional savings from Transport Reform Agreement in excess of $245M, if any, and further additional measures identified in each business unit and/or the Peak Co-ordinating Committee and substantially implemented such as to provide a cost beneficial outcome beyond the Reform Agreement savings after taking into account the costs of the wage increases in point 1 above." [Print M0174]

The VPTC contends that these passages support the proposition that another certified agreement should be entered into following the completion of the procedures set out in the agreement. It points to the words "for the purposes of finalising an Enterprise Bargaining agreement" as manifesting that clear intention. As we understand it is that the Agreement is procedural only and not intended to effect substantive conditions of employment.

The unions on the other hand argue that there was no contemplation of a further certified agreement and that the words relied on merely set out the history of the conciliation leading up to the finalisation of the agreement.

We think that taken as a whole the passages set out above do not contemplate the certification of a further agreement. If it were the case we do not see the need to specify operative dates as were specified in clause 1 of the agreement or to provide that "in the event of cost beneficial measures (including any additional savings arising from clause 3) being implemented earlier than the above operative dates, such earlier dates shall become the operative date". We do not think that provisions such as these are consistent with having in contemplation the execution of a further agreement providing for the substantive payment of pay increases.

However, even if we are wrong about this and the Agreement can be said to be ambiguous in this regard, we believe any ambiguity can be resolved by reference to the transcript of what took place before Hancock SDP on 26 October 1994, when the Agreement was certified and in particular to the submissions of the VPTC on that day. At page 197 of the transcript the following was put to Hancock SDP by the advocate for the VPTC:

"Thank you, your Honour. Your Honour, the VPTC is pleased to advise the commission that having had the opportunity to consult with our principals as it was expressed when we were last before you, the corporation has been authorised by the government to proceed with an enterprise bargaining agreement as is proposed in the framework set out in the documentation before the commission today. The fact of the matter is, and I think the parties recognise this your Honour, that a certain intensity of negotiations is now required to achieve the savings from the productivity measures that will meet the requirements to enable the pay increases arising therefrom to be able to be paid.

. . .

And we would like to say that whilst the situation to date in that respect has been a quite positive one, we believe that it ought not to be considered that the rest of the path that we are following now is going to be a necessarily rosy one. And we believe that it is necessary to recognise that there is the potential for disputation in relation to these matters, and therefore it is essential as we would see it, that all the parties observe those dispute settling procedures that are set out in the agreement."

We do not think these passages are consistent with the notion that a further certified agreement was in contemplation. Rather, they are consistent with the notion that the Government has approved a particular framework to be reflected in the agreement, now certified, which agreement provides for pay increases and in respect of which, if difficulties arise, the dispute settling procedures will be followed.

Accordingly, we are not able to accept the suggestion that in relation to the decision, the subject of the third appeal, Hancock SDP was determining provisions which ought to be incorporated in a subsequent certified agreement between the parties.

In relation to the third characterisation advanced by the VPTC it is clear that in order to constitute an award or order within the meaning of s.45(1)(b) there must be a clear intention to make a binding order. Compliance with the requirement in s.143(2) and setting out the terms of the command or direction which the order is intended to make are indicative of an intention to make an award or order. However, such an intention may be established from the circumstances of the case notwithstanding the absence of a formal order complying with the requirements of Division 6 of the Act. [see BLF v Hornibrook (1983) 289 CAR 70; 4 IR 336; and Hinspeter Crane Service Pty Ltd Appeal (Munro J., Polites DP and Lewin C.) Print J7180, 22 March 1991]

In the circumstances of this matter we are not satisfied that there was a clear intention to make a binding order. In reaching this conclusion we have had regard to the absence of compliance with the requirement in s.143(2) and the fact that the Senior Deputy President declined to express an opinion as to whether or not his decision was intended to be binding when it was put to him in the proceedings which resulted in the decision which is the subject of the first appeal. [Print L9550 at p.7]

Given that no award or order has been made as a result of his Honour's decision of 5 April 1995 (Print M0664) it follows that no appeal lies from the decision. Accordingly we would refuse leave to appeal in respect of the third appeal.

CONCLUSION

We refuse leave to appeal in respect of the first and third appeals.

In relation to the second appeal leave to appeal is granted and the appeal upheld in relation to the ambiguity in the dispute settlement clause only. We remit this matter back to his Honour for further consideration in the light our decision pursuant to s.45(7)(c). In all other respects the second appeal is dismissed.

In conclusion we note that the nature of any future proceedings in respect of these matters is in the hands of the parties. However, at least two options present themselves. The parties may seek to have the ambiguity in relation to the dispute settlement procedure in the Agreement resolved. Alternatively the parties may wish to have issues relating to the quantum and timing of wage increases dealt with by the Commission as a special case.

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