PR917548

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AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

Workplace Relations Act 1996

s.45 appeal against decision

PR913098 issued by Commissioner Hingley on 11 January 2002

Tenix Defence Pty Limited

(C2002/861)

TENIX DEFENCE SYSTEMS PTY LIMITED CERTIFIED AGREEMENT 2001-2004

[PR902975 [AG806735]]

(ODN AG2001/1740)

s.170MD(6) variation of certified agreement

Tenix Defence Pty Limited

(AG2001/5970)

Shipbuilders

Shipbuilding industry

   

VICE PRESIDENT ROSS

 

SENIOR DEPUTY PRESIDENT O'CALLAGHAN

 

COMMISSIONER FOGGO

MELBOURNE, 9 MAY 2002

Variation of a certified agreement - ambiguity or uncertainty - s.170MD(6) Workplace Relations Act 1996 (Cth) - the identification of an ambiguity or uncertainty requires the determination of a jurisdictional fact - role of Full Bench in appeals from such findings - appeal upheld - agreement varied but not in the terms sought by Tenix.

DECISION

Introduction

[1] Tenix Defence Pty Ltd (Tenix) undertakes a shipbuilding business at its shipyard in Williamstown, Victoria. The principal work performed by Tenix at the shipyard relates to the ANZAC Ship Project (ASP).

[2] The ASP is a collaborative arrangement between the Governments of Australia and New Zealand for the development and construction of ten new ANZAC Class guided missile frigates - eight for the Royal Australian Navy and two for the Royal New Zealand Navy.

[3] The contract for the ASP was awarded to Tenix on 10 November 1989. The ASP is the only contract currently performed at the Williamstown Shipyard.

[4] On 20 July 2001, the Applicant changed its name from "Tenix Defence Systems Pty Ltd" to "Tenix Defence Pty Ltd".

[5] Tenix is a party to the Tenix Defence Systems Pty Ltd Certified Agreement 2001-2004 [AG806735] (the Agreement). The Agreement was certified under Division 2 of Part VIB of the Workplace Relations Act 1996 (WR Act) by Commissioner Hingley on 9 April 2001. The nominal expiry date of the Agreement is 9 April 2004.

[6] The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU), the Australian Workers Union (AWU), and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union (the CEPU) are also parties to the Agreement.

[7] The Agreement applies to all employees of Tenix who are covered by the Tenix Defence Systems Pty Limited Award 2001-2004 [AW807056] (the Tenix Award). The Tenix Award was made by the Commission, as a consent award, on 2 May 2001. The Tenix Award came into force on the beginning of the first full pay period on or after 9 April 2001.

[8] The unions named above (the AMWU, AWU and CEPU), are also named respondents to the Tenix Award. The Tenix Award applies to the employment of all employees of Tenix as "shipbuilders" (which includes mechanical, electrical and production employees).

[9] Tenix currently operates on the basis of a three-shift rotation (day, afternoon and night). The shifts are currently all conducted on the basis of nine hours on site, which includes a one half hour meal break.

[10] Employees are paid for eight and a half hours work per shift. The day shift, undertaken by the majority of employees, currently commences at 6.00 am and finishes at 3.00 pm (prior to Monday 17 September 2001, the day shift commenced at 7.00 am and finished at 4.00 pm). The afternoon shift commences at 3.00 pm and concludes at midnight. The night shift commences at midnight and concludes at 9.00 am.

[11] The existing shift cycle is five (8.5 hour) days one week, an unpaid day off (UDO) every second Monday, followed by three (8.5 hour) days and then a "short Friday", whereby the employees finish at 2.30 pm (an 8 hour shift).

[12] In June/July 2001, Tenix identified a need to implement changes to its current work organisation in order to enhance the effectiveness of its operations so as to meet the requirements of the ASP. In particular, Tenix sought to address the problem of an overlap of shifts that had been identified following the introduction of a "proper" afternoon shift in May 2001, pursuant to the Agreement.

[13] From July 2001, Tenix sought to implement changes to its rosters and work cycle to address this problem of overlap. One of the particular proposals sought to be introduced by Tenix, the introduction of a 19 day work cycle, was strongly objected to by the unions respondent to the Agreement.

[14] In proceedings before Commissioner Hingley in relation to three applications for orders under s.127 of the WR Act (made by Tenix (C2001/4039), the AMWU (C2001/3970), and the CEPU (C2001/3974) respectively), it was submitted on behalf of the unions that Appendix 3 (the calendar) and clause 34 (Annual Closedown) of the Agreement, fixed the existing work cycle for the life of the Agreement.

[15] Commissioner Hingley did not grant any of the orders sought by the parties. In deciding not to grant the order sought by Tenix, Commissioner Hingley expressed the view that he did "not believe it is open to the company to implement its present proposal during the term of the agreement."1 Commissioner Hingley also expressed the view, based on the evidence before him, that "any ordinary person reading the document [the Agreement] would see that the calendar represents the position for the next three years."2

[16] On 27 September 2001, Tenix applied to the Commission for an order to vary the Agreement pursuant to s.170MD(6) of the WR Act to remove ambiguity and uncertainty. The variation sought was to insert the following words at the end of clause 34 of the Agreement.

[17] Tenix submitted that clause 34 and Appendix 3 of the Agreement were ambiguous and uncertain insofar as they related to the ability of Tenix to vary work cycles.

[18] The application was heard by Commissioner Hingley on 7 and 18 December 2001. On 19 December 2001, Commissioner Hingley also conducted an informal site inspection of Tenix's shipyard at Williamstown in Victoria.

[19] The following witnesses gave evidence during the proceedings:

[20] On 11 January 2002, Commissioner Hingley issued the decision subject to appeal3. In dismissing the application the Commissioner found that there was no ambiguity or uncertainty in the relevant provisions:

[21] The Commissioner further held that even if he had found more than one contention was arguable and was required to consider the exercise of the discretion to vary the Agreement, he would decline to do so. The Commissioner's reasons for adopting such a course are set out at paragraphs 77-83 of his decision, in the following terms:

The Appeal

[22] The nature of an appeal under s.45 of the WR Act was the subject of consideration by the High Court of Australia most recently in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (Coal & Allied). Gleeson CJ, Gaudron and Hayne JJ, in a joint judgment, said:

[23] The grounds of appeal relied on by Tenix in this matter can be categorised under two broad heads:

1. the Commissioner failed to correctly apply the appropriate test for determining the existence of an ambiguity or uncertainty and erred in concluding that no ambiguity or uncertainty exists; and

2. the Commissioner's discretion miscarried by making errors in the decision making process in concluding that he would not in any event resolve any uncertainty or ambiguity in the manner sought by Tenix.

[24] Tenix contends that the determination of whether there is an ambiguity or uncertainty involves the determination of a jurisdictional fact; it is not a matter which involves the exercise of a discretion. Accordingly it is said that on appeal the Commission is concerned with the correctness of the conclusion reached in the decision at first instance, not whether that conclusion was reasonably open.

[25] The second category of appeal grounds go to the exercise of the Commissioner's discretion in declining to vary the Agreement. In order to succeed on these grounds Tenix must establish an error of the type identified by the High Court in House v R6. The types of error that may constitute grounds for review of a discretionary decision of the kind here under consideration were re-stated in Coal & Allied in the following way:

[26] Before turning to consider the arguments advanced on appeal we propose to deal with the proper construction and application of s.170MD(6).

Section 170MD(6)

[27] Section 170MD(6) relevantly provides:

[28] Before the Commission exercises its discretion to vary an agreement pursuant to s.170MD(6)(a) it must first identify an ambiguity or uncertainty.8 It may then exercise the discretion to remove that ambiguity or uncertainty by varying the agreement.

[29] The first part of the process - identifying an ambiguity or uncertainty - involves an objective assessment of the words used in the provision under examination.9 The words used are construed having regard to their context, including where appropriate the relevant parts of a related award. As Munro J observed in Re Linfox - CFMEU (CSR Timber) Enterprise Agreement 1997:

[30] We agree that context is important. Section 170MD(6)(a) is not confined to the identification of a word or words of a clause which give rise to an ambiguity or uncertainty. A combination of clauses may have that effect.11

[31] The Commission will generally err on the side of finding an ambiguity or uncertainty where there are rival contentions advanced and an arguable case is made out for more than one contention.12

[32] Once an ambiguity or uncertainty has been identified it is 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 Commission is to have regard to the mutual intention of the parties at the time the agreement was made.13

[33] We agree with Tenix that the first step in dealing with a s.170MD(6)(a) application - the identification of an ambiguity or uncertainty - requires the determination of a "jurisdictional fact". In Corporation of the City of Enfield v Developmental Assessment Commission the joint judgment of Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ described the term "jurisdictional fact" in these terms:

[34] Similarly in Re: CFMEU - Termination of Bargaining Periods, Lee and Madgwick JJ said:

[35] In the context of s.170MD(6)(a) the Commission must first identify the existence of an ambiguity or uncertainty before exercising its discretion to vary the agreement. We agree with the Full Bench in Re: CFMEU Appeal which described the existence of an ambiguity or uncertainty as "a necessary statutory prerequisite to any variation being made."16

[36] In dealing with an appeal from the determination of a jurisdictional fact a Full Bench of the Commission is concerned with whether the member at first instance reached the right conclusion. It is not concerned simply with whether the decision of the single member was reasonably open to him or her.17 As Gummow J pointed out in Minister for Immigration and Multicultural Affairs v Eshetu,18 a court or tribunal cannot give itself jurisdiction by erroneously deciding that a jurisdictional fact exists. In our view the converse also applies - an erroneous decision about the non-existence of a jurisdictional fact would be a constructive failure to exercise jurisdiction.

[37] We now turn to consider for ourselves whether the Agreement is ambiguous or uncertain.

Ambiguity or Uncertainty

[38] Section 170MD(6) empowers the Commission to vary a certified agreement for the purpose of removing ambiguity or uncertainty. Tenix contends that clause 34 and Appendix 3 of the Agreement are ambiguous and uncertain for the reasons identified below. Before turning to the detail of the arguments put before us it is necessary to set out the relevant provision in the Agreement and the Award.

[39] Clause 34 of the Agreement is headed `Annual Close Down', it provides: "Further to sub-clause 7.1.13 of the Award, the following Easter and Christmas close downs will apply." The clause goes on to specify the date on which work ceases and the date on which there is a return to work for each of the Easter and Christmas breaks from Easter 2001 to Christmas 2003/4. The clause concludes with the words: `NB Appendix 3'. As the Commissioner noted in the decision subject to appeal the abbreviation "NB" stands for nota bene or note well.

[40] Clause 7.1.13 of the Award is the clause which deals with annual close down as part of the annual leave provisions.

[41] Appendix 3 of the Agreement is headed "Leave and RDO Calendar". It sets out the days of each month from January 2001 to March 2004 noting each short day, public holiday, annual leave day and RDO. A copy of the Appendix is attached to this decision at Annexure 1.

[42] Clause 10 of the Agreement deals with the relationship to the parent award (the Tenix Award). It states:

[43] Clause 6 of the Tenix Award deals with hours of work, shift work, meal breaks, overtime, public holidays and Sundays. Sub-clause 6.1 deals with hours of work of day workers and sub-clause 6.2 has similar provisions relating to shift work. Clause 6 is set out in Annexure 2.

[44] Tenix contends that the above provisions clearly vest Tenix with the right to determine the way in which hours are worked. This is said to be emphasised by the following provisions:

[45] Clause 11.3 of the Agreement records, among other things:

[46] Clause 11.5 of the Agreement records the parties' agreement to ensuring that terms and conditions will be based upon specific needs of the enterprise; and that Tenix and its employees will constantly seek improvements in safety, methods of production, work organisation, quality and the other areas which will enhance the effectiveness of Tenix's operations.

[47] Clause 11.8 of the Agreement records the agreement of the parties to continue to achieve real and sustained performance improvement by embracing a philosophy of continuous improvement.

[48] Clause 12 of the Agreement records the parties' agreement that "international or other relevant Best Practices may be identified and adopted in measuring and improving the efficiency of all workplace functions." In this context the parties agreed that "World Best Practice" is:

[49] We now turn to the question of whether the Agreement is ambiguous or uncertain. In this regard the Commission has to make an objective judgement about whether, on a proper construction of the relevant provision of an agreement, the wording of the provision is susceptible to more than one meaning.19 In SJ Higgins Pty Ltd and others v CFMEU, after referring to the Victorian Public Transport case, SDP Williams said:

[50] Tenix contends that the way in which the Agreement and Award provisions set out above interact and the extent to which it can be said that Appendix 3 regulates work cycles for the period of the Agreement is "highly ambiguous and uncertain". Tenix contends that there are at least three possible interpretations of the nature of Tenix's obligations under clause 34 and Appendix 3 of the Agreement:

1. Clause 34 simply sets out the compulsory annual leave days for six particular periods between Easter 2001 and January 2004. Appendix 3 merely sets out those annual leave days in calendar form. Rostered days off are marked off in the calendar for convenience of understanding but without imposing obligations or requirements. Clause 34 and Appendix 3 does not impose any obligations in relation to rostered days off.

2. Insofar as clause 34 specifies particular days on which work is to cease and when employees are to return to work, those days must be observed. To the extent that those absences incorporate more than the specified number of days' annual leave, then the additional days must be observed through rostered days off or some other permissible basis.

3. The calendar in Appendix 3 nominates particular days for annual leave and rostered days off and it represents the position for the next three years in the sense that the nominated days are to be observed.

[51] Tenix contended that the last possible interpretation was "barely arguable" given that award and agreement obligations need to be expressed in clear and plain language.21

[52] In reply the AMWU and CEPU, supported by the AWU, contended that Commissioner Hingley was correct in determining that the Agreement is not ambiguous or uncertain. Appendix 3 is a calendar for the years 2001, 2002, 2003 and 2004. It clearly sets out the days on which RDOs and Public Holidays fall and when annual leave must be taken. It also sets out the days which are to be worked as short days. The respondents submit that the third "possible interpretation" identified by Tenix is the only arguable interpretation of these provisions.

[53] On balance we find that the extent to which Appendix 3 of the Agreement can be said to regulate work cycles for the period during which the Agreement is in operation is ambiguous and uncertain. In our view it is arguable that there is some question as to the status of the calendar - what obligations or entitlements does it create in the context of the Agreement and the Award? The absence of express provisions stating that the RDOs will be observed on, and cannot be altered from, the days in the calendar gives rise to an ambiguity or uncertainty.

[54] As we have identified an ambiguity or uncertainty in the Agreement it is now 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 Commission is to have regard to the mutual intention of the parties at the time the Agreement was made.

[55] In the decision subject to appeal the Commissioner concluded that even if he had found the Agreement ambiguous or uncertain he would not have exercised his discretion to vary the Agreement. The Commissioner's reasons for adopting this course are set out at paragraphs 77 to 83 of his decision.22 It is apparent from his reasons that the Commissioner rejected Tenix's submissions as to what were the mutual intentions of the parties. The Commissioner went on to say:

[56] The above extract discloses that in considering the exercise of his discretion the Commissioner limited himself to considering whether or not he should give effect to Tenix's primary or alternative variation proposals. Having identified an ambiguity or uncertainty the Commission was empowered to remove it by varying the Agreement in a manner which gave effect to the mutual intentions of the parties at the time the Agreement was made. In that regard the Commissioner was not limited by the form of the application before him.

[57] This aspect of the Commissioner's decision amounts to no more than a statement to the effect that even if he had found an ambiguity or uncertainty in the Agreement he would not have varied the Agreement in the manner proposed by Tenix. For reasons which will become apparent we agree with that conclusion and we do not propose to vary the Agreement in the manner proposed by Tenix. But that is not the end of the matter. There is a broader issue which was not dealt with in the decision subject to appeal. That is, should the Agreement be varied to remove the ambiguity or uncertainty in a manner other than that proposed by Tenix. In the proceedings before us Tenix conceded that if we formed the view that the objectively ascertained mutual intention of the parties was that the work cycle implicit in Appendix 3 was to remain unchanged for the life of the Agreement then we could properly give effect to that intention by varying the Agreement pursuant to s.170MD(6).23

[58] To the extent that it is necessary to do so we have decided that the approach adopted by the Commissioner, in limiting his consideration of the issue to the variations proposed by Tenix, amounted to an error warranting correction on appeal.

[59] In deciding whether we should exercise our discretion and vary the Agreement, and the manner of such a variation, we have had regard to the submissions and evidence in the proceedings at first instance and the submissions on appeal.24

[60] In the proceedings at first instance Tenix advanced three broad propositions in support of the first interpretation:25

_ As a matter of construction, taking into account the nature of award and agreement obligations and the need for such obligations to be expressly stated rather than implied, the first interpretation should be adopted.

_ The mutual intention of the parties. In this regard the evidence establishes that there was no agreement to alter the rights of Tenix to initiate change. The negotiations merely addressed the question of annual close downs and did not go beyond that.

_ The objects of the WR Act. Considerations of efficiency, productivity and the need for the sort of flexibility Tenix seeks point in favour of granting the application.

[61] We note that on appeal the first proposition was changed somewhat in that Tenix submitted that the second interpretation was "probably a better [sic] interpretation of all".26

[62] We have considered each of the interpretations advanced.

[63] We do not find the first interpretation - that is, that clause 34 simply sets out the compulsory annual leave days for six particular periods between Easter 2001 and January 2004 - to be persuasive. On its face clause 34 is not so limited. It states:

 

April 2003

[64] Clause 34 includes a reference to Appendix 3, which is the leave and RDO calendar. One looks at the calendar to ascertain the make up of the days which constitute the closedowns prescribed in clause 34. For instance the part of the calendar dealing with the Easter 2003 closedown is set out below:

[65] The Easter 2003 closedown is for ten days - work ceases on 17 April 2003 and resumes on 28 April 2003. The ten days consist of:

[66] The interpretation advanced by Tenix relies on the heading to clause 34 and the cross reference to clause 7.1.13 of the Award. Clause 7.1.13 is the subclause which deals with annual close down as part of the annual leave provisions. But in our view these features of the clause do not operate to confine its operation in the manner suggested by Tenix.

[67] The words of clause 34 are clear and it is inappropriate to confine them by reference to the heading or to clause 7.1.13 of the Award.27

[68] A useful summary of the law with respect to the use of headings in statutory construction was given by Murray CJ in Ragless v Prospect District Council:

[69] In this instance the language of clause 34 is clear and to the extent that it is inconsistent with the clause heading, the heading must give way.

[70] The second interpretation advanced - and the one contended for by Tenix - is that insofar as clause 34 specifies particular days on which work is to cease and when employees are to return to work, these days must be observed.

[71] Tenix contends that we should adopt this construction of clause 34 and vary the Agreement, pursuant to s.170MD(6), by inserting the following words at the end of clause 34:

[72] We accept the interpretation of clause 34 advanced by Tenix. But that does not lead inexorably to the adoption of the variation proposed. The flaw in Tenix's submission, in our view, is that interpretations two and three are somehow mutually exclusive. We do not think they are.

[73] The third interpretation deals with Appendix 3, not clause 34. Tenix contends that it is arguable - though barely so - that Appendix 3 nominates particular days for annual leave and rostered days off and it represents the position for the next three years in the sense that the nominated days must be observed. In our view the interpretation posited is more than barely arguable. We think it is the proper construction of Appendix 3 having regard to its context within the Agreement and the circumstances in which it was negotiated.

[74] Three matters in the Agreement itself support the construction set out above:

> the heading of Appendix 3 - "Leave and RDO Calendar";

> clause 34 concludes with the words "NB Appendix 3". The abbreviation "NB" stands for nota bene or note well.

> Appendix 3 clearly identifies the short days, public holidays, RDOs and annual leave days over the life of the Agreement.

[75] We also note that Appendix 3 is mentioned in clause 2, Arrangement.

[76] The identification in Appendix 3 of the RDOs to be taken over the life of the Agreement begs the question - why were they set out if the intention was not to fix them for the duration of the Agreement? The interrelationship with clause 34 provides a partial answer. The closedowns prescribed in clause 34 made it necessary to specify which of the days of the closedown were annual leave days and which were RDOs or public holidays. But this does not provide an adequate explanation for why the other RDOs - those outside of the closedowns - were specified.

[77] The third interpretation posited by Tenix provides the answer. Appendix 3 nominates particular days for annual leave and RDOs and it represents the position for the next three years in the sense that the nominated days must be observed.

[78] Tenix contends that the style of the Agreement tells against the notion that Appendix 3 was intended to be prescriptive. It is said that the Agreement is more in the nature of an expression of intent and approach - it is not a prescriptive agreement. We agree that some of the clauses in the Agreement are of the type suggested by Tenix - for example clauses 11 and 12. But there are also a number of provisions which are prescriptive in nature, for example:

[79] The general statements of intent and approach in clauses 11 and 12 must be read subject to the specific rights and obligations set out elsewhere in the Agreement.

[80] We do not agree with the submission that the style of the Agreement tells against the construction of Appendix 3 we have adopted.

[81] The negotiations for the Agreement also shed some light on the intended effect of Appendix 3. In that context Tenix contended that the proposition that the parties intended to lock in the nine day work cycle for the duration of the Agreement is simply not credible in the light of the evidence regarding the negotiations.

[82] The negotiations commenced in November 2000. Between 29 November 2000 and 22 March 2001, the parties met formally on 23 separate occasions.30

[83] The union's log of claims in respect of the Agreement did not contain a claim for the fixing of the work cycle for the life of the Agreement or any other reference to hours of work or rostering.31

[84] During the negotiations for the Agreement Tenix made it clear that there would be close down periods at Easter and Christmas and that employees would be required to take annual leave at those times. There was significant debate and discussion about this issue. The unions sought information from Tenix as to its proposed close down periods and how annual leave was to be scheduled during those periods. Calendars were first tabled and discussed with the union negotiators at the fourth formal negotiating meeting on Tuesday, 23 January 2001.32

[85] Attached to Mr Irving's supplementary witness statement are his file notes of some of the meetings between the parties.33 The file note of the meeting on 23 January 2001 attributes the following comment to Dr Varum, Tenix's lead negotiator:

And later

[86] The proposed close down periods increased the number of annual leave days that employees would be required to take at Christmas and Easter, from 18 days over a three year period to 41 days over three years.34

[87] It was at Tenix's initiative that the calendar was included as an Appendix to the 2001 Agreement. It is clear that the calendar was discussed during the negotiations between the parties and its inclusion was part of a package offer.35

[88] In his evidence Mr Irving, Manager - Industrial Relations for Tenix, did not provide, in our view, any credible explanation for the inclusion of the calendar as part of the agreement on this occasion. He stated that it was done for the convenience of the employees; but conceded that the calendar could have been provided to the employees without forming part of the Agreement.36 In this regard it is relevant to note that the 2001 Agreement was the first time a calendar of the type set out in Appendix 3 was included as part of the agreement between the parties.37 In previous years, around August/September of each year, an annual leave and rostered day off calendar was prepared by Tenix at the request of the shop stewards. The calendar set out Tenix's proposed Easter and Christmas close down periods and the dates on which rostered days off would occur. A copy of the calendar was posted on notice boards.38

[89] In his evidence Mr Rootsey provided the following explanation for the inclusion of the calendar as Appendix 3:

[90] Mr Rootsey was also questioned about the extent to which the calendar set down the dates on which RDOs would occur:

[91] In his evidence Mr Darren Nelson, the Assistant Secretary of the Victorian Branch of the AMWU, stated that one of Tenix's negotiators - Dr John Varum - told the unions that the calendar would be used by Tenix as a marketing tool. Tenix would be able to tell prospective clients "These are the days the shipyard is open."

[92] Mr Irving said that he could not find any comments in his file notes of the relevant meeting to the effect that the calendar was a marketing tool. But he did not go so far as to deny that such a statement was made,41 nor was Dr Varum called to rebut Mr Nelson's evidence. Further, in a later stage in his cross examination Mr Irving effectively conceded that the calendar was used as a marketing document so that Tenix's clients would know when Tenix would not be open, as appears below:

[93] On the basis of the evidence it seems to us that Tenix had at least two reasons for incorporating the calendar into the Agreement:

[94] The calendar in Appendix 3 is based on a nine day cycle - five 8.5 hour days one week, an unpaid day off (or RDO) every second Monday, followed by three 8.5 hour days and then a short Friday whereby employees finish at 2.30 pm (an 8 hour shift). In our view the mutual intention of the parties was to fix that work cycle for the duration of the Agreement. Such a conclusion is consistent with two of the reasons Tenix gave for including the calendar as part of the Agreement.

[95] We note that the nine day work cycle was not discussed per se during the negotiations for the Agreement.44 But that work cycle is implicit in the calendar that was tabled by Tenix during the negotiations and ultimately accepted by the unions. Moreover at no stage during the negotiations was any change to the work cycle - such as moving to a 19 day month - discussed.45 This is particularly significant as the nine day work cycle has been in place since July 1990.46

[96] In these circumstances it is understandable why the union negotiators did not consider it necessary to make any specific claim regarding the fixation of the work cycle. They believed - reasonably in our view - that the calendar fixed the work cycle.

[97] Tenix argued that as no disagreement existed as to Tenix's right to initiate a variation to work cycles during the life of the Agreement, or in any way to modify the effect of the flexibilities provided in clause 6 of the Award, it is "impossible to say on an objective view of the parties actual intentions that the parties agreed to lock in the nine day work cycle for the duration of the agreement."47

[98] The essence of Tenix's submission was that it had the right to initiate a variation to work cycles under clause 6 of the Award, and in particular clause 6.1.2 - Rostered days off, and it was inconceivable that it would have agreed to vary those rights in the absence of a specific demand to do so.

[99] Clause 6.1.2 of the Award states:

[100] The unions do not agree with the proposition that the Award gives Tenix the right to vary the work cycle in the absence of an agreement to do so. It is unnecessary for us to resolve that controversy. We are prepared to assume - without deciding - that Tenix's interpretation of the relevant Award provisions is correct. But in our view that does not lead to the conclusion contended for by Tenix.

[101] Tenix put forward the calendar as part of a package deal. The calendar identifies the RDOs over the life of the Agreement. In our view a fair reading of the Agreement leads to the conclusion that the RDOs specified in the calendar were fixed for the duration of the Agreement. The fact that a consequence of such an interpretation of Appendix 3 is that Tenix's award rights were constrained is relevant but not determinative of whether the interpretation is correct. Agreement making often involves constraining a parties award rights (see s.170LY).

[102] The work cycle in question had been operating since 1990. Tenix had never sought to rely on its `right' to vary those arrangements. In such circumstances we do not think it can fairly be said that there was no disagreement about Tenix's right to vary the work cycle. Implicit in such a submission is the proposition that the parties were in agreement about that issue. In truth there was no such agreement. Rather the parties were operating on the basis of entirely different assumptions about Tenix's ability to vary the work cycle in the absence of agreement.

[103] Tenix's submissions about the mutual intentions of the parties have not persuaded us to adopt the interpretation of the Agreement for which they contend. In our view the mutual intention of the parties at the time they entered into the Agreement supports the construction of the Agreement which we have adopted.

[104] The final broad proposition advanced by Tenix in support of the variation sought relied on the objects of the WR Act. The evidence of Mr Jonathon Laverick Smith in the proceedings at first instance was said to be relevant in this regard. The following points may be drawn from Mr Smith's evidence:

[105] We accept that the enhanced flexibility implicit in the variation sought by Tenix would improve its competitiveness and assist in assuring its future. Such an outcome would be consistent with a number of the objects specified in s.3 of the WR Act (see particularly s.3(a) and (b)).

[106] Absent other considerations we would have found this aspect of Tenix's submission to be compelling. But there are other considerations. In particular we think as a matter of construction the third interpretation of the Agreement ought to be adopted. Further we are of the view that such a construction is consistent with the mutual intention of the parties. Moreover, considerations of fairness tell against the variation sought by Tenix.

[107] In relation to the last point it is important to note that Mr Nelson's evidence was that at the mass meetings of employees at which the terms of the Agreement were explained questions were asked about the inclusion of the calendar. At paragraph 17 of his witness statement he says:

[108] Mr Nelson's evidence also made reference to a petition signed by some 365 Tenix employees, in the following terms:

[109] Mr Nelson was not cross-examined on this aspect of his statement.

[110] Tenix submitted that evidence as to what may have been communicated to mass meetings of employees "is most unhelpful and probably quite irrelevant to the task at hand."50 We disagree.

[111] The Agreement was certified pursuant to Division 2 of Part VIB of the WR Act. The statutory requirements for certification include:

> Tenix must take reasonable steps to ensure that the terms of the agreement are explained to all of the persons employed at the time whose employment will be subject to the agreement (ss170LJ(3) and 170LT(7)); and

> the agreement must be approved by a valid majority of the persons employed at the time whose employment will be subject to the agreement (ss170LJ(2) and 170LT(5)).

[112] Mr Rootsey's evidence was to the effect that Tenix delegated its obligation to explain the terms of the Agreement, to the unions:

[113] In circumstances where Tenix effectively delegated to the unions its statutory obligation to explain the terms of the Agreement to its employees we do not accept that it is either appropriate or fair for the Commission to vary the Agreement in a way which would allow Tenix to resile from the explanation of the Agreement given to its employees before they voted on whether or not to approve the Agreement.

[114] In this regard the object set out in s.3(e) of the WR Act states:

[115] We have decided to vary the Agreement, pursuant to s.170MD(6) of the WR Act, to give effect to what we regard as the objectively ascertained mutual intentions of the parties. Appendix 3 of the Agreement will be varied to insert the following words:

Conclusion

[116] For the reasons given we have decided to grant leave to appeal and to uphold the appeal.

[117] We find that the extent to which Appendix 3 of the Agreement can be said to regulate work cycles for the period during which the Agreement is in operation is ambiguous and uncertain.

[118] We have decided to remove that ambiguity and uncertainty by varying the Agreement in the manner set out in paragraph 115 above.

BY THE COMMISSION:

VICE PRESIDENT

Appearances:

G. Watson (of counsel) for Tenix Defence Pty Ltd.

A. Gooley on behalf of the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia.

S. Wood on behalf of The Australian Workers' Union.

Hearing details:

2002:

Melbourne;

March 20.

ANNEXURE 1

2001 and 2002 Leave and RDO calendar

2003 and 2004 Leave and RDO calendar

 

 

ANNEXURE 2

6. HOURS OF WORK, SHIFT WORK, MEAL BREAKS, OVERTIME, PUBLIC HOLIDAYS AND SUNDAYS

6.1 Hours of Work - Day Workers

6.1.1 Ordinary Hours of Work

6.1.2 Rostered Days Off

6.2 Shift Work

6.2.1 Definitions - for the purpose of this clause:

6.2.2 Hours - Continuous Work Shifts

6.2.3 Hours - Other than Continuous Work

6.2.5 Afternoon And Night Shift Allowances

6.2.6 Saturday Shifts

6.2.7 Sunday and Public Holiday Shifts

6.2.8 Daylight Saving

6.3 Overtime and Call Back

6.3.1 Day Workers

6.3.2 Shift Workers

6.3.3 Requirement to Work Reasonable Overtime

6.3.4 Rest Period After Overtime

6.3.5 Call Back

6.3.6 Saturday Work

6.3.7 Standing By

6.3.8 Meal Times on Overtime

6.3.9 Meal Allowance

6.3.10 Transport of Employees

6.3.11 Time Off in lieu of Payment of Overtime

6.3.12 Make Up Time

6.4 Public Holidays and Sundays

6.4.1 Public Holidays

6.4.2 For the Purposes of this Award

6.4.3 Payment for Work on Public Holidays

6.4.4 Payment for Work on Sundays

6.4.5 Rest Pause - Public Holidays and Sundays

6.4.6 Crib Time - Public Holidays and Sundays

6.4.7 Meal Allowance - Public Holidays and Sundays

6.5 Meal Breaks

6.5.1 In cases where canteen or other facilities are limited to the extent that meal breaks must be staggered and as a result it is not practicable for all employees to take a meal break within five hours, an employee shall not be required to work for more than six hours without a break for a meal; and

6.5.2 Depending upon operational requirements, and by agreement between the Company and the majority of employee's in the plant, work section or sections concerned, an employee or employees may be required to work in excess of five hours but not more than six hours at ordinary rates of pay without a meal break.

6.5.3 The time of taking a scheduled meal break or rest break by one or more employees may be altered by the Company if it is necessary to do so in order to meet a requirement for continuity of operations.

6.5.4 The Company may stagger the time of taking a meal and rest break to meet operational requirements.

6.5.5 Subject to the provisions of subclause 6.5.1 hereof an employee employed on regular maintenance shall work during meal breaks at the ordinary rates of pay whenever instructed to do so for the purpose of making good breakdown of plant or upon routine maintenance of plant which can only be done while such plant is idle.

6.5.6 Except as provided in subclause 6.5.1 and 6.5.2 hereof and except where any alternative arrangement is entered into as a result of discussion with the Shipyard's Accredited Employee Representatives as provided in clause 3.1, time and a half rates shall be paid for all work done during meal hours and thereafter until a meal break is taken.

6.6 Accident Make-Up Pay

6.7 Sea Trials

6.7.1 Definitions

6.7.2 Sea Trials Pay

6.7.3 Hours of Work

6.7.4 Rest Period

6.7.5 Crib Breaks

6.7.6 Accommodation And Meals

Printed by authority of the Commonwealth Government Printer

<Price code I>

1 Tenix Defence Pty Limited, Print PR908675, 6 September 2001 at paragraph 60.

2 Tenix Defence Pty Limited, Print PR908675, 6 September 2001 at paragraph 50.

3 Print PR913098, 11 January 2002.

4 Print PR913098, 11 January 2002 at paragraphs 76 and 84.

5 (2000) 203 CLR 194 at 204.

6 (1936) 55 CLR 499 at 504.

7 (2000) 203 CLR 194 at 205.

8 Re Victorian Public Transport Enterprise Agreement 1994, Print M2454, 7 June 1995 per Ross VP, Polites

9 Re Victorian Public Transport Enterprise Agreement 1994, Print M2454, 7 June 1995 per Ross VP, Polites SDP and Grimshaw C at 3.

10 Print Q2603, 30 June 1998 at paragraph 30.

11 Re CFMEU Appeal, Print R2431, 25 February 1999 per Harrison SDP, Drake DP and Larkin C at para 12.

12 Re: Victorian Public Transport Enterprise Agreement 1994, Print M2454, 7 June 1995 per Ross VP, Polites SDP and Grimshaw C at p. 4; Re: CFMEU Appeal, Print R2431, 25 February 1999 per Harrison SDP, Drake DP and Larkin C at para 13.

13 Re: Victorian Public Transport Enterprise Agreement 1994, Print M2454, 7 June 1995 per Ross VP, Polites SDP and Grimshaw C at 3-4.

14 (2000) 199 CLR 135 at 148.

15 [2002] FCR 301, 20 March 2002 at para 53.

16 Re CFMEU Appeal, Print R2431, 25 February 1999 per Harrison SDP, Drake DP and Larkin C at para 6.

17 Pawel v Australian Industrial Relations Commission [1999] FCA 1660, 10 December 1999 per Branson and Marshall JJ at para 16.

18 (1999) 162 ALR 577 at para 127. Also see R v Judges of the Federal Court of Australia; Ex parte WA National Football League (1979) 143 CLR 190 at 214.

19 Re Victorian Public Transport Corporation, Print M2454, 7 June 1995 per Ross VP, Polites SDP and Grimshaw C; and SJ Higgins Pty Ltd & Ors v Construction, Forestry, Mining and Energy Union, Print PR903843, 2 May 2001 per Williams SDP.

20 Print PR903843, 2 May 2001 at para 7.

21 Exhibit A1 at para 43; and Appeal Book Tag 12 at para 14.

22 See para 21 of this decision.

23 Transcript, 20 March 2002 at paras 192 - 193.

24 Transcript, 20 March 2002 at PN195 - 196.

25 Transcript, 18 December 2001 at PN983 - 984.

26 Transcript, 20 March 2002 at PN328.

27 For example see Hornsby Building Information Centre Pty Ltd (1978) 18 ALR 639 at 645 per Stephen J; and Bevance Pty Ltd v Lu bid ineuse (1985) 59 ALR 334 at 341.

28 [1922] SASR 299 at 311.

29 This was Tenix's alternate variation in the proceedings at first instance - see Exhibit T5 at para 36, Appeal Book Tag 12.

30 Witness statement of Allan Irving, Appeal Book Tag 7 at paras 51 - 52; witness statement of Allen Rootsey, Appeal Book Tag 10.

31 Witness statement of Allan Irving, Appeal Book Tag 7 at para 55 and Annexures A1 - 2 and A1 - 3; witness statement of Allen Rootsey, Appeal Book Tag 10.

32 Witness statement of Allan Irving, Appeal Book Tag 7 at paras 60 - 62; witness statement of Allen Rootsey, Appeal Book Tag 10.

33 See Appeal Book Tag 9.

34 Witness statement of Cameron Teal, Appeal Book Tag 22 at para 6.

35 In Mr Irving's file note of the meeting on 1 February 2001 Dr Varnum is reported as saying: "We think the wage offer and the overall package is a good one but I don't want anyone to be under any misapprehension - there is no more - we won't be moving off it." Also see the reference to the calendar on p.5 of the file note of the meeting on 23 January 2001.

36 Evidence of Allan Irving, transcript, 7 December 2001 at PN170; witness statement of Allen Rootsey, Appeal Book Tag 10.

37 Evidence of Allan Irving, transcript, 7 December 2001 at PN170; witness statement of Allen Rootsey, Appeal Book Tag 10.

38 Witness statement of Allan Irving, Appeal Book Tag 7 at paras 58 - 59 and Annexure A; witness statement of Allen Rootsey, Appeal Book Tag 10.

39 Transcript, 7 December 2001 at PN391.

40 Transcript, 7 December 2001 at PN399 - 401.

41 Transcript, 7 December 2001 at PN93.

42 Transcript, 7 December 2001 at PN280 - 284.

43 Evidence of Mr Rootsey, transcript, 7 December 2001 at PN391.

44 Witness statement of Allan Irving, Appeal Book Tag 7 at para 32; witness statement of Allen Rootsey, Appeal Book Tag 10.

45 Witness statement of Darren Nelson, Appeal Book Tag 17 at para 8; witness statement of Shaun Leane, Appeal Book Tag 20 at para 10; evidence of Allan Irving, transcript, 7 December 2001 at PN291.

46 Witness statement of Allan Irving, Appeal Book Tag 7 at paras 36 - 40; witness statement of Allen Rootsey, Appeal Book Tag 10.

47 Exhibit T1 in the proceedings at first instance at para 33; Appeal Book Tag 6.

48 Appeal Book Tag 17 at para 17.

49 Appeal Book Tag 17 at para 17.

50 Transcript, 18 December 2001 at PN975.

51 Transcript, 7 December 2001 at PN405.