1
Fair Work Act 2009
s.739 - Application to deal with a dispute
Mr Peter Mugford
v
Qantas Airways Limited
(C2015/2344)
COMMISSIONER CAMBRIDGE SYDNEY, 2 FEBRUARY 2016
Dispute settlement procedure - jurisdictional objection raised - interpretation of terms of
workplace determination - instrument replaced and no longer operational - disputed terms
dealing with process for reduction in numbers of pilots - displacement of particular category
of pilot - whether terms of relevant instrument obliged particular observance of seniority of
individual pilot - no ambiguity found - correct construction established - jurisdictional
objection upheld - application refused.
[1] This Decision is made in respect of an application that was taken under s. 739 of the
Fair Work Act 2009 (the Act) for the Fair Work Commission (the Commission) to deal with a
dispute in accordance with a Dispute Settlement Procedure (DSP). The application was made
by Peter Mugford (the applicant) and the respondent employer is Qantas Airways Limited
(Qantas or the employer).
[2] The application was filed on 1 April 2015, and the employer filed a response on 1 May
2015. The matter was the subject of unsuccessful conciliation held on 4 May 2015. On 11
June 2015, the Commission issued Directions in respect to an anticipated Hearing of the
matter scheduled for 26 August 2015. The Hearing date was subsequently amended to 3
September 2015.
[3] At the time that the application was made, the Commission was empowered to deal
with this matter by virtue of a DSP which is found at clause 47 of the Qantas Airways Limited
Pilots (Long Haul) Workplace Determination 2013 (the WD). The WD ceased to operate on
26 August 2015, when it was replaced by the Qantas Airways Limited Pilots (Long Haul)
Enterprise Agreement 2015 (the Agreement).
[4] On 1 September 2015, Qantas formally raised a jurisdictional objection to the matter
on the basis that the Commission no longer had power to determine the dispute because the
Commission’s power was obtained via a term of the WD which had ceased to operate when it
was replaced by the Agreement. In support of its jurisdictional objection, Qantas sought to
rely upon authority established by the Decision of the Full Bench of the AIRC in Stephenson
v Abetz [PR952743], (28 October 2004) (Stephenson)1.
[2016] FWC 677
DECISION
E AUSTRALIA FairWork Commission
http://www.fwc.gov.au/alldocuments/PR952743.htm
[2016] FWC 677
2
[5] At the commencement of proceedings on 3 September, Mr E Haggerty who appeared
for Qantas, advanced the jurisdictional objection which had been first raised only two days
earlier. In the circumstances, particularly as the applicant was representing himself and the
Commission had earlier refused permission for Qantas to be represented by lawyers or paid
agents, the jurisdictional objection was not further entertained at that time.
[6] The Hearing proceeded and the applicant introduced evidence by way of two
statements, he gave evidence as a witness and was cross-examined by Mr Haggerty. Qantas
provided evidence by way of a witness statement of Mr Haggerty who also gave evidence as a
witness and he was cross-examined by the applicant.
Background
[7] The applicant is employed as a Long Haul Pilot (LHP) with Qantas. LHPs engaged by
Qantas operate various different types of aircraft which, until fairly recently, included the
B767 aircraft. LHPs also operate other aircraft, relevantly referred to as A380, B747 and
A330 aircraft. In respect to each aircraft type, there are three pilot ranks being, in ascending
order; Second Officer (SO), First Officer (FO), and Captain.
[8] There is a hierarchy of LHPs which is established via a combination of rank and
aircraft type. Before the retirement of the B767 aircraft, the LHP hierarchy involved aircraft
type in descending order being; A380, B747, A330, and B767. Thus, by way of combination
of aircraft type and rank, the most senior LHP position is that of A380 Captain, followed by
B747 Captain, then A330 Captain and then (before retirement of the B767 fleet), B767
Captain. The FO and SO ranks then follow in the hierarchy for each of the different aircraft
type so that the least senior position was that of B767 SO.
[9] All Qantas LHPs have a seniority ranking determined on the basis of the individual’s
length of continuous service with Qantas. The overall seniority ranking of individuals based
on length of service overlays the hierarchy established via aircraft type and individual pilot
ranking.
[10] As commercial, operational requirements and aircraft types change over time, Qantas
has experienced situations involving a surplus of LHPs which have arisen in particular
categories within the LHP hierarchy. Qantas has developed processes to deal with a surplus of
LHPs. These processes involve a complicated series of steps which aim to avoid or mitigate
the impacts of what is essentially the loss of the pre-existing level of employment within the
LHP hierarchy. Historically, these processes have been reflected in terms contained in
relevant industrial instruments such as the WD.
[11] The processes for addressing a surplus of LHPs include an actual reduction in the
number of pilots in a particular category within the LHP hierarchy. The process by which
Qantas can reduce the number of LHPs in a category is referred to as a Reduction in Numbers
(RIN). The relevant industrial instruments, including the WD, contain terms which prescribe
the details of the RIN process.
[12] Significantly, the terms of the WD (and other relevant instruments), prescribe
particular arrangements which allow individual LHPs who have been identified as surplus in
their category and subject to a RIN, to use their overall seniority to secure redeployment into
another more desirable LHP category. Therefore, in circumstances where a particular type of
[2016] FWC 677
3
aircraft was no longer used, such as the B767, the B767 LHPs could exercise their overall
seniority to displace another more junior LHP who was operating for example, the A380
aircraft. In simple terms, a B767 Captain who was subject to RIN, could displace an A380
Captain who had less overall seniority.
[13] Qantas decided that it would retire the B767 aircraft fleet by the end of the 2014
calendar year, and therefore it implemented a RIN in relation to, inter alia, the B767 Captain
and B767 FO categories. In June 2014, Qantas commenced the RIN process and issued a
notice to relevant staff which, inter alia, advised that any LHP who wished to exercise their
overall seniority to displace a more junior LHP was required to submit an expression of
intention in writing.
[14] The applicant was one of the impacted B767 Captains named in the 2014 RIN, and he
was one of three B767 Captains who indicated their intention to exercise their overall
seniority to displace a more junior pilot in the A380 Captain category. The applicant was the
least senior of the three B767 Captains who had provided their written intention to displace
the more junior of the A380 Captains.
[15] Qantas implemented the displacement process by first applying the position of the
most senior of the three B767 Captains (“Captain R”) against the most junior of the A380
Captains (“Captain RF”). Captain R was thus redeployed as an A380 Captain, and Captain RF
was notionally displaced. Qantas then applied the position of the next most senior B767
Captains (“Captain A”) against the position of the next most junior A380 Captain (“Captain
MF”). Captain A was thus redeployed as an A380 Captain, and Captain MF was notionally
displaced. Qantas then came to the applicant’s position as the next most senior B767 Captain
who had made written notice of intention to displace. The applicant did not have seniority
over the next most junior A380 Captain (“Captain F”). Therefore, the applicant could not
displace Captain F and he was unsuccessful in obtaining his first redeployment preference as
an A380 Captain and instead he was appointed as an A380 FO.
[16] However, both Captain RF and Captain MF had been appointed by Qantas as
supervisory or check pilots. Consequently, although they had been notionally displaced as
A380 Captains they retained their A380 Captain category by virtue of appointment as
supervisory pilots. The applicant has seniority over Captain RF but not over Captain MF.
Consequently, the applicant has asserted that Qantas misapplied the displacement
arrangements as prescribed in the WD as part of the RIN process because Captain RF over
whom he has seniority, was retained in the A380 Captain category, whilst he was denied an
A380 Captain position.
The Applicant’s Case
[17] The applicant represented himself and made oral submissions at the Hearing in
elaboration of written material which he had filed. The applicant submitted that his complaint
involved a very simple interpretation of the particular terms of the WD which prescribe the
processes surrounding a RIN.
[18] The applicant referred specifically to sub-clause 18.1.12 (e) of the WD which provided
an entitlement for a pilot to exercise his or her seniority to displace a more junior pilot as part
of the process of a RIN. The applicant contended that as a B767 Captain with seniority
[2016] FWC 677
4
number 630, he had properly exercised his right under sub-clause 18.1.12 (e) (iii) of the WD
to displace the most junior A380 Captain, that being Captain RF.
[19] The submissions made by the applicant noted that he had appropriately raised his
complaint with Qantas and he had informed Qantas that he had disagreed with their
interpretation and execution of the relevant terms of the WD. In the absence of any
satisfactory resolution of his complaint he had commenced proceedings in the Commission
which were properly taken via clause 47 of the WD.
[20] The written submissions of the applicant referred to Qantas grounding its entire fleet
in October 2011, which ultimately led to the particular terms contained in the WD. According
to the applicant, these particular terms of the WD impacted upon the seniority arrangements
for senior check Captains, which he referred to as “Cat B” Captains. According to the
applicant, the terms of the WD meant that all Cat B Captains were covered by sub-clause
18.1.12 (e) (iii), whereas prior to the making of the WD, all “Cat B” Captains were not
affected by the RIN process.
[21] The applicant submitted that the RIN terms of enterprise agreements which had been
negotiated before the WD was made, represented mechanisms to re-establish seniority which
had been disturbed in times of downturn and demotion, when Qantas had promoted pilots
outside of seniority. The applicant said that the RIN provisions represented a penalty clause in
order to make redundancies unpalatable for Qantas.
[22] The submissions made by the applicant asserted that Qantas had misapplied the terms
of the WD by not removing Captain RF from the A380 category and that he, the applicant,
should be able to displace Captain RF just as Captain R and Captain A had done. The
applicant rejected that there were a further 21 B767 Captains with more seniority than himself
who could have displaced Captain RF if the process of displacement as he urged had been
applied by Qantas.
[23] The applicant submitted that he had been wronged and that the interpretation
applicable to sub-clause 18.1.12 of the WD was very straightforward, and upon proper
application of those terms, he should be categorised as an A380 Captain. The applicant sought
that the Commission make an Order upon Qantas requiring that it award him a position as an
A380 Captain.
The Qantas Case
[24] Mr E Haggerty appeared at the Hearing on behalf of Qantas. Mr Haggerty referred to
and relied upon written submissions which had been filed on behalf of the employer. Mr
Haggerty made further oral submissions in elaboration of the earlier filed material and in
response to the submissions made by the applicant.
[25] The submissions made by Mr Haggerty were broadly divided as issues to be
considered under three topics. Firstly, Mr Haggerty raised the jurisdictional objection which
he asserted did not allow for the Commission to determine the matter. Secondly, Mr Haggerty
made submissions in respect to the question of whether the Commission should exercise any
discretion to determine the matter in accordance with the relevant provisions of the DSP.
Thirdly, the submissions made by Mr Haggerty went to the substantive merits questions
[2016] FWC 677
5
involving the interpretation or proper construction that should be provided for the contested
terms of the WD.
[26] Mr Haggerty submitted that the WD had ceased operation on 26 August 2015 when it
was replaced by the Agreement. Mr Haggerty said that in these circumstances, where the
power of the Commission to deal with the matter before it was conferred by the WD and that
instrument was no longer in operation, the Commission accordingly lost any legal power to
further deal with the application. In support of this submission Mr Haggerty referred to the
Full Bench Decision in Stephenson and to various other Court and Tribunal Decisions which
he said provided authority for the asserted absence of jurisdiction that arose in circumstances
where the particular industrial instrument under which the proceedings were commenced was
no longer in operation.
[27] Mr Haggerty submitted that the function that the Commission was performing
pursuant to s. 739 of the Act and via a DSP in an enterprise agreement or workplace
determination, has been established to represent the power of private arbitration conferred by
the terms of the relevant instrument. According to the submissions made by Mr Haggerty,
once the relevant instrument no longer has force and effect, the power of private arbitration
had been extinguished. Mr Haggerty stressed that the relevant terms of the Agreement had
varied from the counterpart terms contained in the WD and that the dispute that had been
raised by the applicant was about a matter which had been dealt with during the life of the
WD, and could not be conceived to be a matter that was or could be raised under the
Agreement.
[28] Mr Haggerty stressed that the dispute that was now presented by the applicant could
only represent a hypothetical proposition involving interpretation of the terms of an industrial
instrument that was no longer in operation. Mr Haggerty suggested that any determination of
the contested construction of the terms of the WD would result in the Commission exercising
judicial power which was clearly beyond the jurisdiction of the Commission. Mr Haggerty
urged the Commission to dismiss the matter on the basis of an absence of jurisdiction.
[29] Mr Haggerty made further submissions in respect to the second topic that he had
identified, that being the question of whether the Commission should exercise its discretion to
provide for a determination of the dispute that had been raised by the applicant. In this regard,
Mr Haggerty referred to the particular terms of the relevant DSP, clause 47 of the WD. Mr
Haggerty submitted that the terms of the DSP provided for discretion as to whether the private
arbitration powers of these terms should be exercised. Mr Haggerty said that there were a
number of reasons which should satisfy the Commission that it would not be appropriate to
arbitrate the matter under the DSP.
[30] Mr Haggerty submitted that the dispute raised by the applicant involved the
implementation of a RIN in 2014, which was similar to RINs implemented by Qantas in 2012
and 2013, and which had been negotiated with the relevant registered organisation which
represented LHPs. In these circumstances, Mr Haggerty submitted that the Commission
should be reluctant to disturb processes which had had broader acceptance.
[31] Mr Haggerty made further mention of various other factors which he said should
operate to persuade the Commission to refrain from exercising the discretion to determine the
dispute raised by the applicant. He said that all LHPs had been informed by Qantas that the
process regarding displacement by way of seniority would be implemented on a one for one
[2016] FWC 677
6
basis, which was directly contrary to what the applicant sought to obtain. Further, according
to Mr Haggerty the applicant was seeking to obtain a windfall which he would not otherwise
be entitled to through the normal operation of seniority, and that the applicant had been the
only LHP to dispute the implementation and outcome of the 2014 RIN. Further, Mr Haggerty
mentioned the potential flow on effect and consequences for Qantas and other pilots if the
applicant was able to, in effect, reverse the 2014 RIN. According to Mr Haggerty, there was a
potential cost of at least $6.8 million if Qantas had to retrain various LHPs as a result of a
reversal of the 2014 RIN.
[32] Mr Haggerty submitted that the various factors that he had mentioned should persuade
the Commission to refrain from exercising the discretion to arbitrate the dispute that had been
raised by the applicant.
[33] Mr Haggerty made further submissions in respect to the third and final topic that he
had identified, namely that the correct construction of the various terms that dealt with the
RIN and the operation of displacement of less senior LHPs. Mr Haggerty said that the
particular process that Qantas had implemented was entirely consistent with the terms of the
WD. In particular, Mr Haggerty submitted that the process that the applicant had sought to
have Qantas adopt would contravene in particular, sub-clause 15.9 of the WD.
[34] Mr Haggerty also referred to the provisions of sub-clause 16.6 of the WD, which
enabled Qantas to appoint supervisory or check pilots at its sole discretion. Mr Haggerty
submitted that upon an analysis of the particular circumstances involving the three senior
B767 Captains and the displacement of junior A380 Captains who had been appointed as
supervisory pilots, the approach that Qantas applied was entirely consistent with the words
contained in the relevant terms of the WD. According to Mr Haggerty, the approach that the
applicant sought to have applied was not consistent with the construction that should be given
to the relevant terms and it would provide for an approach that would have wide-ranging
ramifications for both Qantas and all the other pilots who had been impacted by the 2014
RIN.
[35] In conclusion, Mr Haggerty submitted that the matter should be dismissed on the basis
that the Commission did not have jurisdiction to deal with the dispute that arose under an
instrument that had subsequently ceased to operate. Further, Mr Haggerty said that the matter
should be dismissed on the basis that the Commission should refrain from exercising the
discretion to determine the dispute, because there were a variety of factors which operated as
a sound foundation against the exercise of any discretion to actually determine the dispute
raised by the applicant. Finally, Mr Haggerty urged that the Commission dismiss the matter
on the basis that the particular contested terms of the WD should not be given the
interpretation as was urged by the applicant.
Consideration
[36] The dispute in this instance has involved a contest regarding the correct interpretation
or construction that should apply to particular terms contained in the WD. The applicant has
asserted that the relevant terms of the WD were wrongly applied by Qantas in the manner that
it implemented what can be described as the seniority displacement in the 2014 RIN.
The Jurisdictional Challenge
[2016] FWC 677
7
[37] There was some considerable history of argument between the applicant and Qantas
about the seniority displacement implemented as part of the 2014 RIN. The processes
involving a RIN, and the arrangements concerning seniority of LHPs, both generally and in
respect to seniority displacement as part of any RIN, appear to attract certain complexities and
have various inherent difficulties. Consequently, the dispute raised by the applicant was from
the outset, a matter involving some potentially significant issues which would have been well
understood by the Parties. Therefore, it was regrettable that the jurisdictional challenge that
was raised by Qantas was first mentioned only two days before the scheduled Hearing.
[38] The prospect that the WD would be replaced by the Agreement was plainly identified
in paragraph 11 of the witness statement of Mr Haggerty dated 24 July 2015. However, it
appears that Qantas and/or its legal advisers, were either unaware of the implications of this
anticipated change to the relevant industrial instrument or they determined not to raise that
issue until only shortly before the commencement of the Hearing on 3 September 2015.
[39] Whether it be a matter of intention or ignorance, once the jurisdictional issue reliant
upon the Full Bench Decision in Stephenson was belatedly raised, it provided the appearance
of a last minute ambush taken with a degree of questionable motivation and possible absence
of good conscience. In circumstances where those decision-makers in Qantas may have only
been advised of the jurisdictional issue shortly before the scheduled Hearing, it may have
been desirable for there to have been a more careful assessment as to whether, in good
conscience, it may have been more appropriate for Qantas to continue its hitherto silence and
permit the applicant’s case to be dealt with on its merits.
[40] The jurisdictional challenge made by Qantas relies upon authority established by the
Full Bench Decision in Stephenson which essentially stands for the proposition that when an
industrial instrument ceases to operate, any DSP contained in that instrument which provided
the Commission with private arbitration powers, ceases to operate, and thereby extinguishes
the private arbitration powers that had been conferred via the DSP. Further, although the
industrial instrument which ceased to operate might be replaced with another instrument that
contains a DSP, the private arbitration powers are not enlivened unless the matter in dispute is
properly activated via the relevant provisions of the DSP in the replacement instrument.
[41] There is some conjecture as to whether the authority established by the Decision in
Stephenson is the correct legal position. In two Decisions of different members of the
Commission issued last year, some reservation was expressed about the reasoning adopted in
the Decision in Stephenson.
[42] Firstly, Lawler VP in the matter of Grabovsky v United Protestant Association of NSW
Ltd 2 (Grabovsky), determined, inter alia, that the Decision in Stephenson “…takes no
account of that fundamental feature of the general law of contract and the numerous binding
authorities that establish it.” Secondly, Sams DP expressed some reservation about the
Decision in Stephenson in a Decision in the case of Mark Launders v Officeworks Pty Ltd 3
(Launders). However, in the Decision in Launders, Sams DP quite properly indicated that, as
an individual member of the Commission, he was bound to follow the authority established
by the reasoning in Stephenson.
[43] The Decision in Stephenson was also considered by Bissett C in a Decision issued in
August 2013, in the matter of The Association of Professional Engineers, Scientists and
Managers, Australia v Jemena Asset Management Pty Ltd 4 (Jemena). It is clear from the
[2016] FWC 677
8
Decision of Bissett C in Jemena that in the circumstances of that matter, the Commission
determined that it was bound to follow the authority established by the Decision in
Stephenson. It would also appear that the circumstances in this instance would operate to bind
the Commission to follow the authority established by the reasoning in Stephenson.
[44] As previously mentioned, it was regrettable that the jurisdictional issue was not raised
at an earlier stage of proceedings. Further, there is an obvious reluctance to apply what would
amount to injunctive relief in circumstances where there was both some conjecture about the
correct legal position, and in the absence of fully argued positions from both sides.
Consequently, I have been reluctant to adopt any concluded view in respect to the
jurisdictional objection that was raised by Qantas. Despite this reluctance, as the jurisdictional
question was raised and pressed by Qantas, I am compelled to deal with it in what can be
described as less than ideal circumstances.
[45] In these somewhat unfortunate circumstances I venture to observe that, with sincere
respect, the Decisions in both Grabovsky and Jemena appear to have extrapolated the
Decision in Stephenson so as to arrive at an erroneous conclusion which I do not believe to
have been created by the reasoning that was adopted by the Full Bench in Stephenson.
[46] I refer to the following extract from paragraph [54] of Grabovsky:
“[54] Moreover, the interpretation adopted by the Full Bench in Stephenson has the
effect of extinguishing accrued rights.”
[47] I also refer to the following extract from paragraph [37] of Jemena:
“[37] Once the JAM Agreement ceased to apply to Mr Hardy any entitlements
available to Mr Hardy pursuant to that agreement ceased to exist.”
[48] The conclusions made in Grabovsky and Jemena as to the extinguishment of rights
and entitlements existing under an instrument which subsequently ceases to operate appear to
have been extrapolated from paragraph [54] of the Decision in Stephenson. However, I
believe that an important distinction needs to be made between the right to have private
arbitration powers of a DSP conferred upon the Commission, as opposed to all other rights
and entitlements that might arise in respect to the employment that was governed by the
instrument during the period of its operation.
[49] In my view, the reasoning of the Full Bench in Stephenson established that the right to
have private arbitration powers exercised by the Commission under the terms of a DSP was
extinguished when the industrial instrument that contained the DSP ceased to operate.
However, importantly other rights and entitlements that existed in respect of the employment
during the period that the instrument operated are not extinguished when the instrument
ceases to operate. The corollary of this distinction is that rights and entitlements under the
extinguished instrument are not able to be agitated before the Commission via the private
arbitration powers conferred by a DSP but would, alternatively, be capable of pursuit in a
Court of competent jurisdiction.
[50] Unfortunately for the applicant, my consideration as to the authority established by the
Full Bench Decision in Stephenson does not assist him in this case. In practical terms, the
application of the jurisdictional impediment created by the authority established in
[2016] FWC 677
9
Stephenson would simply mean that rather than have the Commission resolve questions of
contested construction in the terms of expired instruments, such matters would need to be
prosecuted under the common law as breach of contract litigation. Whether the common law
litigation approach provides the most efficient and practical means for resolution of contests
arising from the terms of expired agreements is a matter that might exercise the minds of
Parties who contemplate invoking a jurisdictional challenge reliant upon the Decision in
Stephenson.
[51] Notwithstanding the position that I am compelled to adopt in respect to the
jurisdictional challenge raised by Qantas, I similarly feel compelled to provide the applicant
with my assessment as to the merits of his case.
The Contested Terms of the Workplace Determination
[52] The approach to resolving questions of contested interpretation/construction of the
terms contained in an industrial instrument such as the WD has been the subject of an
authoritative Decision of a Full Bench of this Commission in the matter of The Australasian
Meat Industry Employees Union v Golden Cockrell Pty Limited 5 (Golden Cockerel). At
paragraph 41 of the Golden Cockerel Decision, the Full Bench set out the following principles
that apply to the approach to resolving questions of contested interpretation/construction of
terms of an enterprise agreement:
“[41] From the foregoing, the following principles may be distilled:
1. The AI Act does not apply to the construction of an enterprise agreement
made under the Act.
2. In construing an enterprise agreement it is first necessary to determine
whether an agreement has a plain meaning or contains an ambiguity.
3. Regard may be had to evidence of surrounding circumstances to assist in
determining whether an ambiguity exists.
4. If the agreement has a plain meaning, evidence of the surrounding
circumstances will not be admitted to contradict the plain language of the
agreement.
5. If the language of the agreement is ambiguous or susceptible to more than
one meaning then evidence of the surrounding circumstance will be
admissible to aide the interpretation of the agreement.
6. Admissible evidence of the surrounding circumstances is evidence of the
objective framework of fact and will include:
(a) evidence of prior negotiations to the extent that the negotiations
tend to establish objective background facts known to all parties
and the subject matter of the agreement;
(b) notorious facts of which knowledge is to be presumed;
[2016] FWC 677
10
(c) evidence of matters in common contemplation and constituting a
common assumption.
7. The resolution of a disputed construction of an agreement will turn on the
language of the Agreement understood having regard to its context and
purpose.
8. Context might appear from:
(a) the text of the agreement viewed as a whole;
(b) the disputed provision’s place and arrangement in the agreement;
(c) the legislative context under which the agreement was made and in
which it operates.
9. Where the common intention of the parties is sought to be identified, regard
is not to be had to the subjective intentions or expectations of the parties. A
common intention is identified objectively, that is by reference to that which
a reasonable person would understand by the language the parties have
used to express their agreement.
10. The task of interpreting an agreement does not involve rewriting the
agreement to achieve what might be regarded as a fair or just outcome.
The task is always one of interpreting the agreement produced by parties.”
[53] Further, in respect to resolving matters of contested construction, the question of the
conduct of the Parties in connection with the contested terms, has been examined in the
following extract from the Full Bench Decision in Essential Energy v Australian Municipal,
Administrative, Clerical and Services Union and Others 6 (Essential Energy):
“[23] In addition, there is one well-established further principle relevant to the
interpretation of industrial instruments, including enterprise agreements, which we
consider to be relevant, namely that it is not permissible to take into account the
conduct of parties which occurs after an industrial instrument is made as an aid to
interpret that industrial instrument.”
[54] It is also relevant to refer to the paragraphs which immediately precede the extract
quoted above from the Essential Energy Decision and which includes the often cited extract
from a Judgement of Madgwick J in Kucks v CSR Limited 7 (Kucks):
“But the task remains one of interpreting a document produced by another or others.
A court is not free to give effect to some anteriorly derived notion of what would be
fair or just, regardless of what has been written into the award. Deciding what an
existing award means is a process quite different from deciding, as an arbitral body
does, what might fairly be put into an award. So, for example, ordinary or well-
understood words are in general to be accorded their ordinary or usual meaning.”
[55] Accordingly, the principles as established by the Full Bench Decisions in Golden
Cockerel and Essential Energy have been adopted and relevantly applied in this instance to
[2016] FWC 677
11
the contested construction of the terms of the WD. Further, the approach to the interpretation
of the terms of the WD has been undertaken cognisant of the guidance provided by various
Judgments including that in Kucks.
[56] In this matter the applicant’s complaint was primarily advanced upon what he asserted
to be the straightforward reading of clause 18.1.12 (e) of the WD. It is relevant to set out
Clause 18.1.12 in full which is in the following terms:
“18.1.12 Reduction in numbers at a base
(a) Prior to a reduction in numbers, the Company, in consultation with the Association,
will consider all reasonable alternatives including natural attrition, secondment to
other operators, redeployment, LWOP and voluntary redundancies.
(b) Subject to clause 18.1.12(a), where a reduction in numbers is required at a base and:
(i) there are vacancies in the same category at another base; and
(ii) there will be no change in the overall pilot numbers in the category
across all bases,
the Company will complete the followings steps:
(iii) award from letters of preference, in seniority order, a base transfer to
pilots in that category; and
(iv) where the above awards results in residual vacancies in the category at
other bases, award from letters of preference, in seniority order, the
residual base transfers to pilots in the category until all vacancies or
bids by pilots in the category are satisfied.
(c) Subject to clauses 18.1.12(a) and 18.1.12(b), at least 30 days prior to a reduction in
numbers at a base in accordance with clauses 18.1.12(d) and 18.1.12(e), the Company
will promulgate the following information:
(i) the number and category of surplus pilots;
(ii) the date(s) from which reductions will become effective;
(iii) the names of pilots in the category at the base affected by the surplus;
(iv) bases where vacancies in the category are available or will become
available; and/or
(v) if applicable to the circumstances, bases and categories where the
Company is proposing to re-deploy surplus pilots.
(d) The reduction will be effected in reverse order of seniority of pilots in that category at
the base except that a more senior pilot in the category may bid for any vacancy in
[2016] FWC 677
12
any base or any base and/or category which is notified as available pursuant to clause
18.1.12(c).
(e) A pilot included in the promulgation issued under 18.1.12(c) may, subject to clause
16:
(i) bid for any advertised vacancy;
(ii) if applicable, bid for any notified base and/or category which is
promulgated as available for re-deployment pursuant to clause
18.1.12(c)(v); or
(iii) exercise his or her seniority to displace the most junior pilot in any
category provided the election to displace is made at or before the
promulgated date or dates specified in clause 18.1.12(c) and provided
he or she will not displace a pilot in a higher status unless the pilot
affected by the reduction would otherwise be demoted to a lower status
or have his or her services terminated.”
[57] In particular, the applicant sought to rely upon the seniority displacement terms that
are contained in sub-clause 18.1.12 (e) (iii). In support of his case, the applicant asserted that
Qantas had not complied with the seniority displacement terms of the WD and that such non-
compliance was reflected by the fact that he, as a LHP with seniority number 630 did not
displace Captain RF as an A380 Captain when Captain RF had a seniority number of 658.
Therefore, the prima facie position that emerged was that the applicant had seniority over
Captain RF, yet Captain RF was not displaced by the applicant, who was instead allocated a
position as an A380 FO.
[58] However, a superficial contemplation of the outcome which emerged, specifically that
a less senior A380 Captain (Captain RF) was not displaced by the more senior B767 Captain
(the applicant), fails to appreciate the actual displacement process that Qantas applied and the
particular qualification contained in the wording of sub-clause 18.1.12 (e) (iii). The outcome
appeared to reflect an absence of seniority displacement, but a more detailed analysis of what
actually occurred combined with the correct construction that should be provided for all of the
relevant terms of the WD reveals a different picture.
[59] Firstly, the actual displacement process that was implemented by Qantas involved, as
its first step, the least senior A380 Captain (Captain RF) being displaced by the most senior
B767 Captain (Captain R). The second step in the displacement process involved the next
most senior B767 Captain (Captain A) displacing, not Captain RF because he had been
displaced in the first step of the process, but the next least senior A380 Captain who was
Captain MF. Thus, the two most senior B767 Captains had displaced the two least senior
A380 Captains. Then it was the turn of the applicant. However, with seniority number 630 the
applicant could not displace the then least senior A380 Captain who was Captain F who had a
seniority number of 409. At this point in time, the seniority displacement process had been
exhausted and unfortunately for the applicant, he did not have seniority over the remaining
least senior A380 Captain who was at that time, Captain F.
[60] Importantly, the words “subject to clause 16” which appear in the opening sentence of
sub-clause 18.1.12 (e) operate to qualify the application of sub-clause 18.1.12 (e) (iii). The
[2016] FWC 677
13
terms of sub-clause 16.6 and sub-clause 16.6.1 in particular then need to be considered.
Relevantly, these terms read as follows:
“16.6 Limitations of seniority
16.6.1 Supervisory, check or training appointments
The selection of a pilot to a supervisory, check or training appointment is at
the discretion of the Company and does not depend on seniority.”
[61] It is clear that the terms of sub-clause 16.6.1 of the WD operate so as to prevail over
the seniority displacement terms contained in sub-clause 18.1.12 (e) (iii). Therefore, once the
seniority displacement process had been exhausted, it was open to Qantas to appoint both
Captain MF and Captain RF as supervisory or check pilots in the A380 Captain category.
Qantas did exactly that, and it appointed the two A380 Captains who had been displaced back
into the ranks of A380 Captain. This process then obtained the appearance, particularly for the
applicant, of denying him an A380 Captain position through a failure to properly observe the
seniority displacement requirements of the WD. However, upon detailed and proper analysis
that was not the case, but rather a position which superficially acquired that appearance.
The Question of Ambiguity
[62] The approach to resolving any contested construction question should logically
commence with an examination of the relevant words so as to discern whether or not these
words contain some ambiguity. It is well established that the approach to resolving questions
of contested construction should focus upon providing the words under examination with their
plain and ordinary meaning, unless for some cogent reason such ordinary meaning is
inappropriate or otherwise unavailable.
[63] In this instance, the contested words of the WD were those contained in sub-clause
18.1.12 (e) (iii). Upon analysis, these words can be given their plain and ordinary meaning as
no particular ambiguity is discernible. When these terms are given their plain and ordinary
meaning and considered in the context of the operation of other relevant terms such as sub-
clause 16.6.1, the particular actions of Qantas in respect to the seniority displacement that it
conducted as part of the 2014 RIN, were entirely consistent with the proper construction of
these terms.
Conclusion
[64] The determination of the dispute in this instance has involved a requirement to settle a
contested construction question arising from particular terms contained in the WD. In the
period between when the application was filed and the Hearing of the matter, the WD ceased
to operate and it was replaced by the Agreement. There is no on-going characteristic of the
dispute. In such circumstances, and as jurisdictional challenge was made, the Commission is
required to follow the authority established in the Decision of the Full Bench in Stephenson.
[65] Consequently, the Commission does not have jurisdiction to determine the dispute.
The application must therefore be dismissed.
[2016] FWC 677
14
[66] However, notwithstanding the absence of jurisdiction, in the particular circumstances
of this case the Commission has provided for a determination of the merits of the applicant’s
complaint. Upon analysis, and application of the principles for resolution of questions of
contested construction as primarily established by the Golden Cockerel Decision, I have
concluded that the disputed terms of the WD should be given a plain and ordinary meaning
which accords with, and was properly reflected in the actions of Qantas in respect to the
seniority displacement process that it undertook as part of the 2014 RIN.
[67] As a consequence of the conclusions that have been reached, the Commission
determines that the application, if it was not jurisdictionally barred, should be refused.
[68] The application is dismissed accordingly.
COMMISSIONER
Appearances:
Mr P Mugford representing himself.
Mr E Haggerty appeared for Qantas Airways Limited.
Hearing Details:
2015.
Sydney:
September, 3.
Printed by authority of the Commonwealth Government Printer
Price code C, PR576639
1 Stephenson v Abetz [PR952743], (28 October 2004).
2 Inna Grabovsky v United Protestant Association of NSW Ltd T/A UPA [2015] FWC 2504.
3 Mark Launders v Officeworks Pty Ltd [2015] FWC 5692.
4 The Association of Professional Engineers, Scientists and Managers, Australia v Jemena Asset Management Pty Ltd
[2015] FWC 5617.
5 The Australasian Meat Industry Employees Union v Golden Cockrell Pty Limited [2014] FWCFB 7447.
6 Essential Energy v Australian Municipal, Administrative, Clerical and Services Union; Communications, Electrical,
Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia; The Association of
Professional Engineers, Scientists and Managers, Australia [2015] FWCFB 1981.
7 Kucks v CSR Limited [1996] IRCA 166 (19 April 1996), 66IR182.
http://www.fwc.gov.au/alldocuments/PR952743.htm
