PR961315
AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
Workplace Relations Act 1996
s.45 appeal against decision PR957250
issued by Deputy President Hamilton on 27 April 2005
Australian Municipal, Administrative, Clerical and Services Union
(C2005/2699)
s.170LW application for settlement of dispute (certification of agreement)
Australian Municipal, Administrative, Clerical and Services Union
and
Australian Taxation Office and another
(C2005/1888)
Commonwealth employment | |
VICE PRESIDENT ROSS |
|
SENIOR DEPUTY PRESIDENT ACTON |
|
COMMISSIONER MANSFIELD |
MELBOURNE, 11 AUGUST 2005 |
Appeal – whether dispute was a dispute over the application of the agreement – jurisdictional fact – issue turned on whether a particular clause gave rise to a binding obligation – error warranting correction on appeal – leave granted – appeal upheld – decision quashed.
DECISION
Introduction
[1] The Australian Taxation Office (the ATO), the Australian Municipal, Administrative, Clerical and Services Union (ASU), the CPSU, the Community and Public Sector Union (CPSU) and the Media, Entertainment and Arts Alliance are all party to the ATO (General Employees) Agreement 20041 (the ATO Agreement). The ATO Agreement was certified pursuant to Part VIB of the Workplace Relations Act 1996 (Cth) (the WR Act).
[2] On 16 February 2005 the ASU lodged a notification (C2005/1888) of an alleged dispute arising under the ATO Agreement. The notification is in the following terms:
“Notice is given by the Australian Municipal, Administrative, Clerical and Services Union (ASU) to the Commission under clause 141 of the ATO (General Employees) Agreement 2004, a certified agreement between the ASU, the Community and Public Sector Union (CPSU), and the Australian Taxation Office (ATO).
The matters in dispute relate to the proper application of:
Clause 118 of the Agreement, and in particular whether the ATO is properly applying its procedure ‘Managing Misconduct in the ATO’; and
Clause 119.1 of the Agreement that all employees will be treated fairly and equitably.
The ASU says the ATO has failed to properly apply the procedure by failing to give our members the chance to be heard prior to formally alleging that they have breached the APS Code of Conduct, and in relation to the question of prejudgement by the decision maker.
The Following steps of the dispute settling procedure have been taken:
The ASU notified three disputes in relation to three members by letters to the ATO dated 27 January and 2 February.
The ATO responded buy letter dated 7 February that in its view the disputes did not constitute disputes under clause 141 of the Agreement.
The ASU wrote to the First Assistant Commissioner, ATO People, on 8 February seeking a step 2 conference in relation to the matter, and, failing that, notice that the ASU would refer the matter to the Commission under clause 141. The ASU subsequently wrote to the Commissioner of Taxation on 10 February as a step 2 notification of dispute seeking the ATO’s reconsideration of its view. The ASU has been verbally informed by the ATO that it has not changed its view.”
[3] In essence the ASU sought to invoke the dispute settlement clause in the ATO Agreement in relation to notices of suspected breach of the APS Code of Conduct that were issued to three of its members employed by the ATO.
[4] In each case the ASU complains that the ATO’s delegate did not discuss the report of a suspected breach with the employee before issuing the notice of suspected breach to the employee. It complains that the delegate’s conduct shows bias and a lack of independence. It seeks the appointment of a new delegate, and a direction that the new delegate consider afresh the action under clause 1.13 of the Misconduct Procedures that is appropriate.2
[5] The ASU seeks a determination by the Commission under clause 141.5 that the following steps are necessary to achieve the ATO’s compliance with the Misconduct Procedures. The determination sought is as follows:
“The ATO failed to comply with the Managing Misconduct procedure in that:
(a) ATO delegates failed to consider whether to grant, and did not accord, the procedural fairness right to be heard to [three employees named]3, in accordance with paragraph 1.12 of the procedure.
(b) That the ATO failed to take all reasonable steps to ensure that the delegate in relation to Mrs Warring’s matter was and appeared to be independent and unbiased in accordance with paragraph 1.8 of the procedure.
That the steps that are necessary to achieve compliance with the procedure are:
1. That delegates consider whether to accord employees the procedural fairness right to be heard before deciding what action to take under paragraph 1.13 of the procedure and accord that right when the circumstances warrant according to the principles of procedural fairness.
2. The parties shall meet to develop guidelines to give practical application to the procedure in regard to 1. If the parties are unable to agree on guidelines, then the matter may be relisted for further determination.
3. That the ATO take all reasonable steps to ensure that delegates are and appear to be independent and unbiased. Reasonable steps include that when an employee claims that a delegate is not independent or unbiased or does not appear to be so then the claim will be promptly considered by an independent and senior managerial employee of the ATO.” 4
[6] The dispute settlement procedure is set out in clause 141.5 of the ATO Agreement, in the following terms:
“The following procedure will apply in the event of any disagreement about the application of this Agreement:
(i) between the Commissioner and one or more organisations of employees bound by this Agreement; or
(ii) between the Commissioner and a group of employees with a common interest in a matter arising under this Agreement.
Step 1
Within 7 days of a matter being raised a conference shall be arranged which should take place as soon as practicable. The conference will be between:
a) the appropriate level of ATO Management and representatives of the organisation(s) if it was raised under (i) above; or
b) the appropriate level of ATO Management and employees who raised the matter if it was raised under (ii) above.
Step 2
If the matter cannot be resolved in a timely fashion under Step 1, it shall be referred to the Commissioner and a copy of the referral sent to First Assistant Commissioner ATO People. To try to resolve the matter, the Commissioner will, within 7 days of receipt of the referral:
a) set up a conference to be held within 21 calendar days of receipt of the referral and attended by representatives of the Commissioner and relevant organisations or employees, as appropriate; or
b) with the agreement of the relevant organisations or employees, as appropriate, refer the matter for mediation or another form of alternative dispute resolution, at ATO expense.
Step 3
If
a) the actions under Step 2 are not taken within the timeframes, or
b) the matter is not resolved following conference, mediation or other process, or
c) having regard to the nature and urgency of the issue, it hasn’t been dealt with in a timely fashion,
the Commissioner, any group of affected employees or any organisation of employees involved in the matter may refer it to the AIRC. If such a matter was raised by employees, the Commissioner will refer the matter to the AIRC if requested to do so by a group of affected employees.
Prior to referring the matter to the AIRC the referring party will advise the other parties to the dispute of their intention to do so. In addition, prior to any AIRC hearing, the parties to the dispute will provide each other with relevant documents and information and an outline of the case that they will put to the AIRC at least 48 hours prior to the scheduled appearance.
In order to resolve the matter, the parties empower the AIRC to settle disputes over the application of this Agreement which involve:
1. Matters in the Agreement which are allowable items listed in Section 89A(2) of the Workplace Relations Act 1996 to the extent that the Commission could deal with such matters under Part VI of the Workplace Relations Act 1996, and;
2. Matters where all the parties to the dispute agree to accept and comply with AIRC recommendations about particular aspects of the matter on which the parties to the dispute are unable to agree. The Commissioner will not unreasonably refuse to refer a matter to the AIRC. The parties to the dispute will comply with the AIRC’s recommendation(s); and
3. Matters that would otherwise be excluded from the power of the AIRC to determine by virtue of (1) above, to the following extent:
a) where the Commissioner is required to consult with employees or other persons bound by this Agreement, the AIRC may determine whether or not the Commissioner has complied with this requirement. If the Commissioner has not complied, the AIRC may determine what steps are necessary to achieve compliance;
b) the AIRC may determine whether or not a person bound by this Agreement has complied with any procedural obligation, employee entitlement or condition under the Agreement. If a person bound has not complied with a procedural obligation, employee entitlement or condition under the Agreement the AIRC may determine what steps are necessary to achieve compliance.”
[7] Clause 118 of the ATO Agreement states:
“Workplace Environment
118. Code of Conduct
The ATO is committed to ensuring that all employees are aware of and comply with the standards of conduct as detailed in the APS Code of Conduct in the Public Service Act 1999, and that the ATO procedure ‘Managing Misconduct in the ATO’ is properly applied.
The ATO will monitor the application of the procedure, in particular:
a) That formal Code of Conduct action is taken where appropriate and in particular that action taken is clearly linked to suspected breaches of the APS Code of Conduct.
b) Ensure that advice, guidance and/or training is provided for Team Leaders and other delegates on the proper application of the Procedure and/or interpretation of Code of Conduct.
c) Maintain a database of Code of Conduct cases and outcomes to ensure consistency in respect of the application of charges and sanctions; and
d) Should there be cases where the recommendations of the Merit Protection Commissioner are not adopted by the ATO, advice on the basis for not adopting such recommendations will be provided to the applicant.”
[8]
The background to clause 118 is dealt with in the uncontested evidence of Mr Jeffrey Lapidos. We deal with Mr Lapidos’s evidence later.
[9] It is also relevant to note that s.15(1) of the Public Service Act 1999 (Cth) requires an Agency head to establish procedures for determining whether an APS employee in the Agency has breached the code of conduct. The code of conduct is set out in s.13 of that Act. These procedures “must comply with basic procedural requirements set out in Commissioner’s Directions”.5
[10] The basic procedural requirements for determining breaches of the Code of Conduct appear in chapter 5 of the Public Service Commissioner’s Directions 19996. In accordance with s.15(3) of Public Service Act 1999 (Cth) and the Commissioner’s Directions, the ATO has established “Managing Misconduct - ATO Procedures for Determining Suspected Breaches of the APS Code of Conduct” (the Misconduct Procedures).
[11] The Misconduct Procedures contain the following provisions.
“What are the Procedures?
1.3 It is important that suspected breaches of the Code of Conduct are addressed without undue delay and with a minimum of formality while ensuring adherence to the principles of procedural fairness.”
“Who Can Make Decisions About Misconduct Matters? …
1.8 Reasonable steps must have been taken to ensure that the Delegate is, and appears to be, independent and unbiased. A person who has previously provided a report in respect of any of the matters involved in the suspected breach of the Code of Conduct shall not determine whether a breach of the Code of Conduct has occurred.
1.9 The decision by a Delegate to have a matter investigated as a suspected breach of the Code does not in itself compromise that Delegate’s independence or impartiality.
Initial Action Where a Breach is Suspected
1.10 Where a breach of the Code of Conduct is suspected, a report is to be given to the Delegate. …
1.12 The Delegate must discuss with a member of the Official Conduct Team (OCT) whether it is appropriate for the matter to be dealt with under the Procedures. The Delegate may also discuss the report with the employee(s) concerned. The decision about how a report will be handled lies with the Delegate.
Options for a Delegate
1.13 A Delegate who has received a report of a suspected breach of the Code of Conduct may decide to:
(a) take no further action; or
(b) refer the matter to the employee’s manager to address other than through the Procedures (eg, for a minor matter, counselling may be the most appropriate form); or
(c) seek or wait further information (eg, investigations by Fraud Prevention & Control); or
(d) Determine the matter under the ATO Procedures.”
“Notifying the Employee of a Suspected Breach
1.28 Prior to any determination being made in relation to a suspected breach of the Code of Conduct, there must be written notification to the employee of the suspected breach. Such notification must include: …”7
[12] Following a conference on 28 February 2005, the ATO confirmed that its position was that the Commission did not have jurisdiction to hear and determine the application pursuant to clause 141. The ASU disagreed. Directions for a preliminary jurisdictional hearing were issued by consent and the parties, including the intervener - the CPSU, were required to file submissions. The matter was heard on 11 and 12 April 2005.
[13] In the proceedings at first instance the ASU contended that clause 1.12 of the Misconduct Procedures requires the ATO’s delegates to discuss a report of a suspected breach of the APS Code of Conduct with an affected employee before issuing a notice of suspected breach to the employee. It argued that the ATO’s delegates had not done so, and had therefore failed to properly apply the Misconduct Procedures. It argued that a failure to properly apply the Misconduct Procedures gave rise to a dispute involving a matter set out in subparagraph 3(b) of Step 3 of clause 141.5 of the ATO Agreement because it involves the question of whether or not the ATO has complied with the procedural obligation, employee entitlement or condition in clause 118.8
[14] The ATO submitted that the dispute was only about the proper application of the Misconduct Procedures. It argued that clause 118 does not create an obligation distinct from, or additional to, the obligation created by the Misconduct Procedures and that the ATO’s obligation to comply with the Misconduct Procedures arises out of s.15 of the Public Service Act 1999 (Cth), not clause 118 of the ATO Agreement. On this basis it is said that there was no dispute over the application of the ATO Agreement, and no question as to whether the ATO has complied with clause 118.
The decision subject to appeal
[15] The critical question in the proceedings at first instance was whether clause 118 of the ATO Agreement “creates an obligation, enforceable as a clause of the ATO Agreement, to properly apply the ATO Misconduct Procedures”9.
[16] In the decision subject to appeal the Deputy President concluded that, although on the language of the clause alone it probably could be interpreted either way, “the stronger argument is that it is declaratory alone and creates no obligations.”10 In particular his Honour found that clause 118 did not establish “any procedural obligation, employee entitlement or condition under the Agreement”11 within the meaning of the dispute settlement clause in the ATO Agreement. The Deputy President sets out six reasons for his conclusion.
1. The clause does not clearly provide an obligation. Rather than saying that it is a term of this Agreement that the ATO procedures be properly applied, clause 118 uses the “far weaker phrase”: “the ATO is committed to ensuring that … the ATO procedure is properly applied.” Three points are made in this context:
2. The clause deals with the application of procedures – the Misconduct Procedures – that are already given enforceability by s.15 of the Public Service Act 1999 (Cth). It was unnecessary for the Misconduct Procedures to be given force by the ATO Agreement.13
3. The part of clause 118 under consideration precedes a number of “specific and probably binding obligations” upon the ATO. Hence it is likely that the first sentence in clause 118 is prefatory to the second sentence, which in turn imposed specific obligations that were consistent with the general objective of properly applying the Misconduct Procedures.14
4. The ATO Agreement is “generally quite detailed and regulatory in the way it approaches issues. Where legal obligations are created it tends to specify in some detail the nature of the obligations, the conditions and restrictions on the exercise of various entitlements, and so on.” By contrast the first sentence of clause 118 is a relatively short statement.15
5. If the first sentence of clause 118 creates an enforceable obligation then the effect (together with clause 141.5) would be to empower the Commission to make a determination in an area that is “already highly regulated”. If that was the intended effect, one would expect the clause to contain a provision to ensure that “dual regulation” does not lead to conflicts, but it does not do so.16
6. The legislative context is relevant to the issue of intention. The Misconduct Procedures are quite detailed and regulation of them in s.15 of the Public Service Act 1999 (Cth) is quite specific. Nothing in s.15 of that Act empowers the ATO to supplement the Misconduct Procedures by agreeing to them having additional force as terms of a certified agreement, and there may be doubts about whether the ATO has that power. Even if the ATO did have such a power, the fact that the Misconduct Procedures have legal force and are quite detailed suggests that the parties’ intention in agreeing to clause 118 was not to add another level of regulation on the issues dealt with by those procedures.17
[17] At paragraphs 53 to 56 of the decision subject to appeal the Deputy President said:
“[53] In summary, the ordinary meaning of the language of the opening sentence of clause 118 could include both a binding and non-binding meaning, but in the context of that clause and the Agreement overall, and given the difficult legislative context, the sentence in my view simply expresses the ATO’s intention to comply with and carry out obligations established by the Public Service Act. It is something of a letter of comfort given to the ASU and CPSU because of the concerns about application of the Agreement that they raised during negotiations18, as well as an introduction to and explanation of the specific enforceable obligations which follow it. It does not make sense to read the words as doing more than that in the context of this Agreement. Nor is this conclusion other than consistent with the nature and purpose of certified agreements.
[54] The first sentence of clause 118 does not establish ‘any procedural obligation, employee entitlement or condition under the Agreement’ within clause 141.5. Clause 141.5 does not empower the Commission to make the determination sought in this matter.
[55] The ASU also made reference to clause 119, but that issue was not developed. Clause 119 in my view takes the matter no further. Nor do other parts of clause 118 provide any assistance.
[56] The application is therefore dismissed.”
[18] Two further aspects of the decision subject to appeal are relevant.
[19] The first is that the Deputy President distinguished the decision of the Full Bench in SDA v Big W Discount Department Stores19 (the Big W decision). In the Big W decision the Full Bench found that a clause in the following terms created a binding obligation:
“BIG W, its Associates and the SDA are committed to achieving and maintaining healthy and safe working conditions in all BIG W workplaces by abiding by all relevant Occupational Health and Safety legislation.”
[20] The Deputy President dealt with the Big W decision at paragraphs 24 and 25 of the decision subject to appeal:
“[24] This clause, as with the clause before me, uses the term ‘committed’. However, it is in different terms in other respects. In the Big W clause both the employer and the union are said to be ‘committed’. They have mutually agreed this commitment, which is consistent with it being a binding obligation between them that this commitment be implemented. In the clause before me, only the ATO is ‘committed’. There is no mutuality in that sentence, and not much sense that this sentence contains a binding promise to the ASU and CPSU. It is consistent with the fact that compliance with the Misconduct Procedure is a legal obligation on the ATO alone, not the ASU.
[25] The remainder of the Big W clause sets out the objectives of that ‘commitment’ as well as a procedure for implementing it. This procedure includes meeting with the SDA where it perceived that issues were affecting health and safety, training of employees in occupational health and safety, establishing a consultative process for rehabilitation, and a procedure for introducing changes which ‘may reasonably be expected to affect Associate’s health and safety’. In the clause before me the remainder of clause 118 can easily operate without the opening sentence being of legally binding force. The opening words operate well as an explanation and introduction to the later parts of clause 118 which contain actual concrete promises. Nor do the same problems of power, inconsistency and duplication arise in the Big W matter, given that State legislation can be overridden by federal award provisions.”20
[21] The second aspect of the decision of note is that the Deputy President supported his conclusion with respect to the meaning of clause 118 by reference to a series of cases dealing with letters of comfort.21 We return to this issue later in our decision.
Submissions on appeal
[22] The Appellant contends that the Deputy President erred in concluding that the Commission did not have jurisdiction pursuant to clause 141 of the ATO Agreement to determine the dispute referred to it by the ASU. In particular it is said that the Deputy President erred in concluding that clause 118 did not impose a “procedural obligation” on the ATO within the meaning of clause 141.5 of the ATO Agreement and in concluding that the opening three lines of clause 118 only constituted a prefatory or explanatory statement on the part of the ATO.
[23] The Appellant submits that the words of clause 118 are plain english words. A commitment to “ensure” that something happens is, prima facie, indicative of making a binding promise. They are words of obligation so that an allegation by a party to the ATO Agreement of a failure by the person who made the commitment to meet the commitment gives rise to a dispute about the application of the agreement.
[24] Three particular points are advanced by the Appellant in respect of the reasons given by the Deputy President.
[25] Firstly, it is submitted that the Deputy President erred in failing to follow the Big W decision.
[26] As set out at paragraphs 24 and 25 of his decision, the Deputy President distinguished the Big W decision in two ways. Firstly, it was said that in the clause in the Big W decision there was a mutual commitment. This mutuality was said to be “consistent with it being a binding obligation between [the parties] that this commitment be implemented”. The ASU argues that it is difficult to see why this is so. Many provisions in certified agreements will be binding notwithstanding that only one party to the agreement is required to comply with the provisions. The requirements to pay wages to employees or to obey lawful directions of the employer are but two obvious examples. It is submitted that mutuality cannot be the hallmark of a binding obligation. In any event, it is submitted that it is far from clear what commitment the union was making in clause 2.6 of the Big W agreement as State occupational health and safety legislation does not impose duties on unions.
[27] The other point of distinction relied upon by his Honour was that the facts in the Big W decision were less complex than those arising in the present case “given that State legislation can be overridden by federal award provisions”. The ASU submits that this is not the case in relation to occupational health and safety laws and refers to s.170LZ(2)(a) of the WR Act.
[28] In reply the ATO submits that the Deputy President did not err in distinguishing the Big W decision. In Big W the Full Bench found that clause 2.6 of the relevant certified agreement imposed obligations that were additional to those required by State occupational health and safety legislation.22 A dispute about whether Big W was required to provide anti-fatigue matting was not merely a dispute about whether it was complying with its obligations under State legislation, but rather was a dispute about what the agreement required.
[29] It is argued that in contrast to the position in the Big W decision, clause 118 of the ATO Agreement does not impose obligations additional to the Misconduct Procedures. Indeed, it imposes no obligations at all, but merely records the ATO’s pre-existing obligations and its intention to comply with them. For this reason, the ATO submits that the present case can be distinguished from the Big W decision.
[30] In the alternative, the ATO submits that the Big W decision is clearly wrong and should not be followed. In this context it is said that a Full Bench of the Commission is not bound by, and may depart from, a decision of another Full Bench if it is satisfied that the earlier decision is clearly wrong.23
[31] It is submitted that the conclusion of the Full Bench in the Big W decision, that clause 2.6(a) of the relevant certified agreement imposed obligations additional to those in State legislation, is unsupported by reasoning. The Full Bench says only that clause 2.6(a) has the effect for which the appellant contends.24 It had earlier recorded the appellant’s contention “that clause 2.6(a) involved a commitment to achieve and maintain healthy and safe working conditions in all Big W workplaces and specified the means by which this ought to occur; ‘by abiding by all relevant Occupational Health and Safety legislation’”.25
[32] The ATO submits that this passage does not describe any obligation further to that arising out of the State legislation. A commitment to abide by State legislation is not an assumption of a new obligation or an obligation additional to that in the State legislation.
[33] In reply to the ATO’s submissions the ASU contends that the Full Bench in the Big W decision found that clause 2.6(a) of the agreement there under consideration imposed an “additional obligation” in the sense that a breach of state occupational health and safety law could be prosecuted under the WR Act. The obligation was additional in the sense that, rather than being limited to criminal enforcement by an inspector appointed under the Occupational Health and Safety Act 1985 (Vic),26 the obligations could be enforced both in the Commission as a dispute under the agreement and, perhaps, in the Federal Court pursuant to s.178 of the WR Act.27
[34] The ASU submits that the reasoning in the Big W decision is “refreshingly simple” and is clearly indistinguishable from the present case. Far from being “clearly wrong” as the Respondent submits, it is clearly correct. It is said that the Big W decision represents good law. It is not distinguishable from the present case and ought to have been followed.
[35] The ASU also submits that in assessing the Big W decision, the current Full Bench should adopt the “cautious approach” described in Cetin v Ripon Pty Ltd.28 The circumstances in which the Full Bench there departed from an earlier Full Bench decision were quite unusual and the present case bears no resemblance to those circumstances.
[36] Secondly, the Appellant challenges his Honour’s reliance on a series of cases dealing with letters of comfort.
[37] The Deputy President concluded that the opening line of clause 118 “simply expresses the ATO’s intention to comply with and carry out obligations established by the Public Service Act.” His Honour went on to say that the clause was “something of a letter of comfort given to the ASU and CPSU because of the concerns about application of the Agreement that they raised during negotiations”.29
[38] The reference to letters of comfort was a reference to a line of cases concerning contractual negotiations that are cited at paragraphs 29 to 35 of the Deputy President’s reasons. The Appellant submits that these cases are of little assistance to the Commission in the present matter. The circumstances in which letters of comfort are provided in the course of contractual negotiations is explained by Cheshire and Fifoot, in their book Law of Contract, as follows:
“The setting for the use of a letter of comfort is where a lender is seeking security from the defendant for a prospective loan to a third party, such party being usually ‘related’ to the defendant, for example, where the third party is a subsidiary company of the defendant. The lender first asks for a guarantee or some other firm arrangement to secure the loan, but the defendant refuses. As a compromise, the lender is content with a letter of comfort.”30 [emphasis added]
[39] The learned authors give as an example the case of Commonwealth Bank of Australia v TLI Management Pty Ltd31 (TLI Management), a case cited by the Deputy President. The ASU contends that in circumstances where a binding commitment has been sought and refused, it is far from surprising that courts have refused to bind the provider of the letter of comfort to its contents as a contractual promise.
[40] But it is argued that the facts of the present case are clearly distinguishable from those in TLI Management. In this context the ASU relies on Mr Lapidos’s evidence that, after promulgation of the ATO’s Misconduct Procedures on 1 January 2001, the ASU “became concerned that the Misconduct Procedures were not being properly implemented”32. The point was pressed during negotiations for the ATO (General Employees) Agreement 2002 between the parties and clause 118 was the result. The clause was replicated in the current ATO Agreement. It is submitted that there is no suggestion on the evidence that the ATO was unprepared to provide a binding commitment but instead offered a ‘letter of comfort’ as a compromise. In the circumstances it is said that it is highly unlikely that the parties would have mutually agreed that a non-binding commitment, which could not even be enforced in the Commission under clause 141, would meet the ASU’s concerns.
[41] In reply the Respondent submits that it is “abundantly clear” from his decision that the Deputy President did not consider that clause 118 was a letter of comfort. Rather it is said that he only referred to letters of comfort by way of an analogy and his construction of clause 118 was based on other considerations.
[42] The third and final aspect of the Deputy President’s reasons that is challenged by the Appellant relates to the proposition that the Misconduct Procedures are already highly regulated. The Appellant contends that there is no statutory obligation on the ATO to comply with the Misconduct Procedures, whether under either s.15 of the Public Service Act 1999 or elsewhere. It is submitted that the only relevant obligations imposed on the ATO by s.15 are to:
(a) establish procedures for determining whether an APS employee in the Agency has breached the Code of Conduct (s.15(3)); and
(b) “take reasonable steps to ensure that every APS employee in the agency has ready access to the documents that set out the procedures referred to in subsection (3)” (s.15(5)).
[43] Section 4 of the Public Service Act 1999 (Cth) provides that the ATO may not be prosecuted if it fails to comply with that Act. The ASU contends that what the Public Service Act 1999 (Cth) regulates is employee compliance with the code of conduct.
[44] The Appellant submits that in those circumstances it should come as no surprise that the parties would have agreed to the mechanism in clauses 141 and 118 of the ATO Agreement that enables some limited enforcement of the Misconduct Procedures. In the absence of those provisions, the Misconduct Procedures would be applied at the whim of the ATO.
[45] In relation to the concern raised by his Honour at paragraphs 50 and 51 about potential conflict between the Public Service Act 1999 (Cth) and the WR Act failed to have regard to s.8 of the Public Service Act 1999 (Cth), which provides that the Public Service Act 1999 (Cth) has effect “subject to the Workplace Relations Act 1996”. Further, any conflict that does exist can be considered in the second stage of the matter as anticipated at paragraph 11 of his Honour’s reasons for decision.
[46] The Respondent relies on the reasons given by the Deputy President for finding that clause 118 does not establish a procedural obligation, employee entitlement or condition, within the meaning of subparagraph 3(b) of Step 3 in clause 141.5 of the ATO Agreement. There is no dispute over the application of the ATO Agreement involving a matter in subparagraph 3(b), and the Commission is not empowered by Step 3 to do anything. The appeal should be dismissed.
Consideration
[47] This is an appeal pursuant to s.45(1)(g) of the WR Act. To succeed the Appellant must show that the Deputy President erred in refusing or failing to exercise jurisdiction. The issue for determination is whether the Deputy President erred in concluding that the Commission did not have jurisdiction pursuant to clause 141 of the ATO Agreement to determine the alleged dispute notified by the ASU.
[48] Clause 141.5 of the ATO Agreement empowers the Commission to “settle disputes over the application of [the] Agreement”. Whether the alleged dispute is a dispute “over the application of [the] Agreement” requires the determination of a jurisdictional fact.
[49] 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:
“The term ‘jurisdictional fact’ (which may be a complex of elements) is often used to identify that criterion, satisfaction of which enlivens the power of the decision-maker to exercise a discretion.”33
[50] Similarly in Re CFMEU - Termination of Bargaining Periods, Lee and Madgwick JJ said:
“. . . the question presents as one of whether the Commission may have erred as to a ‘jurisdictional fact’, that is, the existence or non-existence of a state of affairs which was a statutory precondition to the Commission acting. . .”34
[51] 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.35 As Gummow J pointed out in Minister for Immigration and Multicultural Affairs v Eshetu,36 a court or tribunal cannot give itself jurisdiction by erroneously deciding that a jurisdictional fact exists.
[52] In determining whether the alleged dispute notified by the ASU is a dispute “over the application of [the] Agreement” that expression should not be narrowly construed. In this context we agree with the observation of the Full Bench in Shop, Distributive and Allied Employees Association v Big W Discount Department Stores that:
“…what comprises a dispute over the application of the agreement should not be narrowly construed; to do so would be contrary to the notion that certified agreements are intended to facilitate the harmonious working relationship of the parties during the operation of the agreement.”37
[53] The determination of jurisdictional fact in this case turns on whether clause 118 of the ATO Agreement “creates an obligation, enforceable as a clause of the ATO Agreement, to properly apply the ATO Misconduct Procedures”.
[54] We make two general observations relevant to the proper construction of clause 118.
[55] The first is that the accepted approach to interpreting an industrial instrument was explained by Madgwick J in Kucks v CSR Ltd38:
“It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which may have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.
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.”
[56] This approach was approved by a Full Court of the Federal Court in Ansett Australia Ltd v Australian Licensed Aircraft Engineers’ Association39, and was recently cited by two Judges of the High Court of Australia in Amcor Ltd v Construction, Forestry, Mining and Energy Union40.
[57] The industrial context in which an agreement is negotiated is relevant to determining the mutual intention of the parties to the agreement. As we have noted, the background to clause 118 was dealt with in the uncontested evidence of Mr Jeffrey Lapidos in the proceedings at first instance. At paragraphs 2 and 3 of his witness statement Mr Lapidos says:
“2. During 2000 the ATO consulted with the union in the development of the procedures for investigating and determining whether an employee has breached the Code of Conduct and sanctioning employees accordingly. The procedures – “Managing Misconduct in the ATO” [“Misconduct Procedures”] – became operative on 1 January 2001.
3. As a result of assisting members who were subject to misconduct action, the ASU became concerned that the Misconduct Procedures were not being properly implemented. The union pressed this point during negotiations for the ATO (General Employees) Agreement 2002 and as a result clause 118, dealing with the Code of Conduct, was introduced into that Agreement. That clause is now clause 118 of the current ATO (General Employees) Agreement 2004.”41
[58] The second general observation is that the legislative context within which the ATO Agreement sits is also relevant. As Kirby J observed in Amcor Limited v CFMEU:
“Also set out in other reasons, or described there, are the provisions of the Act that constitute … the legislative background against which the Agreement was made and certified. It was a background that would have been in the minds of both parties (Amcor and its agent on the one side and the Union on the other) who negotiated the Agreement and hammered out its terms. The legislative background is therefore part of the common knowledge attributable to the parties to the Agreement. So far as it is relevant, it would ordinarily be assumed that, in agreeing as they did, the parties intended the Agreement to take its place within the industrial setting created by the Act.”42
[59] The legislative context suggests that certified agreements give rise to binding obligations. While a certified agreement is in operation it prevails over an award or order of the Commission to the extent of any inconsistency with the award or order (s.170LY). Similarly, a certified agreement prevails over terms and conditions of employment specified in a State law, State award or State employment agreement to the extent of any inconsistency (s.170LZ). Where an organisation or person bound by a certified agreement breaches a term of the agreement a penalty may be imposed by the Court (s.178).
[60] We now turn to that part of clause 118 which is in issue.
[61] Relevantly, clause 118 of the ATO Agreement provides:
“The ATO is committed to ensuring that all employees are aware of and comply with the standards of conduct as detailed in the APS Code of Conduct in the Public Service Act 1999, and that the ATO procedure “Managing Misconduct in the ATO” is properly applied.” [emphasis added]
[62] It seems to us that in the context of this matter the expression “committed to ensuring” evinces an intention to create an obligation, enforceable as a clause of the ATO Agreement, to properly apply the Misconduct Procedures. As the Deputy President pointed out in the decision subject to appeal, one of the meanings of the word ‘commit’ is to “bind by pledge or assurance”. We also note that the word “ensuring” is a derivative of the word ‘ensure’, which means, among other things, “to pledge one’s faith to a person for the execution of a promise”.43 Hence, adopting the ordinary meaning of the words in the expression “committed to ensuring” suggests a binding obligation. The context within which the ATO Agreement was negotiated and the legislative context in which it sits also support that conclusion.
[63] We have considered the reasons advanced by his Honour for reaching the contrary conclusion but, with respect to him, we do not find them persuasive. We now turn to briefly deal with his Honour’s reasons, which are summarised at paragraph 16 of this decision.
[64] As to his Honour’s first reason, the fact that the commitment in clause 118 is expressed by the ATO alone and not as a mutually agreed term is of little weight. The Misconduct Procedure does not impose any obligation on the ASU. Hence, as conceded by counsel for the ATO, one would not expect the clause to say that the ASU is committed to complying with a procedure that does not impose any obligations upon it.44 In support of his conclusion the Deputy President also advances the proposition that there is “some degree of vagueness” about a legal obligation to “properly apply” an existing obligatory procedure. With respect to him, we do not agree. We see no “degree of vagueness” about an obligation to properly comply with a misconduct procedure.
[65] The second reason given is that the ATO’s Misconduct Procedures are enforceable by other means and hence it was unnecessary for them to be given force by the ATO Agreement. We accept that this is so, but it does not follow that the availability of alternative remedies means that the parties agreed that clause 118 would have no legal effect.
[66] The fifth and sixth reasons given by his Honour also make reference to the issue of “dual regulation”. We do not find these points persuasive.
[67] The existence of alternative means of enforcing compliance with the Misconduct Procedure does not of itself lead one to conclude that clause 118 was not intended to give rise to an enforceable obligation. Parties to agreements often confer a power of private arbitration upon the Commission in respect of disputes over the application of the agreement. Such a power is conferred despite the availability of an alternative remedy, namely enforcement in a court pursuant to s.178 of the WR Act.
[68] We acknowledge that there are other means available to the ASU to ensure that the ATO properly applies its Misconduct Procedures. But we also accept the Appellant’s contention that the alternative remedies available are costly and time-consuming when compared to proceedings in the Commission. The scope of the remedies available to the Commission may also be broader.
[69] Nor do we find his Honour’s third and fourth reasons persuasive. We acknowledge that the context in which clause 118 appears is a relevant consideration, but in our view that context does not compel the conclusion reached by his Honour.
[70] In this regard we note that in other parts of the ATO Agreement different language is used in circumstances where the provision is intended to be aspirational or prefatory, as opposed to an intention to give rise to a binding obligation. For example clause 120.1 states:
“The principles of fairness, equity and workplace diversity are integral to sound people management.”
[71] Unlike clause 118 there is no reference in this provision to any commitment to ensuring a particular outcome.
[72] We conclude by briefly referring to that aspect of his Honour’s decision that deals with “letters of comfort”. We note at the outset that this point was not raised by any of the parties before his Honour, nor was it relied on by the ATO on appeal.45 For our own part, and contrary to his Honour’s view, we see no sound basis for regarding the opening sentence of clause 118 as “something of a letter of comfort given to the ASU”.46 We accept the submission advanced by the Appellant in this regard.47
[73] We are satisfied that the Deputy President erred in concluding that the Commission did not have jurisdiction pursuant to clause 141 of the ATO Agreement to determine the dispute notified by the ASU. We grant leave to appeal, uphold the appeal and quash his Honour’s decision.
[74] The dispute notification is remitted to the Deputy President for hearing and determination.
BY THE COMMISSION:
VICE PRESIDENT
Appearances:
P. Rozen, of Counsel for the Australian Municipal, Administrative, Clerical and Services Union.
R. Crow, of Counsel for the Australian Taxation Office.
Hearing details:
2005.
Melbourne:
July 19.
1 AG835215 PR948752.
2 Exhibit ATO6 in the proceedings at first instance, Appeal Book at tab PQ; exhibit ASU3 in the proceedings at first instance, Appeal Book at tab G at paragraph 7.
3 Names omitted as unnecessary at this stage of the proceedings.
4 Statement Detailing Determination, Appeal Book at tab C.
5 Exhibit ATO2 in the proceedings at first instance, s.15(3)(a) of the Public Service Act 1999.
6 Exhibit ATO2 in the proceedings at first instance, Appeal Book at tab L.
7 Exhibit ATO3 in the proceedings at first instance, Appeal Book at tab M.
8 Respondent’s written submissions in the proceedings at first instance, Appeal Book, tab F at paragraph 9.
9 PR957250 at paragraphs 43; see also exhibit R1 at paragraph 37.
10 PR957250 at paragraph 43.
11 PR957250 at paragraph 54.
12 PR957250 at paragraphs 43 – 45.
13 PR957250 at paragraph 46.
14 PR957250 at paragraph 48.
15 PR957250 at paragraph 49.
16 PR957250 at paragraph 50.
17 PR957250 at paragraphs 51 – 52.
18 Witness statement of Jeffrey Lapidos at paragraph 3.
19 PR924554, 12 November 2002 per Watson SDP, Kaufman SDP and Foggo C.
20 PR924554 at paragraphs 24 – 25.
21 See generally paragraphs 29 – 35 of his Honour’s decision.
22 See the Big W decision at paragraphs 28 – 29.
23 Cetin v Ripon Pty. Ltd. (2003) 127 IR 205 at paragraphs 48 – 50.
24 Big W decision at paragraph 29.
25 Big W decision at paragraph 13.
26 See s. 48.
27 See Big W decision at 28. The Appellant contends that this aspect of the decision was clearly obiter dictum.
28 (2003) 127 IR 205 at 214 (paragraphs 48 – 50).
29 PR957250 at paragraph 53.
30 Cheshire and Fifoot, Law of Contract (7th Australian edition), p. 193 (emphasis added).
31 [1990] VR 510.
32 Witness statement of Jeff Lapidos at paragraph 3.
33 (2000) 199 CLR 135 at 148.
34 (2002) 113 IR 241 at paragraph 53.
35 Pawel v Australian Industrial Relations Commission (1999) 97 IR 392 per Branson and Marshall JJ at paragraph 16.
36 (1999) 162 ALR 577 at paragraph 127. Also see R v Judges of the Federal Court of Australia; Ex parte WA National Football League (Inc) (1979) 143 CLR 190 at 214.
37 PR924554 at paragraph 23. Also see ASU v Qantas, Print T0301, 7 September 2000 per Munro J, Polites SDP and Cribb C.
38 (1996) 66 IR 182 at 184.
39 [2003] FCAFC 209.
40 [2005] HCA 10 at paragraph 96 per Kirby J and at paragraphs 145 – 146 per Callinan J.
41 Exhibit ASU3 of the proceedings at first instance at paragraphs 2 – 3.
42 [2005] HCA 10 at paragraph 64; also see paragraph 13 per Gleeson CJ and McHugh CJ; paragraphs 41 – 49 per Gummow, Hayne and Heydon JJ.
43 The Oxford Dictionary (1978) Volume III at p.205.
44 Transcript at PNs 218 – 221.
45 Transcript at PNs 235 – 245.
46 PR957250 at paragraph 53.
47 See paragraphs 36 to 41of this decision.
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