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[2019] FWCFB 161
General information, not legal advice.
Fair Work Commission (Full Bench)
2019-01-11
Original judgment source is linked above.
[2019] FWCFB 161 Note: Refer to the Federal Court decision of 24 March 2020 for the result of this matter.
s.604 - Appeal of decision
Construction, Forestry, Maritime, Mining and Energy Union
Appeal against decision [2018] FWC 5823 of Deputy President Anderson at Adelaide on 17 September 2018 in matter number AG2017/5792
[1] On 27 November 2017, Bianco Walling Pty Ltd trading as Bianco Precast (Appellant) applied to the Fair Work Commission (Commission) for variation of the Bianco Walling Pty Ltd (Gepps Cross Site) Enterprise Agreement 2016 - Off Site (2016 Agreement) pursuant to s.217 of the Fair Work Act 2009 (Cth) (Act). The Appellant sought to vary clause 1.2 (or the scope clause) of the 2016 Agreement on the basis that the clause is uncertain and ambiguous.
[2] Clause 1.2 of the 2016 Agreements provides as follows:
This Agreement is between Bianco Walling Pty Ltd (Bianco) and all Bianco employees that are engaged in the classifications contained in this agreement who work in Bianco's concrete manufacturing operations, including the erection of these products on-site and the installation of props and frames (employees)."
[3] The Appellant sought an order to delete the phrase "concrete manufacturing operations" and to insert in lieu the words "Pre-cast division".
[4] On 17 September 2018, Deputy President Anderson dismissed the application to vary on the basis that clause 1.2 of the 2016 Agreement is not ambiguous or uncertain.[1] As such, the Deputy President determined that he was not able to consider whether a variation to the clause should be made, as the jurisdictional criteria set out s.217 of the Act had not been met.[2]
[5] On 27 November 2018, the Appellant sought permission to appeal and appealed the Decision of the Deputy President. Mr B Avallone, of Counsel, was granted permission to appear[3] for the Appellant and Ms L Weber appeared for the Construction, Forestry, Maritime, Mining and Energy Union (Respondent).
[6] Historically and currently, the Appellant only applied the 2016 Agreement to its Pre-cast division and not its Structural or Civil division. In 2017 the Respondent claimed that the 2016 Agreement applied to an employee working in the Appellant's Structural division. The Appellant rejected the claim and subsequently the application to vary was filed.
[7] The 2016 Agreement is a single enterprise agreement which came into operation on 7 November 2016. It remains in operation and has a nominal expiry of 30 October 2020.
[8] From 2000 the Appellant commenced the manufacturing of pre-cast concrete panels. In 2004 it purchased a business that manufactured pre-cast concrete architectural panels, and in 2005 it combined that business with its pre-cast operations at Gepps Gross, Adelaide. This became known as the Appellant's Pre-cast division.
[9] In 2006 the Appellant purchased a business that manufactured civil construction and drainage products including T-beams. This became known as the Appellant's Structural division. In 2011 the Appellant co-located the Structural division with the Pre-cast division at the Gepps Cross site. The Appellant's Civil division had, by then, moved to a different site.
[10] For the purposes of this appeal, it is relevant to mention that the Appellant operates each of its three divisions (Pre-cast, Structural and Civil) as separate business units.[4]
[11] In relation to current and past enterprise agreements, only the employees in the Pre-cast division are employed under the 2016 Agreement. Employees in the Structural division are employed under the Concrete Products Award 2010.
[12] There are four predecessor Agreements to the 2016 Agreement:
the 2001 Agreement applied to both the (offsite) Pre-cast division and the then (on site) bricklaying work but to no other employees;
the 2004 Agreement applied to the (offsite) Pre-cast division only and to no other employees;
the 2008 Agreement applied to the (offsite) Pre-cast division only and to no other employees;
the 2011 Agreement applied to the (offsite) Pre-cast division only and to no other employees; and
the 2016 Agreement applies to the (offsite) Pre-cast division only and to no other employees.
[13] In respect of the predecessor Agreements, the Deputy President found that:[5]
the 2008 Agreement's scope was restricted to the "Gepps Cross facility" but that the 2011 and 2016 Agreements were not so expressed;
the phrase "who work in Bianco's concrete manufacturing operations" was first included in the 2011 Agreement and retained in the 2016 Agreement;
the phrase "including the erection of these products on-site (employees)" was first used in the 2011 Agreement but was varied by the 2016 Agreement to read "including the erection of these products on-site and the installation of props and frames (employees)"; and
to varying degrees, the scope clauses of each of the 2004, 2008, 2011 and 2016 Agreements differed from its predecessor.
[14] Moreover, the Deputy President found that:[6]
only employees in the Pre-cast division had been notified of, participated in negotiations for or voted on the 2004 Agreement, the 2008 Agreement, the 2011 Agreement and the 2016 Agreement (including a variation in 2017);
no employees from either the Structural or Civil divisions have sought to be included in such negotiations or votes for approval of the predecessor Agreements;
not until 2017 when the Respondent made a claim that the 2016 Agreement applied to its Structural division, had this been an industrial or workplace issue for the Appellant or its employees;
it was the Appellant's understanding that the reference to "concrete manufacturing products" in the 2011 and 2016 Agreements was intended by the company and as far as it understood, its employees, to be a reference only to the pre-cast concrete panels and products manufactured in the Appellant's Pre-cast division.
only Pre-cast employees were involved in negotiations for the 2016 Agreement and the 2017 variation, and that employees of the Structural division were not involved in 2011, 2016 or 2017.
the Structural division employees knew that discussions were occurring between the employer and the Pre-cast employees about their Agreement in 2016 and 2017 but that Structural division employees were not involved.
[15] Having considered the facts above, the Deputy President concluded that in respect of past practice:
• applying clause 1.2 to the Appellant's Structural division or Civil division is not consistent with either the intention or understanding of the Appellant or its employees at the time they entered into the 2016 Agreement or voted on and made the 2017 variation to the Agreement;[7]
• the 2016 Agreement was not intended to apply beyond the Pre-cast division;[8]
• both conduct and practice prior to and at the time of making the 2016 Agreement and since objectively establishes a common intention between the Appellant and its employees that clause 1.2 applies to the Pre-cast division only;[9] and
• an application of the 2016 Agreement to operations other than the Pre-cast division would not be consistent with the industrial relations practice or intention of the Appellant or its employees, and that the issue has arisen only recently by virtue of a trade union not covered by the Agreement advancing that proposition.[10]
[16] In relation to the question of permission to appeal, the Appellant submitted:
The appeal seeks to correct a Decision which is tainted by error
The error, if allowed to stand, could result in the Appellant allegations that the Appellant had breached the 2016 Agreement by not having applied the terms and conditions of the 2016 Agreement to the Structural and Civil division employees and/or the voiding of the Agreement that was otherwise made lawfully by the Appellant.
The decision would represent a substantial injustice to the Appellant.
• It is important that the Full Bench clarify that the summary at [33] of Glen Cameron Nominees Pty Ltd v TWU[11] should not be taken to supplant the more extensive description of the applicable principles in AMIEU v Golden Cockerel Pty Ltd[12] and AMWU v Berri Pty Limited.[13]
[17] An appeal under s.604 of the Act is an appeal by way of rehearing and the Commission's powers on appeal are only exercisable if there is error on the part of the primary decision maker.[14] There is no right to appeal and an appeal may only be made with the permission of the Commission. Subsection 604(2) requires the Commission to grant permission to appeal if satisfied that it is "in the public interest to do so". Permission to appeal may otherwise be granted on discretionary grounds.
[18] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.[15] The public interest is not satisfied simply by the identification of error, or a preference for a different result.[16] In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:
"... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters..."[17]
[19] Other than the special case in s.604(2), the grounds for granting permission to appeal are not specified. Considerations which have traditionally been treated as justifying the grant of permission to appeal include that the decision is attended with sufficient doubt to warrant its reconsideration and that substantial injustice may result if leave is refused.[18]
[20] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error.[19] However, as earlier stated the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.
[21] We find that permission to appeal should be granted in this matter. We are of the view that the appeal raises important questions concerning the application of agreement interpretation principles. We consider these to be important matters, and therefore, the dispute arising in this case is a matter of public interest. Accordingly, permission to appeal is granted.
[22] At the heart of the appeal is whether the Deputy President was in error in concluding that he could not have recourse to evidence of surrounding circumstances unless he had first found that there was ambiguity in clause 1.2 of the 2016 Agreement.
[23] The Appellant submits that the Deputy President was in error by not applying principles 8 and 12 of Berri, namely, by not having regard to the industrial context and purpose, in determining whether clause 1.2 is ambiguous or uncertain. The words of the 2016 Agreement are not to be read in a vacuum from the industrial realities. Those are matters which can be proved by evidence extrinsic to the terms of the 2016 Agreement itself, where those matters were known at the time the Agreement was made. Regard can be had to such evidence before determining whether an ambiguity exists.
[24] The Appellant submits that principles 3, 4 and 5 in Golden Cockerel (relating to the admissibility of evidence of the surrounding circumstances) were not modified by the Full Bench in Berri (principles 8, 9 and 10). The explanation given by the Full Bench in Golden Cockerel at [30] is therefore apposite:
"Regard may therefore be had to evidence of the surrounding circumstances before the existence of ambiguity in an agreement is identified as an aide to interpreting the agreement for the purposes of determining whether an ambiguity exists. If thereafter ambiguity is not identified extrinsic material cannot be used to contradict the language of the instrument. If ambiguity is identified the material may be used as contextual material to aide in the interpretation of the instrument..."
[25] Moreover, the Appellant posits that a court construing a commercial contract may have regard to evidence of circumstances external to the language of the contract before establishing whether there is ambiguity or a "constructional choice". Taking into account the extrinsic evidence of the "purpose or objects" to be secured by a commercial contract is similar to the approach which has traditionally been taken in relation to enterprise agreements, that is, industrial context and purpose.[20]
[26] The Appellant suggests that the Deputy President should have found that clause 1.2 is ambiguous. One meaning that is open on the language of the 2016 Agreement is that the scope is limited to the employees in the Pre-cast division. Another meaning that is open on the language of the 2016 Agreement, as a pure linguistic exercise devoid of any industrial context or the industrial realities, is that the scope extends to all three divisions. Clause 1.2 being susceptible to more than one meaning indicates that there is an ambiguity or uncertainty such as to enliven the jurisdiction under s.217 of the Act.
[27] The Appellant contends that the matters outlined at [12]-[15] of this decision, support a finding that clause 1.2, read objectively and in its context including its industrial purpose, means that the scope of the 2016 Agreement is limited to employees in the Pre-cast Division. To that end, the Deputy President should have exercised his discretion under s.217 to vary the 2016 Agreement, with effect from the date the Agreement commenced operation (7 November 2016).[21]
[28] The Appellant asserts that in circumstances where the only employees who participated in the making of the 2016 Agreement were the Pre-cast division employees, a construction that leads to a conclusion that all three divisions are covered by the 2016 Agreement would be fatal to its approval. The Commission, when approving the 2016 Agreement, could not have been satisfied that all of the employees in all three Divisions "made" the Agreement under s.182(1) of the Act, or "genuinely agreed" within the meaning of s.188, because only the employees in the Pre-cast Division participated in the process.[22] An interpretation of clause 1.2 which is consistent with the 2016 Agreement having been validly made (and approved) is to be preferred to an interpretation which would render the 2016 Agreement of no legal effect.[23] This is an important contextual consideration in favour of finding that clause 1.2, properly construed, limits the scope of employees covered by the 2016 Agreement to the Pre-cast Division.
[29] The Respondent submits that the approach to interpretation urged by the Appellant is misconceived because it ignores the fact that evidence of context, purpose or surrounding circumstances of an Agreement must be able to be supported by the language or syntax of the 2016 Agreement itself. By no stretch of language or syntax in clause 1.2, or elsewhere in the 2016 Agreement do the words in clause 1.2 support or define any particular distinction between the different types of processes that the Appellant undertakes in the manufacturing of concrete products within its three divisions, or the divisions themselves.
[30] In Golden Cockerel the Full Bench of the Commission acknowledged the decision of Justice Mason in Codelfa Construction Pty Ltd v State Rail Authority (NSW)[24] (Codelfa) that:
"The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning."
[31] The Full Bench in Golden Cockerel went on to note that it has not been universally accepted that the principle that ambiguity in an instrument must first be identified before extrinsic material may be admitted as an aide to interpretation.[25]
[32] If the Deputy President did err in his approach, the authorities which point towards the proposition that ambiguity is a conclusion to be reached after consideration of evidence of surrounding circumstances, rather than a precondition to the admissibility of evidence surrounding circumstances, are not irreconcilable from the continuing authority of the "true rule" formulated by Mason J in Codelfa, as reaffirmed in Mount Bruce (at [48]). It remains the case that primacy must be given to the language of the text. Moreover, expansive language may point away from the creation of a constructional choice, and consideration of extrinsic material is not necessary where textual markers are sufficient to give proper meaning to clauses.[26]
[33] In regards to the Appellant's assertion that the Commission ought to prefer an interpretation that would result in a lawfully approved enterprise agreement, the Respondent states that this is misconceived because:
it relies on the presumption that the Deputy President's Decision means that the 2016 Agreement was not lawfully made;
the Deputy President made no finding as to whether or not his decision meant that the 2016 Agreement was not lawfully approved; and
• the Deputy President would not have had the requisite jurisdiction to make such a finding, in any event.[27]
[34] Section 217 of the Act provides as follows:
217 Variation of an enterprise agreement to remove an ambiguity or uncertainty
(1) The FWC may vary an enterprise agreement to remove an ambiguity or uncertainty on application by any of the following:
(a) one or more of the employers covered by the agreement;
(c) an employee organisation covered by the agreement.
(2) If the FWC varies the enterprise agreement, the variation operates from the day specified in the decision to vary the agreement.
[35] The Commission's task in respect of s.217 applications is to:
(a) make an objective judgment as to whether properly construed the wording of a provision(s) is susceptible to more than one meaning - this requires the determination of a jurisdictional fact; and
(b) if that judgment is in the affirmative, the Commission may exercise its discretion to decide whether or not the agreement should be varied to remove the ambiguity or uncertainty.[28]
[36] It is clear that the Commission must first identify the existence of ambiguity or uncertainty before its discretion to vary an enterprise agreement is enlivened. This is uncontroversial and indeed the Deputy President concluded that, having found no ambiguity or uncertainty he was not "able to consider whether a variation to the clause should be made under section 217"[29] of the Act.
[37] The purported controversy in this appeal however is whether the Deputy President was in error in concluding that he could not have recourse to evidence of surrounding circumstances unless he had first found that there was ambiguity in clause 1.2 of the 2016 Agreement. In our view, the Deputy President did not fall into such error.
[38] In adopting the principles of agreement interpretation set out in Berri,[30] the first step in construing an agreement is to determine whether an agreement has a plain meaning or if it is ambiguous or susceptible of more than one meaning.[31] The Deputy President engaged in this task and found that, the ordinary meaning of the words used in clause 1.2 of the 2016 Agreement have a plain meaning and therefore he was not able to take into account the evidence of surrounding circumstances, including common intention and objectively established past or current practice.[32] The Deputy President arrived at this conclusion, after finding that:
• the mere existence of a disputed interpretation is not sufficient to render words in an industrial instrument uncertain or ambiguous in a legal sense. That conclusion can only be drawn from an examination of the language of the particular clause in the context of the instrument as a whole;[33]
• evidence of the surrounding circumstances cannot be admitted to contradict the plain language of the agreement;[34]
• to find an ambiguity or uncertainty in the language of clause 1.2 would be to apply a strained and narrow interpretation to words that neither in the terms nor in context have such a meanings;[35] and
• to add the words sought by the Appellant in the context of an interpretation case would be to rewrite the provision in order to give effect to an externally derived conception of intention or purpose, which is impermissible in the absence of finding ambiguity or uncertainty.[36]
[39] We see no error in the Deputy President's findings, approach and conclusion.
[40] As noted in Berri, regard may be had to evidence of surrounding circumstances to assist in determining whether ambiguity exists.[37] However it does not follow that regard must be had to evidence of surrounding circumstances. Recourse to surrounding circumstances in determining whether ambiguity exists depends on the circumstances of each particular case. Here the ordinary meaning of the words in the 2016 Agreement are plainly clear and therefore the Deputy President's decision not to have recourse to evidence of surrounding circumstances, does not disclose error.
[41] Additionally, even if the 2016 Agreement can be construed to have a commercial purpose, such as in the interpretation of contracts, this is not a relevant consideration in this particular case where the ordinary meaning of the language does not disclose any ambiguity.
[42] Following Berri, the construction of an agreement begins with a consideration of the ordinary meaning of the relevant words.[38] The resolution of a disputed construction of an agreement will turn on the language of the agreement having regard to its context and purpose.[39] The task of interpreting an agreement does not involve rewriting the Agreement.[40] The task is always one of interpreting the agreement produced.[41] The common intention is to be identified objectively, that is by reference to that which a reasonable person would understand by the language expressed in the Agreement, without regard to the subjective intentions or expectations.[42] Primacy must be given to the text and language of the Agreement, and this is what the Deputy President has done.
[43] Ambiguity does not simply arise because there are rival contentions advanced. Particularly in circumstances where a clause is said to have a plain meaning, evidence of surrounding circumstances will not be admitted to contradict the plain language of the agreement[43] in any event. The term in clause 1.2 of the 2016 Agreement says what it means, and should not be strained by a narrow or pedantic approach to interpretation as it has been urged by the Appellant at first instance and now on appeal.
[44] For the reasons set out above, we order as follows:
(1) Permission to appeal is granted.
(2) The appeal is dismissed.
[1] [2018] FWC 5823 (Decision); PR700450 (Order).
[3] Granted pursuant to s.596(2)(a) of the Act.
[4] Decision at [17]-[19] sets out in detail the key operational differences and similarities between the three divisions.
[6] Decision at [24] and [32]-[34].
[11] [2018] FWCFB 3744 (Glen Cameron).
[12] [2014] FWCFB 7447 (Golden Cockerel).
[13] [2017] FWCFB 3005 (Berri).
[14] Coal and Allied Operations Pty Ltd v AIRC [2000] HCA 47; (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ.
[15] O'Sullivan v Farrer [1989] HCA 61; (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch [2011] HCA 4; (2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others [2011] FCAFC 54; (2011) 192 FCR 78 at [44] -[46].
[16] GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]- [27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler [2011] FCAFC 54; (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28].
[17] [2010] FWAFB 5343, 197 IR 266 at [24] - [27].
[18] Also see CFMEU v AIRC [1998] FCA 1404; (1998) 89 FCR 200; and Wan v AIRC [2001] FCA 1803; (2001) 116 FCR 481.
[19] Wan v AIRC [2001] FCA 1803; (2001) 116 FCR 481 at [30].
[20] Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited and Anor [2015] HCA 37; (2015) 256 CLR 104 (Mount Bruce).
[21] Re Telstra Corporation (PR954989) [2005] AIRC 36 at [48]; AMWU v Toyota Corporation [2011] FWAFB 2132 at [13]; Aged Care Services Australia Group Pty Ltd v HSU & ANF [2017] FWCFB 2806 at [22]- [23].
[22] One Key Workforce Pty Ltd v CFMEU [2018] FCAFC 77.
[23] Berri at paras [4], [5], [13] and [114] and Construction, Forestry, Maritime, Mining and Energy Union v Hay Point Services Pty Ltd [2018] FCAFC 182 at [17].
[24] (1982) 149 CLR 337, 352.
[25] Golden Cockerel at [23]-[30].
[26] Cherry v Steele-Park [2017] NSWCA 295.
[28] See also Beltana No 1. Salaried Staff Certified Agreement 2001 PR932468 at [23]-[24].
[37] Berri at [114], point 8; Golden Cockerel at [30].
Printed by authority of the Commonwealth Government Printer
Bianco Walling Pty Ltd T/A Bianco Precast
Construction, Forestry, Maritime, Mining and Energy Union [2019] FWCFB 161
(2011) 192 FCR 78
(1998) 89 FCR 200
(2001) 116 FCR 481
(2015) 256 CLR 104
(1982) 149 CLR 337
(2000) 203 CLR 194
(1989) 168 CLR 210
(2011) 85 ALJR 398