Civil Air Operations Officers' Association Of Australia v Airservices Australia

Were the provisions of the Letter of Agreement susceptible of breach by Airservices so as to attract a penalty under s 178? 12 It was first contended on behalf of Airservices that the Staffing Principles embodied in cl 3 of the Letter of Agreement were directed to a subject matter, and adopted a method of dealing with training opportunities, which tended against the imposition of liability to a penalty for a breach pursuant to s 178 of the Act. In support of this contention Counsel pointed out that the requirements of the Letter of Agreement were not adverted to in cl 12.1 of the 1998 Agreement which imposed a specific obligation on Airservices. Clause 12.1 of the 1998 Agreement, it will be recalled, stipulated; "12.1 Airservices shall ensure that all selections for recruitment, promotion and transfer will be determined by merit and relative efficiency. This means fair and open competition involving consideration of the best available field of candidates taking account of the advantages of developing and progressing Airservices Australia employees." 13 However, cl 12.4 of the same 1998 Agreement provided; "The arrangements contained in and regarding the Letter of Agreement concerning Staffing Principles referred to in Clause 18.12.1 of Schedule B are re-affirmed. In the context of Business Transformation, the Staffing Principles will be the subject of ongoing review and negotiations, and would only be changed by agreement of the parties." 14 In my view, cl 12.4 qualified the operation of cl 12.1 which, I accept, was cast in such general exhortatory terms as to negative an intention that it should be capable of a breach by Airservices attracting a penalty. However, whether such an intention can be imputed to the drafters of cl 3 of the Letter of Agreement turns, as I pointed out at [31] of the earlier reasons in this matter, on the proper construction of the Letter of Agreement itself and any relevant provisions of the 1998 Agreement, particularly cl 12, as a whole. The peremptory language of cl 3 of the Letter of Agreement, the identity of the parties theretoand the relationship between them tend, I consider, to a construction which imputes to the drafters of the Letter of Agreement an intention that a breach or non-observance of the obligation to establish a training pool should be capable of attracting a penalty pursuant to s 178. That tendency is strengthened when regard is had to the requirement to constitute, or reconstitute, the relevant pool at least once a year. 15 It was next submitted by Mr Mueller of Counsel for Airservices that the Letter of Agreement disclosed uncertainties and apparent inconsistencies which could only be overcome or reconciled by extreme application of principles of construction or devices of interpretation. I do not agree that any such uncertainties or inconsistencies attend the language of that part of cl 3, or any other part of the Letter of Agreement, which imposed the critical obligation to establish a training pool for each unit. Mr Mueller pointed in this context to cl 9(b) of the Letter of Agreement which, he said, had been accepted by Civil Air as applicable to the circumstances of the appointment of Mr Valkenburg to the Brisbane Tower. That sub-clause provided; "In the event of local disagreement regarding application and interpretations, such disagreements will be referred in writing to Manager, Human Resources, ATSD and the Executive Secretary CIVILAIRfor joint resolution. Final resolution, if necessary, will bevested in GM ATS and the President CIVILAIR." 16 The fact that a dispute resolution mechanism of that kind was available, and was resorted to by a party, does not preclude that party from later seeking the imposition of a penalty under s 178, although the conduct of the parties during the implementation of the dispute resolution mechanism may obviously bear on the exercise of the Court's discretion under that section. It is also important to bear in mind that the breach alleged against Airservices was a failure to establish at all the relevant training pool. That is properly to be regarded as of wide institutional concern between Civil Air and Airservices rather than as a "local disagreement regarding application and interpretations", although a particular consequence of the alleged failure, being Mr Valkenburg's accession to a specific training opportunity, may have had a "local" character. 17 In a related way it was pointed out that the Letter of Agreement and the 1998 Agreement expressly stipulated that the working out of the Staffing Principles should be the subject of on-going consultation and monitoring by the parties. Thus, sub-cl 9(a) of the Letter of Agreement recited; "The ongoing implementation of these arrangements will be the subject of consultation and monitoring by the Parties at the national level." That sub-clause was echoed by cl 12.4 of the 1998 Agreement, which provided; "The arrangements contained in and regarding the Letter of Agreement concerning Staffing Principles referred to in Clause 18.12.1 of Schedule B are re-affirmed. In the context of Business Transformation, the Staffing Principles will be the subject of ongoing review and negotiations, and would only be changed by agreement of the parties." (emphasis added) 18 As I indicated during the course of argument, I regard those provisions as, at best for Airservices, neutral on the question of whether a breach or non-observance of the obligation to establish a relevant training pool was intended to be capable of attracting a penalty under s 178. Their presence argues at least as strongly that Airservices impliedly acknowledged the assumption of a potentially onerous obligation and wished to preserve an opportunity to negotiate relief from it should circumstances require. Equally, the words at the end of cl 12.4 of the 1998 Agreement to which I have added emphasis arguably reflected a determination by Civil Air to preserve for the life of the agreement the benefit of restrictions on Airservices' managerial discretion which were enforceable by penal sanctions, unless and until it should agree to forego that benefit. 19 Another feature of the Staffing Principles said to militate against their susceptibility to breachsounding in a penalty was that they were not a comprehensive code dealing with all aspects of staffing. Other arrangements, it was pointed out, could impinge on the movement of staff within Airservices. Counsel for Airservices referred in this context to Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 where Tadgell J, at 168-171, analysed the principles which have been applied by courts in determining when an offer is capable, on acceptance, of constituting a binding contract. In the Toyota case, the offer had been expressed to be conditional upon an investigating accountant indicating that the subject business could be viable "after the current offer is concluded." The Appeal Division of the Victorian Supreme Court held that an offer so expressed did not evince an intention by the offeror that, upon acceptance, the offeror would then and there be bound by a complete and enforceable contract. No such question arises in the present case. There was nothing in the Letter of Agreement, which was signed on behalf of both Civil Air and Airservices, to indicate that any part of it reflected nothing more than an intention by Airservices to make an offer in the future. Moreover, as I pointed out at [28] of the earlier reasons in this matter, "the parties clearly did wish to ensure that the 1998 Agreement and its predecessors were enforceable at law because they had been certified under the Act." That observation applies with equal force to the Letter of Agreement which I have held was incorporated by reference in the 1998 Agreement. The existence of a common intention that the obligations imposed by the Letter of Agreement should be legally enforceable is also indicated by the limited reach of the savings provisions in cl 1, sub-cl (c) of which read; "Nothing in these principles countermands any of the following: (1) formal agreement on short term staffing arrangements; (2) aspects of any of the SIPT Agreements which specify the teams structures; or (3) FPC requirements at particular locations." That suggests to my mind that it was intended that the Staffing Principles should be of general application except to short term exigencies which were expected to be subject to specific formal agreement between the parties. 20 It was faintly submitted on behalf of Airservices that Civil Air's recalcitrant attitude to consultation with Airservices in accordance with cl 9 of the Letter of Agreement as part of the monitoring of the application of the Staffing Principles was an indication that the principle embodied in cl 3 was not intended to be capable of a breach or non-observance for the purposes of s 178. Sub-clause 9(b) of the Letter of Agreement is reproduced at [15] of these reasons. Sub-clause 9(a) provided; "The ongoing implementation of these arrangements will be the subject of consultation and monitoring by the parties at the national level." However, as explained in [18] above, the presence of clauses like that, although not themselves capable of a punishable breach, argues at least as strongly for the construction that other clauses which were so capable should be reviewable and, if agreed, should be modified in such a way as the review might suggest. I adhere to the view tentatively expressed during the argument that the attitude of Civil Air to re-negotiation of the 1998 Agreement or the Letter of Agreement may bear on the question of penalty but does not assist in divining whether cl 3 of the Letter of Agreement was intended to be capable of a breach attracting a penalty. 21 For the reasons which I have endeavoured to explain, none of the considerations advanced by Mr Mueller, either alone or in combination with any of the others, detracts from my construction of cl 3 which is to the effect that the obligation to constitute a relevant training pool at least once a year was capable of a breach punishable under s 178.

What conduct can amount to a breach of cl 3 of the Letter of Agreement? 22 Mr Mueller submitted that, if the issue discussed above were resolved against him, it should not be found that Airservices had been in breach of any sufficiently certain provision of cl 3. He pointed out that cl 3(a) concerned training opportunities based on forecast staffing requirements for each unit. Unless it were forecast that staffing requirements for a particular unit would, for some relevant period, require the filling of at least one training opportunity or vacancy, there would be no obligation, he contended, to constitute or reconstitute a training pool for that unit. I disagree. That construction denies effect to the last sentence of cl 3; "Applications will be sought at least once per year." Mr Mueller endeavoured to overcome that difficulty by pointing out that the sentence which I have just quoted did not identify for what the "applications" should be made. He ventured as an available construction that the "applications" were to be for particular vacancies or training opportunities as they arose to be filled. However, on the construction which I favour, the "applications" contemplated by cl 3(a) were to be for inclusion in the relevant training pool. That derives support from the proximity of the last sentence of cl 4(a) to the reference to "the establishment of a training pool." It is also consistent with the stipulation in cl 3(f) that; "Training opportunities shall be advertised within a District first and then, if there are insufficient suitable applicants, nationally." In my view, the sentence just quoted refers naturally to the future training opportunities or vacancies which had been predicted as part of the forecast of staffing requirements required by cl 3(a), not to each specific training opportunity or vacancy as it actually occurred. 23 I accept that, on the construction which I have adopted, advertising for applications is part and parcel of the establishment of a training pool so that, contrary to the contention of Civil Air, a failure to advertise could not constitute a breach of cl 3 which is separate from, and additional to, failure to establish a training pool. 24 The construction which I prefer is not invalidated by the consideration to which Mr Mueller pointed that it allows the life of each training pool to be indeterminate. The requirement imposed by the last sentence of cl 3(a) that a training pool for each unit be reconstituted no later than the expiration of one year from when it was established, or last reconstituted, stipulated a maximum life for each pool. Subject to that constraint, Airservices could have reconstituted a given training pool in the light of changed staffing requirements or, indeed, whenever it chose. It remains a question of fact whether it did so for the Brisbane unit in the present case. 25 The operation which my construction gives to cl 3 appears to conform with that illustrated by Attachment 3 to the Letter of Agreement which, as cl 3(d) indicated, was intended to afford "a guide to the construct of the pool." That guide is not without its own difficulties but none of those bears on the issues in this case. In particular, the guide does not support Airservices' contention that it was not obliged to constitute or reconstitute a pool at the end of any given year if the forecast of staffing requirements for the ensuing year did not indicate any fresh or additional training opportunity or vacancy. Rather, it is consistent with the policy which I infer that, if forecast staffing requirements for the first year had been, say, four, but no training opportunities or vacancies had actually been filled in that year, the "need" in terms of Attachment 3 would remain at four but a new training pool would have to be constituted to add to the pool those controllers who, in the intervening year, had become minded to avail themselves of the same predicted training opportunities or vacancies. 26 By way of further illustrating inconsistencies or ambiguities which Airservices said were inherent in cl 3 applied in the way Civil Air suggested, Counsel for Airservices pointed out that par 79 of Mr Starrenburg's affidavit demonstrated that not every staff movement within Airservices had been subject to the Staffing Principles. That paragraph of the affidavit recited; "79. Furthermore, since the inception of staffing principles placements of ATC staff have taken place for reasons and circumstances not covered by those principles for example: (a) Placements of trainee ATCs on recruitment and at the completion of the formal period of training within their defined Functional Stream. (b) Placements of qualified ATCs on direct external recruitment to support and/or shift‑working operational ATC positions. (c) Placement of ATCs who are potentially surplus and who are placed into positions at their level either at the same location or another location. (d) Placement of ATCs undertaking compassionate transfers between units and/or Functional Streams. (e) Placement of ATCs undertaking mutual exchange transfers either at their own expense or supported by Airservices. Placement of ATCs returning to their former units after extended secondments to national projects and/or Head Office support functions. (g) Placement of ATCs returning from outstations. 27 It is by no means self-obvious that the all of the "placements" identified by Mr Starrenburg were not covered by the Letter of Agreement. For example, placement of new recruits, "potentially surplus" controllers and those electing to return from outstations would seem, in terms, to be subject to the scheme of priorities erected by cl 3(b) of the Letter of Agreement as qualified by cl 5 in respect of GAAP/Outstation staff. In the second place, it is to be borne in mind that cl 3 was expressed to regulate only the filling of vacancies or training opportunities. It was not designed to apply to staff on secondment whose substantive positions would presumably have been kept for them and therefore not identifiable as vacancies or training opportunities. "Compassionate transfers" and "mutual exchange transfers" likewise, presumably, did not create vacancies or training opportunities. If they did, they were probably "short term staffing arrangements" within cl 1(c) quoted at [19] above or any resultant breach of cl 3 was waived as a result of the mutual agreement involved. 28 For all of these reasons, I reject the contention that the Letter of Agreement as a whole, or at least cl 3, was so bedevilled by ambiguity as to be unenforceable by resort to s 178 of the Act. This case cannot be assimilated to Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Qantas Airways Limited [2001] FCA 547, to which I was referred by Counsel for Airservices. In that case, North J said, at [64]-[66]; "As with the protocol to clause 15 in EBA III, the text of clause 3 is capable of bearing each of the meanings contended for by the parties. The extrinsic evidence adduced in relation to the construction of EBA III was also relied upon in relation to EBA IV. As concluded in pars 54-56 of these reasons, that evidence failed to establish the objective intentions of the parties, and is thus also of little assistance in understanding the scope of clause 3 of EBA IV. It follows from the foregoing analysis that each of the clauses relied upon by the applicants is ambiguous. There are cogent arguments in favour of the constructions proposed by each of the parties. In this proceeding, the applicants bear the onus of showing that the construction for which they contend is correct. They have failed to establish that either of clause 15 of EBA III or clause 3 of EBA IV has a "plain meaning" which conforms to the interpretation they advance. Rather, the language and structure of both clauses is ambiguous and susceptible of multiple interpretations. In order to resolve the ambiguity, the parties have adduced evidence of background facts. However, the evidence of background facts does not resolve the inherent ambiguity of clause 15 of EBA III or clause 3 of EBA IV. It does not, on the balance of probabilities, establish as a matter of fact that the parties to EBA III or EBA IV intended the relevant clauses to operate in the way contended for by the applicants. It follows that the application must be dismissed." By contrast, in the present case, I have been persuaded that the construction for which Civil Air has contended is correct. Any suggested ambiguity in the relevant provisions can be resolved without violence to that construction.

Was there a failure to establish a relevant training pool for Brisbane? 29 It was contended on behalf of Airservices that the evidence of the circumstances surrounding the transfer of Mr Valkenburg to the Brisbane Tower did not establish a breach of cl 3 of the Letter of Agreement. However, Civil Air relied on an affidavit by Mr Lambert, an Air Traffic Controller employed at Brisbane, which contained these paragraphs; "6. Immediately upon becoming aware of this proposed transfer I contacted Centre Management at the Brisbane Centre in order to clarify whether the proposed transfer was in fact taking place. I spoke to both Peter Eyles and Bob Brock, employees of AirServices Australia in Brisbane Centre Management. I believe that they had authority to represent the employer in relation to my questions. They informed me that the transfer was taking place and that Mr Vaulkenburg would be taking up a position in the Brisbane Tower in order to commence initial training to progress through the stages to achieve Full Performance Controller status. 7. Upon receiving the information outlined in paragraph 6 above I informed both Mr Eyles and Mr Brock that in my view this transfer had not been in accordance with the AirServices Australia Enterprise Agreement 1998-2001. Specifically I pointed out that a training pool had not been convened in order to assess the relative merit of candidates to fill this vacancy and that this vacancy had not been advertised in accordance with the agreement. They did not deny that no training pool had been established. I advised Mr Eyles and Mr Brock that this matter would now be referred as a dispute to the Head Office of Civil Air. 8. Immediately upon members in the Brisbane Tower, Coolongatta Tower and Brisbane Approach becoming aware of the proposed transfer I received complaints from members in these areas who were aggrieved because they believed they would have had priority to Mr Vaulkenburg if the position had been advertised and a training pool established." 30 The cross-examination of Mr Lambert suggested that the appointment of Mr Valkenburg to the Brisbane Tower had been by way of a "placement" to fulfil an undertaking given to him personally by Airservices. However, Mr Lambert reiterated his claim that the "vacancy" or training opportunity had not been advertised and maintained that any undertaking by Airservices was immaterial to its obligations under the Letter of Agreement. 31 There was also evidence in the form of letters dated 4 March and 29 July 1999 from Civil Air to officers within the Operations section of Airservices complaining respectively of a failure to establish training pools generally and a failure to establish one for Brisbane in particular. As noted at [11] above, Mr Starrenburg deposed in par 87 of his affidavit that; "A training pool was established for the Brisbane Tower during the second quarter of 1997 and a number of placements were made from that formally constituted pool." However, there is nothing to suggest that in 1998 or 1999 advertisements had been published calling for applications to be added to that pool or that anything else was done to reconstitute it. That may have reflected Airservices' view, which I have held in [22] above to have been mistaken, that the reconstitution of a training pool was unnecessary in the absence of a fresh forecast of staff arrangements predicting a need for additional or new placements in the Brisbane Tower. In any event, there was also adduced in evidenced by Civil Air a memorandum apparently circulated on or about 26 August 1999 from Mr Allison, Airservices' Manager, Brisbane Centre Operations, from which this is an extract; "As indicated above, an identified staffing shortfall exists in the Brisbane Tower and this equates to an estimated 7 staff during the next 12 months. In anticipation of that, training opportunities were identified and all BCO Enroute ATC staff were asked to submit expressions of interest in June 1999. It is proposed to provide access to training for the identified Tower vacancies in the following matter. October 1999 R Valkenburg ex Archerfield secondment." 32 It has not been suggested that a training pool was established to fill the seven identified training opportunities in the Brisbane Tower. If, as I infer, only Brisbane staff in the "En Route" stream were invited to apply for those training opportunities, the presumptive breach of cl 3 of the Letter of Agreement was compounded by a failure to advertise them within the whole of the Brisbane district as required by cl 3(f). 33 A forecast of several vacancies in the Brisbane Tower during the ensuing three years was also acknowledged by Mr Allison in a confidential internal memorandum dated 28 September 1999 in response to industrial action prompted by the translation of Mr Valkenburg from Archerfield to Brisbane. That memorandum recited in part; "I have recently had a training ban imposed by Civil Air with regard to the placement of a former Terminal Ops staff member in Brisbane Tower. Civil Air contends that BCO has not complied with the Staffing Principles. Our view is the opposite. Whilst I am hopeful of an agreeable outcome the exercise illustrates how unworkable and outdated the Staffing Principles are. ... ... ... ... ... BCO has a requirement to fill a substantial number of Tower vacancies over the next 3 years and I am concerned that the current principles could drive an unacceptable outcome, e.g. a potentially surplus Enroute controller being given first priority to a tower vacancy." 34 In the light of the evidence as a whole, and particularly those parts which I have just recounted, the inference is almost irresistible that Airservices during 1998 and 1999 did not establish a training pool to fill training opportunities or vacancies forecast to arise in the unit known as the Brisbane Tower. That may have been because the priorities which the Letter of Agreement required to be observed in filling those training opportunities were regarded by Airservices as inappropriate or outdated. However, whatever the reasons for it, Airservices' omission was clearly a breach or non-observance of cl 3 of the Letter of Agreement.

Penalty 35 For reasons explained in [23] above, Civil Air has proved only a single breach of the 1998 Agreement incorporating by reference the Letter of Agreement. Section 178(4) of the Act provides, so far as is relevant; (4) The maximum penalty that may be imposed under subsection (1) for a breach of a term of an award, order or agreement is: (a) where the penalty is imposed by the Court: ... ... ... (iia) if the breach is of a term of a certified agreement and continues for more than one day - the total of: (A) $10,000 for a body corporate or $2,000 in other cases; and (B) $5,000 for a body corporate, or $1,000 in other cases, for each day for which the breach continues;" Although the breach which I have found to have been proved could be regarded as having continued for more than one day, I do not regard this as a case which should attract the additional penalty provided for by s 178(4)(ii)(a)(B). 36 There is no evidence that Airservices has committed previous breaches of a similar kind. Nor does it appear that the effects of the breach which I have found were serious. One other identified employee of Airservices, a Mr Bramich, complained of the appointment of Mr Valkenburg to the Brisbane Tower. That complaint, it seems, was pursued to some extent through the dispute settlement procedures ordained by the 1998 Agreement which are examined at [13] of my earlier reasons. However, Mr Bramich ultimately accepted a redundancy package so that the merits of his claim to be appointed in priority to Mr Valkenburg were never determined. In a similar context, it will be recalled that Mr Lambert deposed to complaints having been received from other members of Civil Air who were aggrieved because they believed that they would have been able to establish priority over Mr Valkenburg had applications for inclusion in a training pool been sought by advertisement. However, the evidence does not permit an affirmative finding that Mr Valkenburg would not have obtained the appointment had a training pool been established and applications for membership of it been called for by advertisement. It is strongly arguable that, had Mr Valkenburg been returned to the "En Route" stream at the end of his secondment to Archerfield, he would have been "potentially surplus" and entitled to the maximum priority accorded to that status by cl 3(b)(i) of the Letter of Agreement. 37 The nature of the breach which I have found provides little support for a penalty reflecting a need for deterrence. That is particularly so when it is remembered that the application of the Staffing Principles in question is almost certain to be modified by a new Letter of Agreement concluded on 19 March 2002, the operation of which is apparently conditional upon a new Certified Agreement coming into force between Civil Air and Airservices. Nevertheless, there remains a strong impression that Airservices took the action it did in respect of Mr Valkenburg without first consulting Civil Air or any representative of other potentially affected employees. There is also a suggestion that it preferred its own restricted interpretation of the Staffing Principles to the construction contended for by Civil Air which it believed to be outdated and unworkable. However, there is no evidence that its preference in that respect was based on legal advice which it could reasonably be expected to have obtained. 38 When all the circumstances outlined above are considered together they support the imposition of a penalty which is at the lower end of the scale indicated by s 178(4) but which, to mark the Court's disapproval of the attitudes last indicated, is more than merely nominal. In the result, I consider that a proper penalty is in the sum of $600.00. That is, of course, out of all proportion to the costs expended by each side on this regrettable litigation but I shall order, pursuant to s 356 of the Act, that the penalty be paid to Civil Air. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan.

Dated: 17 April 2002 Counsel for the Applicant: Mr D Langmead

Solicitor for the Respondent: Blake Dawson Waldron