Fair Work Act 2009

s 739 - Application to deal with a dispute

Application for the Commission to deal with a dispute under a dispute settlement procedure - interpretation of agreement - meaning of wage adjustment clause - method of payment of personal leave for 7 day 24 hour shift workers - principles of interpreting industrial instruments - plain, ordinary English meaning of the words - intention of the parties.

[1] Prior to October 2010, Ferrymen Pty Ltd ('Ferrymen') provided wire drawn ferry services, under contract, at only four locations in New South Wales:

[2] In October 2010, Ferrymen won a tender to provide wire drawn ferry services for the Roads & Maritime Services of NSW (RMS) in the Sydney Basin at:

[3] Simply defined, wire drawn ferries generally operate in regional areas to connect two public roads separated by a river where no bridge has been constructed. Contracts for the service, including fares for vehicles and passengers and hours of operation are entered into with local Councils or the RMS.

[4] As a result of winning the RMS contract, Ferrymen's workforce doubled with the majority of its new employees being employees of the former ferries' operator. In providing these services, Ferrymen employs about 26 employees under the terms of the FPL Enterprise Agreement [AE878862] (the 'Agreement') approved by Rafaelli C on 1 July 2010 (Ferrymen Pty Ltd re FPL Enterprise Agreement [2010] FWAA 4947). It will be readily apparent that there are no classifications in the Agreement, although it can be accepted that the numerous references to 'employees' relate to 'wiredrawn ferry drivers'. Cl 5 deals with the qualifications and licences for employees, which I will refer to later in the evidence.

[5] As a result of a request from the Wisemen's Ferry's employees, shifts were extended to 12 hours from 8 hours through a flexibility agreement between Ferrymen and 8 named employees in late 2010. A subsequent flexibility agreement resulted in all Sydney Basin employees extending their shifts to 12 hours.

[6] On 13 December 2012, Ferrymen filed an application, pursuant to s 739 of the Fair Work Act 2009 (the 'Act') for Fair Work Australia (FWA) (as it then was) to deal with a dispute in accordance with a dispute settlement procedure. The application identified the Maritime Union of Australia (the 'MUA' or the 'Union') as the respondent to the dispute. Shortly stated, the dispute concerns the proper interpretation of two clauses in the Agreement; namely, clause 12(2) - Wages Increases and Clause 14 - Personal Leave. The clauses are expressed as follows:

The applicable base weekly wage will increase each year on the anniversary date of the commencement of this Agreement by the Consumer Price Index number for Sydney (all groups) for the year as recorded in the quarter preceding the commencement of this agreement. If the Agreement commences in June, the preceding quarter will be the March quarter.

During the Term of this Agreement the base hourly rate for all employees shall remain equal to or above the Australian Pay and Classification Scales (APCS) as determined by the Australian Fair Pay Commission (AFPC) or other designated Government body.

Casual Employees have no entitlement to paid Personal Leave but are entitled to take Personal Leave in accordance with the NES.

Part time Employees are entitled to pro rata personal leave entitlement of full time employees.

Personal Leave is defined in accordance with the terms of the National Employment Standards.

Any request for Personal Leave should be accompanied by the appropriate documentation, eg. A medical certificate.

All part time and full time employees are entitled to carers leave and sick leave in accordance with the NES.'

[7] The dispute was listed for conciliation before FWA and more recently, the Fair Work Commission (the 'Commission') on a number of occasions in the first half of 2013. It is sufficient to observe that no resolution of the dispute could be reached. Accordingly, directions were issued in preparation for the arbitration of the dispute in accordance with subclause 2(c) of the Agreement's Dispute Resolution Clause (cl 20) and in terms as agreed by the parties in exchanges of correspondence between them on 11, 12 and 13 March 2013. The provisions of cl 20 are as follows:

this term sets out procedures to settle the dispute.

An Employee who is a party to the dispute may appoint a representative for the purposes of the procedures in this term.

In the first instance, the parties to the dispute must try to resolve the dispute at the workplace level, by discussions between the Employee or employees and relevant supervisors and/or management.

If discussions at the workplace level do not resolve the dispute, a party to the dispute may refer the matter to Fair Work Australia.

Fair Work Australia may deal with the dispute in 2 stages:

Fair Work Australia will first attempt to resolve the dispute as it considers appropriate, including by mediation, conciliation, expressing an opinion or making a recommendation.

If Fair Work Australia is unable to resolve the dispute at the first stage, Fair Work Australia may then:

Make a determination that is binding on the parties

Note If Fair Work Australia arbitrates the dispute, it may also use the powers that are available to it under the Act.

A decision that Fair Work Australia makes when arbitrating a dispute is a decision for the purpose of Div 3 of Part 5.1 of the Act. Therefore, an appeal may be made against the decision.

While the parties are trying to resolve the dispute using the procedures in this term:

an Employee must continue to perform his or her work as he or she would normally unless he or she has a reasonable concern about an imminent risk to his or her health or safety; and

an employee must comply with a direction given by the employer to perform other available work at the same workplace, or at another workplace, unless:

Applicable occupational health and safety legislation would not permit the work to be performed; or

The work is not appropriate for the employee to perform; or

There are other reasonable grounds for the employee to refuse to comply with the direction.

The parties to the dispute agree to be bound by a decision made by Fair Work Australia in accordance with this term.'

[8] Before dealing with the evidence adduced in this case, it is appropriate to consider the relevant authorities dealing with the interpretation of the terms of an enterprise agreement. Of course, the earlier and well known cases, were cited by the parties, include decisions of this Tribunal, its predecessors and other Courts. These include Amcor Limited v Construction Forestry Mining & Energy Union [2005] HCA 10 ('Amcor'), Short v FW Hercus Pty Limited [1993] FCA 51 ('Short v Hercus'), City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813; (2006) 153 IR 426 ('City of Wanneroo') and Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales [1982] HCA 24 ('Codelfa').

[9] I do not intend to quote extensively from these or other of the decisions and judgements cited by both parties, as I proceed on the basis that there is no dispute as to the application of these principles to this case. That approach has not been departed from in recent Full Bench decisions of this Commission. I will now refer to two of these in order to demonstrate that the earlier propositions still hold good. Firstly, in Lamb v Bunnings Group Limited [2013] FWCFB 2698, the Full Bench said at paras [15]-[23]:

'[15] There are well established principles concerning the approach to interpreting enterprise agreements. The leading High Court case is the case of Amcor Ltd v Construction, Forestry, Mining and Energy Union; Minister for Employment and Workplace Relations v Construction, Forestry, Mining and Energy Union (Amcor). In that case Gummow, Hayne and Heydon JJ stated:

"30. Clause 55.1.1 must be read in context. It is necessary, therefore, to have regard not only to the text of cl 55.1.1, but also to a number of other matters: first, the other provisions made by cl 55; secondly, the text and operation of the Agreement both as a whole and by reference to other particular provisions made by it; and, thirdly, the legislative background against which the Agreement was made and in which it was to operate."

"94. However, certified agreements such as this commonly lack the precise drafting of legislation. As appears from a scrutiny of the provisions of the Agreement, it bears the common hallmarks of colloquial language and a measure of imprecision. Doubtless this is a result of the background of the drafters, the circumstances and possibly the urging of the preparation, the process of negotiation and the omission to hammer out every detail - including possibly because such an endeavour would endanger the accord necessary to consensus and certification by the Commission.

96. The nature of the document, the manner of its expression, the context in which it operated and the industrial purpose it served combine to suggest that the construction to be given to cl 55.1.1 should not be a strict one but one that contributes to a sensible industrial outcome such as should be attributed to the parties who negotiated and executed the Agreement. Approaching the interpretation of the clause in that way accords with the proper way, adopted by this Court, of interpreting industrial instruments and especially certified agreements. I agree with the following passage in the reasons of Madgwick J in Kucks v CSR Ltd, where his Honour observed:

'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 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.'" (references omitted)

[17] Callinan J stated that there was substance in the abovementioned observations of Madgwick J in Kucks v CSR Limited (Kucks). He then said:

"131. An industrial agreement has a number of purposes, to settle disputes, to anticipate and make provision for the resolution of future disputes, to ensure fair and just treatment of both employer and employees, and generally to promote harmony in the workplace. It is with the third of these that cl 55 of the Agreement is particularly concerned. It is important to keep in mind therefore the desirability of a construction, if it is reasonably available, that will operate fairly towards both parties. …"

[18] In Kucks, following the passage quoted above, Madgwick J went on to say:

"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."

[19] A leading case in relation to the interpretation of agreements is Codelfa Construction Pty Ltd v State Rail Authority of NSW. The dicta of Justice Mason, as he then was, (with whom Stephen, Aickin and Wilson JJ agreed) has frequently been adopted and applied in matters concerning the interpretation of enterprise agreements. In Codelfa His Honour said (at 352):

"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. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract."

[20] It should be emphasised that in interpreting the terms of an enterprise agreement neither a court, nor this Commission, determines what is fair and just. The task involves adopting a meaning consistent with the ordinary or usual meaning of the words the parties have adopted in their agreement.

[21] In our view clause 10.4.3 imposes an obligation on Bunnings, when it sets rosters, to have regard to the five factors specified in the clause. The language of the clause does not support any of the factors having greater or lesser priority. The obligation to have regard to a factor is a common drafting technique in legislation, awards and agreements. In R v Hunt; ex parte Sean Investments Pty Ltd, Gibbs J said:

"18. When sub-s.(7) directs the Permanent Head to "have regard to" the costs, it requires him to take those costs into account and to give weight to them as a fundamental element in making his determination."

[22] In our view this approach does no more than apply the ordinary meaning of the words used. We see no reason why any different approach should be adopted to the interpretation of the words in clause 10.4.3. In our view Bunnings was required to have regard to each of the factors that relevantly applied as fundamental elements in setting its roster. No factor had primacy. Operational requirements involve more than mere preferences devoid of a perceived advantage. In our view an operational requirement is something that is considered to be of benefit to the business.

[23] We do not consider that the Commissioner applied a different approach to the one we have articulated. In our view his approach to the construction of the clause was correct.'

[10] Secondly, in Shop, Distributive and Allied Employees' Assocation (Queensland Branch) Union of Employees v Woolworths Limited T/A Woolworths [2013] FWCFB 2814 ('SDA v Woolworths'), another Full Bench of the Commission said at paras [12]-[14]:

'[12] It is undoubtedly the case that, in resolving a dispute as to the interpretation of a provision of an enterprise agreement approved under the Fair Work Act 2009, it is permissible to take into account the industrial context and purpose of the agreement. However, there are two important limitations upon this approach relevant to the determination of this appeal. The first is that the process of interpretative analysis must focus, first and foremost, upon the language of the agreement itself. For example, in Amcor Limited v CFMEU, the process was described by Gleeson CJ and McHugh J in the following terms: "The resolution of the issue turns upon the language of the particular agreement, understood in the light of its industrial context and purpose ...". Or, as Kirby J put it in the same case, "Interpretation is always a text-based activity". Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or re-write the provision in order to give effect to an externally derived conception of what the parties' intention or purpose was. The oft-quoted statement of Madgwick J in Kucks v CSR Limited makes this clear:

"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."

[13] The second limitation is that regard cannot be had to the respective subjective intentions and expectations of the parties as demonstrated by their "statements and actions" in negotiating the agreement. Rather, the task is to identify the common intention of the parties as they have expressed it in the terms of their agreement. In the context of commercial contracts, this task was described by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd in the following way:

"It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction."

[14] The above passage was treated as part of a "practical approach" according with the established approach to the construction of industrial agreements in Construction, Forestry, Mining and Energy Union v HWE Mining Pty Limited.'

[11] An important consideration in this case was whether the Ports, Harbours and Enclosed Water Vessels Award 2010 [MA000052] (the 'Modern Award') has any application to the employees employed by Ferrymen.

[12] A number of the Award's provisions are particularly relevant. Cl 4.1 deals with coverage:

This award covers employees throughout Australia in the ports, harbours and enclosed water vessels industry and their employees in the classifications listed in clause 13 to the exclusion of any other modern award. The award does not cover employers and employees wholly or substantially covered by the following award:

the Marine Tourism and Charter Vessels Award 2010.

For the purpose of clause 4.1, ports, harbours and enclosed water vessels industry means the operation of vessels of any type wholly or substantially within a port, harbour or other body of water within the Australian coastline or at sea on activities not covered by the above awards.'

[13] Cl 4.8 of the Award is expressed as follows:

'4.8 Where an employer is covered by more than one award, an employee of that employer is covered by the award classification which is most appropriate to the work performed by the employee and to the environment in which the employee normally performs the work.

NOTE: Where there is no classification for a particular employee in this award it is possible that the employer and that employee are covered by an award with occupational coverage.'

[14] Cl 13 deals with the Classifications of:

General Purpose Hand, Deckhand, Greaser, Passenger Attendant, Turnstile Attendant, Boating Attendant, Host, Fireman, Trimmer, Linesman, Cook, Sailor, Able Seaman, Leading Hand

[15] Ms Emilie Cooper is a partner in the law firm Priest McCarron Solicitors, Port Macquarie. She is the solicitor acting for Ferrymen, but it is true to say she was also the principal advisor to Ferrymen when the Agreement was prepared, negotiated and processed in 2010. Ms Cooper met with Mr Paul Eades of Ferrymen between February and May 2010 to discuss the contents of the proposed agreement. She was aware that prior to this time, employees of Ferrymen had been engaged under Australian Workplace Agreements (AWAs). She now understood that for FWA to approve an agreement it must pass the Better Off Overall Test (BOOT). In preparing the draft, Ms Cooper said that consideration was given to the National Employment Standards (NES) and two Awards; namely,

● the Ports, Harbours and Enclosed Water Vessels Award 2010 (the 'Modern Award'); and

● the Wire Drawn Ferries (State) Award (the 'State Award').

[16] In 2010, Ms Cooper had formed the view that the work of wire drawn ferry drivers did not match any of the classifications in the Modern Award. She was instructed by Ferrymen that the qualifications relevant to operating a wire drawn ferry were far less than those required to master a ship. She therefore formed the opinion that the Modern Award was not comparable and referred to cl 4.8.6 of the Modern Award to draw the conclusion that the award with occupational coverage was the State Award. After further investigation, particularly looking at the Dredging Industry Award 2010, she could not locate any Modern Award that appeared to cover the particular duties and qualifications of wire drawn ferry drivers.

[17] Ms Cooper prepared the first draft of the proposed Agreement on 8 March 2010 and negotiations with employees commenced on 14 May 2013. She deposed that employees were provided with the following:

● Copies of the Modern Award, the State Award and the Act's National Employment Standards (NES).

[18] On 28 May 2010, Ms Cooper was contacted by a solicitor, Mr Kevin Martin, who claimed he had been appointed as a bargaining representative for some of the employees. They discussed some of the concerns of the employees to which Ms Cooper responded in writing on the same day. Negotiations continued through June 2010 with Mr Martin. Concurrent negotiations were conducted directly with some other employees who had not nominated any bargaining representative. Ms Cooper annexed a letter from Mr Martin in which he said he supported her view that the Modern Award was not the relevant Award. He proposed both the State Award and the Transport Industry - Motor Bus Drivers and Conductors (State) Award [AN120607] (Ms Cooper did not accept the latter as relevant). Twelve further versions of the draft agreement were prepared with the sixteenth version approved by the employees and subsequently filed in FWA for approval.

[19] It was Ms Cooper's view that cl 12 of the Agreement was drafted with the intention that wage rates would be adjusted by reference to the CPI (Sydney). This was to provide certainty for the employees and for Ferrymen in tendering for other ferry services. She believed that the National Minimum Wage (NMW) was set by the Australian Fair Pay Commission (AFPC) and if the Commission, or some other designated government body (cl 12.2) increased rates ahead of the CPI, employees would fall below the NMW. This was why she drafted a clause to ensure that the employees' wage rates did not fall below the NMW.

[20] Ms Cooper claimed that she was not aware the AFPC had been abolished (1 July 2009) until the issue was raised by the MUA on 20 November 2012. She noted that no issue was taken with the wording of cl 12.2 when the Agreement was approved by Rafaelli C. Ms Cooper insisted that it was not Ferrymen's intention to have the base hourly rates no less than the rates under the Modern Award, as it had been agreed by the parties the Award did not apply. Ms Cooper understood that once the Agreement was approved, then the rates under the Modern Award would have no application. Ms Cooper compared the rates at the time as follows:

[21] As to the dispute over calculating personal leave for seven day shift workers, Ms Cooper relied on the Act's NES (s 99) that a person's leave is paid at the employees' base rate of pay for the employees' 'ordinary hours of work'. She said that s 16(1) of the Act defines 'base rate of pay' as being exclusive of:

[22] As Ferrymen includes Saturday and Sunday penalty rates, flexibility allowance and crib allowance at Item A of Sch 1 to the Agreement, then these amounts are excluded for the purposes of identifying the 'base rate of pay'. This was how Ferrymen had always paid personal leave to its employees.

[23] Ms Cooper said that in August 2010, a variation of the Agreement was negotiated and agreed to by Ferrymen and the employees. The variation was approved by FWA [PR500733]. At no time, during these negotiations, were any issues raised about the matter now before the Commission. Ms Cooper also said that no issue was raised about the application of cl 12(2) or 14(c) of the Agreement when 12 hour shifts were introduced in 2011 for employees in the Sydney Basin.

[24] In cross examination, Ms Cooper acknowledged that in her first meeting with Messrs Phillip Eades and Paul Eades (Senior) on 5 February 2010, there was discussion of the Modern Award and the fact that its rates were $100 higher than those in the State Award. There was also a brief discussion of seeking to amend the Modern Award to reflect Ferrymen's operations. However, she believed the intention of having an enterprise agreement was for certainty. She denied it was seen as a means of avoiding the terms of the Modern Award.

[25] Ms Cooper agreed she was aware of the BOOT having been involved with AWAs in the past. However, Ms Cooper said she could not recall a letter from Mr Paul Eades in which he had been advised by the Industrial Relations Commission of New South Wales that the State Award had been 'swallowed up' by the Modern Award. He had also believed that the Modern Award was not relevant to his operations. Ms Cooper stated that at the time there was a lot of confusion and she could find nothing to verify that the State Award had been 'incorporated' into the Modern Award.

[26] Ms Cooper was shown a file note (Exhibit C) which she had created and which indicated she would undertake an analysis of the proposed agreement, the Modern Award and the State Award for the purposes of the BOOT. This was because they were looking at all the options. Ms Cooper was shown a draft Form F17 which she had prepared, although she was unsure when she had done so, but it may have been around May 2010. She agreed that in reference to Questions 3.1 and 3.2 (as to Award comparisons), she had handwritten 'Modern Award' and 'NAPSA' (Exhibit D). She agreed she thought there was a possibility that the Modern Award applied. This was a draft she had been working on herself and it was not part of the negotiations. She accepted that she had prepared a number of drafts for Mr Eades, which included statutory requirements she had obtained from the Commission's website.

[27] Ms Cooper was shown a letter she provided to Mr Eades (Exhibit I), in which she had expressed no doubt as to the application of the Modern Award. Prior to this letter, Mr Paul Eades had received email advice from Ms Gayle Wilson (Exhibit J) from O'Connor Ferry Service about the application of the Modern Award after she had sought advice from FWA. However, FWA had agreed to get back to Ms Wilson as there did not appear to be a classification which suited his operations and an occupational award might apply (this did not occur).

[28] Ms Cooper conceded that Mr Wilson's email did not make it clear that the Modern Award had no application. Ms Cooper said she had explored the various options and advised Mr Eades of the difficulty in that FWA did not even know which Award applied. She accepted she had not followed up FWA's advice, but she later requested the FWO for advice as to the Award coverage. She could not recall if there had been a reply. Ms Cooper said she had not looked at the classifications in the various Awards to compare them with the work of employees on wire drawn ferries, but she knew of the comparisons from a general understanding of the differences with Masters on a free floating vessel from information she had from Ferrymen. She had not considered that there was a classification for Master under the State Award and had relied on what Mr Eades had told her about the rates. Ms Cooper acknowledged that she had formed the view that the Modern Award should be circulated to the employees as part of the pre-approval process of the Agreement.

[29] Ms Cooper identified another agreement to which she had regard when drafting the Ferrymen Agreement, being the O'Connor Ferry Service Employee Collective Agreement 2009 (the 'O'Connor Agreement'). Ms Cooper agreed that she had lifted cl 12.2 of the Agreement from the O'Connor Agreement.

[30] Nevertheless, Ms Cooper said the position of the Modern Award was 'terribly confusing', as was the status of the NAPSA. However, she agreed she wrote to Mr Eades on 13 May 2013 to advise that the State Award had application to his employees and had continuing operation. She had added a query that a Bench might take a different view if the matter was ever litigated. She accepted that this meant the position remained unclear.

[31] In a subsequent draft of the Agreement which she had drafted, cl 13 identified the Modern Award as being inapplicable. She could not recall if this exclusion appeared in earlier drafts. By making this reference, she conceded that there was still a prospect that the Modern Award applied.

[32] Ms Cooper claimed that she had not undertaken any analysis of the Minimum Wage and the rates in the Agreement. Ms Cooper could not recall if she was involved or prepared the final F17 declaration of Mr Phillip Eades which was filed with FWA. This F17 made no reference to the Modern Award in questions 3.1 or 3.2. She conceded the final version of the F17 had been run past her prior to filing. Ms Cooper acknowledged that the document filed should not set out to be misleading.

[33] Ms Cooper was asked to comment on Mr Martin's expertise in award coverage in light of his suggestion that the Transport Industry - Motor Bus Drivers and Conductors (State) Award had some application. While she believed that this Award was irrelevant, she had agreed with him that the Modern Award did not apply.

[34] In his statement, Mr Eades acknowledged that he had been aware that the Modern Awards were being phased in, in 2010. As part of that process, he reviewed the Modern Award and concluded that it contained no classifications relevant to the duties and qualifications of wire drawn ferry employees. In particular, Mr Eades was of the view that the employees did not fall within the classification of Master of a vessel or a ship under the Award. Mr Eades then undertook an inquiry of the qualifications of Masters required by the RMS and referred to the duties of Masters obtained from his research as:

'Masters and Skippers have a fundamental responsibility to ensure the safety and wellbeing of their crew and the seaworthiness of the vessel.

The general functions carried out by a Master Class 5 will vary depending on the size of the vessel and whether it is a trading or fishing vessel, but generally your work will cover:

• Full responsibility for the crew and safe vessel operation.

• Supervise berthing, unberthing and anchoring.

• Navigate using electronic equipment from the bridge, including radar.

• Plan and navigate an offshore passage within the limits of responsibility of a Master Class 5.

• Liaise with other vessels and the shore staff.

• Ensure safety regulations are met and liaise with government authorities.

• Detailed stability planning of cargo to prevent capsizing.'

[1] Mr Eades compared these duties to the qualifications required to become a wire drawn ferry driver which are:

● TAFEPLUS Statement in Ferry Operations No: 24898;

● Confined Spaces Training Course that meets the requirements of OH&S Regulation 2001, clause 77;

● Provision of a completed Task and Training Book for Vehicular Ferry Driver;

● Meet specific eyesight and medical standards; and

● The completion of 150 hours on the job training over one month.

As a result, Mr Eades concluded that the duties, skills and responsibilities of Masters under the Award were significantly greater than those required to be a wire drawn ferry driver.

[2] Mr Eades claimed his view was shared by other operators in the industry. This was illustrated in an email from Ms Gayle Wilson of O'Connor Ferry Services. He also claimed that FWA had advised the Modern Award did not apply. Mr Eades referred to the engagement of Ms Cooper in February 2010 to assist with drafting, negotiating and preparing approval documentation for a proposed enterprise agreement. He and other members of Management met with Ms Cooper on a number of occasions from February to May 2010. Mr Eades accepted that consideration was given to both the Modern Award and the State Award as to the appropriate award comparison.

[3] Mr Eades outlined the negotiations with the employees in May 2010 which included solicitor, Mr Kevin Martin, who was the employee bargaining representative for some of the employees. There were numerous exchanges of correspondence and redrafts of the proposed Agreement. Discussion was also had directly with the employees who were not represented. Mr Eades said he was aware that Mr Martin supported Ferrymen's view that the Modern Award did not apply. Mr Eades prepared the F16 and F17 which were submitted to FWA with the Agreement, which had been approved by the employees on 18 June 2010.

[4] Mr Eades set out the three types of roster arrangements operated by Ferrymen as:

1. Ordinary Hours Rotational Shift (OHRS) - clause 11(1) of the Agreement. This shift applies to 24 hour 7 day a week ferry services where the roster operates on a Monday to Friday basis and casuals are used for weekend work.

2. Seven Day Rotational Shift (SDRS) - clause 11(2) of the Agreement. This shift applies to 24 hour 7 day a week ferry services. These ferries operate 24/7 but the permanent roster rotates over 12 weeks.

3. Split Shift (SS) - clause 11(3) of the Agreement. The split shift only applies to the ferry service at Hibbard in Port Macquarie and the Mortlake ferry service in Sydney.

[5] Mr Eades said that the rates of pay in Schedule 1 of the Agreement are adjusted each year and relied upon when Ferrymen tender for new contracts.

[6] Mr Eades described the Seven Day Rotational Shift (SDRS) system as a benefit for the employees. It ensures that they receive the same amount of pay each week, irrespective of whether they worked on a Saturday, Sunday or week day. Mr Eades said, however, that personal leave had been paid at the base rate for ordinary hours under the Agreement in accordance with the NES and the relevant provisions of the Act. Mr Eades said the hourly rate for SDRS employees was a rate which includes penalty rates and allowances and as such is not the base rate of pay.

[7] As to the interpretation of cl 12.2, Mr Eades, claimed that it was not the intention of Ferrymen that the base hourly rate was to be adjusted so as to be equal to or greater than the rate for a Master in the Modern Award. This was because it was never accepted that the Modern Award had application to wire drawn ferry drivers. He could not recall any proposal or suggestion by anyone in the 2010 negotiations that the terms of the Modern Award applied.

[8] Moreover, Mr Eades maintained that Ferrymen would never have agreed to the terms of cl 12.2 if this had been the intention. He added that Ferrymen did not factor calculations of wages which the Union claims now apply by virtue of cl 12.2 of the Agreement into its tender price. It was not until the MUA raised this matter in its letter of 20 November 2012 that the interpretation of cl 12.2 was ever raised by anyone. It was Mr Eades' further evidence that when he had made phone inquiries with the FWO as to what was the relevant Award comparator, he had received varying responses.

[9] In cross examination, Mr Eades said his involvement with the company goes back 5 years when he was made a director of the Company, together with his father and mother. The Company also has a site supervisor in the Northern Rivers area. He said the industry is very small. He was aware of only two operators with 20 ferries operating in New South Wales.

[10] Mr Eades first became aware of the State Award some years ago when that Award specifically covered the industry. Mr Eades was also aware of the Modern Award process and that the State Award had been incorporated in the Modern Award, although he could not recall when he first downloaded the Modern Award. He noticed there was no reference to wire drawn ferries and understood the pay rates were significantly higher in the Modern Award.

[11] Mr Eades acknowledged that the scope of the Modern Award included operations in 'enclosed waters' and that this phrase would cover Ferrymen's operations. However, when he looked at the Award, he noticed many of its terms did not apply to his operations, such as certain allowances for ship based operations. Mr Eades believed that the Modern Award was written with shipping in mind and that Masters under the Award referred to the Masters of shipping vessels. He accepted that his drivers were classified under the State Award as Masters/Engine Drivers and he was aware that they had to possess the qualification of Master of Vehicular Ferry and Chains (Mr Eades possessed that qualification himself). He still relied for his opinion that there was no mention of ferry, let alone wire drawn ferry in the Modern Award.

[12] Mr Eades said he was not involved in the specifics of the Agreement and had not participated in discussions with his father and Ms Cooper about the Agreement. The three of them had met and agreed on its terms. He later became involved in preparing and submitting the F17 to the Commission. Mr Eades was not aware of earlier drafts of the document (F17). Mr Eades agreed that in May 2010, he was involved in making calculations in respect to comparing the enterprise agreement with the State Award.

[13] Mr Eades had not understood the email from Ms Wilson of O'Connor Ferry Service to have expressly confirmed that new agreements needed to be tested against the Modern Award. However, she had said that after advice from FWA, no AWAs or collective agreements existed and that employees must be covered under the Modern Award. Mr Eades conceded he had taken no steps to follow up this email or make any independent inquiry of his own.

[14] Mr Eades said he had no involvement in the decision of when the employees would be asked to vote on the proposed Agreement. This was the decision of his father and Ms Cooper. He was not aware if there had been any particular urgency in having the agreement approved.

[15] Mr Eades agreed the Modern Award had been circulated to employees. This was not because he believed it applied, just that there was doubt and confusion. Mr Eades reaffirmed he had prepared and signed the application and the F17. He could not explain why there was no reference to the Modern Award having been provided to the employees. Mr Eades understood he could identify more than one Award in relation to Questions 3.1 and 3.2 in the F17. He had been confident that the State Award applied and was not confident that the Modern Award did.

[16] Mr Eades was asked why he had declared in the F17 that paid Toolbox meetings were a more beneficial term than provided for in the State Award. He conceded he and Ms Cooper had identified the six terms which were more beneficial than the State Award.

[17] Mr Garrett is the Assistant Secretary of the Sydney Branch of the MUA. He provided a witness statement, but was not required for cross-examination.

[18] Mr Garrett has responsibility for representing the industrial interests of MUA members who are engaged by Ferrymen. From his experience, Mr Garrett believed that employees engaged in operating wire drawn ferries are in command or in charge of the vessel.

[19] Mr Garrett has had industry experience in the Manning Committee established under Part 3 of the Commercial Vessels (Certificates of Competency and Safety Manning) Regulations 1986 (NSW) (since repealed). He has experience in dealing with various marine legislation and said that the particular instruments apply to the operations of vehicular ferries which are defined as commercial vessels for the purposes of the:

a) Marine Safety Act, 1998 (NSW) (the 'Marine Safety Act').

b) Marine Safety (Commercial Vessels) Regulation 2010 (NSW) (the 'Commercial Vessels Regulation'.

[20] Mr Garrett deposed that crew members onboard vessels, within the jurisdiction of the above Act and Regulations are required to hold appropriate competency certificates, for duties identified in Schedule 6 of the Commercial Vessels Regulation, which states:

'Master of a vessel designed to carry vehicles across a waterway and that is winched across by a system of cables or chains permanently fixed to each side of the shore.'

s 5(1) of the Marine Safety Act defines a vessel as including:

'water craft of any description used or capable of being used as a means of transportation on water.'

[21] Mr Garrett said that the Roads and Maritime Services is the Government Agency responsible for issuing the certificates of competency. He described the process by which the certificate comes to be issued. A certificate of competency may include a standard restriction as follows:

'Restricted to operations as Master/Engineer of a Vehicular Ferry in Chains within NSW designated sheltered water limits.'

[22] Ferrymen's written submissions were prepared by Mr C Magee of Counsel. Counsel characterised the first issue to be determined by the Commission as being what the mechanism should be, if any, by which cl 12(2) of the Agreement operates in the absence of the AFPC. It was said that on its face, cl 12(2) is otiose and can have no effect because of the abolition of the AFPC and the APCS. As a result, the APCS has no application in determining the 'base hourly rate' in cl 12(2).

[23] Counsel rejected the MUA's assertion that the effect of cl 12(2) is to require the base hourly rate to be at least equal to the transitional rate calculated by reference to Sch A in the Modern Award. Ferrymen contended that the rates under the Modern Award cannot have any application because the operation of an enterprise agreement applies to the exclusion of the Modern Award (s 57).

[24] Counsel submitted that determination of this issue requires a proper interpretation of the clause as to whether:

the reference to the APCS should be read as a reference to some other industrial instrument.

In undertaking this exercise, the Commission would apply the well established principles of interpretation of industrial instruments; See: "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v Silcar Pty Ltd [2011] FWAFB 2555 ('AMWU v Silcar') and Short v FW Hercus.

[25] It was submitted by Counsel that the Commission would have considerable regard to the intention of the parties as to the Agreement's purpose and effect, in the context of a just and common sense approach. It was said that evidence in relation to Ferrymen's intentions was clear from the statements of Ms Cooper and Mr Eades. Counsel observed that the insertion of cl 12(1) was for wage increases to be set by reference to increases in the CPI (Sydney). This was to provide certainty for Ferrymen and its employees, and also in relation to tendering for other ferry services. Cl 12(2) recognised that increases in the Minimum Wage might not reflect CPI increases. Therefore, it was drafted to ensure that the base weekly wage rate would not fall below the Minimum Wage set by the AFPC.

[26] It was put by Counsel that not only did the draftsperson understand that the AFPC was the relevant Government body setting the minimum wage, but another designated Government body might replace it. However, the draftsperson was not aware the AFPC had been abolished at the time the Agreement was drafted and it was never raised during the negotiations or when the Agreement was approved by FWA on 6 July 2010.

[27] Counsel argued that the parties had agreed at the time that the Modern Award did not apply and Ferrymen would never have agreed to the inclusion of cl 12(2) if that had been the case.

[28] Counsel put that once the Agreement was approved, it was understood that the rates under a Modern Award would have no application to Ferrymen. Further, it was apparent that a common sense approach to a reading of cl 12(2) was that the base hourly rate would not fall below the minimum rate for the classification as set by the relevant Government agency empowered with wage setting powers.

[29] Submissions were put as to the successor body to the AFPC. The Minimum Wage Review Panel is arguably the successor to the AFPC. If this was so, the comparison would need to be to the National Minimum Wage rate and the base hourly rate under the Agreement.

[30] Counsel submitted that a further factor supporting Ferrymen's contentions is that it was not the intention that the base rate be equal to the rate for 'Master' under the Modern Award. This was because it was the parties' views that the Modern Award did not address the circumstances applicable to wiredrawn ferries. Ferrymen believed that the qualifications required to operate wiredrawn ferries were far less than those needed to master a ship and that the two classifications are not comparable. It was noted that the employees' representative at the time did not accept that the Modern Award applied and no one had proposed or suggested that it had. Moreover, Ferrymen would never have agreed to the clause if this was the intention.

[31] Counsel submitted that another factor supporting Ferrymen's view was that it had tendered for the Sydney Basin contract based on prices relative to the comparison to the State Award. It was also claimed that the BOOT had been satisfied by the fact that the parties considered that the relevant comparative instrument for the purposes of the BOOT was the Wire Drawn Ferries (State) Transitional Award and not the Modern Award.

[32] Counsel argued that regard should also be had to the way the parties had conducted themselves. For over two years, the Agreement has operated on Ferrymen's understanding of the effect of cl 12(2). In fact, there has been a variation to the Agreement and Flexibility Agreements negotiated since its approval, without cl 12(2) even being raised as an issue.

[33] It was further put that the Union's contention would place an impermissible strain on the language of the clause. It was said that the Commission should not rewrite the terms of the Agreement to reflect what it asserts is a fair term. This is not a process available to the Commission as an arbitral tribunal.

[34] Counsel submitted that, as personal leave is defined in accordance with the NES, the relevant section of the Act is s 99, which provides that the employer must pay the employee personal leave at the employee's base rate of pay for the employee's 'ordinary hours of work'. s 16(2) of the Act defines 'base rate of pay' as not including:

[35] Ferrymen has been paying personal leave on the base rate of pay identified at Item A of Sch 1 of the Agreement to its seven day rotational shift workers. The rate at item 2 of the Schedule includes penalty rates for Saturday and Sunday hours as well as the flexibility and crib allowances. These are excluded from the definition of 'base rate of pay'. The Union proposes the rate should be the rate set out at Item 2, which includes the excluded components. Its contention, therefore, was not open on a proper interpretation of the clause.

[36] In written submissions, Mr A Neal alerted the Commission to the inadmissibility of much of the evidence of Ms Cooper and Mr Eades; the latter of whom's involvement in the Agreement making process is unclear. However, he accepted the thrust of the applicant's evidence was to establish the intentions of the parties when interpreting the two disputed clauses. He said the interpretation of cl 12 must be seen in the context of the abolition of the AFPC, the phasing out of the APCSs having been respectively replaced by FWA (now the Commission) and the Modern Award.

[37] Mr Neal relied on the principles of interpretation of industrial instruments in a number of authorities to distil the following propositions:

The parties' presumed intention may be taken into account in determining which of two or more possible meanings is to be given to a contractual provision. What cannot be taken into account is evidence of statements and actions of the parties which are reflective of their actual intentions and expectations. Objective background facts can include statements and actions of the parties which reflect their mutual actual intentions. That is, evidence of the mutual subjective intention of the parties to a contract may be part of the objective framework of facts within which the contract came into existence. It is the mutuality which makes the evidence admissible.

It is trite that narrow or pedantic approaches to the interpretation of an Award or Agreement 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 to be of a practical bent of mind.

It is justifiable to read an Award or Agreement 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. Meanings which avoid inconvenience or injustice may reasonably be strained for.

Ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.

The language of the industrial instrument must be construed in its context, having regard to the subject matter and the wording of the entire agreement. The context will include the statutory context in which the agreement is made.

The context of an expression may thus be much more than the words that are its immediate neighbours. Context may extend to the entire document of which it is a part, or to other documents with which there is an association.

The starting point must always be the language employed by the parties to an industrial agreement, but industrial context and purpose are always relevant when construing that language.

See: Australian Workers' Union v Co-Operative Bulk Handling Limited [2010] FWAFB 4801 ('AWU v Co-operative Bulk Handling'); Watson & Others v ACT Department of Disability [2008] AIRC 291; (2008) 171 IR 392 ('Watson v ACT Department of Disability'), citing Codelfa and Kucks v CSR Ltd [1996] IRCA 166; (1996) 66 IR 182 ('Kucks v CSR'); Australasian Meat Industry Employees Union v Coles Supermarkets Australia Pty Ltd (1998) 80 IR 208; Ansett Australia Limited v Australian Licensed Aircraft Engineers' Association [2003] FCAFC 209 ('Ansett v ALAEA) and Short v Hercus.

[38] Mr Neal submitted that in applying the above principles, cl 12 of the Agreement cannot be construed as the applicant contends. Mr Neal drew a distinction between parties to an agreement, being an employer and a Union/s under the Act and the parties which are the employer and its employees. In the present case, where the employees were represented by different bargaining representatives at different times and some not represented at all, it is impossible to identify the intentions of the parties. Here, there is no evidence from any of the employees so there is no basis upon which the Commission could conclude as to their intentions, let alone a common intention. All the Commission is left with is the words of the Agreement.

[39] Mr Neal said the reliance by Ferrymen on Mr Martin's views was hearsay and neither representative of the employees or all of them. In addition, there was no evidence that Mr Martin's view was communicated to the employees or agreed by them. Mr Neal submitted that the sum of Mr Eades' evidence went no higher than there were views of the Management, a number of discussions were held with employees and Ms Cooper drafted the Agreement. At best, it might be said that the identification of both the Modern Award and the State Award in the letter attached to the Notice of Representational Rights was confused and uncertain.

[40] Mr Neal put that Ms Cooper, as the applicant's solicitor, was in no position to give evidence as to the intentions of Ferrymen, let alone the employees. Ms Cooper was no more than the drafter of the Agreement. She was not a party or a decision maker. Her views should not be accepted as they are irrelevant and inadmissible. It also cannot be relied upon as evidence of conduct subsequent to the making of the Agreement.

[41] In short, Mr Neal submitted that the mutual intention of the parties is difficult, if not impossible to ascertain. Another difficulty arises in that there are no facts 'notorious to the parties' which would assist in ascertaining their mutual intention. Accordingly, the interpretation of the Agreement can only be achieved by reference to the language used in cl 12.

[42] Mr Neal outlined the objective facts going to the history of the setting of the Federal Minimum Wage by the AFPC and the APCS and their relationship to the State Award and what became the effect of successor statutory provisions. He stressed that the Federal Minimum Wage was not the same as the APCS. Legislative change was enacted to preserve conditions and entitlements such as to ensure employees would not be disadvantaged by being covered by either the APCS or the NAPSA during transition.

[43] After 27 March 2006, the rates in the Wire Drawn Ferries (State) Award became preserved under the APCS for employees. This rate was for a Master/Engineer, $550.80 per week or $14.49 per hour. The Federal Minimum Wage at the time was $12.75 per hour. Mr Neal observed there was no reference to the Minimum Wage in cl 12, rather the rates could not fall below the APCS rates or the preserved rate. Therefore, the National Minimum Wage or Federal Minimum Wage has no application and cannot possibly be the comparator for wage increase purposes. Furthermore, Mr Neal submitted that the APCSs were clearly capable of independent adjustment to the Federal Minimum Wage and the two concepts did not equate.

[44] Mr Neal then dealt with the Agreement's relationship to the Modern Award. He noted that following the introduction of the Fair Work Act 2009 and the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (the 'Transitional Act') on 1 July 2009, all NAPSAs (the State Award) continued in force. Importantly, he said that by force of cl 11 of Div 2 of Part 3, Sch 9 of the Transitional Act, a transitional APCS ceases to cover an employee if a Modern Award started to cover the employee:

'11 Transitional APCS ceases to cover an employee if a modern award starts to cover the employee

A transitional APCS ceases to cover an employee when a modern award that covers the employee comes into operation.'

[45] Cl 29 of Div 2 of Part 5, Sch 3 also has a similar effect:

'29 Modern awards and award-based transitional instruments

Modern awards other than the miscellaneous modern award

(1) If a modern award (other than the miscellaneous modern award) that covers an employee, or an employer or other person in relation to the employee, comes into operation, then an award-based transitional instrument ceases to cover (and can never again cover) the employee, or the employer or other person in relation to the employee.

(2) While an award-based transitional instrument that covers an employee, or an employer or other person in relation to the employee, is in operation, the miscellaneous modern award does not cover the employee, or the employer or other person in relation to the employee.'

[46] It was noted that when the AFPC was abolished, the functions of setting the Minimum Wage was taken over by the Minimum Wage Panel and FWA (now the Commission) was separately charged with modernising awards and adjusting them annually by the Minimum Wage Adjustment.

[47] Mr Neal put that as the Modern Award was made on 4 September 2009 to commence on 1 January 2010, the terms and conditions of the old NAPSA have been replaced by the Modern Award's condition. The Full Bench expressly recognised the State Award when making the Modern Award ([2009] AIRCFB 826) it said:

'[221] We recognise the impact of the wage rates we have established for this award on employers covered by the Motor Ferries State Award and Wire Drawn Ferries (State) Award. However a consideration of the wage rates for all current awards has led us to the conclusion that the rates we have adopted are more representative of rates in existing minimum rates prescriptions. Transitional arrangements will ameliorate the impact to some extent.'

[48] Mr Neal highlighted the coverage and classification clauses in the Modern Award and noted that the Full Bench recognised the link to the State Award. Mr Neal said that Ferrymen concedes it employs Masters and there is no distinction between Masters on ships or wiredrawn ferries. Accordingly, there is no basis to claim they are excluded from coverage of the Modern Award. Mr Neal stated the position as follows:

'Accordingly, in the Respondent's submission, the Modern Award applied to the Applicant's employees at the time the Agreement was made in July 2010. Furthermore, by force of clause 11 of Division 2 of Part 3 of Schedule 9 to the TPCA Act [the Transitional Act], the transitional APCS derived from the rates of pay in Part B, Table 1 of the Wire Drawn Ferries (State) Award ceased covering the Applicant's on 1 January 2010 when Modern Award commenced. The APCS applying to the Applicant's employees were replaced with the transitional rates of pay set out in clause A.2.5 of Schedule A Transitional Provisions to the Modern Award.

Accordingly, a reference to the APCS in clause 12 of the Agreement should be read as a reference to the transitional rates in the Modern Award, and the reference in Clause 12 to the AFPC should be read as a reference to the Fair Work Commission which is now responsible for establishing transitional rates and rates of pay in Modern Awards, including rates of pay replacing rates of pay in transitional APCS.'

[49] Mr Neal submitted that it was not the point that FWA approved the Agreement for BOOT purposes by reference to the State Award because:

● the BOOT is not relevant to the parties' intentions;

● only the employer incorrectly identified the State Award in its F17, which was the form prepared and signed by it, without the employees seeing it, let alone approving it.

[50] Mr Neal said Ferrymen cannot rely on a submission that it would not have agreed to cl 12 if the Modern Award was to apply. It cannot on the one hand say it did not know the Modern Award applied, but then take deliberate steps to exclude it. Further, Ferrymen cannot rely on s 57 of the Act to relieve it of the statutory obligation to determine whether an agreement passes the BOOT by applying the correct reference instrument (Modern Award). A secondary attempt to rely on s 55(1) does not sit well with its admissions of knowing little of the Fair Work Act 2009.

[51] As to the relief sought by the applicant, Mr Neal submitted (and it was later conceded by Ferrymen) that the Commission does not have the power to vary the Agreement through s 739 of the Act. The only means to do so is s 217 and as this case is not brought under that section, the relief sought by Ferrymen cannot be granted.

[52] Mr Neal noted that Ferrymen seeks to have cl 14 interpreted to the effect that personal leave for Seven Day Roster Staff (SDRS) be paid out at the ordinary rate of pay for ordinary hours of work; that is, as expressed at Item A of Schedule 1.

[53] Mr Neal drew attention to cl 11(2)(h) of the Agreement, which deals with the components of rates of pay for SDRS by reference to Item A in Sch 1:

SDRS weekly rate of pay is shown at Z and is calculated in accordance with the following formula:

SDRS weekly rate of pay = (A + J + O + Flexibility Allowance being F + L + Q + Crib Allowance being (D + K + P ) divide by 7 days and multiply x 5 days.'

● (F) is the ordinary hours daily rate of flexibility allowance;

[54] Mr Neal observed that the applicant's position is to exclude flexibility and crib allowances and Saturday and Sunday loadings for the purposes of ss 16 and 99 of the Act. Section 99 relevantly provides:

If, in accordance with this Subdivision, an employee takes a period of paid personal/carer's leave, the employer must pay the employee at the employee's base rate of pay for the employee's ordinary hours of work in the period.'

[55] s 16(1) provides a definition of base rate of pay for the purpose of personal leave is the employee's ordinary hours less any of the following:

[56] Mr Neal relied on the Explanatory Memorandum to the Act in this regard which read as follows:

'The concept of an employee's ordinary hours of work is central to the paid personal/carer's leave entitlement as it determines the rate at which the entitlement accrues and also the entitlement to payment when leave is taken.

Leave accrues according to an employee's ordinary hours of work (which may be set out in a modern award or enterprise agreement, or are calculated in the manner set out in clause 20). Such hours are often expressed as a number of hours per week. In effect, therefore, the Bill ensures an employee will accrue the equivalent of two weeks' paid personal/carer's leave over the course of a year of service.

Although this is expressed as an entitlement to 10 days (reflecting a 'standard' 5 day work pattern), by relying on an employee's ordinary hours of work, the Bill ensures that the amount of leave accrued over a period is not affected by differences in the actual spread of an employee's ordinary hours of work in a week.

Therefore, a full-time employee who works 38 hours a week over five days (Monday to Friday) will accrue the same amount of leave as a full-time employee who works 38 ordinary hours over four days per week. Over a year of service both employees would accrue 76 hours of paid personal/carer's leave

Similarly, the requirement to pay an employee for their absence on the basis of their ordinary hours of work for the period of the absence means that the employee is entitled to be paid for his or her ordinary hours of work on the days in the week they would have worked but for being absent from work on paid personal/carer's leave (i.e., excluding overtime).'

[57] It was the Union's case that the personal leave entitlement for an SDRS employee is the rate that the employee would have otherwise received had he/she not been on personal leave. Accordingly, the correct rate is found at Item Z, Z1 and Z2. Z is the weekly rate of pay with pay and allowances, including penalty rates. Mr Neal said that the weekly rate for SDRS clearly comprises ordinary hours, Saturday and Sunday hours and is in effect the base rate of pay for ordinary hours of work. The Bill's Explanatory Memorandum supports such an interpretation.

[58] In the alternative, the respondent submits that the Modern Award transitional rate should apply and Mr Neal relied on s 206 of the Act in that respect:

' 206 Base rate of pay under an enterprise agreement must not be less than the modern award rate or the national minimum wage order rate etc.

If an employee is covered by a modern award that is in operation

(a) an enterprise agreement applies to an employee; and

(b) a modern award that is in operation covers the employee;

the base rate of pay payable to the employee under the agreement (the agreement rate) must not be less than the base rate of pay that would be payable to the employee under the modern award (the award rate) if the modern award applied to the employee.

(2) If the agreement rate is less than the award rate, the agreement has effect in relation to the employee as if the agreement rate were equal to the award rate.

If an employer is required to pay an employee the national minimum wage etc.

(a) an enterprise agreement applies to an employee; and

(b) the employee is not covered by a modern award that is in operation; and

(c) a national minimum wage order would, but for the agreement applying to the employee, require the employee's employer to pay the employee a base rate of pay (the employee's order rate) that at least equals the national minimum wage, or a special national minimum wage, set by the order;

the base rate of pay payable to the employee under the enterprise agreement (the agreement rate) must not be less than the employee's order rate.

(4) If the agreement rate is less than the employee's order rate, the agreement has effect in relation to the employee as if the agreement rate were equal to the employee's order rate.'

[59] In a reply submission, Ferrymen conceded that the Commission does not have the power to grant the relief it had originally sought. It accepted the case involves the proper interpretation of cl 12 and cl 14 of the Agreement.

[60] Counsel submitted that the Commission can make use of extrinsic materials in the proper interpretation of the Agreement. See: AWU v Co-operative Bulk Handling. It was put that as the language of cl 12(2) was ambiguous or susceptible to more than one meaning, the evidence of the parties' presumed intentions may be taken into account; See : Watson v ACT Department of Disability. It was further put that the intention of the drafter of the clause, Ms Cooper, on instructions from Ferrymen, is a relevant and admissible consideration.

[61] Counsel did not dispute the Union's summary of the legislative history, but submitted that the objective intention of cl 12(2) must be seen in the context of the primary function of the AFPC as set out in s 22 of the Workplace Relations Act 1996 (the 'WR Act') was the setting of the Federal Minimum Wage. Thus, cl 12(2) was framed to ensure the base hourly rate would not fall before the Federal Minimum Wage; therefore ensuring compliance with s 172(2) and 173 of the WR Act.

[62] Counsel put that it did not matter that the Agreement makes reference to a non-existent entity, because it was the context in which the parties were negotiating which should be the focus. The confusion as to the state of the law was unsurprising given the complexity of the changes introduced by the Act in 2009 and the transitional provisions. Indeed, this fact weighs heavily against a conclusion that the positive reference to the APCS means other than the Federal Minimum Wage. Further, the clause does not make reference to the rates in the State Award.

[63] It was submitted that the fact Ferrymen and the bargaining agent for some of the employees agreed that the Modern Award did not apply reinforces the objective intention of cl 12(2) could not have been to ensure the base hourly rates were those in the Modern Award. It was pointed out that the Union submission that the Agreement was drafted to ensure the rate was equal to or greater than the State Award cannot be correct because the hourly rate in the Agreement was already less than the State Award.

[64] Counsel submitted that there was no evidence that it would have been obvious to the drafters of the clause that the Federal Minimum Wage and the APCS were capable of independent adjustment and that the 'two did not equate'. It cannot be inferred that the parties had a sophisticated understanding of the convoluted changes to industrial laws and the transitional arrangements and the terms of the Fair Work Act 2009. Indeed, the terms of the clause demonstrate the contrary.

[65] It was put that even if it was correct that the Modern Award applied at the time, it would be clearly contrary to the words of cl 12 of the Agreement, the mutual intention of the parties as evidence by the communications as to which industrial instrument was appropriate for the application of the BOOT and the reference to the APCS to be read as a reference to the transitional rates in the Modern Award. It was then consistent with the F17 lodged by the employer.

[66] Counsel noted that the parties were aware of the existence of the Modern Award and its rates. However, they were of the view it was not applicable to the employees. It had been clearly expressed to exclude the transitional rates in the Modern Award. It was put that the parties have acted consistently with their intentions and it would be wrong to force a meaning to a bargain which they did not intend and ask the Commission to substitute a meaning it believed to be a better one; See: Amcor.

[67] Counsel rejected the Union's contentions as to personal leave entitlements of SDRS employees. It was clear from the interaction of ss 16(1) and 99 of the Act that the rate should be that found at Items A and B of Schedule 1 to the Agreement. Counsel put that the Explanatory Memorandum cannot oust the clear language of the Act.

[68] In oral submissions, Mr A Moses of Senior Counsel made additional points and emphasised aspects of Ferrymen's written submission. He said it was important to note that Ferrymen never agreed to the position of the Union and it was the evidence of Ms Cooper and Mr Eades that the Modern Award did not apply. The evidence demonstrated that by 13 May 2010, Ms Cooper had reached a view that the Modern Award did not apply. Mr Moses observed that the Union had led no evidence from anyone to contradict the employer's view.

[69] Mr Moses contended that the language of the clause was not ambiguous or susceptible to multiple interpretations. He submitted that this was not the appropriate forum to transform the Agreement into something the parties never intended. He said the interpretation is not to be viewed through the prism of the Union which had not been a participant in the negotiations. It is to be interpreted according to the ordinary meaning of the words - a fundamental semantic rule of interpretation. Interpreters are not required to define arcane nuances or to discover hidden meanings; See: Antonin Scalia and Bryan A. Garner, Reading Law: The Interpretation of Legal Text (St. Paul, MN: Thomson West, 2012); City of Wanneroo; and Transport Workers' Union of Australia v Toll Dnata Airport Services [2012] FWA 5605 ('TWU v Toll Dnata').

[70] Mr Moses said that the Union might criticise Ms Cooper and say that she got it wrong, but that does not alter her state of mind, consistent with Mr Eades' evidence which he gave in a straightforward, transparent manner; also bearing in mind that it was the applicant which had brought the matter to the Commission.

[71] Mr Moses said if there had been a mistake, it must be where the parties meant one thing, but the document turned out to mean something else. That is not the situation here. If the Union contends that there was an error and the employees were somehow inadvertently misled, then they can go elsewhere and make the appropriate application. But the Union cannot ask this Commission to rewrite the Agreement and impose upon the parties something they had never agreed to or intended. Even so, Ferrymen was completely open and transparent with its employees. It gave the employees a copy of the Modern Award and the only person who came back was the employees' bargaining agent, who said the Modern Award did not apply.

[72] In relying on Hayne J's comments in Australian Communication Exchange Ltd v Deputy Commissioner of Taxation (2003) 201 ALR 271; [2003] HCA 5, Mr Moses put that the terms of an industrial instrument are not to be strained to achieve a result that is considered fair and reasonable according to a standard of fairness. This is what the Union asks the Commission to do in this case.

[73] In respect to the interpretation of the personal leave clause, Mr Moses put that the Union's submission did not comply with ss 16(1) and 99 of the Act. It ought to be rejected.

[74] In oral submissions, Ms L Doust of Counsel relied on the recent Full Bench decision in SDA v Woolworths to sharpen the approach to be adopted in this case as to interpreting industrial instruments. There, the Full Bench put two limitations on the use of industrial context and purpose of an Agreement:

The focus, first and foremost, is upon the language of the Agreement itself. Extrinsic material cannot be used to disregard or rewrite the provision; and

Subjective intentions or expectations cannot be used. Rather, the task is to identify the common intentions of the parties as they have expressed it in the terms of their Agreement.

[75] Ms Doust said the applicant itself had sought to depart from the interpretation principles because it asked the Commission to import the words 'National Minimum Wage' into the clause. She noted that clauses such as 12(1) and 12(2) are likely to have had a powerful impact on the Commissioner when considering the BOOT.

[76] Ms Doust submitted that, firstly, it was wrong to make the comparison to the State Award when that Award no longer had any application to the employees because the Modern Award had taken effect. In any event, Ferrymen's argument rested entirely on Ms Cooper's subjective intent and not to any mutuality of intent. Moreover, to suggest the National Minimum Wage played a role in Ms Cooper's thinking, belied reality. She was unable to say whether the National Minimum Wage was $10 or $100 less than the rate in the Agreement and there was nothing in her file which indicated she had undertaken any consideration of the National Minimum Wage.

[77] Secondly, this clause was not even Ms Cooper's invention. It came from clause 5.2.3 of the O'Connor Ferry Service Collective Agreement which Ms Cooper inserted in the provision, minus reference to FWA.

[78] Thirdly, Ms Cooper's evidence was that she was aware of the two concepts of the National Minimum Wage and APCS. Yet there is no coherent explanation, if it was her intention, why the National Minimum Wage was not referenced in cl 12(2).

[79] Ms Doust claimed the real intention was to avoid the Modern Award rate, notwithstanding there could be no doubt it covered the operation of Ferrymen. So much is clear from the Award Modernisation Decision of the Full Bench where reference was made to the Ports, Harbours and Enclosed Vessels Award 2010 (see para [81]).

[80] It was absolutely clear the State Award had been 'swallowed up' by the Modern Award and Mr Eades and Ms Cooper knew this to be so. Advice had been received from the New South Wales Industrial Relations Commission and Mr Eades had asked:

'When do we have to disregard the state award and work under the modern award and if so is it possible to make application to vary the modern award and bring it close in form to the Wire Drawn Ferries award?'

[81] Ms Doust submitted that Ms Cooper's view that the Modern Award did not apply belies all the surrounding documentary evidence; Mr Wilson's email could not be said to be a conclusion, Ms Cooper's own email of 11 May 2010; the advice to provide employees with a copy of the Modern Award; and Ms Cooper's email of 13 May 2010 where she admitted:

'... this is an evolving area of the law and it may be that if the matter were litigated that a different view would emerge from the Bench.'

[82] Ms Doust contended that, at the very least, Ferrymen appreciated there was a real prospect that the Modern Award applied and it was curious that an express provision of the Agreement was to oust the operation of any allowances under the Modern Award. In addition, in various drafts of the F17, the Modern Award is referenced. Yet when the final F17 is filed, there was no explanation why the Modern Award no longer appeared.

[83] Ms Doust further submitted that the effect of the wording of the clause insofar as 'other designated Government body' was exactly what happened. The APCS were replaced by the transitional provisions of the Modern Award from 1 July 2010.

[84] In dealing with cl 14 - Personal Leave, Ms Doust identified the relevant sections of the Act; namely s 99 and 16 and the Explanatory Memorandum. Ms Doust said that the weekly rates of pay for SDRS workers had been calculated without inclusion of overtime, allowances or shift penalties. It became an aggregate pay payable on any day of the week. This is the base rate for the ordinary hours of work for a seven day rotational shift worker. However, ordinary hours are different for weekly employees. The principle should be that payment for leave is as if you were being paid for being at work.

[85] In reply, Mr Moses responded to the principles set out in SDA v Woolworths and said the very thing the High Court said was impermissible - the use of extrinsic material to rewrite the clause - is exactly what the Union is asking the Commission to do.

[86] Mr Moses said that even if Ms Cooper's understanding was wrong, that is irrelevant. The real question is what were the intention of the parties at the time. Mr Moses noted Mr Eades' evidence was blunt and firm. Whether there were 'internal musings' about whether something applied or not, is not the point. The ultimate position is what was put to the Commission in its final F17 and that was that the Modern Award did not apply.

[87] Mr Moses said there was no evidence advanced as to the views of other employees so all the Commission is left with is the evidence of Ferrymen and the views of Mr Martin.

[88] Mr Moses corrected Ms Doust's submission that the State Award did not apply at the time. The Award was terminated on 27 July 2010, after the Agreement was approved by the Commission on 1 July 2010.

[89] Mr Moses emphasised that Ferrymen had never tried to hide information or act in bad faith. Letters were being exchanged openly about the effect of the Modern Award and the employees were given a copy. There had been no misleading of the Commission and the applicant had always acted in good faith. As to discretionary issues, Mr Moses advised that the applicant's contract with RMS did not include a mechanism to vary rates on account of new rates being imposed on it. If it lost this case, the Company would have to 'wear it'.

Applying the principles of industrial instrument interpretation

[90] The parties have agreed that this case concerns the correct interpretation of cl 12 and 14 of the FPL Enterprise Agreement. Both parties relied on the well known authorities which have dealt with the principles to be applied by the Commission in interpreting industrial instruments; in this case, an enterprise agreement. I dealt with these authorities earlier.

[91] It would seem obvious that Ferrymen's submission as to the interpretation of cl 12(2) placed an overwhelming reliance on the intentions of the parties at the time the Agreement was negotiated. I accept that this is a consideration which may be relevantly taken into account; See: AWU v Co-Op Bulk Handling. However, in my view, the first task of the Commission is to give the words in contention their plain, ordinary English meaning. As was said by the Full Bench in SDA v Woolworths at para [12]:

'[12] It is undoubtedly the case that, in resolving a dispute as to the interpretation of a provision of an enterprise agreement approved under the Fair Work Act 2009, it is permissible to take into account the industrial context and purpose of the agreement. However, there are two important limitations upon this approach relevant to the determination of this appeal. The first is that the process of interpretative analysis must focus, first and foremost, upon the language of the agreement itself. For example, in Amcor Limited v CFMEU, the process was described by Gleeson CJ and McHugh J in the following terms: "The resolution of the issue turns upon the language of the particular agreement, understood in the light of its industrial context and purpose ...".7 Or, as Kirby J put it in the same case, "Interpretation is always a text-based activity". 8 Admissible extrinsic material may be used to aid the interpretation of a provision in an enterprise agreement with a disputed meaning, but it cannot be used to disregard or re-write the provision in order to give effect to an externally derived conception of what the parties' intention or purpose was. The oft-quoted statement of Madgwick J in Kucks v CSR Limited makes this clear:

"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." [my emphasis]

[92] If it is found that the words in the clause are unclear, ambiguous or susceptible to more than one meaning, then the intention of the parties may be of assistance in determining their meaning. I would emphasise that the recent authorities make plain that extrinsic material cannot be used to disregard or rewrite the provision; See: SDA v Woolworths, para 12, supra above. However, in this case, Ferrymen did not direct itself to the clear, unambiguous meaning of the words in cl 12 and by concentrating exclusively on the intention of the parties, fell foul of the correct approach to the principles of agreement interpretation. As was said in Codelfa, it is inadmissible to rely on surrounding circumstances to contradict the plain, ordinary meaning of the language used.

[93] In any event, as I will later explain, I consider the intentions of the parties (in truth, the intentions of Ferrymen and Ms Cooper, as there was no direct evidence of what the employees had intended) was to find every conceivable basis not to make the correct comparison to the Modern Award. It was the Modern Award that cl 12 is referring to and it was the Modern Award, the Agreement was required to be compared to for the purposes of the BOOT.

[94] I turn to the express language of cl 12(2). There is no mention of the Federal Minimum Wage or National Minimum Wage as the reference point for adjusting wages. As the AFPC performed two distinct functions - setting the minimum wage and adjusting the APCS, it must be accepted that the words 'the base hourly rate for all employees shall remain equal to or above the APCS', were deliberately intended to exclude comparisons to the National Minimum Wage. Nevertheless, Ferrymen submitted that if the Commission was 'the designated regulatory authority' succeeding the AFPC, then the comparison should be to the National Minimum Wage set by the Commission's Minimum Wage Review Panel. I disagree.

[95] As I just mentioned, the problem with this submission is that it flies directly in the face of the language used in cl 12(2) as to what was said erroneously to be the comparator in July 2010 - the APCS and not the actual Minimum Wage; See: SDA v Woolworths, para 12, supra above. They are obviously two different concepts. The fact that the AFPC's primary function may have been setting the Federal Minimum Wage does not reconcile that distinction.

[96] In addition, I do not see how it could be contradicted that the direct descendant of the APCS are the rates in the Modern Award. Accordingly, there is a real, practical alignment and synergy between the APCS and the Modern Award, noting that the Commission's Minimum Wage Review Panel performs the same two functions as the former AFPC. While Ferrymen claims cl 12(2) was drafted to ensure the base weekly wage rate did not fall below the Minimum Wage, I find it inconsistent that Ferrymen now argue the rates should be aligned to the State Award - an instrument which no longer exists as an Award or a NAPSA.

[97] In any event, Ferrymen's position is to ask the Commission to do what is not permitted - to import into the clause words which rewrite the provision to Ferrymen's liking. In addition, Ferrymen's submission is inconsistent with Ms Cooper's evidence. How could it be said there was a comparison to the National Minimum Wage when on Ms Cooper's own admission, she could not say what it was, not even guess whether it was $10 or $100 less than the Agreement's rates and she could produce no evidence of the National Minimum Wage ever being a focus of her subjective intent.

[98] Lest there be any doubt, I note the ordinary and plain meaning of 'designated' in the phrase 'other designated Government authority'. It would be historic nonsense not to accept, as I am sure any ordinary bystander would, that the natural successors to the AFPC was FWA and the FWC. Indeed, it could hardly be said to be otherwise given the AFPC took over the exact functions of the AIRC to set minimum wages and the APCS. The Macquarie Dictionary defines 'designate' as 'to nominate or select for a duty, office, purpose, etc; appoint, assign.'

[99] I would wish to add that it was curious that Ms Cooper used the precise words of cl 5.2.3 of the O'Connor Agreement, but in translation left off Fair Work Australia as an example of a designated Government authority. There was no explanation why this was so. Yet Ms Cooper claims she did not know FWA had replaced the AFPC until November 2012.

[100] Having found that cl 12(2) is clear, unambiguous and not susceptible to more than one meaning, in deference to the detailed case advanced by Ferrymen, a few comments on its submissions are apposite.

[101] Even if the intentions of the parties were an overriding factor in this case, the Union is on safe ground to submit that where there is no evidence of the intentions of the employees party to the Agreement, the Commission must go to the terms of the Agreement itself. To develop the narrative, it would be unwise to determine the intentions of the parties where only one side's view is brought into the evidentiary equation. Of course, I readily acknowledge that Ferrymen relies, inter alia, on the views of Mr Kevin Martin, a solicitor and alleged bargaining representative for some, but not all the employees at the time. In the absence of any testing of Mr Martin's evidence, it would be wrong to attach much weight to his views, which were a little 'off beat', in any event. For example, he said that Transport Industry - Motor Bus Drivers and Conductors (State) Award might be the relevant industrial instrument for the purposes of the BOOT. In addition, there was no evidence of Mr Martin's view being that of any of the relevant employees and certainly not all of them. In my view, there was no common intention of the parties as described to in SDA v Woolworths, para 13, supra above.

[102] I would wish to add one small point of digression. It is my opinion that the construction and intent of the Act's enterprise bargaining stream, with its emphasis on agreements being made by the employer and the employees, rather than the employer and the Union/s, puts a slightly different complexion on the bargaining process. It is rare to see an agreement between the employer and a group of individual employees having been 'negotiated' in the traditional sense, with offers and counter offers, robust bargaining and hard talk. Even rarer, are cases involving protected action taken by non-union employees.

[103] I accept, of course, that the Act provides a number of protections for employees in bargaining, such as the opportunity to nominate bargaining representatives, the Commission being satisfied that the employees genuinely entered into the agreement and that the BOOT must be satisfied. Nevertheless, this Agreement seems to have been conceptualised and taken down the unremarkable path of most non-union agreements. The employer prepares the documentation, discusses its content with the employees through information sessions, the Agreement is voted on and, if supported by a majority of voting employees, is sought to be approved by the Commission. The documentation is prepared by the employer and usually the Commission hears nothing from the employees except what is on the face of the documents prepared by the employer. This is not be taken as any criticism; it merely reflects the reality of the current legislative regime.

[104] While I accept it may be presumed the Commissioner who approved the Agreement was satisfied that all the legislative requirements had been met, I must say, for my own part, I am sceptical as to how it could be said that the employees genuinely entered into the Agreement, had they known the F17 filed by the employer was wrong in a number of fundamental respects. I very much doubt the employees had any idea there was an underlying and unanswered question (even on Ferrymen's own evidence) as to the correct Award comparison. Had they known the financial impact on them was substantial, it is difficult to imagine they would have voted to support the Agreement. However, it is unnecessary to pursue these matters any further, because I must accept the Agreement was validly approved by the Commission (or FWA, as it then was).

[105] Throughout the leadup to the filing of the application for approval of the Agreement, there is no doubt in my mind that the question of the relevance of the Modern Award was a major factor in Ms Cooper's and Mr Eades' deliberations. Various comparisons were identified in the evidence. Exhibits H and I and early drafts of the F17 refer to the identity of the Modern Award at question 3.2 and 3.2 (Exhibit D). Yet, when the final F17 was lodged, reference to the Modern Award is kept to a bare minimum. To the extent Ms Cooper's and Mr Eades' evidence was that the application of the Modern Award was unclear, ambiguous or subject to competing interpretations, I cannot accept that this was the reality.

[106] It would be ludicrous to suggest that with such activity about the effects of the Modern Award, that Ms Cooper and Mr Eades would not have gone to the terms of the Modern Award which provide at the Scope clause (cl 4):

'For the purpose of cl 4.1, ports, harbours and enclosed water vessels industry means the operation of vessels of any type wholly or substantially within a port, harbour or other body of water within the Australian coastline or at sea on activities not covered by the above awards.'

Indeed, Mr Eades correctly accepted that this scope clause included his operations of wire drawn ferries. In addition, the classifications in the Modern Award include: Master, Mate, Engineer, etc. I cannot see how Ms Cooper can rationalise her decision that the Modern Award did not apply because it had classifications for Masters and the State Award applied, when it too had classifications for Masters.

[107] Ms Cooper even undertook a comparison of the Modern Award, the State Award and the Agreement rates. It disclosed rates at that time as follows:

[108] Ms Cooper also said in a letter of May 2010 that while the State Award applied, ' it may be that if the matter were litigated that a different view would emerge from the Bench.' I also note that the Full Bench, in its Modern Award decision, made the following observation:

'[221] We recognise the impact of the wage rates we have established for this award on employers covered by the Motor Ferries State Award and Wire Drawn Ferries (State) Award. However a consideration of the wage rates for all current awards has led us to the conclusion that the rates we have adopted are more representative of rates in existing minimum rates prescriptions. Transitional arrangements will ameliorate the impact to some extent.'

[109] Ms Cooper gave evidence of reviewing the terms of the O'Connor Agreement. In my view, Ms Cooper 'cherry-picked' the clause in the O'Connor Agreement, but for reasons unknown, left off a reference to FWA as the designated Government body to the AFPC.

[110] It seems to me that Ms Cooper and Mr Eades had clear and unequivocal information which informed them that 'No AWAs or collective agreements exist and employees must be covered by the Modern Award'. I quote the email from Gayle Wilson:

I have just finished speaking with Fair Work Australia and have been advised of the following:

The new Ports, Harbours and Enclosed Water Vessels Award 2010 commenced operation on 1 January 2010, except the rates of pay, which come into force from the 1st July 2010. Therefore, what this means is that employees should be getting now, all other allowances and penalties provided in the new award, such as the 1st Aid allowance which was not included in the Wire Drawn Ferries State Award. All other conditions apply to employees' under the Ports, Harbours & Enclosed Water Vessels Award 2010 now.

The Wire Drawn Ferries State Award does apply and will continue to apply only to already approved AWA's or Collective Agreements and continues until the agreements cease. I assume this is what Paul Edes [sic] from Ferrymen was referring to when he said he was told the Wire Drawn Ferry State Award applied to him for another 3 years. If no AWA's or collective agreements exist, then employees must be covered under the Ports, Harbours & Enclosed Water Vessels Award.

For any new Agreements, they need to be made against the Ports, Harbours & Enclosed Water Vessels Award.

Fair Work Australia made reference to existing Workplace agreements made under the old award or any award, that if 50 % + 1 employees wish to have a new Agreement, under the Fair Work Australia new rules, employers are to agree under the "good faith bargaining process". This is likely to be the case considering the large difference is pays [sic] between the older award and the new award.

Concerning the classification or lack of under the Ports, Harbours & Enclosed Water Vessels Award for ferry drivers, they said they will get back to me on that as they agreed there does not appear to be a classification to suite [sic]. In this case it may fall under and be covered by an award with occupational coverage.'

[111] Despite Mr Eades' evidence that he thought the situation was still confused and uncertain, I cannot see how that could possibly be the case. Ms Cooper and Mr Eades did not like the answer to the question of coverage, chose to ignore the correct position and reconstructed a case which conformed to a theory which they knew to be wrong or at least highly problematic.

[112] It was curious why the F17 prepared by Mr Eades had not mentioned that a copy of the Modern Award had been provided to the employees. He did not know why this was omitted. One inference, of course, is that it was a clumsy attempt to keep any reference to an applicable Modern Award in the documents to be filed, to the bare minimum, notwithstanding the express requirement to identify a Modern Award in questions 3.1 and 3.2. In addition, two draft F17s had actually mentioned 'Modern Award' in answer to question 3.1. Strangely, the reference disappears from the final F17 filed in the Commission.

[113] While I am unable to make any specific findings on the documents being crafted to deliberately mislead the Commission, it is certainly a matter of some concern. It is also puzzling that the Agreement expressly sought to oust the operation of any allowances in the Modern Award. This is to be found at cl 13(2), which reads as follows:

The Rates provided for in clause 11 and Schedule 1 and these allowances incorporate all penalty rates, allowances, and loadings referred to in the Modern Award or the State Award and the NES in so far as these are relevant.'

It begs the question that if there was never a view that the Modern Award applied, why was it then necessary to specifically exclude all allowances in an Award that supposedly had no application? In passing, I observe that it is not permissible to oust any of the terms of the NES from an enterprise agreement; See: s 55(1) of the Act.

[114] In my assessment, Ferrymen's evidence was, at best, confusing and often contradictory. Moreover, I find it disingenuous that Ferrymen claimed that its view was supported by the fact that it had tendered for the Sydney Basin contract, based on its interpretation that the Modern Award did not apply. It is hardly relevant, let alone determinative that Ferrymen tendered for the contract based on its own view of the terms and conditions under the Agreement. Of course, it was going to tender on the least possible impact of labour costs on its tender price. Indeed, it is hardly surprising that it won the tender based on the wages being pitched at the lowest level it could find.

[115] Other aspects of Ms Cooper's evidence were particularly difficult to comprehend. She gave evidence that adjusting rates by the CPI gave the employer and employees certainty. I do not understand how adjusting rates by the CPI gave certainty to employees and Ferrymen in tendering. Surely, identifying specific percentage increases during the nominal term of an agreement gave much more certainty than speculating on the unpredictable factor of the CPI.

[116] Stretching credulity was that Ms Cooper said she did not know the AFPC was abolished until 20 November 2012, when told by the MUA (remembering in 2010 she had removed FWA from her inclusion of the corresponding clause from the O'Connor Agreement). She had prepared the Agreement conscious of the requirements under the Fair Work Act and an application had been made to FWA. It seems utterly implausible that Ms Cooper believed the AFPC was still operating, particularly given the general publicity surrounding the introduction of FWA and the Act in 2009.

[117] Even if it had been the case as to intention, parties cannot contract out of the express provisions of the Act, which firstly require:

That a Modern Award is the reference instrument for the purposes of the BOOT. Section 193(1) provides as follows:

'When a non-greenfields agreement passes the better off overall test

(1) An enterprise agreement that is not a greenfields agreement passes the better off overall test under this section if the FWC is satisfied, as at the test time, that each award covered employee, and each prospective award covered employee, for the agreement would be better off overall if the agreement applied to the employee than if the relevant modern award applied to the employee.'

Secondly, the rates under the Agreement cannot be less than those contained in the modern Award, particularly where other less beneficial terms are being proposed; Section 206(1) is as follows:

'If an employee is covered by a modern award that is in operation

(a) an enterprise agreement applies to an employee; and

(b) a modern award that is in operation covers the employee;

the base rate of pay payable to the employee under the agreement (the agreement rate) must not be less than the base rate of pay that would be payable to the employee under the modern award (the award rate) if the modern award applied to the employee.'

[118] The statutory provisions relevant to determining the interpretation of cl 14 as it applies to SDRS employees are to be found at ss 16(1) and 99 of the Act. These sections are as follows:

(1) The base rate of pay of a national system employee is the rate of pay payable to the employee for his or her ordinary hours of work, but not including any of the following:

If, in accordance with this Subdivision, an employee takes a period of paid personal/carer's leave, the employer must pay the employee at the employee's base rate of pay for the employee's ordinary hours of work in the period.'

[119] It will be readily apparent that the terminology of the above provisions does not exactly mirror the corresponding terms in Schedule 1 of the Agreement. The Agreement speaks of the 'base weekly wage' under the heading 'ordinary hours'. Ferrymen relies on the 'basic weekly wage' as meaning the 'base rate of pay' and 'ordinary hours' as meaning the 'employees ordinary hours of work in the period'. The issue is further entangled by the definition of an 'SDRS weekly rate of pay' at cl 11(2)(h).

[120] Nevertheless, what is obvious is that the SDRS employees' weekly rate of pay is a calculation which has regard to:

Flexibility Allowance for five week days, one Saturday and one Sunday and Crib Allowance for five week days. one Saturday and one Sunday.

On Ferrymen's analysis, relying on the exclusions in s 16(1) of the Act, is that the rate to be paid to an SDRS employee when on personal leave is calculated by reference to the base weekly wage (at that time $670, compared to the SDRS weekly rate of $914.90).

[121] Unsurprisingly, the Union argues that the SDRS employees' ordinary base rate of pay for their hours of work are inclusive of the components said to be referable to penalty rates, flexibility and crib allowances. Consequently, it is the SDRS' weekly rate of pay which is the appropriate reference point for calculating personal leave.

[122] Neither party drew my attention to any authority directly on the point. Nevertheless, in my opinion, there is a tension between the wording of the Agreement and the statutory language. There is no doubt that these statutory provisions must be read beneficially. I would prefer to interpret the beneficial purpose of the legislation by asking the question - why should an employee's ordinary rate of pay be significantly less when he/she takes a day's personal leave than if he/she was actually working that day? That said, I am bound to follow the one Full Bench decision which, my inquiries reveal, answer this question quite differently. In Warren; Hull Moody Finishes Pty Ltd; Sidotti [2011] FWAFB 6709 ('Warren v Hull Moody'), the majority of the Full Bench expressly dealt with the meaning of s 16(1) of the Act in respect to annual leave as follows:

'[29] The definition of base rate of pay is contained in s 16. Relevantly, it is as follows:

(1) The base rate of pay of a national system employee is the rate of pay payable to the employee for his or her ordinary hours of work, but not including any of the following:

[30] The definition is expressed as a general concept - the rate of pay payable to the employee for his or her ordinary hours of work - together with the exclusion of certain other separately identifiable amounts. In our view any amount paid with respect to the specified matters in s 16 and any other separately identified amount is not included within the definition of base rate of pay and is not required to be paid for absences on annual leave. In our view it is not relevant whether the amounts are paid as separate amounts or are identifiable components of a rolled-up rate. Either way they have the character of payments excluded from the definition.'

See also: The Australian Workers' Union v BP Refinery (Bulwer Island) Pty Ltd [2012] FWA 1197.

[123] Under the NES, national system employees are only entitled to be paid the 'base rate of pay' for both annual leave (s 90) and personal leave (s 99). As 'base rate of pay' has the same definition for both annual leave and personal leave, there would be no reason why the majority's interpretation of s 16(1) above should not equally apply in the context of personal leave. Despite my misgivings, I am bound to follow the interpretation of the majority in Warren v Hull Moody and must reject the Union's interpretation of cl 14 - Personal Leave.

[124] For the aforementioned reasons, I find firstly, that the Union's interpretation of cl 12(2) is to be preferred over the interpretation proposed by Ferrymen. Specifically cl 12(2) shall be read as meaning the base hourly rates for all employees covered by the Agreement shall remain equal to or above the transitional rates in the relevant Modern Award, namely, the Ports, Harbours, Enclosed Water Vessels Award 2010. Secondly, in respect to cl 14, the Union's interpretation is rejected and the rate to be paid to a SDRS employee while on personal leave shall be calculated by reference to Items A and B of Schedule 1 to the Agreement. This proceeding is concluded.

Mr A Moses, Senior Counsel, with Mr C Magee, Counsel for the applicant

Ms L Doust, Counsel, with Mr A Jacka and Mr P Garrett for the respondent

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