Australian Industrial Relations Commission|2002-06-11

National Union of Workers v GrainCorp Operations Limited - PR918161 [2002] AIRC 638; (11 June 2002)

Notice under a Dispute Settling Procedure of a Certified Agreement - meaning of the phrase "conditions of employment" in a dispute settling procedure - interpretation of clause of a certified agreement - manning levels

[1] On 8 May 2002, after business hours, the National Union of Workers ("NUW") filed with the Melbourne Registry of this Commission a Notice under a Dispute Settling Procedure in accordance with section 170LW of the Workplace Relations Act 1996 (Cth) ("the Act"). The Notice relates to an alleged dispute between the NUW and GrainCorp Operations Ltd ("GrainCorp"), parties to the GrainCorp Operations Ltd (Sunshine, Portland & Geelong) and National Union of Workers Comprehensive Agreement 2001 (AG809763 PR907664) ("the 2001 Agreement"). The alleged dispute concerns the employment of Bulk Grain Workers at the export terminal owned and operated by GrainCorp in McLeod Street, Geelong ("the Geelong Terminal").

[2] Specifically, the alleged dispute relates to the proper construction of clause 2 of Appendix B of the 2001 Agreement. According to the submissions of the NUW, the clause requires that GrainCorp engage 39 full time Bulk Grain Workers at the Geelong Terminal throughout the life of the 2001 Agreement and, if at any time during the life of the 2001 Agreement there are less than 39 full-time Bulk Grain Workers, requires that those positions be backfilled.

[3] The NUW's section 170LW Notice was filed with the Registry after the Commission as presently constituted delivered an ex tempore decision refusing to make orders pursuant to section 127 against GrainCorp, arising from the same set of circumstances. That ex tempore decision, made on transcript on 8 May 2002, appears in my written reasons for decision in that matter (application by the National Union of Workers, PR918160, 11 June 2002).

[4] Notwithstanding discussions between the parties at the direction of this Commission (transcript, PN37), and an attempt by the Commission (at the request of the parties) on 22 May 2002 to conciliate this matter, this alleged dispute came to be heard before the Commission as currently constituted on 24 May 2002.

[5] During the course of proceedings before the Commission in this matter under section 170LW, the parties agreed to rely upon and refer to the evidence before the Commission in the section 127 application previously heard and determined by me (transcript, PN8, 26), and any other material that may be relevant. As I state in my reasons for decision in the section 127 matter (s127".

[6] GrainCorp Operations Ltd is a New South Wales based corporation engaged principally in the storage, handling and marketing of cereal grains. GrainCorp owns and operates grain-receiving centres throughout southeast Australia. In Victoria, GrainCorp operates a number of district offices, two export terminals (in Geelong and Portland) and a domestic terminal at Sunshine.

[7] This application concerns an alleged dispute under the 2001 Agreement relating to GrainCorp's export terminal in McLeod Street, Geelong ("the Geelong Terminal"). Mr McConaghy describes the work undertaken at the Geelong Terminal as the receipt, treatment and storage of grain and woodchips by road and rail, for export. Mr McConaghy states that GrainCorp employs approximately 55 full time employees and 20 casual employees at the Geelong Terminal. Not all of those employees are engaged as Bulk Grain Workers. The number of full-time Bulk Grain Workers employed at the Geelong Terminal is something less than 39. It is a point of conjecture between the NUW and GrainCorp how many full-time Bulk Grain Workers should be engaged at the Geelong Terminal.

[8] The Geelong Terminal has been owned and operated by GrainCorp since in or about late 2000. Before that time, the Geelong Terminal was owned and operated by VicGrain Ltd. The National Union of Workers has acted on behalf of Bulk Grain Workers at the Geelong Terminal for a number of years.

[9] Mr Thow, who from 1997 until 2000 was the NUW site Organiser for the Geelong Terminal, states that the issue of manning levels (particularly the number of full time Bulk Grain Workers) has been an ongoing issue at the Geelong Terminal for at least seven years. Mr Thow states that the pattern over that time has been for the employer to seek ongoing workforce reductions "whenever they saw an opportunity". According to Mr Thow, the pattern over the last seven years has been for the NUW and VicGrain Ltd to agree to certain flexibilities as part of the enterprise bargaining process and to agree, as part of the bargaining outcome, that manning levels would drop from the pre-existing level to a new agreed level.

[10] When the first certified agreement between the NUW and VicGrain Ltd that dealt comprehensively with the terms and conditions of employment was struck in 1998 ("the 1998 Agreement"), it contained an Appendix B that pertained specifically to the Geelong Terminal. Clause 2 of Appendix B of the 1998 Agreement stated as follows:

VicGrain gives an undertaking that any flexibility demonstrated during the life of this agreement will not be used as the basis for redundancies during this agreement, or beyond it.

No redundancies will be sought by VicGrain Ltd as a result of the above flexibility in manning and work practices. Workforce numbers will be thirty-nine (39) full time employees where completion of dust extraction and other agreed capital works has occurred. However, manning levels will not be reduced to thirty-nine (39) until it can be demonstrated that the above technical change is operational and is effectively fulfilling its function.

This number of full time employees thirty-nine (39) is to be maintained for the life of the agreement, meaning that replacements will be sought when numbers fall below this level."

[11] It was the uncontested evidence of Mr Thow that this clause was intended by both VicGrain and the NUW to be a compromise between the manning level at that time of 49 (in accordance with the VicGrain - NUW Certified Agreement 1996) and VicGrain "business requirement" (according to VicGrain - see s127 Exhibit A2, attachment 2) of 30 permanent Bulk Grain Workers. It was presumably open to GrainCorp to subpoena VicGrain employees or former employees to counter the evidence of Mr Thow on this point. For whatever reason, GrainCorp elected not to do so.

[12] On the basis of Mr Thow's evidence, the documents tendered by the NUW (including s127 Exhibit A2, attachments 2 and 3) and the failure of GrainCorp to call any evidence to the contrary, I am satisfied that it was the intent of both the NUW and GrainCorp that clause 2 of Appendix B of the 1998 Agreement would mean (amongst other things) that, for the life of the 1998 Agreement, no less than 39 full-time Bulk Grain workers would be engaged at the Geelong Terminal and that replacements would be sought if numbers fell below 39.

[13] In November 2000, a Bulk Grain Worker died in a workplace accident at the Geelong Terminal (transcript, PN254). This was approximately one month after GrainCorp became the owner and operator of the Geelong Terminal and during the life of the 1998 Agreement. That employee was replaced by GrainCorp with a new Bulk Grain Worker.

[14] By the time that it was appropriate to negotiate a new certified agreement to cover the terminals covered by the 1998 Agreement, the owner and operator of each of the three terminals was GrainCorp. Initially, it was the intention of the parties to negotiate a new enterprise agreement, on fresh terms. Negotiations were conducted between, amongst others, Mr McConaghy, Mr Scully and representatives of the NUW.

[15] As part of the negotiations for a new enterprise agreement, a number of matters were discussed. These matters included a proposal put by GrainCorp that the reference to Manning Levels in clause 2 of Appendix B of the 1998 Agreement should not be included in any new enterprise agreement. Minutes (prepared by an officer of GrainCorp) of an enterprise bargaining meeting of 5 April 2001 include the following excerpt (s127 Exhibit A2, attachment 4, paragraph 6):

"Appendix B. (page 73) Manning Levels. GrainCorp wants the deletion of point 2 except first sentence. The Company does not believe staffing levels should be in an enterprise agreement.

Mr McConaghy states in his evidence that to leave the remaining provisions of clause 2 of Appendix B would be inconsistent with the view held by GrainCorp "that staffing levels should not be in any enterprise agreement." (s127 transcript, PN608) He states that the mere mention of a staffing number is objectionable to him, but that his objection is not "inconsistent with the interpretation I had taken of clause 2." (s127 transcript, PN609-610) Mr McConaghy states that the issue of manning levels is a "red-letter" issue for the Company, and that this is the only certified agreement covering GrainCorp that contains such a clause (PN613-617).

[16] On 21 May 2001 Mr McConaghy wrote to Mr C Donnelly (Victorian Branch Secretary of the NUW) a letter in the following terms:

"I am writing in connection with the current negotiations for a new enterprise bargaining agreement to cover the bulk grain workers at the Company's Geelong, Portland and Sunshine Terminals.

The negotiations commenced in February and whilst a wide range of issues have been canvassed it appears that there is very little likelihood that agreement would be reached. On this basis, a `roll-over' of the current agreement has met with some acceptance on both sides. The two issues which remain outstanding are the duration of a `roll-over' and the appropriate quantum for an accompanying pay increase."

... [two paragraphs discussing GrainCorp's view as to an appropriate wage increase]...

On this basis the Company is prepared to make the following offer:

(a) a `roll-over' of the current agreement without any adjustments other than to rates of pay and duration;

(b) the agreement to be of two (2) years duration from 28 May 2001; and

(c) an accompanying pay increase of 7%; 3.5% as of 28 May 2001 and a further 3.5% twelve months later.

This offer is made after detailed consideration by the Company and, in our view, represents a realistic and reasonable offer in all the circumstances.

The Company would hope that you would accept that this offer represents a considerable movement from our starting position. ..."

[17] Both Mr McConaghy (s127, transcript PN508-517) and Mr Scully (s127, transcript PN749-752) deny that GrainCorp resiled from or abandoned its claim to remove the bulk of clause 2 of Appendix B, insisting that GrainCorp did not "press" the claim further as part of those enterprise bargaining negotiations. To the extent that the claim made by GrainCorp, would result in a change to the meaning and effect of that clause, I am of the view that GrainCorp resiled from its claim for the life of the 2001 Agreement. I state this notwithstanding the evidence of Mr Scully and Mr McConaghy, including (s127 transcript, PN619-625) and despite the submissions of Mr Johns (at, for example, PN242).

[18] Mr Scully states that in agreeing to a roll-over, GrainCorp agreed to be bound by clause 2 of Appendix B: "To whatever that clause means." (s127 transcript, PN754) At no time during the discussion of a proposed roll-over of the 1998 Agreement did Mr McConaghy, Mr Scully or (it would appear) any other representative of GrainCorp mention to any NUW representative that GrainCorp had a view that clause 2 of Appendix B allowed GrainCorp to reduce the number of full-time Bulk Grain Workers engaged at the Geelong Terminal below a level of 39 (s127 transcript, PN626-628).

[19] In accordance with Mr McConaghy's proposal, the parties agreed to roll-over the 1998 Agreement, changing only the rates of pay and the name of the employer (s127 transcript, PN522-524). Once certified, this agreement became the 2001 Agreement.

[20] In or about mid to late 2001, the employment of Mr Markham, a Bulk Grain Worker at the Geelong Terminal, was terminated. Mr Markham has made an application with respect to the termination of his employment pursuant to section 170CE of the Act. That matter has been heard by Blair C and a decision of this Commission is pending. Mr McConaghy has given evidence that when asked by employees whether Mr Markham's position will be replaced by a new Bulk Grain Worker, he explained that it would not be for the time being because it may be open to the Commission to order the reinstatement of Mr Markham to his previous position (s127 transcript, PN662-664).

[21] Also in or about mid to late 2001, a Bulk Grain Worker named Mr Hogan was promoted to a supervisory position. Mr Hogan's position as a Bulk Grain Worker has not been filled by a new employee, despite the protests of the NUW (s127 transcript, PN660, 665-671).

[22] It is now the position of GrainCorp that the meaning and effect of clause 2 of Appendix B does not include a prohibition against reducing the number of full-time Bulk Grain Workers below 39, and that the "objective intention" of the parties was that it not do so. It is the contention of GrainCorp that clause 2 of Appendix B precludes GrainCorp from reducing manning levels if that reduction is a result of increased flexibility, but not if the reduction is for any other reason.

[23] It is this divergence in views as to the meaning and effect of clause 2 of Appendix B of the 2001 Agreement which, should I be satisfied that the Commission has jurisdiction to do so, I am required to hear and determine.

[24] The alleged dispute before the Commission at this point in time concerns the proper interpretation to be given to clause 2 of Appendix B of the 2001 Agreement. The issue between the parties can be demonstrated by quoting the determination sought by the NUW, which was in the following terms (Exhibit A2 - cf Exhibit A1- transcript PN106-111):

"That in order for GrainCorp to comply with the terms of the Agreement they must employ no less than 39 BGW's and must maintain 39 BGW's while the Agreement remains in force."

[25] Such a determination is sought by the NUW based on a particular interpretation of clause 2 of Appendix B of the 2001 Agreement. GrainCorp hold a different view as to the proper interpretation of that particular clause, and are of the view that such a determination ought not be issued by this Commission, even if the Commission has jurisdiction to determine the matter.

[26] For reasons that I set out further below, I prefer the interpretation placed upon clause 2 of Appendix B of the 2001 Agreement by the NUW. While not identical in every respect, I will issue a determination substantially similar in nature to that sought by the NUW.

Does Jurisdiction reside in this Commission to determine this matter?

[27] In previous paragraphs of this decision I have referred to the matter before the Commission as an "alleged dispute". This is due to a submission made by Mr Johns that the matter before the Commission is not a dispute relating to wages or conditions of employment, within the meaning of the dispute resolution procedure of the 2001 Agreement.

[28] Before coming to that matter, I shall address other issues relating to the jurisdiction of the Commission to hear and determine this matter. It was put to me by Mr Lyons[1] that:

(a) as part of its function in the resolution of a dispute under an agreement, notified under section 170LW, the Commission may be required to form a view as to the meaning and effect of a provision of that agreement;

(b) the making of such a determination does not involve a trespass into the exercise of judicial power;

(c) the dispute is clearly one concerning the operation of the agreement and a dispute between the employer and employees subject to the agreement, within the scope of section 170LW of the Act and the dispute resolution clause of the 2001 Agreement;

(d) each of the steps in the dispute resolution clause of the 2001 Agreement, except for referral to the Commission, has been exhausted;

(e) the determination sought would settle the dispute between the parties and is consistent with other decisions of the Commission;

(f) that the following propositions were set out by the Commission in Public Transport Corporation of Victoria v Australian Rail, Tram and Bus Industry Union and others (Hancock SDP, 16 February 1995, Print L9550) ("PTC of Victoria v ARTBIU") in relation to the former section 170MH of the Industrial Relations Act 1988, which is for all practical purposes identical to section 170LW of the Act:

(i) the exercise of arbitral function under an agreement is not "arbitration at large" but is constrained by the terms of the agreement;

(ii) the Commission should give a broad interpretation to dispute settling procedures;

(iii) that selecting between competing contentions about the meaning and application of an agreement, while not a part of the Commission's normal arbitral function, nevertheless has the characteristics of an arbitration as sanctioned by the High Court of Australia in Re Ranger Mines Pty Ltd ex parte Federated Miscellaneous Workers' Union Of Australia [1987] HCA 63; (1987) 163 CLR 656 at 666; and

(iv) that the Commission has power to arbitrate disputes where there is a "concrete linkage" between the subject matter of the dispute and the subject matters dealt with in a certified agreement, and where there is a direct link to the efficacy of the agreement;

(g) that the power that the Commission is being called upon to exercise is a power of private arbitration in accordance with a process agreed to by the parties;

(h) where the parties have agreed to submit disputes as to their legal rights and liabilities for resolution by a particular person, there is no need for the subject matter to fall within the scope of section 170LW;

(i) that "the parties have agreed to submit themselves to a determination of the Commission on all grievances or disputes. This is a perfectly valid step, even if it goes beyond the power conferred by section 170LW" (Exhibit A2, paragraph 12);

(j) where the parties have voluntarily granted the Commission power to determine right and obligations, these powers are not restricted by the ordinary distinction between arbitral and judicial functions;

(k) the fact that the conduct of the employer may be actionable in a court of competent jurisdiction does not prevent agitation of the issues before the Commission; and

(l) questions of enforceability, or refusal of one party to accept that the determination would be binding should not concern the Commission in making its determination.

[29] In response to Mr Lyons' suggestions, Mr Johns stated that there is "little difference" between the parties regarding the process to be undertaken in determining jurisdiction and that he agrees "in great part" with the submissions of Mr Lyons as they relate to section 170LW of the Act (transcript, PN176).

[30] Mr Johns did, however, object to the jurisdiction of the Commission on the ground that the matter before the Commission is not a dispute or claim within the scope of the disputes resolution procedure of the 2001 Agreement (transcript, PN177-208).

[31] Clause 12.1 of the 2001 Agreement sets out the parameters of disputes and claims that will be subject to the dispute resolution procedure. It states:

"Any dispute or claim (whether any such dispute or claim arises out of the operation of this Agreement or not) as to wages or conditions of employment of any and its employees shall be settled in the following manner:..."

[32] Given the difficulty of the wording of that clause, I shall read it as if it did not contain the words "and its" (transcript PN119, 179).

[33] Mr Johns makes the point that the issue before the Commission is not a dispute or claim about the wages of employees. It must, therefore, if it is within the terms of clause 12.1, be a "dispute or claim... as to... conditions of employment".

[34] Mr Johns submits that, in order for a thing to be a condition of employment "it must be a provision which makes the existence of the employment dependent upon the happening of the event. So the existence of each of the bulk grain workers' employment must be dependent upon there being 39 people if you adopt the union's interpretation of the clause. And in my submission there is no evidence before you that that is a condition of employment by any of the employees." (transcript, PN183)

[35] When I asked whether, in his view, the conditions of employment might be determined by an award, agreement or legislation, Mr Johns submitted "that the phrase "conditions of employment" is restricted to what is contained in the contract of employment of the employees." (transcript, PN185-6)

[36] In support of the construction put on the words "conditions of employment" by him, Mr Johns referred the Commission to a decision of the High Court of Australia in T C Whittle Pty Ltd v T & G Mutual Life Society Ltd (1977) 18 ALR 431. The lead decision in that case was given by Barwick CJ, with whom Mason J (as he then was) agreed. Murphy J stated he agreed with the conclusions of Barwick CJ, but did not go so far as to say he agreed with the steps taken to reach that conclusion. Considering the phrase "conditions of employment" used in a commercial contract, at page 438, Barwick CJ stated:

"The expression "conditions of employment" is capable, in my opinion, of two possible meanings, apart from the particular context of the clause. It could mean the conditions dictated by statute or award which are consequential upon the employment of a workman: the conditions under which employment may take place. If that meaning were adopted, the consequential condition need not be a term express or implied of the contract of employment itself. On the other hand, the expression may include only the conditions on which, as between employer and employee, the employee works; in other words, the expression relates only to the terms of the contract of employment express or implied. When those terms are so largely regulated by industrial award, it is perhaps not so easy to regard them as part of the contract of employment: but, in my opinion, that is a proper use to be made of the terms of the industrial award, at least in so far as they fix wages and other employee benefits.

The clause, in my opinion, provides a context which settles the choice to be made between these possibilities. As I have pointed out, it is both central and fundamental to the understanding and operation of the clause that the average wage is a notional concept, its amount being constructed from the financial specifications of a series of industrial awards and of statutes regulating the terms of industrial employment. These are relevantly the conditions of employment current at the date of the closing of tenders. The relevant alterations in conditions of employment must, in my opinion, be of a like character. That means, in my opinion, the change to be allowed must be a change in the obligations of the employer towards the employee in the employment or a change in the entitlement of the employee to action by the employer in the employment.

The relevant changes in the conditions of employment must be by statutory instrument or industrial award and, in my opinion, be general in nature, ie be operative as to all employees who fall within the area intended to be regulated. ..."

[37] When one reads the excerpt above from his Honour's decision, rather than a few selected lines, it becomes apparent that this authority is not as unambiguous in its support for the narrow construction put by Mr Johns as would first appear.

[38] Mr Lyons described Mr John's submission as "semantic" and "absurd" (transcript, PN289). It could also be described as overly legalistic, were it not directly contrary to a unanimous decision of five members of the High Court of Australia.

[39] In R v Booth (ex parte Administrative and Clerical Officers' Association [1978] HCA 14; (1978) 141 CLR 257, the Court (Gibbs J as he then was, Stephen J, Mason J as he then was, Jacobs J and Murphy J at 262-3) stated (when determining the meaning and effect of a clause in the Public Service Arbitration Act 1920 (Cth):

"The expression `conditions of employment' is defined in s 3 (1) of the Act to mean `salaries, wages, rates of pay or other terms or conditions of service or employment'. The expression as so defined is obviously intended to have a wide meaning. In Australian Tramway Employees' Association v Prahran and Malvern Tramway Trust [1913] HCA 53; (1913) 17 CLR 680, at p 693, in a passage cited by Dixon CJ in Reg v Findlay; Ex parte Commonwealth Steamship Owners' Association [1953] HCA 81; (1953) 90 CLR 621, at p 630, Isaacs and Rich JJ said:

`The "terms" of employment are the stipulations agreed to or otherwise existing on both sides upon which the service is performed. The "conditions" of employment include all the elements that constitute the necessary requisites, attributes, qualifications, environment or other circumstances affecting the employment.'

No doubt this extensive meaning should be attributed to the word `conditions' in the definition. The `other terms or conditions of service or employment' cannot be limited to those which are ejusdem generis with salaries, wages and rates of pay."

[40] If one accepts the "extensive meaning" of "conditions of employment" adopted by the Court in R v Booth (and Dixon CJ, Isaacs and Rich JJ before them), it is clear that the number of full-time Bulk Grain Workers engaged is an attribute, environment or other circumstance affecting the employment, and is therefore a "condition of employment".

[41] Following the decision of the High Court in R v Booth, and the cases cited by the Court therein, and bearing in mind that the Commission should give a broad interpretation to dispute settling procedures (Hancock SDP in PTC of Victoria v ARTBIU ), I reject the narrow construction put on the words "conditions of employment" by Mr Johns. I consider it highly unlikely that the intention of the parties was that the dispute procedure would only apply to a portion of circumstances arising under the 2001 Agreement, subject to a narrow construction based on shaky legal ground.

[42] It follows that I reject the submission of Mr Johns that the Commission lacks the jurisdiction to hear and determine this matter.

The Commission's determination is issued pursuant to section 170LW of the Act

[43] While the point was not raised by Mr Johns, I consider it appropriate to make a further comment regarding the jurisdiction of this Commission in matters of "private arbitration". It is submitted by Mr Lyons that, even if this dispute is not one within the scope of section 170LW of the Act, it is appropriate for the Commission to exercise a power of private arbitration because the parties have voluntarily submitted to the Commission exercising such powers. Mr Lyons relies upon the bracketed words "whether any such dispute or claim arises out of the operation of this Agreement or not" in the dispute resolution clause.

[44] This part of Mr Lyons' argument relies upon the dispute resolution procedure of the 2001 Agreement having some force under what the High Court refer to in the Gordonstone decision (Construction, Forestry, Mining and Energy Union v Australian Industrial Relations Commission [2001] HCA 16; (2001) 203 CLR 645) as the "general law", rather than section 170LW of the Act. The enforceability of a determination of this Commission, and indeed of any agreement between the parties, other than in accordance with the relevant terms of the Act, is a question for a place other than this Commission. However, as is well known, such enforceability is not without its difficulties (as highlighted by the decision of the Victorian Court of Appeal in Ryan v Textile Clothing and Footwear Union Australia [1996] VicRp 67; (1996) 66 IR 258).

[45] Given those comments, lest there be any doubt about the basis on which the decision of this Commission is made, I am of the view that this matter is a dispute over the application of the 2001 Agreement, and that the determination I intend to make is in settlement of that dispute. It squarely falls within the parameters of section 170LW of the Act. If this determination has some enforceability beyond that set out in section 170LW of the Act, then that is for the parties, and ultimately a Court of competent jurisdiction to decide.

[46] A number of general principles relating to the interpretation of industrial instruments have been established by cases in the past. While an award or agreement should be interpreted in the same manner as a court or tribunal would interpret legislation or another document, it must be borne in mind that often industrial instruments are framed and drafted by laypersons who are not aware of all the legal niceties that may have been developed by the courts.

[47] Among the general principles to be followed in the interpretation of awards and certified agreements are these:

(a) if the terms of an industrial instrument are clear and unambiguous, then the industrial instrument must be interpreted in accordance with that clear and unambiguous meaning (Re Clothing Trades Award (1950) 68 CAR 597);

(b) the words used in an industrial instrument should not be interpreted in a strict, technical fashion, because those who framed the industrial instrument are often non-lawyers drafting words in the context of custom and practice in an industry or particular enterprise (Bond & Co Ltd (in liquidation) v McKenzie (1929) 28 AR 499; Hancock SDP in PTC of Victoria v ARTBIU, above);

(c) each clause should be interpreted within its context, that is, the meaning of particular words should be read in the context of the industrial instrument as a whole (Australian Workers' Union v Abbey (1939) 40 CAR 494) and in the context of the clause/section in which it falls (Avondale Motors (Parts) Pty Ltd v Federal Commissioner of Taxation [1971] HCA 17; (1971) 45 ALJR 280 at 283);

(d) the court or tribunal should strive to give effect to the intention of the authority which made the award (or, presumably, in the case of an agreement, the intent of the parties to the agreement), provided that the words appearing in the instrument can reasonably be interpreted to mean that which the authority/parties intended them to mean (Australian Timber Workers' Union v W Angliss and Co Pty Ltd (1924) 19 CAR 172;

(e) the court or tribunal's recourse to extrinsic material in the interpretation of industrial instruments is not dependant upon the existence of ambiguity in the industrial instrument (Australian Municipal, Administrative, Clerical & Services Union v Treasurer of the Commonwealth of Australia (1998) 82 FCR 175; 80 IR 345);

[48] The admissibility or otherwise of evidence of subsequent conduct when a court or tribunal is seeking to determine the objective intent of the parties to an industrial instrument, contract, other agreement or document is by no means settled law in this country. Bearing that legal uncertainty in mind, I choose, in this case, not to rely upon the subsequent conduct of GrainCorp and NUW in seeking to ascertain the intent of the parties to the 2001 Agreement. Had I given such consideration, it is not likely to have been of great assistance - subsequent to the certification of the 2001 Agreement, GrainCorp did not replace two Bulk Grain Workers, but gave an explanation for not replacing Mr Markham that the Commission might reinstate him. Similarly, I draw no inferences, either positive or negative, from the fact that GrainCorp sought legal advice regarding the meaning and effect of clause 2 of Appendix B (s127 transcript, PN776-780, 789-794). While industrial instruments should not be read in an overly technical or legalistic manner, it often falls to lawyers to give advice to parties regarding the meaning of particular terms of such instruments. Inferences ought not be drawn from the seeking of such advice.

[49] While I do not consider conduct subsequent to the making of the 2001 Agreement to be of any assistance to the Commission, I do consider what happened prior to the making of the 2001 Agreement to be most pertinent, particularly in the circumstances where the eventual 2001 Agreement was a roll-over of the previous 1998 Agreement. This prior conduct and context includes the conduct of GrainCorp replacing the Bulk Grain Worker who passed away in late 2000, during the 1998 Agreement, and its bargaining position as demonstrated in the memorandum of the 5 April 2001 meeting (s127 Exhibit A2, attachment 4, paragraph 6)).

[50] Mr Johns submits that such evidence, which goes to what the actual "subjective intention" of each of the parties was, is not of assistance in determining the "objective intention" of the parties. Mr Johns submits that the "objective intention" means "looking at the objective framework of the facts at the time the agreement came into existence, [and asking] what would a reasonable person have intended that clause to mean?" (transcript, PN255) While I accept that a rule applies to the construction of general law contracts made wholly in writing, to the effect that that extrinsic evidence of subjective intention cannot "subtract from, add to, vary or contradict the language of a written instrument" (Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR at 347), the "objective framework" referred to above can include assumptions of fact or meanings in which the parties have concurred in the course of negotiations (Codelfa, above_; Bank of New Zealand v Simpson_ [1900] AC 182 at 189).

[51] In any event, as I state above, it has been held by his Honour Marshall J that extrinsic evidence is admissible when interpreting an award. In Australian Municipal, Administrative, Clerical & Services Union v Treasurer of the Commonwealth of Australia (above, pages 346-7), his Honour considered himself to be bound by the decision of Burchett J (with whom Drummond J agreed) when sitting on a Full Court of the Federal Court in Short v F W Hercus [1993] FCA 51; (1993) 40 FCR 511; 46 IR 128. Burchett J stated (at 518; 134):

"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. Context may also include, in some cases, ideas that gave rise to an expression in a document from which it has been taken. When the expression was transplanted, it may have brought with it some of the soil in which it once grew, retaining a special strength and colour in its new environment. There is no inherent necessity to read it as uprooted and stripped of every trace of its former significance, standing bare in alien ground. True, sometimes it does stand as if alone. But that should not be just assumed, in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used."

[52] In the present circumstances, including that:

(a) the 2001 Agreement is an agreed roll-over of the 1998 Agreement;

(b) there is uncontested evidence about the intent of the parties to the 1998 Agreement;

(i) the replacement of one deceased Bulk Grain Worker in late 2000; and

(ii) a discussion of the terms of the 1998 Agreement where GrainCorp proposed to remove most of clause 2 of Appendix B:

this passage from the decision of Burchett J is particularly apposite.

[53] In addition to the foregoing discussion of general principles of interpretation, I note that Mr Johns referred in the section 127 matter to the principle of statutory construction that "where there is a conflict between general and specific provisions of statutory instruments, the specific provisions prevail." (s127 Exhibit R3, paragraph 6.10) Mr Johns submits that there is a conflict between the first two paragraphs of clause 2 of Appendix B and the last paragraph of that clause. While I accept Mr Johns' submission that such a principle of interpretation exists, I do not agree that the principle has any application in this case. This is because, in the construction of clause 2 of Appendix B that I prefer, there is no conflict or inconsistency between the first, second and third paragraphs.

Clause 2 of Appendix B - the Principles of Interpretation Applied

[54] It is the submission of the NUW that the words contained in the third paragraph of clause 2 of Appendix B are clear and unambiguous and that they should therefore be given their natural and ordinary meaning. This is a submission with which I tend to agree. That third paragraph reads as follows:

"This number of full time employees thirty-nine (39) is to be maintained for the life of the agreement, meaning that replacements will be sought when numbers fall below this level."

[55] It can be seen that the draft determination sought by the NUW, and the determination which I consider it appropriate to make, is essentially a re-statement of that third paragraph. While such a re-statement may seem to be superfluous, because of the submissions made on behalf of GrainCorp, it is necessary that such a determination be made in settlement of this dispute.

[56] Mr Johns submits that, read in context with the first and third paragraphs of clause 2 of Appendix B, what is proscribed by the third paragraph is any reduction in the number of Bulk Grain Workers at the Geelong Terminal if that reduction is due to increased efficiency or flexibility at the Geelong Terminal. When I asked Mr Johns whether such a proscription would apply even when the number of Bulk Grain Workers engaged is something less than 39, Mr Johns stated that it indeed would (transcript, PN227-238), because the objective intention of clause 2 of Appendix B was nothing more than to put a "ring-fence" of protection against redundancies by reason of efficiency and flexibility.

[57] I find this submission of Mr Johns to be unconvincing. If it were the case that the only protection afforded by clause 2 of Appendix B of the 2001 Agreement was against redundancy by reason of increased efficiency and flexibility, then there would be no reason for including the number 39 in two of the three paragraphs of the clause. If Mr Johns' interpretation was correct, then the second and third paragraph of clause 2 would have no practical impact. In effect, clause 2 of Appendix B would only need to be one sentence long, in the following terms:

"GrainCorp gives an undertaking that any flexibility demonstrated during the life of this agreement will not be used as the basis for redundancies during this agreement, or beyond it."

[58] I note, with interest, that a clause in those terms was sought by GrainCorp in the process of negotiating a new agreement in 2001 (see above, s127 Exhibit A2, attachment 4, paragraph 6). When GrainCorp, its employees and the NUW agreed to roll-over the 1998 Agreement, the parties effectively resiled from those claims made in negotiations and agreed to the terms previously in existence under the 1998 Agreement (except for pay rates which were increased). I do not accept the evidence of Mr Scully and Mr McConaghy that they had either not considered the meaning and effect of clause 2 of Appendix B at the time of negotiating the 2001 roll-over, or that they had formed a view that the clause only applied to reductions in staff as a result of workplace flexibility. To quote Mr Lyons (transcript, PN282):

"...it beggars belief that the company would seek removal of a provision which they didn't think meant anything, which they didn't think added anything. Because if they were content to accept the obligation to place them by paragraph 1 Mr Johns is correct. Paragraphs 2 and 3 added nothing so why did they seek to have it removed? The answer is that it does put additional obligations on the company in line with what the union has suggested."

[59] Despite Mr McConaghy's colourful interpretation of the 2001 Agreement's no extra claims provision (s127 transcript, PN534-546, 554-562) and the efforts of GrainCorp to stretch the English language to read down clause 2 of Appendix B, I do not consider it open to GrainCorp to effectively "change the deal" during the life of an enterprise agreement.

[60] I agree with Mr Johns' submission that the words of an agreement ought to be read in context (see also Short v F W Hercus and Australian Municipal, Administrative, Clerical & Services Union v Treasurer of the Commonwealth of Australia - both referred to above). Reading clause 2 of Appendix B of the 2001 in its historical context, where manning levels had been an ongoing issue between the NUW, the employer and the employees for a number of years, where the negotiation of each industrial agreement has included discussion of an appropriate manning level at the Geelong Terminal and where GrainCorp first (in late 2000) acted as if it was bound by an identical provision in the 1998 Agreement, then sought (in 2001) to have an explicit manning level removed from the new enterprise agreement, I cannot accept an interpretation of clause 2 of Appendix B that effectively ignores the inclusion of an express and unambiguous provision such as paragraph 3.

[61] Mr Johns submits that the context in which paragraph 3 of clause 2 of Appendix B of the 2001 Agreement should be read is the context of the first two paragraphs. Mr Johns submits that the first two paragraphs are clearly directed towards the issue of redundancies due to increased flexibility, and that hence the third paragraph should be read down to refer only to that context. This is perhaps most clearly stated in GrainCorp's written submissions in the section 127 matter (s127, exhibit R3, paragraph 6.8):

"Accordingly, paragraph three of Clause 2 should be read down to mean that the number of full time employees will not be reduced beyond 39 as a result of flexibilities in manning and work practices achieved during the life of the agreement. Further, that where numbers do fall below 39 because of flexibilities that the numbers are to be replaced."

[62] With respect, I do not agree. As I have already stated, and as was stated by Mr Lyons, to accept Mr Johns' submission would give the third paragraph no practical effect. I do not sense any express or implied limitation contained within that clause confining the effect of paragraph 3 to the circumstances contemplated by paragraphs 1 and 2. Mr Johns' interpretation would also reduce the stipulation of 39 employees to a nonsense, in the event that manning levels have been reduced below the level of 39 and further reductions are sought because of flexibilities. While I asked Mr Johns to address me on that circumstance, he was not able to establish that his interpretation of clause 2 would be able to work in such a situation in any way that was not, plainly speaking, absurd.

[63] It is suggested by GrainCorp that there is an inconsistency, in the NUW's interpretation of clause 2 of Appendix B, between paragraphs 1, 2 and 3. I do not agree. Put simply, the interpretation of each paragraph of clause 2 of Appendix B propounded by the NUW is as follows:

(1) any increased efficiency obtained by flexibilities allowed by the Agreement (1998 and 2001) will not be used to justify redundancies, either while the Agreement is in force or when a new agreement is being negotiated (cf the interpretation given to the words "during its life, or beyond it" by Mr Johns on transcript, PN213-223);

(2) the numbers will not be reduced from the existing level at the making of the Agreement (in 1998 - 49, in 2001 - 40) to the level of 39 until certain capital works are completed at the Geelong Terminal;

(3) in any event, and without qualification, GrainCorp will not reduce the number of full-time Bulk Grain Workers below 39 during the life of the agreement and will back-fill positions if numbers drop below 39 for any reason whatsoever.

[64] I do not detect any inconsistency between the meaning and effect of each of the three paragraphs, when interpreted as the NUW suggests. I agree that the interpretation of clause 2 put forward by the NUW, reflects the clear and unambiguous meaning of the words contained within that clause.

[65] Mr Johns submits that redundancies occasioned by competitive pressures are not within the meaning and scope of clause 2 of Appendix B of the Agreement, and are therefore not dealt with by the Agreement (transcript, PN242-253). Relying upon the decision of her Honour Kenny J in Emwest Products Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (unreported, Federal Court of Australia, 6 February 2002, [2002] FCA 61)[2], Mr Johns suggests that there is therefore no breach of the no extra claims provision of the 2001 Agreement which only pertains to "matters dealt with in this agreement". I do not agree.

[66] I am of the view that clause 2 of Appendix B of the 2001 Agreement contains a blanket proscription on any reduction in the number of full-time Bulk Grain Workers at the Geelong Terminal below a level of 39. This proscription is not limited to redundancies of a particular nature - it covers the field (transcript, PN285). Indeed, even if numbers fall below 39 through no fault of GrainCorp, positions must be back-filled up to a level of 39. While this is not all the work that clause 2 of Appendix B does (paragraphs one and two address other circumstances, as suggested by Mr Lyons), it is clear and unambiguous that the clause contains such a proscription.

[67] It was put to me by that Mr Johns that, if it is not possible to identify the objective intention of the parties, then that may well be because there was no objective intention to give a definite meaning to clause 2 of Appendix B (transcript, PN257-265). Mr Johns' submission amounts to saying that there was no "meeting of the minds" between the NUW and GrainCorp as to the meaning and effect of clause 2 of Appendix B. I reject that submission.

[68] In the factual context as set out above, including the history of negotiation regarding manning levels over the years, and in April 2001 with GrainCorp, notwithstanding the evidence of Mr McConaghy and Mr Scully and notwithstanding the submissions of Mr Johns, I am of the view that the objective meaning of clause 2 of Appendix B of the 2001 Agreement was clear and unambiguous, both at the time of making the agreement, and now some twelve months later.

[69] In this matter, the NUW seeks a determination from the Commission in the terms set out above. In the circumstances, taking into account the principles which apply to the interpretation of industrial instruments and for the reasons set out above, I consider it appropriate to issue a determination of a substantially similar nature to that sought by the NUW.

[70] I attach to this decision a copy of a determination dated 11 June 2002 (PR918753).

[71] I note the comments made by Mr Johns about the enforceability of such a determination, and about the practical realities facing GrainCorp at the Geelong Terminal and elsewhere (transcript, PN265-270). These practical realities and other issues do not change the clear meaning and effect of the 2001 Agreement (John L Pierce Pty Ltd v Kennedy (2000) 105 IR 459; Amalgamated Society v Adelaide Steamship Co Ltd [1920] HCA 54; (1920) 28 CLR 129 at 162).

[72] It may well be that the manning level of 39 set by the 2001 Agreement is inefficient, indeed that Mr Scully will have staff "coming out [of his] ears" (s127 transcript, PN802). It is not, however, a manning level imposed upon the parties by the Commission. It is a term of an agreement made by the parties in good faith, without undue coercion and in accordance with the Act.

[73] So long as the agreement satisfies the "no disadvantage test" and the other requirements of the Act, the role of this Commission does not include protecting parties from making commercially poor decisions, or what may be (for one party at least) a `bad' deal.

[74] Furthermore, it is not for this Commission to participate in a process where one party to an agreement, having decided that it ought not to have agreed to a specific term, sets out to twist the meaning of that term in order to render it a nullity. If an Agreement sets onerous requirements upon one or other parties then that is for the parties to address, either when negotiating a new agreement after the nominal expiry date of the existing agreement, or during its life by negotiating and agreeing to a variation in accordance with Division 7 of Part VIB of the Act.

[75] In light of this decision, the determination I shall issue and the commercial and other realities confronting the parties, I commend GrainCorp, its employees and the NUW to meet as soon as practicable in order to discuss and resolve the practical concerns that confront those involved with the Geelong Terminal.

Mr Tim Lyons on behalf of the National Union of Workers

Mr Leigh Johns, solicitor, on behalf of GrainCorp Operations Limited

Printed by authority of the Commonwealth Government Printer

1 Mr Lyons referred the Commission to a number of decisions of this Commission and of the courts in support of his submissions. Because his submissions relating to jurisdiction went largely unopposed by Mr Johns, I will not set out or expressly refer to each of those cases here.

2 I note that a Full Court of the Federal Court has heard an appeal against her Honour's decision and has reserved its decision. Because I have not accepted the argument of Mr Johns on this point, I would anticipate that the outcome of that appeal will not materially affect the outcome of the matter presently before the Commission.

Service Arbitration Act 1920

National Union of Workers v GrainCorp Operations Limited - PR918161 [2002] AIRC 638;

At a glance

Court

Decision date

Source

Judgment (143 paragraphs)

National Union of Workers v GrainCorp Operations Limited - PR918161 [2002] AIRC 638; (11 June 2002)

Parties

Legislation Cited (3)

Cases Cited (12)