Transit Systems West Services Pty Ltd v Australian Rail, Tram and Bus Industry Union

THE COURT: 1 The applicant is a private operator of bus services in New South Wales. Over recent years, the New South Wales government has privatised a number of bus services previously conducted by the State Transit Authority (the STA). The applicant successfully tendered for a contract to operate public bus services in "region six", in inner-western Sydney. It commenced to operate those services from 1 July 2018. Bus drivers previously employed by the STA took up employment with the applicant from that date, and continued to drive buses in connection with those services in region six. 2 Part 6-3A of the Fair Work Act 2009 (Cth) (the FW Act) is entitled "Transfer of business from a State public sector employer". It creates a federal instrument when there is a transfer of business from a State public sector employer, like the STA, to a "national system employer", like the applicant. 3 The purpose of the relevant provisions was to "ensure that where there is a transfer of business from an old employer to a national system employer, transferring employees will retain the benefit of the existing terms and conditions of employment in State awards and agreements and their accrued entitlements". See Explanatory Memorandum, Fair Work Amendment (Transfer of Business) Bill 2012 (Cth) at 2. 4 As the Guide to Part 6-3A (s 768AA) explains: This Part provides for the transfer of certain terms and conditions of employment when there is a transfer of business from a non-national system employer that is a State public sector employer (called 'the old State employer') to a national system employer (called 'the new employer'). A transfer of business involves the transfer of employment of one or more employees of the old State employer to the new employer. Each of those employees is a 'transferring employee'. If there is a transfer of business, then this Part provides for certain terms and conditions of employment with the old State employer to be transferred to the employment of the transferring employee with the new employer. This Part achieves the transfer of those terms and conditions by creating a new instrument - a 'copied State instrument' - for each transferring employee. The new instrument is a federal instrument and is enforceable under this Act. 5 In this case, because the applicant employs bus drivers in region six whose employment transferred from the STA, the drivers are covered by a State award copied under Pt 6-3A of the FW Act, namely the State Transit Authority Bus Operations Enterprise (State) Award 2018 (the copied State award). 6 Clause 67.3 of the copied State award provides: A full-time employee who ordinarily works on a day on which a Public Holiday is proclaimed, but is rostered off, will be entitled to the Additional Payment based on the ordinary hours, which the Employee would have worked, but for the rostered day off, up to a maximum of 7.6 hours. 7 In May 2019, a dispute arose between the applicant and the first respondent (the union) in relation to bus drivers who were not rostered to work on Easter Saturday, 20 April 2019. 8 Later that month, the union filed an application with the Fair Work Commission (the FWC) pursuant to s 739 of the FW Act requesting the FWC to deal with the dispute in accordance with the disputes settlement procedure contained in cl 85 of the copied State award. It was common ground that the dispute was accordingly to be determined by the FWC in its capacity as a private arbitrator. 9 The issue in dispute arose in this way. The rostering system adopted by the applicant was based on "lines of work", set up to six months in advance. Drivers rotated through those lines of work on a Monday to Saturday roster. 10 In 2019, Easter Saturday fell on 20 April and the applicant ran to a normal Saturday timetable. For that reason, all drivers who had rotated through the lines and were "ordinarily rostered" to work on that day were required to work and were not rostered off. The applicant took the view that in those circumstances cl 67.3 had no work to do, and accordingly no "Additional Payments" were made. 11 In response, the union asserted that, consistent with the position reached under a 2013 agreement between it and the STA (in resolution of an industrial dispute before Haylen J in the Industrial Relations Commission of New South Wales) (the 2013 agreement), the drivers were entitled to Additional Payments for the Easter Saturday public holiday, provided they had worked at least ten Saturdays in the preceding twelve months. 12 The terms of the 2013 agreement were also reflected in a "human resources procedure", which had set out the STA's policy as to holiday payments prior to the transfer of business. The applicant was bound to apply that procedure for six months after it began to operate the bus services on 1 July 2018. 13 At first instance, Commissioner Cambridge determined that cl 67.3 of the copied State award should be given a meaning consistent with the 2013 agreement and the human resources procedure, concluding as follows (Australian Rail, Tram and Bus Industry Union v Transit Systems West Services Pty Ltd [2019] FWC 6767 at [74]-[75]): In this case, the Commission has been required to Determine a contested construction question regarding the terms 'ordinarily works' contained in clause 67.3 of the Copied State Award … In respect to [that] question, having regard for all of the evidence that was presented, and by application of the principles relevant to the task of construing contested terms such as those under examination in this instance, the Commission Determines as follows: The words 'ordinarily works' appearing in clause 67.3 of the Copied State Award are to be given a meaning that accords with the terms of clause 2.4.1 of the [human resources] procedure. Accordingly, clause 67.3 of the Copied State Award is to be applied as if it contained the following additional terminology: Saturday Public Holiday Payment for Bus Operators When a public holiday falls on a Saturday, Bus Operators who are rostered off will qualify for payment if they have worked at least 10 Saturdays in the preceding 12 months. Bus Operators employed within the last 12 months of the Saturday Public Holiday to be cleared as a 'day off' worked are to have the decision for payment to be determined on a pro-rata basis. 14 The applicant appealed, unsuccessfully, to a Full Bench of the FWC. 15 The Full Bench reasoned (relevantly) as follows (Transit Systems West Services Pty Ltd v Australian Rail, Tram and Bus Industry Union [2020] FWCFB 4 at [51]-[60]): There is no doubt that the 2013 Agreement was a settlement agreement reached between the [union] and the State of New South Wales and did not constitute 'an order, a decision or a determination of a State industrial body or a court' within the meaning of s 768AI(3) of the Act. However, that did not necessarily mean that the existence and consistent application of the 2013 Agreement were irrelevant to the task of construing clause 67.3 of the Copied State Bus Award. Contrary to [the applicant's] contention, the Commissioner was correct to have regard to the history of the provision and the available extrinsic evidence to interpret clause 67.3 of the Copied State Bus Award. Even if there had been no ambiguity apparent on the face of clause 67.3 of the Copied State Bus Award, it is permissible to have regard to evidence of surrounding circumstances to assist in determining whether an ambiguity exists. The relevant history … shows not only that the 2013 Agreement was made between the parties to the STA Bus Award to resolve their dispute about the proper interpretation of clause 67.3, but that (a) both parties complied with the 2013 Agreement between the time it was made and the time of the transfer of business to [the applicant] and (b) in 2015 and again in 2017, when the STA Bus Award was renegotiated by the parties and made by the NSW IRC on the basis of an agreement reached between the parties, the terms of clause 67.3 did not change. At the time the STA Bus Award was made in 2017, these objective background facts were both known to the parties to the STA Bus Award and were notorious facts of which knowledge by the employees covered by the STA Bus Award is to be presumed. These background facts assist in the task of properly construing clause 67.3 of the STA Bus Award immediately before the transfer of business to [the applicant] on 1 July 2018 because they reveal the parties' presumed intention when they negotiated the STA Bus Award in 2017. Their presumed intention was to resolve the two ambiguities which we have identified in clause 67.3 in a way such that the indefinite expression 'a day on which a Public Holiday is proclaimed' in clause 67.3 means the day of the week on which the public holiday in question falls (e.g. a Saturday) and employees who work at least 10 Saturdays in the preceding 12 months satisfy the requirement of 'ordinarily works' in clause 67.3. The context to which we have referred assists in establishing the meaning of clause 67.3 of the STA Bus Award immediately before the transfer of business to [the applicant], but does not displace the meaning of the provision. As we have stated earlier, clause 67.3 of the Copied State Bus Award has the same meaning, on its proper interpretation, as it had in the STA Bus Award immediately before the transfer of business to [the applicant] on 1 July 2018. … We reject [the applicant's] contentions that the Commissioner's construction of clause 67.3 eschewed any reliance on the text of the clause and does not make sense. The Commissioner commenced his analysis with the ordinary and grammatical meaning of the words in clause 67.3 of the Copied State Bus Award and then used relevant objective background facts to assist in the resolution of the ambiguity which he had identified in the text of the clause. The interpretation found by the Commissioner makes sense both from an industrial relations perspective and having regard to the ambiguous language used in the provision. We reject [the applicant's] contention concerning the underlying purpose of clause 67.3. The purpose of the provision is to define the circumstances in which an employee will be paid for a day on which they ordinarily work but are not rostered to work. For the reasons given, we agree with the Commissioner's construction of clause 67.3 of the Copied State Bus Award and reject the grounds of appeal relied on by [the applicant]. … We grant permission to appeal on the basis that it is in the public interest to clarify the correct approach to be taken to the interpretation of a copied State award. However, we dismiss the appeal because we are satisfied, for the reasons set out above, that the Commissioner's conclusion in relation to the proper construction of clause 67.3 of the Copied State Bus Award was, in the context of the present Dispute, correct. (Citations omitted.) 16 The applicant seeks the following relief in this court: (1) A declaration that, on its proper construction, cl 67.3 of the copied State award has the effect that the applicant is not required to pay an employee who is not rostered to work, and does not work, on the relevant public holiday, pursuant to ss 21, 22 and 23 of the Federal Court of Australia Act 1976 (Cth) and/or ss 562 and 563 of the FW Act. (2) A declaration that the decision made by the Full Bench of the FWC on 6 January 2020 is invalid. (3) An order in the nature of certiorari to quash that decision, pursuant to s 39B of the Judiciary Act 1903 (Cth) and/or s 23 of the Federal Court of Australia Act 1976 (Cth). 17 At the commencement of oral argument, counsel for the applicant conceded that his case was limited to an allegation that there had been jurisdictional error on the part of the Full Bench. 18 The applicant contends that, on the proper construction of ss 739(5) and 768AI(3) of the FW Act, it was not open to the FWC in deciding a private arbitration to call in aid surrounding circumstances in order to resolve an ambiguity about the objective common intention of the parties in a clause contained in a copied State award to which it and the union were parties. 19 It is necessary to set out the sections upon which it relied. 20 Section 739 of the FW Act provides as follows: 739 Disputes dealt with by the FWC (1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute. (2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless: (a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or (b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter. (3) In dealing with a dispute, the FWC must not exercise any powers limited by the term. (4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so. (5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties. (6) The FWC may deal with a dispute only on application by a party to the dispute. (Notes omitted, emphasis added.) 21 Section 768AI of the FW Act provides as follows: 768AI What is a copied State award? (1) If, immediately before the termination time of a transferring employee: (a) a State award (the original State award) was in operation under the State industrial law of the State; and (b) the original State award covered (however described in the original State award or a relevant law of the State) the old State employer and the transferring employee (whether or not the original State award also covered other persons); then a copied State award for the transferring employee is taken to come into operation immediately after the termination time. (2) The copied State award is taken to include the same terms as were in the original State award immediately before the termination time. (3) If the terms of the original State award were affected by an order, a decision or a determination of a State industrial body or a court of the State that was in operation immediately before the termination time, the terms of the copied State award are taken to be similarly affected by the terms of that order, decision or determination. (Notes omitted, emphasis added.) 22 In his written submissions, counsel for the applicant advanced the following contentions: In this context, the words [in sub-section 768AI(3)] 'affected by' mean 'influenced by' or 'impacted upon' or 'subject to any change by'. Hence if a term of the original State award had a specific operation or effect arising from a determination of a State industrial body, then that operation or effect would be protected. Conversely, if there was no relevant determination, then that term of the original State award continues to have its own operation and effect, unaffected by anything else. In short, s 768AI imposes a constraint on the extent to which extrinsic or historical materials can be used to affect the legal meaning of a term of the copied State award. Read in the context of Pt 6-3A as a whole, it is clear that s 768AI strikes a balance between the rights and obligations of transferring employees and their new national system employers. While the protection afforded to employees goes to circumstances well beyond the terms of the original State award, those circumstances are nevertheless circumscribed. The Parliament is taken to have intended to limit the circumstances under which a new employer is required to comply with any terms anterior to those found in the copied State award. Sub-section 768AI(3) thus prescribes the circumstances under which a new employer (such as [the applicant]) is bound to anything other than the strict terms of the copied State award itself. Tellingly, these circumstances do not include any consent understanding, or settlement agreement, reached between the parties to the original State award. The necessary consequence of this construction of s 768AI is that the terms of the copied State award are taken not to be affected by the terms of the settlement agreement reached between the [union] and STA. Put simply, the settlement agreement is a legally irrelevant consideration. … [The applicant] does not allege that the Full Bench decision was inconsistent with a fair work instrument, namely, the copied State award. Rather, [it] submits that the Full Bench's decision was inconsistent with the Act by overstepping the implied limitations for which s 768AI provides. In particular, [the applicant] submits that the Full Bench's decision was inconsistent with the Act in the following respects: (a) The constraint imposed by s 768AI was overridden by the decision in that the Full Bench used extrinsic evidence, namely, the settlement agreement, to affect the terms of cl 67.3. (b) The Full Bench adopted principles applicable to the interpretation of 'consent awards' made by the NSWIRC, which were inconsistent with the statutory framework governing copied State awards. The task before the Full Bench was to determine the proper construction of cl 67.3 of the copied State award. On any fair reading of the Full Bench's conclusions on the matter, the Full Bench placed great emphasis on the terms of the settlement agreement in order to construe cl 67.3. 23 The immediate difficulty with these submissions is that they derive no support from the words of the provisions relied on. 24 In oral argument, when asked by the court to address the lack of any apparent textual support for the assertions made in support of the application, counsel for the applicant said this: So what we rely upon in that regard … is an implication derived from the terms of both [sub-section] 768AI(3) and Part 6-3A of the [FW] Act as whole. We say that there is an implication to be derived from those legislative provisions that the terms of the copied State Award could not be affected by the type of private settlement agreement, which was central to the award made by the private arbitrator. 25 Later in his submissions, counsel said: [W]hat we say … is that the Full Bench [of the FWC] … went outside its jurisdiction to make an award that requires [the applicant] to comply with a private settlement agreement which did not transmit to [the applicant] … this is the argument set out in our written submissions as to the statutory implication derived from s 768AI, namely, that a settlement agreement of this nature cannot affect the terms of a copied State award and, therefore, a binding decision of a private arbitrator cannot be inconsistent with this implication … 26 Counsel for the applicant was also asked by the court to explain the apparent inconsistency between the submission he advanced and the passage quoted from the Explanatory Memorandum cited at [3] above, as follows: KATZMANN J: You would accept, I take it, that the intention of Pt 6-3A was to preserve existing award conditions? MR MOIR: Yes, your Honour. KATZMANN J: And you would also accept, I take it, that s 768AI(3) should be interpreted in accordance with the purpose of the 2012 Amending Act? MR MOIR: That's correct, your Honour. KATZMANN J: Well, if the purpose of the 2012 Amending Act was to preserve the existing award conditions and the existing award conditions in this case included … cl 67.3, as it was applied in accordance with the agreement of the former employer and the union, why would one read down s 768AI(3) to limit the matters that could be taken into account in construing the meaning of a copied State award in the manner you suggest s 768AI(3) should be interpreted? MR MOIR: Your Honour, the principal reason is certainty. What we say in our submissions is that a key purpose of Pt 6-3A and s 768AI is to provide certainty for all parties in the context of a transfer of business. And the applicant says that that reference to certainty is a key theme found within that part of the Act … 27 The contention that a Commissioner acting as a private arbitrator under s 739(4) of the FW Act is in some way precluded by the terms of ss 739(5) and 768AI(3) from having regard to the circumstances of the origin and use of a term of a copied State award when construing it was not advanced before either the Commissioner or the Full Bench of the FWC, as counsel conceded. That would be sufficient on its own to refuse the application on purely discretionary grounds. 28 But in any event, the contention is untenable. It draws no support from the terms of those provisions. It is also inconsistent with their purpose, which was broadly to ensure that transferring employees would retain the benefit of their existing terms and conditions of employment. 29 The applicant does not contend that the decision of the Full Bench was inconsistent with the copied State award. And it was expressly conceded that the Full Bench (and the Commissioner) had engaged in "a fairly orthodox process of construction". 30 In those circumstances, we are at a loss to understand how anything that the Full Bench said, even on the applicant's own case, could give rise to jurisdictional error. There would only have been jurisdictional error on the part of the Full Bench if it had misconceived its role, misunderstood the nature of its jurisdiction, misconceived its duty, failed to apply itself to the question, or misunderstood the nature of the opinion which it was to form. See, by way of example, Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 208-209 [31] (Gleeson CJ, Gaudron and Hayne JJ). As in that case, the Full Bench did none of those things. Here, at most, the applicant's case is that the Full Bench adopted an erroneous approach to the process of reasoning, by having regard to the 2013 settlement agreement in construing the copied State award. To borrow words used by the Full Court in Endeavour Energy v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (2016) 244 FCR 178 at 189 [34] (North, Jessup and Reeves JJ) "[w]hatever else s 739(5) means, it does not, in our view, produce an outcome of the kind sought by the applicant". 31 Besides, at its highest the applicant's case was that the Full Bench erred in the manner in which it construed the copied State award. Even if that were correct, it cannot be said that the Full Bench exceeded the limits of its authority in doing so. See Construction, Forestry, Mining and Energy Union v Wagstaff Piling Pty Ltd (2012) 203 FCR 371 at 381 [40]-[41] (Buchanan and Katzmann JJ). 32 Even if the applicant had a point, which it does not, as counsel for the union submitted, making a declaration that the decision made by the Full Bench is invalid would be inutile, because it would leave on foot the decision of the Commissioner that cl 67.3 of the copied State award is to be construed in the manner contended for by the union. The applicant also sought relief in the nature of certiorari, but where the FWC exercises powers arising out of an agreement to arbitrate, it is not exercising government powers and is thus not susceptible to the issue of constitutional writs. See Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (2015) 235 FCR 305 at 338 [85] (Dowsett, Tracey and Katzmann JJ); Endeavour Energy at 189 [32]-[35] (North, Jessup and Reeves JJ). 33 The application will accordingly be dismissed. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Katzmann, Kerr and O'Callaghan.