AG2005/2045, Transcript of Proceedings [2005] AIRCTrans 730 (22 March 2005)

1800 534 258

TRANSCRIPT OF PROCEEDINGS

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Workplace Relations Act 1996 10891

DEPUTY PRESIDENT McCARTHY

AG2005/2045

s.170LJ - agreement with organisations of employees (division 2)

APPLICATION BY LIQUOR, HOSPITALITY AND MISCELLANEOUS UNION-WESTERN AUSTRALIAN BRANCH AND ANOTHER
(AG2005/2045)

PERTH

11.29AM, MONDAY, 14 MARCH 2005

Reserved for Decision

PN1

MR J NICHOLAS: I appear on behalf of the LHMU.

PN2

MR I HARRIS: I appear behalf of the employer, Challenge Australian Dairy.

PN3

THE DEPUTY PRESIDENT: Good morning, Mr Harris. Yes, I have an application for certification of an agreement pursuant to section 170LJ of the Workplace Relations Act. I have viewed the documentation and examined the agreement, the result of which I caused to have circulated what I have classed as a certification report identifying those issues that I have considered that provisions of the Act have been satisfied and other issues that I requested some further information or explanation be provided to me regarding. I take it both of you have had access to a copy of that. Mr Nicholas, do you want to address those issues I have raised?

PN4

MR NICHOLAS: Certainly, sir. The first, there was a couple of minor issues, if I can characterise them as such, at paragraph 7, point 8, the report refers to the statutory declaration of the employer.

PN5

THE DEPUTY PRESIDENT: Yes.

PN6

MR NICHOLAS: There has been a discussion this morning that Mr Harris agrees that that was a typographical error and it should have been 28 February 2007 in the statutory declaration to bring it in line with the provisions of the agreement.

PN7

THE DEPUTY PRESIDENT: The agreement. Yes.

PN8

MR NICHOLAS: And as with paragraph 7.9.1 of the certification report, the employer's statutory declaration omitted the previous agreements that were to be replaced by this agreement and Mr Harris agrees that the agreements referred to in the LHMU statutory declaration are in fact what should have been in the employer's.

PN9

THE DEPUTY PRESIDENT: Yes.

PN10

MR NICHOLAS: Sir, as far as I can tell, I think that takes us to paragraph 9 of the certification report. An issue is raised there in relation to clauses 1.4(a) and (b) of the proposed certified agreement. The position of the parties and what we would say is the correct construction of that provision which essentially turns on the words in clause 4.1.

PN11

THE DEPUTY PRESIDENT: 1.4.

PN12

MR NICHOLAS: Sorry, 1.4(a) and (b), and these words are common to both. This agreement shall be read in conjunction with. Now, our submission is that there is a preliminary finding that needs to be made either way whether in fact the terms of subparagraph (a) and (b) in fact read in or incorporate the terms of the award and the proposed state agreement and if they do then that certainly may raise questions in relation to the section 170LI of the Act, but if in fact that is not the effect of those provisions then there is no further need to look into whether the terms of those agreements, or the agreement in that award, may contain any provisions that are outside the ambit of 170LI.

PN13

The union's submission, sir, is that in fact those words:

PN14

This agreement shall be read in conjunction with -

PN15

should probably be understood as indicating that there is a matrix of instruments that apply to employees bound by the proposed certified agreement and a matrix of instruments, and that matrix may inform the interpretation of the proposed certified agreement but it certainly doesn't incorporate the terms of that award and that proposed agreement. So as a matter of construction, clause 4.1 is merely incidental to the operative provisions of the proposed certified agreement. Sir, in support of that, both the state award and the proposed state agreement operate or are intended to operate independently of the proposed certified agreement.

PN16

It is not intended that the award or the proposed state agreement form a discrete part of the proposed certified agreement by incorporation or indeed that they should be able to be enforced as discrete parts of the proposed certified agreement. If that were the case, it would be expected that the parties would use words that clearly indicated that intention and such a circumstance isn't uncommon with agreements that incorporate terms of other instruments using phrases such as the terms of X award are incorporated into this agreement or the terms of X award form part of this agreement, and that is not the case here. Rather, the intention of the parties was to indicate that there are these other instruments that form part of the matrix that might inform a reading of the proposed certified agreement.

PN17

Sir, by operation of the rules for the interpretation of contracts, such other agreements may provide some assistance in interpreting the clauses of a certified agreement. But in that respect, clearly by the operation of section 170LI, it wouldn't be possible to imply a term that may fall outside the ambit of that clause from a state award or a proposed state agreement into the proposed certified agreement. And sir, in the same way, when construing the proper construction of clause 4.1, we say regard should be had - - -

PN18

THE DEPUTY PRESIDENT: 1.4.

PN19

MR NICHOLAS: I did it again, sir. Sorry. You are right, clause 4.1.

PN20

THE DEPUTY PRESIDENT: 1.4 four.

PN21

MR NICHOLAS: 1.4, sorry. Regard should be

PN22

THE DEPUTY PRESIDENT: If you say it again, Mr Nicholas, I will take it you mean 1.4.

PN23

MR NICHOLAS: Thank you sir. I would be obliged.

PN24

THE DEPUTY PRESIDENT: Must be temporary dyslexia or something.

PN25

MR NICHOLAS: It must be. I will be obliged for that, sir. We would say regard should be had to the circumstances surrounding its creation. And the following passage from Mason J, as he was then, in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 supports such an approach and we would say is instructive here. Mason J says :

PN26

Lord Wilberforce said in 1971, the time has long passed when agreements, even those under seal, were isolated from the matrix of facts in which they were set and interpreted purely on internal linguistic considerations. There is no need to appeal here to any modern anti literal tendencies for Lord Blackburn's well known judgment in River Wear Commissioners v Adamson 1877 provides ample warrant for a liberal approach. We must, as he said, enquire beyond the language and see what the circumstances were with reference to which the words were used and the object appearing from those circumstances which the persons using them had in view.

PN27

And then he goes on to say:

PN28

His Lordship went on to assert that the well known decision of Cardozo J in Utica City National Bank v Gunn in 1918 -

PN29

And he quotes:

PN30

follow precisely the English line -

PN31

At 1384 and he goes on:

PN32

There extrinsic evidence of the circumstances in which a guarantee was executed and of its object was received for the purpose of giving the words loans and discounts the looser meaning of renewals. Lord Wilberforce quoted with evident approval the comment of Cardozo J at 608 that surrounding circumstances may stamp upon a contract a popular or looser meaning than the strict legal meaning. Certainly when, to adopt the latter, would make the transaction futile.

PN33

THE DEPUTY PRESIDENT: Just a moment Mr Nicholas. Sorry, Mr Nicholas.

PN34

MR NICHOLAS: Sir, sorry. I have failed to provide you with a copy of that case I was just referring to and I could provide that to you.

PN35

THE DEPUTY PRESIDENT: I am aware of it.

PN36

MR NICHOLAS: Thank you, sir. So it is the union's submission that the Commission here may be faced with a similar situation as the one faced by Cardozo J all those years ago in that, to adopt a construction of clause 1.4 that has the effect of incorporating a non pertaining matter, would have the effect of making the proposed certified agreement a futile transaction. Sir, certified agreements operate as contracts and given special status by the operation of the Act in the Law of Employment, Macken and Others, point to a passage by Webb in Industrial Relations and Contract of Employment, published in 1974, it was approved by majority of the South Australian Full Court and by Wilson J in the High Court in Ansett Transport Industries Operations Pty Ltd v Wardell [1980] HCA 8; (1980) 142 CLR 237. And the passage is as follows:

PN37

The significance of the common law can be recognised if contracts of employment are seen to be stratified. First there ...(reads)... the point where state law has already cut through common law. Sometimes direct into common law.

PN38

And sir, in terms of the Act, the objects provided in section 3 support the concurrent operation certified agreements and other agreements. Subparagraphs (b), (c), (d) and (e) would be relevant and perhaps especially subparagraph (e) which provides for:

PN39

Providing a framework of rights and responsibilities for employers and employees and their organisations which supports fair and effective agreement making and ensures that they abide by awards and agreements applying to them.

PN40

Sir, the Act also supports concurrent operation of different instruments by providing in division 5 of Part VIB a hierarchy of operation of concurrent instruments. The most relevant section 170LZ(1) of which provides:

PN41

Subject to this section, a certified agreement prevails over terms and conditions of employment specified in a state law, state award or state employment agreement to the extent of any inconsistency.

PN42

Sir, when clause 1.4 is read in conjunction with section 170LZ(1), it is clear that sub clauses 1.4(a) and (b) are reflecting the statutory reality.

PN43

In the case of sub clause (a) it restates that the proposed certified agreement prevails over the state award. In the case of the second sentence of sub clause (b), there is a statement of intention of the operation of the proposed certified agreement not affecting the operation of awards or agreements dealing with matters not specifically dealt within the proposed certified agreement. So taken as a whole, the provisions of clause 1.4 are properly understood as placing the proposed certified agreement and the hierarchy specifically provided for in section 170LZ of the Act, a hierarchy that doesn't require the terms of other instruments to be incorporated into the proposed certified agreement.

PN44

And in this way, clause 1.4 is incidental to the express provisions of the proposed certified agreement and the way it relates to other instruments relevant to the parties and employees bound by it. And finally, clause 1.4 should also be understood in relation to the reaction by the parties to the decision by the High Court in the well known now, Electrolux case. Sir, that decision while clarifying the meaning of section 170LI, left in doubt how that section may be applied to a whole range of provisions that were prior to that agreed between the parties.

PN45

Now, given such uncertainty and the possibility that a resolution of those matters might take some time, what the parties decided to do was take anything out of the proposed certified agreement that may fall foul of 170LI and put it into the proposed state agreement. So the whole intention following from Electrolux was to take any provision that may fall foul of 170LI out of the proposed certified agreement. Now, in such circumstances it would be astounding if clause 1.4 could properly be seen as incorporating the provisions of the proposed state agreement when given the circumstances surrounding making the agreement, the parties had in mind the effect of Electrolux and the effect of including any matter that may be outside the provisions of section 170LI.

PN46

THE DEPUTY PRESIDENT: So let me understand this properly, Mr Nicholas. You have an agreement with Challenge Dairy or is there a proposed agreement with Challenge Dairy that is referred to in 1.4(b)? Is that agreement proposed or does it exist?

PN47

MR NICHOLAS: Sir, it does exist in the sense that the parties have agreed to it, but it is proposed in the sense that it hasn't yet been registered in accordance with the State Act.

PN48

THE DEPUTY PRESIDENT: I see. On hearing you, the inferences you are making, you are not conceding that the content of that agreement contains matters that do not pertain but you do concede there may be provisions that may not pertain. Is that gist of what you are saying?

PN49

MR NICHOLAS: Our position, sir, is that they do contain provisions that are outside.

PN50

THE DEPUTY PRESIDENT: That do not pertain.

PN51

MR NICHOLAS: That do not pertain and certainly that is the intention of the parties, to take those matters out. I don't I propose to go through the terms of the state agreement in those circumstances.

PN52

THE DEPUTY PRESIDENT: Well, on that, if you are conceding that there is terms within that agreement that do not pertain to the requisite relationship, there is no need to go through that, Mr Nicholas, unless you want to run the test that maybe I have a different view as to whether they do or not, but if you are conceding that it contains such provisions then there is no need to go through it.

PN53

MR NICHOLAS: Thank you, sir.

PN54

THE DEPUTY PRESIDENT: On the assumption that Challenge Dairy also has a like concession. Yes. So what you are saying is that the terms of 1.4 in both (a) and (b), are an acknowledgment that there are other instruments that apply and purely an acknowledgment, is that the gist of what you are saying?

PN55

MR NICHOLAS: That is right, sir. That is right. And that they don't - that 1.4 doesn't incorporate the terms of the award and the agreement referred to into the proposed certified agreement.

PN56

THE DEPUTY PRESIDENT: And in that sense, reliance on - well, basically there can be no reliance on 1.4 for enforcement of non compliance with those other instruments because they are merely a statement that other instruments exist. Is that really what you are saying?

PN57

MR NICHOLAS: That is exactly it, sir, that there is no intention in terms of the proposed certified agreement, that the state award or the proposed state agreement should be able to be enforced through the provisions of the certified agreement.

PN58

THE DEPUTY PRESIDENT: Yes.

PN59

MR NICHOLAS: It may be that in enforcing the provisions, the actual provisions contained in the proposed certified agreement, that regard might properly be had to those other instruments, because they form part of the circumstances surrounding the creation of the proposed certified agreement, but that is only in relation to the express terms contained within the proposed certified agreement.

PN60

THE DEPUTY PRESIDENT: And in support of what you are saying, the status of those documents or agreements are, in relation to this agreement, what you are saying is, shall be read in conjunction with, should be read or means, those documents exist.

PN61

MR NICHOLAS: That is right, or have regard to those documents, that it certainly is not intended to mean that those other instruments should be incorporated into this agreement.

PN62

THE DEPUTY PRESIDENT: I see. Have you got any authorities about what term or phrase in conjunction with means?

PN63

MR NICHOLAS: Sir, I wasn't able to find any authority that was exactly on point. Obviously that term has been considered by the Commission in the past, although it appears there are different members of the Commission take different attitudes in different circumstances which - - -

PN64

THE DEPUTY PRESIDENT: It's taken in the context of what - - -

PN65

MR NICHOLAS: In the context of the whole agreement that the words - - -

PN66

THE DEPUTY PRESIDENT: And the specific provisions, I assume.

PN67

MR NICHOLAS: Yes sir. Those words may and have taken on different meanings.

PN68

THE DEPUTY PRESIDENT: Yes. Well, I gather from what you are saying, is that given the factual background and matrix of how these provisions came into force, or how they came not necessarily into force, but came to be within the agreement, that should be fairly determinative of what in conjunction with means in the context of this agreement. That is what you are saying - - -

PN69

MR NICHOLAS: Exactly, sir.

PN70

THE DEPUTY PRESIDENT: I take it from what you are saying. Yes. In that context have you had the opportunity to examine the High Court decision last week regarding Amcor, which goes into my once only reading of it, issues associated with the meaning of agreements?

PN71

MR NICHOLAS: I have had probably a much briefer look at it than yourself, sir, so I won't be able to - I would not be able to - - - .

PN72

THE DEPUTY PRESIDENT: Well, it is not my intention. I will need to consider what you have said and I am not wishing to cut you off now, but I need to consider what you have said in relation to the provisions of 1.4, but, because I do need to consider, I won't be in a position to certify this agreement today. If you want to put any further submissions in writing on any implications you may or may not seek from that decision, you will be given that opportunity,
Mr Nicholas.

PN73

MR NICHOLAS: Thank you, sir.

PN74

THE DEPUTY PRESIDENT: You also earlier referred to the principal objects of the Act or the principal object. I missed any of those principal objects you were referring to. I think you referred to the principal object, didn't you?

PN75

MR NICHOLAS: That is right, sir. In section 3 of the Act, it states:

PN76

The principal object of this Act is to provide a framework for co operative workplace relations which promotes the economic prosperity and welfare of the people of Australia by -

PN77

Then there are some subparagraphs. The reference that I made or the union submits is relevant to understanding how clause 1.4 should be constructed are subparagraphs (b) through to (e). Subparagraph (b) provides:

PN78

Ensuring that the primary responsibility for determining matters affecting the relationship between employers and employees, rests with the employer and employees at the workplace or enterprise level.

PN79

And (c):

PN80

Enabling employees, employers and employees to choose the most appropriate form of agreement for their particular circumstances whether or not that form is provided for by this Act.

PN81

THE DEPUTY PRESIDENT: Well, that would seem to be especially relevant here.

PN82

MR NICHOLAS: That is right, sir. So in conjunction with section 170LZ, it is clear that the Act is acknowledging that there may be a whole range of instruments that bear upon the relationship between employers and employees and that there should be - or it is dealt with in 170LZ by providing a hierarchy as to how those different instruments should relate to each other.

PN83

THE DEPUTY PRESIDENT: Yes. And also (d)(i) and (e).

PN84

MR NICHOLAS: That is right, sir. Subparagraph (d) providing the means:

PN85

(i), for wages and conditions of employment to be determined as far as possible by the agreement of employers and employees at the workplace or enterprise level on a foundation of minimum standards.

PN86

And at paragraph (e):

PN87

Providing a framework of rights and responsibilities for employers and employees and their organisations which supports fair and effective agreement making and ensures that they abide by awards and agreements applying to them.

PN88

THE DEPUTY PRESIDENT: Yes.

PN89

MR NICHOLAS: But it is my understanding of the Electrolux decision that none of the Justices there were saying that the provisions of 170LI in any way precluded the operation of any other agreement between the parties. They were specifically concerned with what was able to be put into an agreement certified under the Act.

PN90

THE DEPUTY PRESIDENT: Well, that is my understanding. Well, Mr Nicholas, what it dealt with was in context of proceedings of this nature, what can be certified and what can't be certified and not that parties can't reach agreements on matters that can't be certified. The issue here is obviously whether the terms of clause 1.4 are such that the agreement can't be certified. But I think you have addressed it sufficiently for me to further consider the issue unless there is anything further you wish to add.

PN91

What I was going to propose, there was another issue that I had raised with respect to, if there are terms in the agreement that aren't, that cause it not to be certifiable, the severability of those offending clauses or terms, it may be that that becomes unnecessary to address if I find in your favour as to 1.4. So what I was going to suggest, Mr Nicholas, is that I make a decision on that issue and if it goes against you, then you can address me on the severability issue. Is that an appropriate manner to proceed?

PN92

MR NICHOLAS: Yes, that might be a proper way of addressing it.

PN93

THE DEPUTY PRESIDENT: Yes, thank you. Is there anything further you wish to add?

PN94

MR NICHOLAS: No thank you, sir.

PN95

THE DEPUTY PRESIDENT: Yes, Mr Harris, do you wish to add to anything that Mr?

PN96

MR HARRIS: Yes. Not fully understanding what just transpired, Challenge Dairy has exhausted every avenue of consultation with the employees to reach this agreement and we would certainly like to see it certified due to the - and not pertaining to the, anything out of the Electrolux .....

PN97

THE DEPUTY PRESIDENT: Yes, thank you, Mr Harris. I will reserve my decision. Mr Nicholas, if you want to avail yourself of that opportunity, of any implication from the Amcor decision, would you try and do so by close of business Wednesday?

PN98

MR NICHOLAS: Thank you, sir.

PN99

THE DEPUTY PRESIDENT: This matter is adjourned.

<ADJOURNED INDEFINITELY [12.01PM]