FEDERAL COURT OF AUSTRALIA INDUSTRIAL LAW - interpretation of an award dealing with the filling of vacant pilot positions by reference to seniority - applicability of seniority to initial allocation of recently trained pilots - conduct of parties as an aid to construction - relevance of agreement by parties to form of words in award after interpretation of certified agreement containing similar words by the Australian Industrial Relations Commission Workplace Relations Act 1996 s 413 The Merchant Service Guild of Australia v Sydney Steam Collier Owners and Coal Stevedores Association (1958) 1 FLR 248 referred to Short v F W Hercus Pty Ltd (1993) 40 FCR 511 referred to THE AUSTRALIAN AND INTERNATIONAL PILOTS ASSOCIATION v QANTAS AIRWAYS LIMITED NG 431 of 1997 MOORE J SYDNEY 26 FEBRUARY 1998 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 431 of 1997 BETWEEN: THE AUSTRALIAN AND INTERNATIONAL PILOTS ASSOCIATION Applicant AND: QANTAS AIRWAYS LIMITED Respondent JUDGE: MOORE J DATE OF ORDER: 26 FEBRUARY 1998 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application is dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 431 of 1997 BETWEEN: THE AUSTRALIAN AND INTERNATIONAL PILOTS ASSOCIATION Applicant AND: QANTAS AIRWAYS LIMITED Respondent JUDGE: MOORE J DATE: 26 february 1998 PLACE: SYDNEY REASONS FOR JUDGMENT This is an application by the Australian and International Pilots Association ("the Association") under s 413 of the Workplace Relations Act 1996 seeking an order of interpretation of the Qantas Airways Limited - Technical Aircrew (Long Haul) Award 1996 ("the Award"). The interpretation is sought of provisions relating to the filling of vacant pilot positions within Qantas Airways Limited ("Qantas") having regard to seniority. Generally pilots commence flying on line operations as second officers after initial training. Qantas presently fills a number of vacant second officer positions with recently trained pilots in a way the Association contends contravenes the Award and disadvantages more senior pilots who might otherwise fill those positions. In order to understand the issues it is necessary to set out in a little more detail the operations of Qantas and the way in which vacant pilot positions are filled. The Qantas fleet is presently constituted by three types of aircraft, the Boeing 747-400 ("B744"), the Boeing 747-200/300 ("B747") and the Boeing 767-200/300 ("B767"). Each of these aircraft types is generally flown with a crew of three - a captain, a first officer and a second officer. Specialised training is necessary for each of these positions on each of the aircraft types. When engaged by Qantas, pilots generally undergo specialised training as a second officer in one of the three aircraft types. Specialist courses exist for each aircraft type. While undertaking this initial specialised training, and more general initial training, the pilots are described as pilots under initial training. Initial training is generally for a period between three to six months. The numbers of pilots who are engaged and undergo initial training, and the type of initial specialised training they undertake, results from an assessment made by Qantas of its staffing needs for a projected period of a little over three years from when the assessment is made. This assessment involves a consideration of the vacancies likely to arise in the ranks of captain, first officer and second officer in each of the three aircraft types. It also involves the likely consequences of those positions being filled by pilots already employed by Qantas. This second aspect of the assessment flows from a system operating within Qantas which enables pilots to bid for positions which might become vacant. A bid will succeed or fail depending on the pilot's relative seniority to other pilots who have bid for the same position. The notion of bidding comprehends an application to fill the vacant position, and it can be made in advance of a position becoming vacant, coupled with a right to undergo specialised training for the position in the event the bid is successful. By these means Qantas determines its likely future need for pilots for particular types of aircraft and the numbers involved. Once that assessment is made then pilots are engaged and undergo initial training, including specialised training, in sufficient numbers to satisfy the anticipated demand created by likely vacancies and the movement of pilots within Qantas in the way just described. The present practice of Qantas is to engage and train the number of pilots it anticipates will be needed as second officers in each of the aircraft types. Thus a pilot under initial training will be engaged and undergo initial training to qualify as a second officer in one of the aircraft types. At the conclusion of the initial training period, which will have included a period of specialised training, Qantas will appoint that person to a second officer position in that aircraft type if there is then a position vacant. Even if there is no vacancy, Qantas will nonetheless employ that person as a second officer on that aircraft type and make adjustments to its rostering of existing second officers to utilise the recently trained pilot. Qantas does not presently permit the second officer positions into which the newly training pilots are appointed to be filled by the process of bidding by pilots already flying on line. The Association contends that this aspect of this practice is contrary to the provisions in the Award. It contends that the Award does not permit Qantas to fill a vacant second officer position in a particular aircraft type with a pilot who has just completed his or her initial training, including specialised training on that aircraft type, without considering applications for that position by more senior pilots. Rather the Association contends that pilots who, for reasons for which will become apparent shortly, have completed their training more than 18 months earlier, can bid for vacant positions as second officers on any of the aircraft types and have their bid considered by reference to their seniority. If the Award was given effect to in this way, the most senior pilot bidding for a position as a second officer would be preferred over a pilot who had just completed his or her period as a pilot under initial training when the vacant position was filled. In the result Qantas could not, as it presently does, place in a vacant position as a second officer a pilot who had just completed his or her period as a pilot under initial training if another more senior pilot, at least one who had concluded his or her initial training more than 18 months earlier, had bid for this position. I will refer to some aspects of this scheme in more detail later. It is convenient to set out the relevant provisions in the Award which raise the question of interpretation in these proceedings. The Award describes clauses in it as sections and I will do so as well. Section 13 is headed "Seniority" and deals with that matter. Paragraph 13(a)(i) identifies what seniority means and provides: "13 Seniority General (a) (i) Seniority shall be the length of continuous service as a pilot or as an FEO with the company and with other companies whose operations were merged with the company prior to the making of the International Airline Pilots Agreement, 1986, except as provided in paragraphs (v) and (vi) of this subsection and in subsection 32(b)." It was ultimately common ground that the reference to "the length of continuous service as a pilot" was a reference to a continuous period commencing when the pilot was engaged by Qantas. Section 13 goes on to specify the way in which seniority affects the rights of pilots within Qantas. Central to these proceedings are the first paragraphs of sub-section 13(c) which provide: "Application of seniority (c) (i) Without limiting any other provisions of this award and provided that in each case the crew member is sufficiently qualified to undertake the training or duty required, seniority shall be used to determine the order of selection of crew members for promotion, transfer to a base station, transfer to and status on an aircraft type and in the event of redundancy selection for demotion or termination. Where a crew member applies for a vacancy under this subsection and is considered not to be sufficiently qualified the company shall advise the crew member accordingly. (ii) The company shall promulgate all initial vacancies in sufficient time for written application or letters of preference to be lodged and such vacancies shall be awarded in order of seniority of sufficiently qualified crew members from the applications or letters of preference on file in the flight operations branch at the closing time and date specified in the promulgation. If there are no applications or preferences on file, the initial vacancies shall be assigned to sufficiently qualified crew members in reverse order of seniority. (iii) Where further vacancies except base station vacancies are created by the filling of initial vacancies such further vacancies shall be awarded in order of seniority of sufficiently qualified crew members from the applications or letters of preference on file in the flight operations branch at the closing time and date specified in the promulgation. If there are no applications or preferences on file, the further vacancies shall be assigned to sufficiently qualified crew members in reverse order of seniority. Vacancies at a base station shall not be considered further vacancies." (emphasis added) It can be seen that subject to the qualifications in the opening words of paragraph 13(c)(i), seniority is used to determine the order of selection of crew members for promotion and transfer to and status on an aircraft type. While it is not presently relevant it also governs transfer to a base station and redundancy leading to demotion or termination. The mechanism for giving effect to this provision is found in paragraphs 13(c)(ii) and (iii) and the remainder of the section. Sub-section 13(c) contains other provisions which were not referred to by the parties and appear not to be relevant for present purposes. The next provision of relevance is sub-section 13(d) which deals with limits on the operation of the seniority system applying in the way contemplated in sub-section 13(c). Sub-section 13(d) relevantly provides: "Limitations of seniority (d) (i) The selection of a crew member to a supervisory, check or training appointment shall be at the discretion of the company and shall not depend on seniority. (ii) During the eighteen months commencing from the date on which a crew member first operates a service as a second officer or as an FEO with the company, the company shall not be obliged to recognise the crew members seniority with respect to allocation to an aircraft type. During this period such crew member may be allocated to an aircraft type at the discretion of the company. (iii) The company may allocate a crew member to a training type aircraft for the purpose of the crew members training in accordance with the provisions of section 37 of this award. A crew member so allocated for this purpose, shall not be subject to the provisions of paragraph (iv) of this subsection, once the crew member has achieved the company promotional criteria. (iv) Subject to the provisions of paragraph (iii) of this subsection, a crew member trained for transfer to another aircraft type who qualifies in the category for which the vacancy was created, may then be required to operate on that type for a minimum period of eighteen months, before being eligible to be awarded a vacancy involving another aircraft type transfer. (v) ....." (emphasis added) It can be seen that paragraph 13(d)(i) declares that seniority has no application in relation to the selection of crew members for particular positions. That paragraph confers an unfettered discretion on Qantas in relation to appointments to those positions. Paragraph 13(d)(ii) operates in relation to a pilot during the period of 18 months following the completion of his or her period as a pilot under initial training. It was not in issue that the expression "the date on which a crew member first operates a service as a second officer" refers to the time at which initial training as a pilot is completed. One of the contentious issues in these proceedings is the effect of the last sentence of paragraph 13(d)(ii). Section 16 is entitled "Allocation to aircraft type". It relevantly provides: "16 Allocation to aircraft type (a) Aircraft types in operation, or planned to be in operation, during the currency of this award shall be rated in the following order: (i) B744 aircraft (B747-400); (ii) B747 aircraft; (iii) B767 aircraft. (b) A pilot or flight engineer under initial training upon completion of training shall be allocated to an aircraft type by the company. (c) Without limiting any other provisions of this award where a vacancy for a crew member occurs on an aircraft type such vacancy shall be awarded or assigned in accordance with the provisions of section 13, of this award. (d) A crew member awarded or assigned a vacancy which involves an aircraft type endorsement may at the company's option, be required to remain on the new type for a period of time as specified in section 13, of this award." (emphasis added) It can be seen that subject to the qualification in the opening words of sub-section 16(c), section 13, dealing as it does with seniority, is to determine how a vacancy is to be filled. It can also be seen that sub-section 16(b) deals specifically with the allocation of a pilot who has completed his or her initial training to an aircraft type. The central issue in these proceedings is the relationship between those two sub-sections and paragraphs 13(c)(i) and (d)(ii). I should also set out the terms of section 14, which is entitled "Promotion and Demotion". It relevantly provides: "14 Promotion and Demotion (a) The status of a pilot shall be in the following descending order: (i) captain; (ii) first officer; (iii) second senior officer; (iv) second officer; (v) pilot under initial training. The status of a FEO shall be in the following descending order: (i) FEO (ii) FEO under initial training (b) A pilot on appointment shall have the status of pilot under initial training. A FEO on appointment shall have the status of flight engineer under initial training. (c) A pilot under initial training or FEO under initial training, upon completion of training and aircraft type endorsement and en route flying training shall have the status of second officer in the case of a pilot, or FEO, on the aircraft type to which the crew member is initially allocated by the company. (d) The category of a pilot shall be the pilots status on an aircraft type and shall be ranked in the following descending order: (i) B744 captain; (ii) B747 captain; (iii) B767 captain; (iv) B744 first officer; (v) B747 first officer; (vi) B767 first officer; (vii) B744 second officer; (viii) B747 second officer; (ix) B767 second officer. The category of a FEO shall be his or her status on an aircraft type. (e) A promotion shall be a change to a higher category. (f) The selection of a crew member for training and promotion beyond the category of second officer on the aircraft type to which the pilot was initially allocated or to which a FEO was initially allocated shall be in accordance with this section and section 13, of this award." The application of the Association sought the following orders of interpretation: "1. On its true meaning, Section 13 of the award means that: (a) Where any pilot vacancy arises, Qantas Airways Limited ['Qantas'] shall first allocate to such a position a suitably qualified pilot who has made a written application, or lodged a letter of preference with Qantas for any such vacancy; or (b) Where there is no suitably qualified pilot who has made a written application, or lodged a letter of preference, Qantas shall only assign to such vacancy a suitably qualified pilot in reverse order of seniority in accordance with clause (c)(ii) of the award. 2. On its true meaning, Section 16(b) of the award means that: (a) Whereas Qantas is required to allocate pilots after initial training to an aircraft type, nothing in this sub-clause conflicts with or operates to prevail over, the manner in which the award requires the filling of vacancies in accordance with Section 13." The submissions of the parties approached the issue of the proper construction of the Award in essentially two ways. The first involved a consideration of terms of the Award. The other was a consideration of the history of the relevant Award provisions which was a matter relied upon by Qantas in particular. It is convenient to consider first the terms of the Award itself. The Association contends that the Award contemplates a scheme in which appointment to a vacant position is determined by seniority subject to certain exceptions. One exception is found in paragraph 13(d)(i) which makes it clear that seniority does not determine who is to be appointed to a supervisory, check or training position. Similarly, it is contended, paragraph 13(d)(ii) denies to a pilot who has less than 18 months service after ending his or her initial training, the right to assert his or her seniority over a less senior pilot in the same position. That is, a less senior pilot who also has less than 18 months service since completing his or her initial training. In those circumstances and in relation to such pilots, paragraph 13(d)(ii) enables Qantas to allocate or reallocate a pilot without regard to comparative seniority. The Association contends that the last sentence of paragraph 13(d)(ii) did not confer a right on Qantas to initially allocate a pilot, who had just completed initial training, to an aircraft type for which a more senior pilot had or might wish to bid under the seniority system created by section 13. Qantas put in issue this construction of the Award and contends that having regard to the scheme of the Award viewed as a whole, the practice it presently adopted was consistent with it. In my opinion, the starting point in construing the relevant provisions of the Award is to consider what is comprehended by sub-section 13(c) having regard to other provisions of the Award. Paragraph 13(c)(i) is enlivened when it is necessary to "determine the order of selection of crew members" in certain circumstances. This is a description of a process of preferring one crew member over another or others having regard to his or her seniority relative to the other or others. This process of selection arises, relevantly, in two situations. One is where there is a promotion and the other is where there is a transfer to an aircraft type. It can be seen from sub-section 16(a) that aircraft are given a ranking with the B744 ranked higher than the B747 which in turn is ranked higher than the B767. This accords with evidence led by the Association to the effect that the B744 is the aircraft type on which pilots ordinarily aspire to operate. Sub-section 14(e) identifies what is a promotion. It is a change to a higher category. It can be seen from sub-section 14(d) that the lowest category is a B767 second officer and the highest category is a B744 captain. It appears to me that a promotion is intended to be the movement of a pilot from a lower category identified in that sub-section to a higher category. On one view of section 14, the reference in sub-section (e) to "higher category" is a category within an aircraft type though this is not clear having regard only to the terms of section 14. However, what is presently significant is that the lowest category of pilot who can be promoted, as defined, is a B767 second officer. In my opinion, the scheme in section 13, as it applies to promotions, contemplates two things. First, the pilot is in a category and secondly aspires to be appointed to a position in a higher category. It follows that the reference in paragraph 13(c)(i) to promotion is a reference to the process of moving from one category in sub-section 14(d) to another and higher category. It appears to me to follow that if, as I consider is the case, paragraph 13(c)(i) involves the selection amongst crew members seeking promotion having regard to their comparative seniority, then it involves the selection of those within the hierarchy referred to in sub-section 14(d) who may be the subject of promotion. This class does not include pilots under initial training or those who have just completed training but who have not been allocated an aircraft. Thus, insofar as sub-section 13(c) speaks of "the order of selection of crew members for promotion", it is a reference to the selection amongst those in the promotional hierarchy. That is, the selection between pilots in one of the positions referred to in sub-section 14(d). Sub-section 13(c) also involves the determination of "the order of selection of crew members for ..... transfer to ..... an aircraft type". This provision plainly has to be read in conjunction with section 16. It is to be recalled that sub-section 16(b) provides for the initial allocation of a pilot who has just completed his or her initial training, to an aircraft type. The word "transfer" normally connotes the movement of someone or something from a pre-existing position or place to another position or place. It is not apt to describe the initial placement of a person or thing in a position or place. It would be consistent with the scheme of the relevant provisions of the Award to treat the expression "transfer to .... an aircraft type" as a reference to the movement of a pilot from one aircraft type to another. Thus, a transfer must necessarily follow the initial allocation of a pilot to an aircraft type under sub-section 16(b). If, as I consider is the case, this expression deals with movement from one aircraft type to another, then it rather suggests that the reference in sub-section 14(e) to a promotion being a change to a higher category, it is a reference only to the hierarchy of categories within an aircraft type. Understood this way, it is intended by sub-section 13(c) that seniority determines who should fill a vacant pilot position if, in relation to those competing for it, it involves a promotion and/or transfer to another aircraft type. The scheme may be illustrated this way. A position of first officer on a B747 may become vacant. There may be six second officers on that aircraft type who bid for the position. The most senior would ordinarily be appointed. It may be, however, that there are three second officers in that aircraft type who have bid for the position and two first officers and two second officers in the B767 aircraft type who have also bid for that position. In relation to the first group it would involve a promotion and in relation to the second group it would involve a transfer to an aircraft type. Irrespective of the characterisation of the movement, the comparative seniority of all of them will ordinarily determine who fills the vacant position. If sub-section 13(c) has this meaning then it is not intended to operate, for present purposes, in circumstances where there is neither a promotion nor a transfer to an aircraft type. It follows for the reasons I have just given that it would have no application to a pilot who had not been initially allocated to an aircraft type under sub-section 16(b). That is because that pilot would not then be in a category of pilot referred to in sub-section 14(d) nor then allocated to an aircraft type from which he or she could transfer. It follows, in my opinion, that sub-section 16(c) confers no greater rights on pilots than are conferred by paragraph 13(c)(i). The process of determining an order of selection of crew members contemplated by paragraph 13(c)(i) involves a selection from a group in which all are seeking promotion or transfer. If the selection could result in someone being neither promoted nor transferred, paragraph 13(c)(i) has no application. Thus it does not confer on a pilot a right to bid for a position and be selected on grounds of seniority where one of the potential occupants of the position is neither being promoted nor transferred to an aircraft type. This approach to the construction of the Award has this effect. The right purportedly exercised by Qantas in relation to the appointment of pilots who have concluded their initial training is consistent with the general scheme of the Award and does not depend on the scope of the last sentence of paragraph 13(d)(ii). That sentence was, however, the focal point of the submissions the parties made. It cannot be viewed in isolation and, as is apparent from the preceding sentence in paragraph 13(d)(ii), it removes the obligation Qantas would otherwise have to recognise and give effect to the seniority of a particular pilot who is in that 18 month period. It says nothing about the corresponding obligation in relation to the seniority of a particular pilot who is outside that period. Seniority is a comparative matter. I rather think, therefore, that the last sentence of paragraph 13(d)(ii) is intended to apply when it is proposed a pilot, within the 18 months period, is to be allocated to an aircraft type and when only those pilots who bid for that position are also within that period. It is only in those circumstances that Qantas is relieved of the obligation to select on the basis that would otherwise arise under paragraph 13(c)(i). The practical effect of the preceding construction of the Award is the same as the practical effect of a construction of the International Airline Pilots Agreement 1989 adopted by the Australian Conciliation and Arbitration Commission in a decision of 3 March 1995. The language of that agreement was substantially the same, for present purposes, as the sections of the Award I have been considering. The Commission did not discuss at length the relevant provisions though it appears to have concluded that the last sentence of what is paragraph 13(d)(ii) of the Award, together with what is sub-section 16(b) of the Award, conferred a right on Qantas to allocate a pilot who had just completed initial training to a second officer position on an aircraft type irrespective or his or her seniority in relation to any other pilot who had or might bid for the position. The relevance of this decision is that after it was given, the Award was made in 1996 with the consent of the parties. Qantas submits that this was a relevant consideration having regard to the observations of the various members of the Commonwealth Industrial Court in The Merchant Service Guild of Australia v Sydney Steam Collier Owners and Coal Stevedores Association (1958) 1 FLR 248 at 250-251, 254 and 257. It is also consistent, it is submitted, with the observations of Burchett J in Short v F W Hercus Pty Ltd (1993) 40 FCR 511 at 517, where his Honour referred to a situation where a particular interpretation has been accepted by the parties and embodied in a succession of agreements. While the agreement of the Association to the Award containing provisions in substantially the same terms as the provisions construed by the Commission implies acceptance of that construction by the Association, there are other considerations that would suggest undue reliance cannot be placed on that fact in the present case. As was pointed out by counsel for the Association, the making of the Award was said to be a consolidation of two existing Awards and nothing more. Moreover, it took place very shortly before major amendments to the Industrial Relations Act 1988 took effect, which would have precluded the making of an award containing all the terms of the Award. The Award was being made with expedition. In the present case, for the reasons I have given, the meaning of the Award is comparatively clear. The events of 1996 are simply confirmatory of the construction of the Award I consider is the correct one. Qantas submits that if I was not persuaded that the construction contended for by the Association was the correct one, no other order of interpretation should be made. The Association does not contend otherwise. Accordingly, the order I propose to make is to dismiss the application. I certify that this and the preceding twelve (12) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore Associate: Dated: 26 February 1998 Counsel for the Applicant: Mr J Nolan Solicitor for the Applicant: Mr P Murphy Counsel for the Respondent: Mr H Dixon Solicitor for the Respondent: Blake Dawson Waldron Date of Hearing: 5 February 1998 Date of Judgment: 26 February 1998