Civil Air Operations Officers Association Of Australia v Airservices Australia [2001] FCA 1435

FEDERAL COURT OF AUSTRALIA

Civil Air Operations Officers' Association Of Australia v Airservices Australia [2001] FCA 1435

V617 of 1999

CIVIL AIR OPERATIONS OFFICERS' ASSOCIATION OF AUSTRALIA

-v- AIRSERVICES AUSTRALIA

RYAN J MELBOURNE 12 OCTOBER 2001

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V617 of 1999

BETWEEN: CIVIL AIR OPERATIONS OFFICERS' ASSOCIATION OF AUSTRALIA

Applicant

AND: AIRSERVICES AUSTRALIA

Respondent

JUDGE: RYAN J

DATE OF ORDER: 12 OCTOBER 2001

WHERE MADE: MELBOURNE

THE COURT ORDERS: 1. THAT the question reserved by the order of the Court of 31 July 2000 for separate decision be answered, yes. 2. THAT the application be adjourned for further directions to 16 November 2001. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V617 of 1999

BETWEEN: CIVIL AIR OPERATIONS OFFICERS' ASSOCIATION OF AUSTRALIA

Applicant

AND: AIRSERVICES AUSTRALIA

Respondent

JUDGE: RYAN J

DATE: 12 OCTOBER 2001

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 The applicant, Civil Air Operations Officers' Association of Australia ("the Association") seeks the imposition of penalties pursuant to s 178 of the Workplace Relations Act 1996 ("the Act") for the commission by the respondent, Airservices Australia ("Airservices") of contraventions of cl 12 of the Airservices Australia Enterprises Agreement 1998-2001 ("the 1998 Agreement"). An order has been made by consent pursuant to O 29 r 2 of the Rules of this Court for the determination separately and before any other question in the proceeding, of whether the effect of cl 12.4 of the 1998 Agreement; "Is that the terms of the document described in that clause as 'The Letter of Agreement concerning Staffing Principles referred to in clause 18.12.1 of Schedule B' are incorporated as terms of the Agreement." 2 For the purposes of determination of that question, the parties have filed a statement of agreed facts which traced the history of the 1998 Agreement and its predecessors, the 1992 Agreement, the 1994 Agreement and the Airservices Air Traffic Services Enterprise Agreement ("the 1996 Agreement"). It is common ground that the Association and Airservices are bound by the 1998 Agreement which was certified pursuant to s 170LT of the Act on 1 July 1998 and which applies to persons employed by Airservices as air traffic controllers. By par 4 of the agreed statement of facts, it was recited; "Each of the 1994 Agreement, the 1996 Agreement and the 1998 Agreement refer to a letter of agreement between Airservices and Civil Air relating to Air Traffic Controllers entitled "Staffing Principles". The relevant clauses in each certified agreement are set out in Annexure A." 3 Annexure A set out the references to letters of agreement and other documents appearing in each of the 1994 Agreement, the 1996 Agreement and the 1998 Agreement. The reference in the 1998 Agreement is contained in cl 12.4 in these terms; "The arrangements contained in and regarding the Letter of Agreement concerning Staffing Principles referred to in Clause 18.12.1 of Schedule B are re-affirmed. In the context of Business Transformation, the Staffing Principles will be the subject of ongoing review and negotiations, and would only be changed by agreement of the parties." 4 Schedule B to the 1998 Agreement reproduced the 1996 Agreement, cl 18.12 of which is as follows; "Career Progression 18.12.1 Selection for training across streams in air traffic control will be based on merit, as agreed between the relevant parties and jointly endorsed in the document entitled "Staff Principles (Version 8)", dated 2 October 1996, which outlines the entitlement of pre September 1992 controllers to cross stream training. (The following underlined extract of 18.12.1 comes from the 1992 ATC EBA) Release to take up any vacancy will be subject to operational requirements but will not be delayed beyond 6 months. 18.12.2 After the introduction of modular training programs and the re-alignment of work and salary scales, opportunities will remain in air traffic control for cross stream training to complement the intake of new graduates, to meet staffing needs and to provide ongoing career development." 5 The 1994 Agreement contained this reference to "Other Agreements"; "The staffing principles concerning the movement of ATCs, and the principles agreed on the consolidation and size of TCUs and other Letters of Agreement between the parties are at Attachment E and form part of this Agreement." 6 Paragraph 9 of the agreed statement of facts contained an acknowledgment by Airservices, without conceding that it is relevant to the construction of cl 12.4 of the 1998 Agreement, that the Association during the negotiations for that Agreement had expressed a concern that; "(a) the process of business transformation might involve the creation of different business units and that those units might make their own staff arrangements; and (b) for this reason Civil Air believed it was very important that the 1996 LOA be affirmed in the new enterprise agreement. Airservices, for its part, said, amongst other things, that it did acknowledge the existence of the 1996 LOA and that while it did not consider that reference to it in the enterprise agreement was necessary, it would accept reference to it in the terms of clause 12.4 including the reference to ongoing review and negotiations of the 1996 LOA with a view to changes being made to it by agreement." 7 The statement of agreed facts ended by reciting "The terms of the 1998 Agreement were not drafted by lawyers." 8 The document entitled "Staffing Principles (Version 8) dated 2 October 1996 ("the Letter of Agreement") was headed; "LETTER OF AGREEMENT BETWEEN AIRSERVICES AUSTRALIA AND CIVIL AIR OPERATIONS OFFICERS' ASSOCIATION OF AUSTRALIA ON STAFFING PRINCIPLES" 9 Clause 1 of the Letter of Agreement recited under the heading "Application"; "a. These principles apply to ATS units listed in Attachment 1, which are grouped into two Districts, based on the major centres of Brisbane and Melbourne. However, for these principles, Sydney, Perth and Adelaide will be treated as major units with similar status to Brisbane and Melbourne. The status of Sydney Perth and Adelaide will be reviewed from time to time. b. Each unit is a separate entity for the purposes of these principles. c. Nothing in these principles countermands any of the following: (1) formal agreement on short term staffing arrangements; (2) aspects of any of the SIPT Agreements which specify the teams structures; or (3) FPC requirements at particular locations;. d. Definitions are at Attachment 2." 10 Clause 2 of the Letter of Agreement provided for transfers, which, in some respects, were expressed to be subject to further agreement between the parties. Clause 3 provided for "training opportunities" for air traffic controllers desiring to fill vacancies anticipated to arise in the future. Clause 4 provided for "movement between streams" the objective of which was expressed by sub-clause (e) as being "to maintain an appropriate balance between in-stream, cross-stream and new recruit training opportunities." 11 It was submitted on behalf of the Association that the words of cl 12.4 of the 1998 Agreement should be given meaning and effect as far as possible. By stipulating that the "arrangements in the Letter of Agreement are re-affirmed," the parties, it was submitted, are to be taken to have acknowledged that the provisions of the Letter of Agreement should continue to define, in the relevant respects, the relations between them. It was further contended on behalf of the Association that cl 12.4 of the 1998 Agreement, construed in the manner just indicated, could operate consistently with sub-cll 12.1, 12.2 and 12.3 of the same Agreement. Those sub-clauses provided; "12.1 Airservices shall ensure that all selections for recruitment, promotion and transfer will be determined by merit and relative efficiency. This means fair and open competition involving consideration of the best available field of candidates taking account of the advantages of developing and progressing Airservices Australia employees. 12.2 Selection criteria and decisions will be based on the requirements of the position with no discrimination on the grounds of political affiliation; race, colour or ethnic origin; religion; sex; sexual preference; marital status; pregnancy; physical or mental disability; union membership or activities; family responsibilities; permanent part-time status; or any other unjustified discrimination. 12.3 Employees may request a review of a selection decision in accordance with the Review of Decisions provisions of this Agreement." 12 It was pointed out on behalf of the Association that cl 9(b) of the Letter of Agreement provided a mechanism for the resolution of disagreements regarding applications and interpretations of the Letter by stipulating; "In the event of local disagreement regarding application and interpretations, such disagreements will be referred in writing to Manager, Human Resources, ATSD and the Executive Secretary CIVILAIR for joint resolution. Final resolution, if necessary, will be vested in GM ATS and the President CIVILAIR." 13 Clause 12.3 of the 1998 Agreement, it will be recalled, provided that "employees may request a review of a selection decision in accordance with the Review of Decisions provisions in this Agreement." That was, apparently, a reference to a document headed Attachment G which is entitled "Review of Decisions." Attachment G was one of the attachments to the Air Services Australia Corporate Enterprise Bargaining Agreement which was said at the end of the 1998 Agreement to form part of it. Clause 17 of the 1998 Agreement, which is headed "DISPUTE SETTLEMENT PROCEDURES" provides a step by step mechanism for resolution of a dispute as to a matter that arises "which is of concern or interest". In the first instance, the employees shall discuss the matter with the immediate supervisor (cl 17.6.1). Thereafter, if not resolved, the matter is to be referred successively to local management, senior management and then the General Manager of Airservices with a corresponding escalation of the level of seniority of the Association's representation. Finally, sub-cll 17.6.5 and 17.6.6 of the "Dispute Settlement Procedures" provide; "17.6.5 If the matter cannot be resolved at this level it may then be notified to the Industrial Relations Commission. The IRC is empowered to arbitrate to resolve matters relating to specific commitments within this Agreement, including those relating to terms and conditions of employment. It is understood that the parties to this Agreement shall endeavour to resolve the issues between them in full accordance with the procedures set out here before they resort to the formal processes of the IRC. The parties reserve the right to make whatever submissions to the commission they wish. 17.6.6 Nothing contained in this Agreement shall prevent the National/Federal/General Secretary of an organisation or his/her nominee or other appropriate employee representative and the Chief Executive entering into negotiations at any level either at the request of either party or his/her own initiative in respect of matters in dispute should such action be considered conducive to achieving resolution. Advice shall be conveyed by the one party to the other prior to this course of action being taken." 14 The concluding sub-clause of cl 17 of the 1998 Agreement is in these terms; "17.7 The procedures in the [scil. this] Clause replace those previously contained in the Corporate Agreement and the ATS Agreement. The relevant Clauses are deleted from Schedules A and B." 15 Immediately after cl 17.7 and as the last operative words of the 1998 Agreement follow these words; "ATTACHMENTS TO THIS DOCUMENT TO FORM PART OF THIS AGREEMENT SCHEDULE A Provisions of the Airservices Australia Corporate Enterprise Bargaining Agreement 1996 SCHEDULE B Provisions of the Airservices Australia Air Traffic Services Enterprise Agreement 1996." 16 Clause 17 of the 1998 Agreement provides, I consider, a mechanism for the resolution of disputes generally between "parties" to that Agreement. Understandably, therefore, cl 17 is expressed to supersede, by deleting them, the dispute resolution provisions contained in the Airservices Australian Corporate Enterprise Bargaining Agreement which is contained in Schedule A to the 1998 Agreement and the corresponding provisions in the 1996 Agreement, which is Schedule B to the 1998 Agreement. However, cl 12.3 of the 1998 Agreement expressly preserves the availability of the review of a "selection decision" in accordance with the Review of Decisions procedure contained in Attachment G. That preservation is also understandable because the review mechanism afforded by Schedule G is expressly framed to make available to an employee an avenue for redress of a grievance about a "decision directly affecting an employee's employment which is considered to be unfair or incorrect." It sets up a "Grievance and Appeal Board" ("GAB") and, by cl 3, limits the jurisdiction of the GAB by providing; "Harassment and discrimination complaints and efficiency appeals are not defined as "grievances" and are to be processed in accordance with the specific procedures which have been developed in relation to these matters. Where this section makes reference to those procedures it is in regard to the GAB's role and jurisdiction in these matters." 17 Under the heading "Jurisdiction", Attachment G provides; "A Grievance and Appeal Board (GAB), established in accordance with the principles set out in this section, shall be responsible for arbitrating matters of dispute lodged with Airservices by employee(s) in respect of: · grievances as described in this section; · cases of relative efficiency in relation to a selection decision as described in the process for efficiency appeals; and · cases of discrimination and harassment as described in Airservices' Guidelines for Eliminating Workplace Harassment. Decisions taken by Airservices which may indirectly or directly affect employees but are not reviewable decisions include, but are not limited to: · Airservices decisions in relation to business matters including contracts; purchase, acquisition and maintenance of property and assets of Airservices; · Airservices decisions in accordance with legislative requirements under the Air Services Act 1995; and · compliance with, or implementation of, an industrial award by Airservices. Where issues arise at any stage of the grievance process that require either referral to and/or clarification by the Board (including issues of jurisdiction, definition, vexatious and malicious complaints), the Chairperson will consider and decide the matter after full consultation with the relevant industrial parties to the agreement establishing the GAB." 18 After setting out various procedural provisions and providing for informal resolution of the grievance, Attachment G, by cl 6.6 stipulates; "If the issue remains unresolved then the employee may refer the matter to the GAB for arbitration. The GAB's decision is final." 19 Attachment G then goes on to make specific provision for the resolution of "Efficiency Appeals" (cl 7) and "Harassment and Discrimination" (cl 8, which ends by stipulating; "Harassment complaints may only be referred to the GAB in accordance with the above guidelines and where the complaint resolution steps have been completed. Complaints forwarded direct to the Board will be referred to Divisional Equity and Diversity Contact Officers in the first instance or the National Equity and Diversity Officer.") 20 In my view, the provisions of cl 17 of the 1998 Agreement, cl 9(b) of the Letter of Agreement and Attachment G can be reconciled so that each retains an identifiable and useful sphere of operation. In descending order of generality, cl 17 provides for the resolution of disputes between the "parties" to the 1998 Agreement being, relevantly, the Association and Airservices. Clause 9(b) of the Letter of Agreement provides for the resolution of "local" disagreements regarding the application and interpretation of the Letter of Agreement, whether between the "parties" to the 1998 Agreement, an individual employee and Airservices, or two or more employees. Finally, Attachment G provides a mechanism for the resolution of a grievance about, amongst other things, a specific selection for recruitment, promotion or transfer. Analysed in this way, the three sets of provisions are, I consider, entirely reconcilable one with the other. However, if there are inconsistencies which I have not detected, they should be resolved in accordance with the maxim of interpretation generalia specialibus non derogant by allowing Attachment G to prevail over the other two prescriptions and cl 9(b) of the Letter of Agreement to prevail over cl 17 of the 1998 Agreement. 21 Reference was made in written submissions filed on behalf of Airservices to cl 7 of the 1998 Agreement as embodying an effective incorporation by reference of the agreements and schedules there referred to. That clause provides; "7.1 This Agreement includes the provisions of the following pre-existing enterprise agreements: * The Airservices Australia Corporate Enterprise Bargaining Agreement 1996 (the Corporate Agreement), included in Schedule A; and * The Airservices Australia air traffic Services Enterprise Agreement 1996 (the ATS Agreement), included in Schedule B. 7.1.1 Unless otherwise specified in this Agreement, the provisions of Schedules A and B shall apply. 7.1.2 The provisions of Schedules A and B will continue while this Agreement remains in force. 7.2 The following Clauses of Schedule A shall apply to all employees party to this Agreement Clause 10.2 HOME BASED WORK Clause 13 SPECIAL PAID LEAVE Clause 14 FLEXIBLE UNPAID LEAVE SCHEME Clause 18 REVIEW OF DECISIONS Clause 29 DISCIPLINE AND COUNSELLING. 7.3 An Australian Workplace Agreement entered into during the life of this Agreement shall prevail over this certified agreement to the extent of any inconsistency and shall comply with the Workplace Relations Act 1996." 22 However, those responsible for drafting the 1998 Agreement, obviously did not regard the technique exhibited by cl 7 as the only means of effecting an incorporation by reference of pre-existing contractual or consensual provisions. They also resorted, perhaps out of an abundance of caution, to the formula reproduced at [15] above. More significantly, the 1996 Agreement which, as Schedule B, is undeniably incorporated by reference in the 1998 Agreement, contained cl 18.12.1 which is reproduced at [4] of these reasons. There has been no attempt by the use of exclusionary words like those in cl 17.7 of the 1998 Agreement to limit the incorporation into that Agreement of cl 18.12.1 of the 1996 Agreement which, in turn, expressly incorporates the Letter of Agreement. For these reasons, I decline to regard cl 12.4 of the 1998 Agreement, drafted as it was by lay persons, as evincing an intention that the Letter of Agreement should not form part of the 1998 Agreement. 23 Mr Mueller of Counsel for Airservices pointed out that parties to a certified agreement, or any agreement for that matter, can include in the document embodying it references to historical facts or collateral agreements without intending those references to have effect as an enforceable part of the principal agreement. He contended that cl 12.4 should be construed as just such a reference which acknowledges that the Letter of Agreement is still extant and has its own utility for that purpose. An acknowledgment of that kind, Mr Mueller suggested, could be the basis, for example, of an invocation of the powers of the Industrial Relations Commission under s 110 of the Act. 24 In my view, this argument confuses, with respect, the identification of those terms of the certified agreement, a breach of which creates a liability to a penalty pursuant to s 178 of the Act, with the question of whether a particular provision has been incorporated as a term of the certified agreement at all. Whether a term is one which is susceptible of breach (which by s 4 of the Act includes "non-observance") is a matter of construction of the particular term. For example, there would be no breach of a "board of reference" or "settlement of dispute" clause which can undeniably constitute a term of a certified agreement, if, at the end of the stipulated process, the dispute remained unresolved. On the other hand, a refusal by a party to engage in the process at all may, at least arguably, amount to a breach of the relevant term. Other terms of an agreement frequently impose a duty on only one party and so, self-obviously, are not susceptible of breach by the other party. 25 By contrast, whether a provision contained in some document outside the four corners of the instrument in which the parties have embodied their agreement has been incorporated as a term of that agreement is a matter of construction primarily of the contractual document as a whole. For example, a stipulation in the contractual document that "nothing herein shall affect the operation" of some specified collateral agreement acknowledges, in the way suggested by Mr Mueller, that the collateral agreement is extant but does not incorporate it as a term of the contractual document. 26 Reference was made on behalf of Airservices to Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235 where the Victorian Court of Appeal was called on to decide whether an unregistered collective agreement between a union and an employer was an "industrial instrument" within the meaning of s 556 of the Corporations Law, which accorded priority in a winding up to a "retrenchment payment" being "an amount payable by the company to the employee by virtue of an industrial instrument". "Industrial instrument", in turn, was defined as; "(a) a contract of employment; or (b) a law, award, determination or agreement relating to terms and conditions of employment." 27 The Court held that the unregistered agreements were not "industrial instruments" as defined because they were not legally enforceable. One of the reasons for that conclusion was the finding that no consideration had passed from the union to the company. As to that matter, Hayne J, in the passage, at 271, cited by Mr Mueller, said; "The conclusion that there is no consideration for the employer's promise might, at first sight, seem to suggest that the employer's promise is to be characterised as no more than some unsolicited act of generosity on its part and might lead to the further suggestion that such a characterisation of what happened in this matter flies in the face of the fact that there was a real and lively industrial dispute about redundancy benefits that was settled when the union accepted something less than it had originally sought. (The unions had sought what were said to be the "Hycraft" terms but in the end they accepted benefits which were less.) Further, can it be said that the conclusion appears to fly in the face of Homfray's insistence upon the provision of "offsets" as the price for agreeing to provide a reward redundancy benefit? The facts that a dispute was settled and that "offsets" were sought and given, do not (alone or together) mean that the arrangement that was struck was a contract enforceable at law. The settlement of the dispute and the provision of the offsets is as consistent with the making of an arrangement that was to have industrial as opposed to legal consequences as they are with the parties having reached an agreement intended to be binding at law. If, as I consider to be the case, no good consideration was provided by the union for the employer's promise, then no legally binding contract was made. But that is not to say that the arrangement struck was of no significance at all. There is no doubt that the parties could properly regard the arrangement as constituting the employer's undertaking that it would in future provide redundancy benefits at the level agreed and that its employees would permit payment of wages by electronic funds transfer, permit selection of redundancies according to the criteria and procedures laid down (whatever they might mean) and allow for the introduction of more flexible shift arrangements. But the fact that that may have been the legitimate expectation of the parties does not mean that the parties are to be taken as contemplating that those expectations were to be capable of enforcement by resort to the courts. Implicit in many of the submissions made on behalf of the respondents was that any conclusion that did not require the payment in priority to other claims of the redundancy benefits set out in the agreements signed in late 1988 was a conclusion that would defeat the legitimate expectations of the parties to those arrangements. The parties clearly intended to strike a bargain on a matter of significance, why is it not enforceable? Considerations of the kind I have just described, in the end, amount to no more than bare assertion: the agreement is enforceable because the parties want it so." 28 The sentence immediately following the passage just quoted is important. His Honour went on to say; "They are considerations that are to be judged in light of the important fact that if the parties had wished to ensure that the agreements were enforceable at law, they could have registered them under the appropriate industrial legislation." In this case, the parties clearly did wish to ensure that the 1998 Agreement and its predecessors were enforceable at law because they had them certified under the Act. What is at issue here is not the enforceability of the 1998 Agreement but what terms are comprehended within it. A further issue which may arise after the relevant terms have been identified, is which of those terms imposed duties on a party which are susceptible of breach in the sense discussed at [24] of these reasons. 29 It was next submitted on behalf of Airservices that cl 12.4 of the 1998 Agreement does not, in terms, adopt the Letter of Agreement as part of the 1998 Agreement but simply notes that "the arrangements in the Letter of Agreement concerning Staffing Principles ...... are re-affirmed." The use of the word "arrangements" and the reference to a document concerning "principles" were both relied on as contra-indications that the "arrangements" to which cl 12.4 referred were intended to create legal obligations enforceable under s 178 of the Act. Those expressions, it was said, are not apt for use in imposing prescriptive obligations. 30 As I pointed out during the course of argument, it may be that the use of the word "arrangements" in cl 12.4 is an echo of the same word in cl 9(a) of the Letter of Agreement itself, which says; "The ongoing implementation of these arrangements will be the subject of consultation and monitoring by the parties at the national level." 31 In any event, as indicated in [24] and [25] above, these matters are more appropriately to be called in aid in determining whether the Letter of Agreement imposes on, for example, Airservices, an obligation, breach of which will give rise to a liability under s 178 of the Act. It may be, as Mr Mueller suggested, that, if Airservices disregards or departs from one or other of the "arrangements" in the Letter of Agreement, the consequences will be industrial, rather than legal ones of the kind provided for in s 178. However, as already indicated, whether that is so will turn on the proper construction of the Letter of Agreement itself and any relevant provisions of the 1998 Agreement, particularly cl 12 as a whole. A conclusion that cl 12.4 incorporates the Letter of Agreement by reference in the 1998 Agreement, does not entail that every provision contained in the Letter of Agreement is susceptible of a breach by Airservices which attracts the penal consequences indicated in s 178. 32 Counsel for Airservices also contended that the second sentence of cl 12.4 of the 1998 Agreement, by reciting that "the Staffing Principles will be the subject of ongoing review and negotiations and would only be changed by agreement of the parties" provided a further indication that the Letter of Agreement was seen as a separate compact standing apart from the 1998 Agreement. However, the 1998 Agreement is itself expressed to be variable by agreement of the parties; see e.g. cl 32.1 of the Airservices Australia Corporate Enterprise Bargaining Agreement 1996 and cll 9.10, 21.1 and 25.1 of the 1996 Agreement, each of which is expressly incorporated by reference as Schedule A and Schedule B respectively in the 1998 Agreement by the stipulation quoted at [15] of these reasons.