FEDERAL COURT OF AUSTRALIA Australian Rail, Tram and Bus Industry Union v KDR Victoria Pty Ltd t/as Yarra Trams [2013] FCA 330 Citation: Australian Rail, Tram and Bus Industry Union v KDR Victoria Pty Ltd t/as Yarra Trams [2013] FCA 330 Parties: AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION and STEVAN UZELAC v KDR VICTORIA PTY LTD TRADING AS YARRA TRAMS File number: VID 776 of 2012 Judge: MARSHALL J Date of judgment: 12 April 2013 Catchwords: INDUSTRIAL LAW – interpretation of certified agreement – separate question – whether a provision of the certified agreement requires the employer to conduct a particular form of appeal or inquiry into a dismissal – whether an internal disciplinary policy document was incorporated into the agreement by reference – relevance of custom and practice – prior negotiations – "common understanding" INDUSTRIAL LAW – alternative position– interpretation of the respondent's internal disciplinary policy – whether it obliged the respondent to conduct a particular form of appeal or inquiry – relevance of custom and practice – separate question answered in the negative Legislation: Fair Work Act 2009 (Cth) ss 50, 546 Public Transport (Victoria) Enterprise Agreement 1997 Cases cited: City of Wanneroo v Holmes [1989] 30 IR 362 Commissioner of Taxation and Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 293 ALR 257 Printing & Kindred Industries Union v Davies Bros Ltd [1986] 18 IR 444 Shop Distributive and Allied Employees' Association v Woolworths Ltd (2006) 151 FCR 513 Dates of hearing: 22 February, 1 March and 2 April 2013 Place: Melbourne Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 37 Counsel for the Applicants: Mr C Dowling Solicitor for the Applicants: Slater & Gordon Counsel for the Respondent: Mr C O'Grady Solicitor for the Respondent: Herbert Geer IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY FAIR WORK DIVISION VID 776 of 2012 BETWEEN: AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION First Applicant STEVAN UZELAC Second Applicant AND: KDR VICTORIA PTY LTD TRADING AS YARRA TRAMS Respondent JUDGE: MARSHALL J DATE OF ORDER: 12 APRIL 2013 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The separate question is answered as follows: Does clause 23 of the Yarra Trams Enterprise Bargaining Agreement 2009 require Yarra Trams to conduct an inquiry constituted by: (i) A hearing conducted by persons independent of the Chief Executive Officer of Yarra Trams; and/or (ii) A hearing conducted by persons not employed by Yarra Trams, where an employee of Yarra Trams who is dismissed from the service of Yarra Trams requests such an inquiry in writing to the Chief Executive Officer of Yarra Trams within 48 hours of such dismissal? Answer: no. 2. The applicants are given leave to discontinue the proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY FAIR WORK DIVISION VID 776 of 2012 BETWEEN: AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION First Applicant STEVAN UZELAC Second Applicant AND: KDR VICTORIA PTY LTD TRADING AS YARRA TRAMS Respondent JUDGE: MARSHALL J DATE: 12 april 2013 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 A separate question arises for resolution in this proceeding. The substantive proceeding is one in which the applicants seek the imposition of a penalty on the respondent for its alleged contravention of the terms of an enterprise agreement. An answer to the separate question requires the Court to consider if a clause of an enterprise agreement imposes an obligation on the respondent which it failed to fulfil. Critical to the resolution of the separate question is whether the relevant clause of the enterprise agreement obliges the respondent to apply the provisions of one of its internal policy documents which is referred to in the clause. Essential facts 2 The pleadings have not yet closed. A defence is still to be filed but certain essential matters appear not to be in dispute. So much can be gleaned from the competing submissions and evidence tendered on the separate question. Much of the evidence before the Court concerns the way the parties have conducted themselves in respect of the issues arising in the separate question. Little of it assists in the determination of any issue requiring resolution. 3 The respondent ("Yarra Trams") employed the second applicant, Mr Uzelac, as a tram driver based at its Kew Depot. At all material times, the first applicant Union ("RTBU") had Mr Uzelac as a member. 4 On 20 July 2012, Yarra Trams terminated Mr Uzelac's employment. On 23 July 2012, Mr Uzelac informed the Chief Executive Officer of Yarra Trams (Mr Masson) of his wish to appeal against his termination. Mr Uzelac wrote: I wish to appeal against the decision to terminate my employment with Yarra Trams on Friday 20th July 2012. I believe this decision is too severe. 5 On 27 July 2012, Mr Altieri (State Secretary of RTBU) wrote to Mr Petale (Director of Human Resources at Yarra Trams) concerning Mr Uzelac's appeal. Mr Altieri referred to an internal Yarra Trams procedure for conducting inquiries against dismissals as allegedly contained in cl 4.6 of a document entitled Disciplinary Counselling Policy and Procedures ("the disciplinary document"). 6 Clause 4.6 of the disciplinary document, referred to by Mr Altieri, provides, so far as is material: 4.6 Appeals An employee who has been dismissed from the service of Yarra Trams…shall be entitled to an inquiry if within 48 hours of such dismissal…he/she so requests in writing to the Chief Executive. The employee shall be entitled to be represented at an inquiry by a member of a union… 7 Mr Altieri sought the confirmation of available dates for a Mr Sam Branciforte to deal with the appeal and noted Mr Uzelac's unavailability until the second week of August 2012. 8 By letter dated 3 August 2012, Mr Petale wrote to Mr Altieri in the following terms, omitting formalities: As this matter involved a summary dismissal, no Panel was convened. Accordingly it is not appropriate to conduct an inquiry into the dismissal by asking Mr Branciforte to hear verbal submissions by either Mr Uzelac or his representative, or by Yarra Trams. Since the only issue in dispute is the severity of the decision to dismiss Mr Uzelac summarily, it is more appropriate for Mr Uzelac to provide a written submission setting out the grounds being relied upon. The submission will then be assessed and the CEO will make a final decision whether the decision to summarily dismiss Mr Uzelac will stand or whether some other decision will be substituted. In the absence of any written submission from Mr Uzelac then the inquiry will be concluded on the basis of the information currently available to the CEO. 9 Mr Altieri replied on 10 August 2012 and made the following points, amongst others: Mr Uzelac is entitled to an appeal; Part 1, cl 23 of the relevant enterprise agreement "confirms that staff discipline is to be conducted in accordance with [the disciplinary document]"; The disciplinary document makes no distinction between summary dismissal and dismissal on notice. 10 Mr Masson replied to Mr Altieri. He said that "the form of the inquiry is something for Yarra Trams to determine in the circumstances". He said he would make a final decision by 31 August 2012. 11 On 31 August 2012, Mr Masson wrote to Mr Uzelac. He advised that he had concluded the inquiry into his summary dismissal and found the decision "justified in the circumstances". The substantive proceeding 12 In the substantive proceeding, the applicants seek, amongst other orders: a declaration that Yarra Trams has contravened s 50 of the Fair Work Act (Cth) ("the Act"); and the imposition of penalties on Yarra Trams pursuant to s 546 of the Act for breach of cl 23 of the Yarra Trams Enterprise Bargaining Agreement 2009 ("the enterprise agreement"). The statutory and enterprise agreement context 13 Section 50 of the Act provides: A person must not contravene a term of an enterprise agreement. 14 Clause 23 of the enterprise agreement provides: 23 Disciplinary Counselling Staff discipline will continue to be conducted in accordance with the Yarra Trams Disciplinary Counselling Policy and Procedures, as contained in MSM document c400im0001. During the life of the Agreement the parties undertake to give further consideration to implementation of the Discipline Panel for all areas of Technical Services. The only exception to the above procedure is for Tram Drivers and Customer Service Staff where, their immediate supervisor will refer all matters requiring formal disciplinary action to their immediate manager for further action. This however in no way restricts the rights of staff performing a staff supervisory role to conduct informal performance counselling discussions with their subordinate staff as may be required from time to time. This exceptions arrangement for Tram Drivers and Customer Service Staff in no way restricts or limits the immediate supervisors right to interview employees or to conduct investigations into all matters relevant to their subordinate staff's work performance. Front line supervisors will also perform the following actions at the direction of their Manager: suspend employees issue call-in notices issue letter of release issue As Instructed notifications The separate question 15 On 22 November 2012, Middleton J ordered as follows: Pursuant to Rule 30.01 the Court determine[s] that the following question arising in the proceeding be heard separately from any other question: Does clause 23 of the Yarra Trams Bargaining Agreement 2009 require Yarra Trams to conduct an inquiry constituted by: i. A hearing conducted by persons independent of the Chief Executive Officer of Yarra Trams; and/or ii. A hearing conducted by persons not employed by Yarra Trams, where an employee of Yarra Trams who is dismissed from the service of Yarra Trams requests such an inquiry in writing to the Chief Executive Officer of Yarra Trams within 48 hours of such dismissal? Proper construction of clause 23 16 For a person to be in breach of, or to contravene a provision of an enterprise agreement, that person must have failed to perform some obligation which the provision imposes. Apart from the exceptions set out in the last two paragraphs of the clause, concerning obligations on supervisors in some cases, cl 23 does not itself impose any obligation on Yarra Trams. Rather, it observes that staff discipline issues will be dealt with under the disciplinary document. 17 The applicants contend otherwise. They say, in effect, that the terms of the disciplinary document have been incorporated by reference into the enterprise agreement. The applicants point to the history of the treatment of appeals against dismissals in predecessor agreements covering predecessors to Yarra Trams. In their written submissions on the separate question, they contend that cl 23 of the enterprise agreement "makes clear the parties' agreement to incorporate" the disciplinary document into the enterprise agreement. They say the disciplinary document referred to in cl 23 is the one that existed at the time of the negotiations which led to the creation of the enterprise agreement and was well known to the parties. They submit at paragraph 45(d) of those submissions: The operation of the appeal right contained in that document in the (at least) 10 years prior to negotiations for the 2009 Agreement provided for an appeal that involved the appointment of an independent chair person. That is a person independent of the Chief Executive officer of Yarra Trams and/or a person not employed by Yarra Trams. 18 Mr Altieri's evidence that the disciplinary document was familiar to the parties and discussed in negotiations leading to the final enterprise agreement is evidence of the actual intentions of the RTBU in making the agreement, but such evidence is inadmissible for the purpose of construing the final agreement; see Printing & Kindred Industries Union v Davies Bros Ltd [1986] 18 IR 444 at 451. 19 I accept the submission of Counsel for Yarra Trams that cl 23 of the enterprise agreement places no obligation on Yarra Trams to conduct an inquiry into a dismissal. The first paragraph of cl 23 acknowledges that, subject to the balance of cl 23, all disciplinary issues are dealt with by the disciplinary document. It is the disciplinary document itself which places obligations on Yarra Trams. However, it forms no part of the enterprise agreement and cannot be enforced as though it were part of the enterprise agreement. 20 The applicants point to evidence that the corporate entities which preceded Yarra Trams as an employer of tram workers responded to requests for inquiries by establishing an independent review panel which conducted appeals by way of oral hearing. They submit that such conduct revealed a "common understanding" of the meaning of the provision in the agreement. 21 The Court acknowledges the evidence that, on many occasions in the decade prior to the negotiations for the 2009 agreement, Yarra Trams' predecessors convened panels consisting of an independent chairperson to hear "inquiries" from decisions by management to discipline employees. Counsel for the applicants tendered evidence of 25 "inquiries" where a consistent process was followed in purported compliance with cl 4.6 of the disciplinary document. Given this historical background, it is understandable that the RTBU and its members expected such a practice to continue after 2009. However, custom and practice in the industry under different industrial instruments cannot prevail over the plain meaning of the words in cl 23 of the enterprise agreement; see City of Wanneroo v Holmes [1989] 30 IR 362 at 378-9 per French J. Evidence as to that custom and practice is presently of no assistance in interpreting cl 23 of the enterprise agreement. As Gray J observed in Shop Distributive and Allied Employees' Association v Woolworths Ltd (2006) 151 FCR 513 at 520: It is necessary to take great care…to avoid infringing the general principle that the conduct of parties to an agreement cannot be taken into account in construing the agreement. For the limited principle to operate, there must be clear evidence that the parties have acted upon a common understanding as to the meaning of the relevant provision and not for other reasons, such as common inadvertence as to its true meaning. 22 Assuming that the parties to predecessor instruments acted upon a common understanding, such understanding was based on inadvertence as to the true meaning of the disciplinary document. Such inadvertence might be explained by the fact that the same people were generally involved in the disciplinary appeals process throughout the period. The procedure adopted may have been the preferred approach of those persons, but this does not mean that the parties were legally obliged to adopt it. 23 Furthermore, the disciplinary document is not included in an appendix to the enterprise agreement. Inclusion in an appendix is a technique which has been used in the industry in previous enterprise agreements to specifically incorporate various terms and conditions of employment into an industrial instrument. For example, cl 6 of the Yarra Trams (Operations) Enterprise Agreement 2003 agreement provided: 6. RELATIONSHIP TO OTHER CERTIFIED AGREEMENTS AND AWARDS 6.1 This Agreement contains all of the terms and conditions of employment which apply to the employment of employees whose employment is subject to this Agreement and consists of all Parts and Appendices contained herein. Pursuant to Section 170LX(2) of the Act, this Agreement wholly replaces each agreement listed in Appendix One and any other certified agreement which binds the parties to this Agreement which would otherwise apply to the employment of any employee whose employment is subject to this Agreement. 6.2 The Awards listed in Appendix One, as they apply from time to time to employees whose employment is subject to this Agreement will continue to apply but each such Award will operate subject to this Agreement. In the event that an Award or Awards listed in Appendix One is or are set aside and replaced by another Award or Awards (whether through the award simplification process or otherwise) then the Award or Awards that is or are set aside will cease to apply and any replacement award or awards will, from the operative date of such award or awards operate subject to this Agreement. 6.3 The terms of the agreements listed in Appendix One, as they apply to employees whose employment is subject to this Agreement, are incorporated into this Agreement ("the incorporated terms") but the incorporated terms are to operate subject to this Agreement. 6.4 To the extent of any inconsistency between this Agreement and any Award listed in Appendix One (including any replacement award) or an incorporated term or terms, this Agreement shall prevail. 6.5 To the extent of any inconsistency between the Yarra Trams (Operations) Enterprise Agreement 2000, and any Award listed in Appendix One (including any replacement award) or any other incorporated term or terms, the Yarra Trams (Operations) Enterprise Agreement 2000 shall prevail. 6.6 This Agreement operates to the exclusion of any other certified agreement which applies to any employee whose employment is subject to this Agreement whether or not listed in Appendix One. 24 Historical considerations relevant to the enterprise agreement and its predecessors, in any event, do not support the contentions of the applicants. Clause 23 of the enterprise agreement does not replace or repeat any like clause in any predecessor agreement. The closest provision was made in a separate agreement in reliance on cl 11 of the Public Transport (Victoria) Enterprise Agreement 1997 ("the 1997 agreement"). The 1997 agreement bound the RTBU and a predecessor of the respondent company. Clause 11 of it allowed the striking of further agreements which would be filed with the 1997 agreement in the Australian Industrial Relations Commission. This did not have the effect that the further agreements were thereby incorporated into the 1997 agreement. One of those separate, later, agreements made under the purview of cl 11 had as its cl 7 in 1998, an agreement to "Introduce the PTC Disciplinary Counselling Procedures". It is observed that the full content of the 1997 agreement is not in evidence. 25 The "PTC Disciplinary Counselling Procedures" were issued on 26 August 1992. Clause 4 of that document was in materially identical terms (as to its first three paragraphs) to cl 4.6 of the disciplinary document. However, cl 4 of the 1992 document went on to outline the roles of the participants in the process. Clause 4.6 of the disciplinary document does not do so, although nothing appears to turn on the difference. 26 There is no evidence of any other predecessor agreement to the enterprise agreement which contains any reference to the disciplinary document apart from that discussed in [24] above. On the contrary, Mr Altieri gave evidence that the employer party in the negotiations which led to the 2006 enterprise agreement refused to consider incorporating the disciplinary document into the agreement. It can be seen from the foregoing that there has been no common understanding that the disciplinary document has been incorporated into the enterprise agreements made over time, including the current one. Alternative position 27 If the Court is in error in determining that cl 23 does not have the effect contended for by the applicants, the issue arises as to whether the disciplinary document requires a hearing of the sort contended for by the applicants. In that regard, on that assumption, it is important to identify with precision the obligation which cl 4.6 of the disciplinary document imposes on Yarra Trams. 28 Clause 4.6 of the disciplinary document does not deal with the nature of the inquiry to which an employee is entitled. It deals with the right to representation. It says nothing about whether the inquiry is to be conducted by way of an oral hearing or "on the papers". It does not identify the person or persons who may conduct the inquiry. 29 The applicants refer to the history of cl 4.6 to support their view that an inquiry must be conducted by an independent chairperson on the basis of an oral hearing. They say that from 1999 until 2009 that was the way, in practice, the industrial parties interpreted the sub-clause. 30 The construction of cl 4.6 must commence with the plain words of that provision. There is nothing in those words to fill in the detail as to the nature of an inquiry. Clause 4.6 is written in broad terms. Its lack of detail may be contrasted with the very prescriptive description of the content of a disciplinary panel convened pursuant to cl 8 which is set out below. The practice of conducting appeals under cl 4.6 with an oral hearing and an independent chairperson cannot dictate the actual requirements of the sub-clause. The most recent judgment of the High Court dealing with the highly analogous issue of statutory construction is that of Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 293 ALR 257. At [39] in the joint judgment of French CJ, Hayne, Crennan, Bell and Gageler JJ, the Court said as follows: This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself. 31 The circumstances in which an employee may seek to invoke the provisions of cl 4.6 are broad in scope. An employee may wish to challenge the severity of a disciplinary decision, or the decision itself. The lack of strictures on the form of the inquiry supports the proposition that cl 4.6 allows the employer sufficient flexibility as to the circumstances in which an inquiry will be conducted and the manner in which the right to representation may be exercised, either orally or on the papers. The simple proposition raised by Yarra Trams, which the Court accepts, is that cl 4.6 of the disciplinary document is silent on the need for an oral hearing or for an inquiry to be conducted by an independent chairperson. Such lack of detail makes it extremely difficult to form a view that failure to hold an inquiry with an independent chairperson presiding and on the basis of an oral hearing will necessarily offend cl 4.6. 32 Clause 8 refers to a "disciplinary panel". It provides: 8. DISCIPLINARY PANEL 8.1 When is a Panel Convened In circumstances where serious disciplinary action is being considered against an employee the Employer may direct the matter to be dealt with by a Disciplinary Panel. Examples of incidents that would generally be directly referred to a Disciplinary Panel, but not limited to are: (a) Tram to Tram rear-on (b) Tram to Tram side-on (c) Fighting (d) Breach of rule 28 (e) Refusing Duty Recourse to a Disciplinary Panel should be limited to those cases where transfer, regression, suspension without pay or dismissal is being considered. Where a party considers a Disciplinary Panel to be inappropriate the matter is to be subject to further discussion within the agreed Dispute Resolution Procedure. Where agreement cannot be reached, the employer will progress disciplinary action at its initiative. Wherever practicable Disciplinary Panels should be conducted in a timely manner. In all other disciplinary cases, the responsibility for the conduct of employee disciplinary matters remains with the Depot Manager his or her delegate, or equivalent. An employee who has been reduced in grade, suspended without pay or dismissed as a result of a Disciplinary Panel hearing retains their right to lodge an appeal in accordance with clause 6 above. 8.2 Conduct of the Panel Panels will be held at an agreed location that allows for privacy and confidentiality of proceedings. However it is recognised that there will be times where it is not possible to do this, in which cases "Panels" will be held be held at other locations. Representation at "Panels" will include: • The Chairperson of the Panel. • The employee, or employees involved. • An employee advocate (normally an official of the Union), or a support person, but not a person external to the employment relationship such as a lawyer, friend or family member. • Management advocate. • Other persons as required by the Chairperson, or at the request either advocate to assist in the proper conduct of proceedings. 8.3 The Role of the Chairperson The "Panel" Chairperson is a person appointed by Yarra Trams, in consultation with the RTBU Tram & Bus Division, who has extensive experience in Tram operations. The role of the Chairperson is to facilitate the proper conduct of proceedings, in accordance with the Principles outlined in the Yarra Trams Disciplinary Counselling Policy, and to make recommendations to the parties on appropriate disciplinary action. The "disciplinary panel" referred to here may be convened prior to dismissal action being taken. It does not address the issue of an appeal. 33 As can be seen from the previous discussion, the disciplinary document itself does not have the effect contended for by the applicants. 34 Predecessors of Yarra Trams, including companies other than the respondent which have traded as Yarra Trams, appear to have organised panels chaired by independent chairpersons to review dismissal decisions by way of oral hearing. In that regard, the discussion at [20]-[22] above, is equally applicable to this issue. However, there is nothing, on a plain reading of the disciplinary document, to support the view that the document prescribes the conduct of an inquiry. The only certainty it provides is that there will be an inquiry and that the dismissed employee may be represented at the inquiry. 35 Upon the assumption that the enterprise agreement has incorporated the disciplinary document and on the further assumption that the industrial parties construed the disciplinary document as having the effect that disciplinary panels were required to be established, such understanding is based on common inadvertence as to the actual requirements of the disciplinary document. Answer to the separate question 36 The Court answers the separate question in the negative. An order reflecting that answer is contained in the order page accompanying these reasons for judgment. 37 During the course of the hearing of the separate question, the Court raised with the parties the consequences of a negative answer to the question. The parties agreed that there would be no utility in adjourning the matter to a directions hearing and that, given such an answer, it would be appropriate for the Court to make an additional order disposing of the proceeding. The applicants, on this scenario, submitted that they should be granted leave to discontinue the proceeding. Such an order will be made. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. Associate: Dated: 12 April 2013