Industrial Relations Commission of New South Wales CITATION: Rail Corporation New South Wales and Australian Rail Tram and Bus Industry Union, New South Wales [2008] NSWIRComm 101 RAIL CORPORATION NEW SOUTH WALES Appellant PARTIES: AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION, NEW SOUTH WALES Respondent FILE NUMBER(S): IRC 228 of 2008 CORAM: Schmidt J at 1; Staff J at 1; McKenna C at 68 CATCHWORDS: Appeal - leave to appeal and appeal a decision - long-running dispute about classification - question posed interpretation of unregistered industrial agreement - submissions indicated decision would be accepted - no jurisdictional impediment to an appeal - recommendation made in arbitral proceedings - consideration of arbitral proceedings under s 136 and interpretation of an instrument under s 175 of the Industrial Relations Act 1996 - rights of appeal under s 187 considered - industrially pragmatic result of the consideration - error demonstrated - leave to appeal granted - appeal upheld - recommendation made set aside LEGISLATION CITED: Industrial Relations Act 1996 Industrial Relations Commission Rules Australian Rail, Tram and Bus Industry Union, New South Wales Branch v Rail Corporation NSW [2008] NSWIRComm 14 CASES CITED: Davies v Kyogle Council [2008] NSWIRComm 90 State Rail Authority of New South Wales and Australian Rail, Tram and Bus Industry Union (C No. 20712 of 2000, 10 May 2000) HEARING DATES: 23 April 2008 DATE OF JUDGMENT: 23 May 2008 APPELLANT: Mr PM Kite SC SOLICITORS: Blake Dawson Waldron LEGAL REPRESENTATIVES: RESPONDENT: Ms L Carruthers Research, Industrial Officer AUSTRALIAN RAIL TRAM AND BUS UNION, NSW JUDGMENT: - 16 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES FULL BENCH CORAM: Schmidt J Staff J McKenna C 23 May 2008 Matter No IRC 228 of 2008 RAIL CORPORATION NEW SOUTH WALES AND AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION, NEW SOUTH WALES Application by Rail Corporation New South Wales for leave to appeal and appeal against a decision of Deputy President Sams given on 8.2.2008 in matter no. IRC 413 of 2007 DECISION OF SCHMIDT AND STAFF JJ [2008] NSWIRComm 101 1 We have had the advantage of reading, in draft form, the decision of Commissioner McKenna, who has concluded that leave to appeal the decision of Deputy President Sams, should be refused (see Australian Rail, Tram and Bus Industry Union, New South Wales Branch v Rail Corporation NSW [2008] NSWIRComm 14). While we are in agreement with various of the conclusions reached by the Commissioner as to matters argued by the parties, we find ourselves in disagreement on the question of leave and the determination of the appeal. 2 For reasons which we will explain, we have concluded that leave to appeal must be granted and the appeal upheld. 3 It is unnecessary that we outline the circumstances in which the proceedings came before Sams DP, they are dealt with in the Commissioner's decision. We agree with the conclusions which the Commissioner reached, as to the nature of the proceedings below and the parties' right to appeal his Honour's decision, in accordance with the provisions of s 181 of the Industrial Relations Act 1996 ('the Act'). The parties' agreement below 4 We do not agree, however, with the Commissioner's observations about an agreement between the parties, that they would accept Sams DP's recommendation and that there would be no appeal. 5 In our view this issue was put beyond doubt at the hearing of the appeal. The respondent Union twice explained that while it opposed the appellant, Rail Corporation New South Wales ('Railcorp'), being granted leave to appeal, for the reasons which it advanced, it nevertheless accepted that Railcorp had the right to appeal his Honour's decision. Indeed, the Union explained that its view was that it would have had a similar right, had his Honour taken a view consistent with the case which Railcorp had advanced below, rather than accepting the Union's claims. 6 If follows that it was common ground between the parties that in indicating to his Honour, as he noted in his decision, that they would accept the Commission's decision on the dispute which had brought them before the Commission, they were referring to the Commission as an institution, exercising the jurisdiction granted by the Act, as Railcorp sought to explain in its submissions. 7 That agreement was reached by the parties in a context where, initially the parties had been in dispute, as to whether or not the Commission was the appropriate forum for the dispute to be resolved. They reached an agreement as to that issue, but as they explained before us, each reserved the right to appeal the decision of the single member of the Commission, to whom the dispute had been allocated. That was the right which Railcorp sought to exercise in these proceedings. Leave to appeal 8 As the Commissioner explains in her decision, the way in which leave to appeal is approached by the Commission is long settled. Ultimately, appeals are concerned with error. Under this statutory scheme, the mere exercise of a right to appeal, cannot be a basis upon which leave to appeal may be refused. 9 In this case, we are well satisfied that the leave sought must be granted. The Union argued that leave to appeal should be refused, because, despite the recommendation made below and Railcorp's undertaking to abide by the Commission's decision, the recommendation was not enforceable and accordingly, nothing flowed from a refusal of such leave. We are unable to accept that submission, in the circumstances before us. As the parties explained, unless the appeal is upheld, by its agreement, Railcorp is bound to act on the recommendation made. 10 That position has to be considered in circumstances where both parties' cases revealed how it was that Sams DP fell into error, in the conclusions which he reached. We are satisfied that these circumstances are such, that justice requires that leave to appeal be granted. The appeal 11 The question to which the Union sought an answer, in the proceedings below, by way of recommendation, was: Does the application of the Dwyer Agreement give Area Controllers at Strathfield Signalling Complex an Area Controller 4? 12 This question arose out of the dispute notified to the Commission by the Union, in relation to the grading of the Lidcombe panel, within the Strathfield signal box. For reasons which he explained, Sams DP concluded that this question had to be answered in the affirmative. 13 The Union contended in its case on appeal, however, the answer to the question posed, depended on the proper interpretation of clause 5 of the Dwyer agreement. That clause was not one referred to in his Honour's decision. Indeed, despite the way that the Union developed its case on appeal, it does not appear that was the way in which it put its case to Sams DP below. Clause 5 provides: The parties agree that in the event of future signalbox/panel re-evaluations for Area Controllers and where these re-evaluations indicate under the Jade system that a classification above the existing Area Controller grade 3 level is warranted, then such re-evaluation will be made with a new classification level and remuneration equivalent to the wage differential between Area controller grades. 14 It was common ground between the parties that while a Grade 4 Area Controller is elsewhere referred to in the Dwyer agreement, such a grade was not brought into existence when the agreement was made. The agreement contemplated that it could be introduced in future. Clause 5 was the mechanism whereby that could be achieved. 15 His Honour's decision shows that he gave consideration to the extensive evidence as to the course which the parties had taken, in seeking to resolve the Union's ongoing claim for the establishment of a Grade 4 Area Controller, at a number of the busier signal boxes, including Strathfield. That claim had been considered, but rejected by Commissioner Larkin in proceedings before the Australian Industrial Relations Commission in 2000 (see State Rail Authority of New South Wales and Australian Rail, Tram and Bus Industry Union (C No. 20712 of 2000, 10 May 2000). 16 In 2000, the parties had put forward competing proposals for a new classification structure, at a time when there was only one grade of Area Controller. Larkin C recommended a new structure, different to either of those which the parties proposed. This recommendation required further negotiations between the parties, as to how existing employees would be transferred to the new structure. For Area Controllers, the Commissioner recommended three grades, not four, as the Union had claimed. She also recommended wage increases, which departed from the proposals which the two parties had advanced. She set the Grade 2 level Area Controller at a relativity of 4% and the grade 3 level at 7%. 17 In 2002, further negotiations led to the development of a job evaluation system, which came to be known as the 'Jade system'. The Jade system itself explained that: The system was designed through a series a joint union/management workshops to provide for a method of differentiating the difficulty levels of individual area controller positions and to provide for a grading structure. 18 Once developed, the Jade system was applied in a process which commenced in 2002, with the result that employees were transferred to the new structure, as the result of an extensive exercise undertaken together by the parties, for all of Railcorp's signal box panels. As the Jade system explained, this was achieved by the development of factors, amended and refined through a series of trials, which were transferred to 'factor sheets', which were then completed for each panel. Each panel was given a randomly allocated number, so that they could not be readily identified, by those undertaking the assessments. In assessing each factor, regard was had to specified statistical information, used to rate the difficulty level of each panel. Every such factor was described by a number of agreed evaluative statements, which guided the judgment of the working group making these assessments. 19 A rating scale was used to assist the comparison process then undertaken by the parties. This was a tool which had no meaning of itself, but provided a means of comparison. A rating profile was developed for each panel and all panels were ranked from the most complex, to the least. Decisions were then made as to where the most logical breaks between the grades should be made, on that ranking. 20 This qualitative exercise, when so undertaken, resulted in Lidcombe panel at Strathfield being the highest ranked panel. 21 The Jade system envisaged that grading could be reviewed in future. The panel in question then had to be reviewed against a number, (usually two), typical panels selected from the same current grade as the panel in question, together with typical panels from the grade above and the grade below. Those selected as comparators were to be those 'where it was believed that there has been no significant change in work value since the last evaluation and that do not have unusual features'. 22 An Evaluation Review Committee, with 7 or 8 management and union representatives, as well as representatives of each grade involved in the review, from country/metropolitan locations was to be set up for such a review. The occupant of the position being reviewed and close colleagues were not to be involved in the review and again, the positions involved in the review were to be randomly allocated numbers, for the ranking exercise. The result of the review was to be a recommendation by the Committee to Railcorp. 23 The Jade system also contemplated that in future, as well as the possibility of the grade of any position being reviewed, the grade structure itself, could also be reviewed. It was expressly provided: The grade structure put in place represents the current situation of the panels and their associated comparative work values. No structure stays valid forever and from time to time review of the grading structure will take place to enable it to reflect the current reality. Where through successive reviews it becomes apparent that there are problems with a particular grade in that it can no longer be argued that all the positions within that grade are similar enough to be grouped together then consideration is given to how the structure should be amended. This may result in one grade being split in two or two grades that no longer show a clear difference may be combined. This structure, like all others, must reflect the current reality of the work situation to be useful and valid in terms of providing the basis for appropriate remuneration for staff employed within its structure. 24 Despite the implementation of the Jade system, the claim for a Grade 4 Area Controller, continued to be pressed by the Union. At one point, in the ongoing discussions between the parties, in March 2003, a Grade 4 was offered by Railcorp, but that offer was rejected by the Union. Finally, the Dwyer agreement was reached in November 2004. It involved wage increases for existing grades. The Dwyer agreement also expressly contemplated the possibility, encompassed in clause 5, that in future re-evaluations under the Jade system, it might be indicated that 'a classification above the grade 3 level is warranted'. 25 Almost immediately after the Dwyer agreement was implemented, the claim for a Grade 4 Area Controller classification was agitated again by the Union, in respect of a number of signal boxes, including the Lidcombe panel at the Strathfield signal box. It was Mr Morgan-Jones' evidence that the initial review was not properly conducted and that since the review it was claimed by the Union that the work load had increased. 26 In 2006, the parties eventually embarked on a process, whereby this claim was sought to be assessed, by application of the Jade system. An evaluation working party was established for that purpose. There were difficulties with the exercise undertaken by the working party, which led to the outcome of the exercise being undertaken twice, in part. Despite this, the recommendation finally made by the working party was that a Grade 4 Area Controller classification be introduced for Lidcombe. This recommendation was not accepted by Railcorp. On appeal the Union accepted that under the Dwyer agreement, Railcorp was not obliged to accept such a recommendation. 27 Given the ongoing dispute between the parties after the refusal of the recommendation, Railcorp engaged the author of the Jade system, Ms Novakovic, to review what had been done by the working party. Her review revealed the extent of the difficulties with the process which had been undertaken. Ms Novakovic not only took the view that the system could not be used for the purpose to which the parties had sought to put it, but that the working party had, in any event, conducted the review exercise in a way which misapplied the Jade system in a variety of ways. 28 Ms Novakovic's advice was put in evidence below, without objection. In his decision, Sams DP observed, in a critical way, that she had not been called to give evidence in the proceedings. What cannot be overlooked however, as Railcorp submitted, was that her advice was tendered without objection and that she was not required for cross examination by the Union. Ms Novakovic's view contradicted that of witnesses called by the Union, such as Mr Morgan-Jones, who believed, as his Honour noted (at [30]), that the review 'was followed to the letter'. Ms Novakovic's report was to a very different effect. While his Honour took the view that there was no evidence as to what Ms Novakovic was asked to do, that was, in fact, explained in the evidence of Mr Greenhill, Railcorp's Manager, Industrial Relations. His evidence was that Mr Caine had recommended against Railcorp accepting the working party's recommendation, having taken the view that the Grade 4 classification was not warranted. Plainly, Ms Novakovic, as author of the Jade system, had been engaged to review what the working party and Mr Caine had recommended. 29 Ms Novakovic's advice was that there were difficulties in the approach which had been adopted, because the working party departed from what the system had required in various ways. She pointed out that all of the panels in the review undertaken by the working party were grade 3; and that some panels were not appropriate to be included in the review, because they were not lead panels themselves. Under the system, any review could only assess one panel at a time, not multiple panels, as the working party had sought to do. The review had not been undertaken by independent panel members, as Mr Morgan-Jones' evidence below confirmed. The information reviewed by the working party had also not been presented anonymously. 30 It was also Ms Novakovic's view that the mere request for a review had not justified any review taking place at all, because the Jade system required that there be evidence of significant change, before any review was conducted. 31 On the case advanced on appeal, there can be no question that Ms Novakovic's view was correct. The Jade system required, as a starting point, that change be identified which reflected a change in the value of the work being reviewed. That did not occur. In this respect the Jade system provided: Where a decision is made that the work value of a position appears to have changed the panel is put up for review. 32 This was plainly an important aspect of the Jade process. It follows that his Honour erred in observing at [118] that: Thirdly, while it might be said that the 'Jade' methodology is akin to a work value exercise, it neither requires involvement by the Commission nor uses the language found in the Work Value Principle to initiate a process of assessing work changes which may result in the regrading of various signal boxes. 33 Likewise, his Honour also erred in suggesting that Larkin C's decision in 2000 did not have regard to the Work Value Principles and that it, 'like here, was designed to settle an industrial dispute through a recommendation of the Commission as to a way forward.' There were two difficulties with that observation. Firstly, in her decision Larkin C herself observed at [16]: Notwithstanding the above qualification, a number of the work value principles are relevant in weighing the parties' respective position and attempting to provide to the parties a justifiable recommendation. 34 The second difficulty was that in the arbitration before his Honour, he had not been requested to make 'a recommendation of the Commission as to a way forward', but rather to interpret the effect of the Dwyer agreement. 35 The Union did not accept Ms Novakovic's advice. While his Honour found what Railcorp then did, in engaging a Ms Lipski, to be strange, the evidence was that this was done as an attempt to assist the parties to resolve their ongoing dispute, as to whether or not the working party's recommendation should be accepted by Railcorp. 36 By that stage, the ongoing difficulty had resulted in a dispute, required to be dealt with under the parties' agreed dispute resolution procedures. Railcorp engaged Ms Lipski, a job evaluation and remuneration expert, to independently review what had occurred and to consider further the claim for a Grade 4 Area Controller classification. Essentially, Ms Lipski agreed with Ms Novakovic's advice and otherwise concluded that there was no basis for the establishment of a Grade 4 classification upon her investigation. She made other suggestions as to how the parties might consider approaching the question of whether the creation of a Grade 4 classification was warranted. 37 The Union did not accept Ms Lipski's opinion. Railcorp continued to refuse the claim and a dispute was eventually notified to the Commission, in which the Union sought adherence to what it claimed the Dwyer agreement required. Eventually, the Union pursued the question earlier set out, as to the proper interpretation of the Dwyer agreement, in arbitral proceedings before the Commission. It sought an answer to the question it posed, by way of recommendation. 38 In coming to his conclusions, Sams DP had regard to detailed evidence as to the history of the parties' dealings with each other and formed views critical of the approach which Railcorp had adopted, in dealing with the Union's claim and refusing the working party's recommendation. On the evidence, it is apparent that this approach led his Honour into a number of errors (detailed below), as to various of the conclusions which he reached and the answer which he came to, in relation to the question which the Union had posed. 39 Firstly, his Honour wrongly, in our view, concluded that the Dwyer agreement itself contemplated the creation of a grade 4 position, as did the history of the parties' negotiation before that agreement. His Honour took the view that it was 'curious and unexplained', why the Jade methodology, which post dated the Dwyer agreement, also included reference to a Grade 4 classification, yet Ms Novakovic 'vehemently discounted' that grade in the advice she gave Railcorp. 40 There was no dispute that his Honour was incorrect in the view which he took as to this issue. The Jade review predated the Dwyer agreement by some years and referred to a grade 4 position in this way, as his Honour noted at [104]: ... At para 4 of the 'Jade' methodology the following is to be found: After all panels were rated on all factors a rating profile was developed for each panel and they were ranked from most difficult to least difficult. Decisions were then made as to where the most logical breaks between groupings or grades should fall. The result is (3 or 4?) grades of Area Controller. 41 On the evidence, the explanation for that reference to a grade 4, was that at the time the Jade system was being devised, the parties were still discussing the Union's ongoing claim for a Grade 4 Area Controller, which was not finally agreed. There was no dispute between the parties that when it was applied by the parties, the Jade system was applied to a 3 grade, not a 4 grade structure for Area Controllers. The possibility of a 4th grade was certainly referred to in the Jade system, because those discussions were ongoing, but the system itself did not establish that grade. The Jade system rather contemplated that the parties could act to establish a grade 4 in future, subject to proper application of the Jade methodology set out earlier in this decision. 42 At the time the Jade system was implemented in 2002, introduction of the Grade 4 classification depended upon the parties' ongoing discussions of the Union's claim. Even when the Dwyer agreement was later reached in 2004, the parties had still not agreed to a Grade 4 classification, despite that grade having been offered by Railcorp in 2003, but on terms which the Union did not accept. 43 The evidence of the history of the parties' negotiations clearly showed ongoing pursuit of a Grade 4 classification for Area Controllers, but no agreement, even despite Railcorp offering that grade after the Jade system was agreed and before the Dwyer agreement was finally reached. The Union rejected that offer and instead, improvements to the rates of pay of the existing classification structure were agreed in the Dwyer agreement and were then implemented by Railcorp. It was immediately after the wage increases flowed under the Dwyer agreement, that the claim for a grade 4 was raised again. 44 It follows that like the Jade system, the Dwyer agreement certainly contemplated that the Grade 4 classification could be further pursued by the Union in future. It was not, however, then agreed, as a part of the Dwyer agreement. 45 His Honour also observed at [110] that the exercise which the working party had undertaken in 2005 and 2006 had produced: ... an entirely unexceptional result as envisaged by the Dwyer Agrement; seemingly consistent with almost everyone's expectations. That is, a result was obtained, which by comparison to an anchor position, was higher than an AC3. 46 In making this observation, his Honour plainly erred. What the evidence showed was that Lidcombe, by comparison to other panels considered by the working party in the 2006 evaluation, achieved the highest score. Of itself, that did not demonstrate a result 'higher than an AC3 grade'. Rather, it confirmed exactly the results achieved when the Jade system was applied to all of the panels in 2002. Lidcombe achieved the highest ranking in the exercise undertaken in 2006, it being the most complex panel then considered. That there had been any change in the results it had achieved, by comparison with the results achieved in the 2002 exercise, was not considered or demonstrated. Nor did the results demonstrate that the size or nature of the differences between Lidcombe and the other panels established in 2002, had changed in 2006. 47 Such comparisons would have been difficult, if not impossible, to undertake, because of the qualitative nature of the Jade system. It was designed to show differences between panels being compared at any given point, not to identify whether change had occurred, over time. That was no doubt why the Jade system contemplated that a re-evaluation of any panel would only be undertaken, once 'a decision is made that the work value of a position appears to have changed'. 48 While the Union argued in its case, that this had in fact occurred, all that was in evidence was a claim that there had been a number of changes at Lidcombe, which had increased the level of responsibility and workload. The Jade system contemplated that more than the making of a mere claim, had to precede a re-evaluation. The Union's case was that a claim was sufficient and the idea that work value change had to be identified, was 'a red herring' in the proceedings. Given the express terms of the Jade system, which refers to work value at various points, that submission cannot be accepted. 49 His Honour took the view, as we earlier observed, that work value considerations were irrelevant to the Jade review process and the Dwyer agreement, leading him to comment that: ... there is no suggestion that a request for a review of a particular position below an AC3 would require a strict work value test. Rather, the contemplation of the Dwyer Agreement is to initiate the EWG process to establish whether the upgrade is justified 50 His Honour's conclusion is plainly wrong. Clause 5 of the Dwyer agreement contemplated that if a grade 4 was to be introduced, the salary would be equivalent to the wage differential then agreed between the other grades - a differential then increased to 7% as between each of the three existing grades. It seems to us that in considering the Union's case, and its reference to work value was a mere 'red herring', it cannot be overlooked that these were significant wage increases, agreed for the existing classification structure, after the Union had refused Railcorp's offer of a Grade 4 classification. These increases were implemented immediately before the Grade 4 classification was raised again. 51 The idea that work value considerations would be irrelevant to a determination of whether some grade 3 positions should be regraded as grade 4, a 'splitting' of the grade 3 classification, as contemplated by the Jade system, with a further resulting wage increase of 7%, in that context, would appear to have been quite an extraordinary approach for these industrial parties to have taken. That there was no necessity to mention work value, in that context, in the Dwyer agreement, was undoubtedly because the trigger point for any re-evalution of any position under the Jade system, even as between existing grades, was, expressly a decision 'that the work value of a position appears to have changed'. That a mere claim for a Grade 4 classification was not enough to lead to a re-evaluation under the Jade system was entirely understandable, given that this claim for a Grade 4 classification had been one pursued by the Union since 2000. During that time, Area Controllers had received two rounds of negotiated wage increases, even though the Grade 4 classification was not achieved. 52 In the circumstances, given the difficulties with the approach adopted by the working party, that its recommendation that a grade 4 be introduced, was not accepted by Railcorp, does not seem surprising. Likewise, it was unsurprising on the evidence, that Ms Novakovic and Ms Lipski's' further reviews, led them to similar conclusions. 53 As Sams DP observed, the parties had agreed that the Jade system could not result in any change, unless a recommendation was accepted by Railcorp. Here, for good reasons, on the evidence, that did not occur. It follows that a further matter overlooked by his Honour, in the conclusions which he reached, was that even if Railcorp's reasons for refusing the working party's recommendation had not been good ones, that fact alone would have precluded the question posed by the Union, being answered positively, as a matter of interpretation of the Dwyer agreement. 54 It is necessary to deal with one further matter. There was evidence that Mr Caine, the Manager (metropolitan), responsible for the reliability and 'ontime' running of trains, had overheard a telephone conversation which Mr Wright, the General Manager Operations, was having. Mr Caine wrongly understood from what he overheard, that Railcorp had agreed to the Grade 4 classification and passed that information on, by telephone, to one of his friends, Mr Field, one of the Union's members, at Strathfield. Shortly afterwards, when he told Mr Wright what he had done, Mr Wright informed Mr Caine of his error. Mr Caine then telephoned Mr Field to advise him of his error and Mr Wright wrote to the Union, to advise it of what had occurred. In cross examination, Mr Kessey of the Union explained that it was accepted by the Union that there had been a miscommunication as to this matter. 55 His Honour observed at [114] that Mr Caine's actions 'on one view was, in reality, the decision approving the regrading. When it was rescinded, understandably it caused major grief for all concerned'. On a proper analysis of the evidence that observation was plainly incorrect. 56 There was no dispute between the parties that the decision as to the introduction of the Grade 4 classification was not Mr Caine's to make, but that of Railcorp's Group General Manager. Such a decision required positive recommendations by various others, including Mr Caine. On the evidence, there had been no such recommendations made, nor any decision to introduce the claimed grade. It follows that there was no evidence that such a decision was ever made, or rescinded by Railcorp. Mr Caine's advice was entirely incorrect (he overheard a telephone conversation and leapt to a wrong conclusion); it was immediately corrected by he and Mr Wright and the Union did not claim that anything other than a miscommunication had occurred in relation to the giving of that advice. We observe in passing that the criticism by Sams DP [112] - [114] of Railcorp in respect of how it dealt with this aspect of the dispute was, on a proper consideration of the evidence, unwarranted. 57 Sams DP accepted that a recommendation resulting from the Jade process did not have to be accepted by Railcorp. He commented, however, that 'it would be a very courageous management indeed which refused to accept a recommendation of a joint Management - Union group, particularly if the decision was unanimous'. 58 What here occurred was precisely such a decision. Railcorp rejected a unanimous recommendation, made by the working party as the result of a flawed exercise, which did not, from the outset, proceed on the required basis, namely identified work value change. The recommendation was made as the result of an exercise which was not conducted in accordance with the Jade system, as devised. As we have already observed, it did not achieve results which showed any change from the evaluation of the Lidcombe panel in 2002. All that was shown was that it was the most complex panel of those considered in 2006, with the highest ranking, just as it was in 2002. 59 In reaching his conclusions, his Honour gave no consideration to issues such as this, which has led him into error. The question which the Union sought to have decided in the proceedings, was the proper interpretation of the Dwyer agreement, not a consideration of the industrial merits of Railcorp's approach to the claim which the Union had been pursuing since 2000. 60 As the Union put its case on appeal, that question depended on a consideration of clause 5 of the agreement. That was a clause which the Deputy President did not deal with in his decision. On its face, clause 5 required the Union's question to be answered in the negative. The clause does not deal with Strathfield Signalling Complex. Rather, it contemplates that a future re-evaluation of Area Controllers under the Jade system, might indicate that a classification above the existing grade 3 level is warranted. Any re-evaluation can only arise, if work value change has been identified. 61 The exercise which the working party conducted was not a re-evaluation of Area Controllers, generally, as the parties had undertaken when the Jade system was first implemented. It was not even a more limited re-evaluation of Area Controllers at Lidcombe panel, in accordance with the Jade system. In the 2006 exercise, the Jade system was not implemented as it was designed. It contemplated a blind comparison of unidentified signalling complexes, undertaken in a particular way, by particular persons, one panel at a time. That exercise was not undertaken, and it is unsurprising that the recommendation was not accepted by Railcorp. Such acceptance was a critical prerequisite for the introduction of a new classification. 62 It follows that neither the Dwyer agreement, or even the way in which the Jade system was purported to be applied, resulted in the creation of an Area Controller 4 at Strathfield. 63 His Honour observed at [103] of his decision: There is no doubt in my mind that the parties entered into the Agreement fully cognisant of the fact that it contemplated an AC4 and moreover, provided a mechanism for achieving it. 64 At [106] Sams DP went on to observe that the parties well understood that 'an AC4 could be achieved through the Dwyer agreement'. The Dwyer agreement did not, however, itself 'give' a Grade 4 classification at Strathfield, nor did the mechanism provided 'give' that result in this case, having in mind the way in which that 'mechanism', the Jade system, was in fact applied by the working party and the fact that Railcorp never accepted the recommendation made by the working party. 65 It follows that Sams DP erred in the conclusions which he reached. Accordingly leave to appeal must be granted and the appeal upheld. 66 We finally observe that given the matters we have outlined, we have found it unnecessary to determine the correctness of the appellant's view, that the drafters of the Dwyer agreement had failed to recognise that, by itself, the Jade system could not require the creation of an Area Controller grade 4. As the appellant has accepted, that does not preclude the Union from pursuing the claim, nor absolve Railcorp from considering it. If Railcorp's view of the Dwyer agreement is correct, it also means, of course that the parties need to revisit that aspect of the agreement. 67 We were informed that the parties are currently in negotiation over the Union's continuing claim for a Grade 4 Area Controller classification, in the context of negotiations over a range of other matters lying between them. As we observed at the hearing, a considerable period of time has passed since the working party considered the Union's claim. The parties must now consider the claim, in the light of current work requirements of Area Controllers and any change in the value of the work, which has occurred. The Commission's assistance is available to the parties, should it be sought, if they are unable to resolve their ongoing differences as to these, or any of the other matters presently lying between them. Orders For the reasons given, we would make the following orders: 1. Leave to appeal is granted. 2. The appeal is upheld. 3. The recommendation made by Sams DP is set aside. ------------------------ DECISION OF McKENNA C 68 On 20 February 2008, Rail Corporation New South Wales ("RailCorp") filed an application for leave to appeal and appeal against a decision of Sams DP ([2008] NSWIRComm 14). That decision found in favour of the case advanced by the Australian Rail, Tram and Bus Industry Union, New South Wales ("the Union") concerning the classification of certain employees. 69 For its part, the Union contended before Sams DP that an unregistered industrial agreement known as the Dwyer Agreement allowed, or should allow, a number of its Area Controller members employed by RailCorp at the Strathfield Signalling Complex to be upgraded/reclassified. The Dwyer Agreement itself comprises no more than a short letter dated 12 November 2004 from RailCorp to the Union confirming a number of agreed industrial matters concerning signallers. It is named after the signatory to that letter, Ian Dwyer. As to the specific terms of the Dwyer Agreement, the pertinent provision concerning the Area Controllers was cl5, which reads: 5. The parties agree that in the event of future signalbox/panel re-evaluations for Area Controllers and where these re-evaluations indicate under the Jade system that a classification above the existing Area Controller grade 3 level is warranted, then such re-evaluation will be made with a new classification level and remuneration equivalent to the wage differential between Area Controller grades. 70 While it was common ground that the parties' agreement was reflected in the Dwyer Agreement, the difficulty is that such agreement is (arguably) technically incapable of achieving its stated outcome under the proper application the agreed system. That system was set out in a document titled "Job Evaluation of Area Controller Positions – Job Factor Evaluation System", but commonly known as the "Jade" system (deriving from its author's name, Jade Novakovic). 71 The dispute about the classification of the Area Controllers came before Sams DP by way of a dispute notification made pursuant to s130 of the Industrial Relations Act 1996 ("the Act"). As Sams DP outlined in the following extract, which summarises key events, the dispute already had a long-running history by the time it came before him: 11 It was apparent from the documentation appended to the dispute notification, that the subject matter of the dispute has had a long and protracted history, dating back to 1999/2000. At that time, Larkin C of the Australian Industrial Relations Commission (AIRC) issued a recommendation arising from an industrial dispute which established the existing three tiered classification structure and wage relativities for Area Controllers: See State Rail Authority of New South Wales and Australian Rail, Tram and Bus Industry Union (C No. 20712 of 2000, 10 May 2000). 12 The Commissioner's recommendation led to further negotiations between the parties regarding the evaluation system for ACs which ultimately led to an agreement in November 2004 known as the 'Dwyer Agreement' (see Annexure 1). This produced a 7% wage differential between each of the AC grades. The agreement also envisaged a fourth AC level, but, at the time, no AC positions were considered eligible for regrading to that level. 13 At the end of 2005, a re-evaluation was requested of a number of the busier signal boxes, including the Lidcombe panel at Strathfield Signal Box. A re-evaluation was subsequently undertaken through an Evaluation Working Group (EWG) consisting of Management and Union representatives. It was agreed that the Lidcombe panel should be regarded as AC4, as it had scored 64 against the benchmark panel of 57. However, as a result of the identification of some incorrect data in the original assessment, the data was revisited. The reassessment did not affect the earlier result. The Chair of the EWG, Mr Brett Perrim (Manager, Workplace Change), recommended that the author of the original grading methodology, Ms Jade Novakovic (the 'Jade' methodology - Annexure 2), be engaged " to assist in the factor ranking process ". Ms Novakovic recommended against the EWG's conclusions (see Jade Review - Annexure 3) and the dispute remained unresolved. 14 Despite further meetings between the parties and a second review by Ms Julia Lipski (Lipski Review - Annexure 4) which also argued against the EWG's conclusion, the Union progressed the dispute through steps one through five of the Disputes Resolution Procedure cl 8 of the Rail Corporation New South Wales Rail Infrastructure Corporation and State Rail Authority of New South Wales Enterprise Agreement 2005 [PR 960346] ('the Agreement'); an agreement registered under the Workplace Relations Act 1996 (Cth). 72 When conciliation before Sams DP failed to resolve the dispute, the Union initially proposed the making of certain orders, which were as follows: The Applicant seeks the following Orders: Order 1: The applicant seeks that the Commission makes the following recommendations: i. That the parties adhere to the result obtained by agreement entered into by the parties on 12 November 2004 colloquially referred to as the "Dwyer Agreement". ii. That the parties adhere to the findings of the Evaluation Working Group convened to review the Lidcombe Panel of the Strathfield Signalling Complex. iii. In the alternative to Order (i and ii), that the Commission determine whether there are significant reasons for the creation of a new classification of Area Controllers employed by the Respondent at a Grade 4 level. iv. Such other Order as the Commission deems appropriate. 73 The Union later amended the relief it was seeking in arbitration to posing the following question about the Dwyer Agreement: Does the application of the Dwyer Agreement give Area Controllers at Strathfield Signalling Complex an Area Controller 4? 74 The parties' competing views as to the correct answer to this question was the subject of the arbitration. The Union submitted the question should be answered in the affirmative and, if Sams DP found in favour of its case, it would be a matter for the parties themselves to take the next step in relation to giving effect to the decision. 75 For its part, RailCorp submitted the question should be answered in the negative. In opposing the case advanced by the Union, RailCorp initially flagged certain jurisdictional objections. Those objections were to the effect that the Australian Industrial Relations Commission, rather than this Commission, was the jurisdictionally appropriate tribunal to make the orders then being sought by the Union. However, RailCorp did not press those initial jurisdictional objections after the Union recast the outcome it was seeking in arbitration, namely, answering a question, or making a recommendation, or both. RailCorp's case argued that the Union's contentions in favour of reclassification should fail on various bases, including the proper construction of relevant documents; merit; practicability; and the proper application of principle, including wage-fixing principles. 76 In a reserved decision delivered on 8 February 2008, Sams DP found in favour of the contentions advanced by the Union. He answered the question in the affirmative and made a related recommendation, relevantly concluding: [122] For the aforementioned reasons, I would answer the question posed by the Union in the affirmative. The Union conceded that the practical effect of answering the question in its favour would require the parties themselves addressing how it was to be implemented. I strongly recommend that the parties adopt a practical approach to this task and I grant liberty to apply in the event of any further difficulties. Leave to appeal 77 In opposing leave to appeal, the Union submitted the parties had agreed to accept the decision made by Sams DP. Certainly, this was a view shared by Sams DP, given his opening comments in the appealed decision, namely: [4] Both parties agreed to accept the decision of the Commission in answering the question. 78 In the appeal, RailCorp submitted that the parties had not agreed to accept the decision made by Sams DP. Mr P Kite SC, for RailCorp, submitted that the Union was incorrect in its submissions that there had been any agreement of this nature; and that Sams DP was similarly incorrect in noting in his decision that there had been an agreement to accept his decision. As to this, Mr Kite's submissions in the "Appellant's Chronology" noted: "At the start of the arbitration, the appellant stated that it regarded the arbitration as involving compulsory arbitration under s136 of the Act and it did not intend to waive any appeal rights that it had under the Act". 79 It is true that, at the outset of the arbitration, RailCorp submitted it intended to reserve appeal rights, albeit on my reading of the transcript such reservation was in relation to the discrete area of jurisdiction. However, RailCorp's position evolved and was clarified during the course of the hearing before Sams DP. As noted by Sams DP at [87], RailCorp withdrew the jurisdictional objections it had flagged initially, submitting such objections were unnecessary given that the Union was not seeking orders or the variation of an industrial instrument. Consequent upon the withdrawal of the jurisdictional objections, RailCorp's submissions then indicated it was bound by the application of a policy promulgated by the NSW Government concerning the acceptance of decisions of the Commission. 80 In my view, a reading of the transcript of the proceedings supports the observation made by Sams DP that the parties had agreed to accept his decision - or, perhaps more accurately in the case of the appellant, RailCorp submitted it was bound by Government policy to it. Despite RailCorp's suggestions to the contrary in the appeal, I think Sams DP was correct in noting that the parties' submissions indicated a preparedness to accept his decision. Looked at another way, it was reasonable for the Union and Sams DP to construe RailCorp's submissions as indicating that it would be bound to accept his recommendation on the merits once the jurisdictional objections were withdrawn. 81 Mr Kite submitted in the appeal that the submissions below about accepting the Commission's recommendation were not intended by RailCorp to be construed as involving only a first instance decision of a single member of the Commission; and that "the Commission" should be considered in a broad, institutional sense. However, that was not the submission put before Sams DP in terms of accepting Commission recommendations; and nor was that the effect of any of the exchanges between Sams DP and the parties concerning acceptance of his decision. RailCorp's submissions before Sams DP about accepting recommendations would have benefited from greater clarity if the intention was to refer to the Commission in an institutional sense (including appeal benches). Moreover, if RailCorp's final position before Sams DP was that it always intended to reserve all ordinary appeal rights available to any party to any proceedings, it remains difficult to understand the context and purpose of the various submissions made by RailCorp below concerning acceptance of recommendations. By way of example, the solicitor appearing for RailCorp in the proceedings before Sams DP submitted that in the absence of jurisdictional impediments and assuming the question was answered in the affirmative: "The parties would be obliged to [give effect to the decision of Sams DP] because they are committed to complying with the recommendations of the Commission". 82 There is nothing unusual in industrial parties making submissions to the effect that they are prepared to abide by a recommendation or decision of a single member of the Commission; indeed, such undertakings are a reasonably commonplace occurrence. Of course, there is no obligation on parties to abide by recommendations or decisions, for example, in limitation or forfeiture of other available rights. However, where industrial parties themselves enter into such arrangements, or aver that they are otherwise bound to accept a decision, and affirm such matters in submissions before the Commission, parties typically adhere to their submissions. Given my conclusion that Sams DP was correct in noting that the parties had agreed to accept his decision, this factor tends strongly, in terms of discretionary considerations, to militate against granting leave to appeal. 83 A second principal reason advanced by the Union in opposing leave to appeal was its contention that the decision was not jurisdictionally amenable to an appeal. The Union submitted that the proceedings before Sams DP properly could be characterised as a form of "private arbitration". In that context, Ms L Carruthers, for the Union, emphasised that the decision had not resulted in any form of enforceable order. All that had resulted from the decision, she noted, was an answer to a question or a recommendation, or both; it would be a matter for the parties to negotiate what practical steps should be taken to give effect to the findings made by Sams DP in relation to the employees' classification. On the other hand, RailCorp submitted that the proceedings before Sams DP involved the ordinary exercise of conciliation and arbitration functions under Ch 3 Pt 1 of the Act in contested proceedings, resulting in a decision from which an appeal to the Full Bench lies under s187 of the Act. 84 I do not consider that the proceedings before Sams DP involved a private arbitration or any other characterisation of that general type. There was nothing in the appeal papers to indicate the parties ever asked Sams DP to conduct the proceedings as a private arbitration or that, for instance, he indicated this was an atypical course on which he was embarking. Furthermore, in form and in substance, the proceedings before Sams DP took an ordinary jurisdictional path involving: the filing of a dispute notification under s130 of the Act; attempted conciliation under s134; the issuing of a certificate of attempted conciliation under s135; and the giving of directions for an arbitrated hearing. In due course, Sams DP then conducted site inspections; received formal evidence and submissions in arbitration; and published a reserved decision. In short, the proceedings were heard and determined pursuant to the ordinary dispute resolution parameters of the Act. 85 I also note the submissions by the Union that the decision made by Sams DP was not a decision within the meaning s187 of the Act – in the sense that it would not be jurisdictionally amenable to an appeal because it did not involve an enforceable result. Again, I do not accept the submissions of the Union in this respect. The decision itself resulted in two principal outcomes, namely, answering a discrete question and making a collateral recommendation. Both those outcomes were available under the statutory scheme. When exercising arbitral functions under Pt 1 of Ch 3 of the Act various statutory provisions may be enlivened, such as s380 concerning small money claims and s175 concerning powers of interpretation. Although s175 of the Act was not specifically referred to by Sams DP in his decision, that provision empowers the Commission, when exercising its functions, to determine any question concerning the interpretation, application or operation of any instrument. In this instance, a dispute was before the Commission under s130 of the Act and Sams DP was asked in arbitral proceedings to answer a question concerning the unregistered industrial agreement known as the Dwyer Agreement. As to that, s175 reads: 175 Powers of interpretation The Commission may, for the purpose of exercising its functions in connection with a matter before it, determine any question concerning the interpretation, application or operation of any relevant law or instrument (including the industrial relations legislation and any industrial instrument). 86 Sams DP also recommended that the parties should adopt a practical approach to addressing the question of how the decision might be implemented. As to that, the Commission may, in arbitral proceedings under Ch 3 Pt 1 of the Act (among a range of other potential outcomes), make a recommendation. Section 136 relevantly reads: 136 Arbitration of dispute (1) The Commission may, in arbitration proceedings, do any one or more of the following: (a) make a recommendation or give a direction to the parties to the industrial dispute, (b) make or vary an award under Part 1 of Chapter 2, (c) make a dispute order under Part 2, (d) make any other kind of order it is authorised to make (including an order made on an interim basis). (2) … 87 RailCorp submitted in the appeal: "The determination by the Commission of an industrial dispute is capable of constituting a 'decision' even though it is not accompanied by relief such as an order or award…". I accept this submission. In my view, nothing by way of a jurisdictional impediment to an appeal turns on the absence of, for example, an enforceable order in the decision of Sams DP. An appeal would lie to the Full Bench by an aggrieved party (or by other the other classes of appellants specified in s187(b)-(d) of the Act) against an arbitrated decision by a single member of the Commission that involved answering a question about the interpretation, application or operation of an instrument. Similarly, an appeal would lie against a decision comprising a recommendation made in arbitration pursuant to s136(1)(a) of the Act - no more and no less than an appeal would lie against a decision comprising the making or varying of an award under s136(1)(b), or the making of a dispute order or any other kind of authorised order contemplated in s136(1)(c)-(d) of the Act. Moreover, r4 of the Industrial Relations Commission Rules 1996 broadly defines a "decision" as including an "award, order, direction, contract determination or ruling". The word "ruling" in this definition of "decision" in the Commission's Rules would comprehend the findings made by Sams DP concerning the question before the Commission. 88 I accept the submissions by RailCorp that an appeal lies to the Full Bench from the decision made by Sams DP. Whether leave to appeal should be granted is, however, a separate question. As to that question, I note the position concerning appeals was recently restated in Davies v Kyogle Council [2008] NSWIRComm 90: It is also well settled that leave to appeal will not be lightly granted. An appeal bench is ultimately concerned with correction of error. (See Knowles v Anglican Church Property Trust (No 2) (1999) 95 IR 380 at 381; Perrott v XcelleNet Australia Ltd (1998) 84 IR 255 at 265; De Simone Consulting Pty Ltd v Ison (2000) 97 IR 478 at 482; Caltex Petroleum Pty Ltd v Harmer (1999) 92 IR 264; Ace Business Brokers Pty Ltd v Phillips-Treby (2000) 100 IR 420 and Strathfield Group Ltd v Hall (2002) 121 IR 158 at [45].) Further, "some issue of real significance in the interests of justice will need to be identified for such an application to succeed." (See Austin v NF Importers Pty Ltd & Anor (2005) 146 IR 113 at [4].) 89 I have not been satisfied, against the background of these recently restated appeal principles, that this is a case where leave to appeal should be granted. Although it was common ground in the hearing of the appeal that either party would have had the ability to file an appeal, the separate and discrete question is whether leave to appeal should, as a matter of discretion, be granted given the submissions below concerning acceptance of the decision. I consider there was a proper basis for the Union and Sams DP to consider that RailCorp would accept the findings on the merits – and, in the circumstances of this case, RailCorp should be held to those submissions so far as leave to appeal is concerned. By extension, I would not have been minded to grant leave to appeal to the Union had it been the appellant – given the Union's own submissions before Sams DP concerning acceptance of the decision. 90 Second, I consider that there is much to commend the industrially pragmatic approach that Sams DP adopted in his consideration of the question before him in that he reviewed the relevant history of industrial relations and emphasised the need for parties to abide by not only the letter, but also the spirit, of agreements brokered in good faith. Agreements between the parties should not fail on some narrow, technical approach because of some incompetency concerning implementation - and it is clear, as Sams DP concluded, that the parties had contemplated reclassification above the existing maximum grade of Area Controller Grade 3. I also consider that there is much to commend his Honour's comments concerning the desirability of RailCorp acting on the recommendation of the Evaluation Working Group, a joint union/management committee, which had considered the grading of the Area Controllers. 91 Third, Sams DP noted that the practical effect of answering the question in the Union's favour would require the parties themselves addressing implementation. In that respect, he strongly recommended a "practical approach" to implementation, and granted liberty to apply for a relisting in the event of any further difficulties. Again, this recommendation reinforces the industrially pragmatic approach adopted by Sams DP. 92 In short, I consider that the decision given by Sams DP represented an industrially just and equitable result. I say this notwithstanding my acceptance of the submissions that the answer given may not have been strictly open to his Honour on a narrow, technical approach to the question before him (equally, I observe he was not bound to apply a narrow or technical approach to the matter before him); that the decision contains at least one significant factual error; that he gave weight to evidence which would not assist in the construction of documents; that he drew potentially inappropriate evidentiary inferences; and that there were some other aspects of the decision to which RailCorp adverted where Sams DP had, arguably, erred. 93 Nonetheless, I would not be minded, considering the history of this matter and the decision as a whole, to intervene in the substance of the industrially pragmatic outcome determined by Sams DP. Shortly stated, I consider that his Honour reached the right industrial result based on the material before him. 94 Lastly, even if the appeal were to be upheld, I would not simply set the decision aside, as has been proposed by RailCorp in the appeal. I would remit the matter to Sams DP or reconvene the proceedings before the Full Bench with a view to allowing the parties to address shortly on the form of another recommendation, so as to attempt to put an end to this long-running dispute. _____________________ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.