FEDERAL COURT OF AUSTRALIA
Australian & International Pilots Association v Qantas Airways Limited
(ACN 009 661 901) [2008] FCA 1972
Held: no binding agreement – proposed implied term not so obvious it went without saying – negotiations ongoing – parties intended to create legal relationship – loss and damage not established – specific performance would not be granted
INDUSTRIAL LAW – certified agreement – breach of terms – terms requiring employer to grant paid relief from duty to employees to enable employees to attend to business of union – whether terms enforceable at law – whether terms pertained to relationship of employer and employees – whether relief from duty could be substituted for annual leave – whether relief from duty required for incoming President of union – whether relief from duty involved scheduling issues – whether demonstrable operational requirements prevented grant of relief
Held: terms enforceable – pertained to relationship of employer and employees – relief from duty could not be substituted for annual leave – incoming President not entitled to relief from flying – scheduling issues had not been discussed – no evidence of demonstrable operational requirements – relief from duty should have been granted to two employees
WORDS AND PHRASES – “pertaining to the relationship between…an employer…and…persons…employed” – “scheduling issues” – “demonstrable operational requirements”
Workplace Relations Amendment (Agreement Validation) Act 2004 (Cth)
Qantas Airways Limited Flight Crew (Long Haul) Certified Agreement 2003-2004 cll 24.2, 24.7, 27, 28.28, 45, 46
Qantas Airways Limited Flight Crew (Long Haul) Certified Agreement 2005-2006
Masters v Cameron (1954) 91 CLR 353 followed
Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 discussed
Sinclair, Scott & Co Ltd v Naughton (1929) 43 CLR 310 referred to
G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 discussed
B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 followed
Australian and New Zealand Banking Group Ltd v Frost Holdings Pty Ltd [1989] VR 695 discussed
Australian Broadcasting Corporation v XIVTH Commonwealth Games Ltd (1988) 18 NSWLR 540 cited
Gibson Motor Sport Merchandise Pty Ltd v Forbes [2005] FCA 749 cited
Caltex Properties Ltd (in liq) v Love and Ors (unreported, Supreme Court of Western Australia, Parker J, 14 May 1995) cited
R v Portus; Ex parte ANZ Banking Group Ltd (1972) 127 CLR 353 distinguished
Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 distinguished
Wesfarmers Premier Coal Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (No 2) [2004] FCA 1737 (2004) 138 IR 362 followed
AUSTRALIAN & INTERNATIONAL PILOTS ASSOCIATION v QANTAS AIRWAYS LIMITED (ACN 009 661 901)
VID 295 of 2006
GRAY J
23 DECEMBER 2008
MELBOURNE
| IN THE FEDERAL COURT OF AUSTRALIA |
|
| VICTORIA DISTRICT REGISTRY | VID 295 of 2006 |
| BETWEEN: | AUSTRALIAN & INTERNATIONAL PILOTS ASSOCIATION Applicant
|
| AND: | QANTAS AIRWAYS LIMITED (ACN 009 661 901) Respondent
|
| GRAY J | |
| DATE OF ORDER: | 23 DECEMBER 2008 |
| WHERE MADE: | MELBOURNE |
THE COURT ORDERS THAT:
1. The proceeding be listed for further hearing on the outstanding issues referred to in the reasons for judgment, on a date to be fixed.
2. On that date, the parties bring in minutes of orders reflecting the conclusions reached in the reasons for judgment.
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 | VID 295 of 2006 |
| BETWEEN: | AUSTRALIAN & INTERNATIONAL PILOTS ASSOCIATION Applicant
|
| AND: | QANTAS AIRWAYS LIMITED (ACN 009 661 901) Respondent
|
| JUDGE: | GRAY J |
| DATE: | 23 DECEMBER 2008 |
| PLACE: | MELBOURNE |
REASONS FOR JUDGMENT
The nature of the proceeding
1 On 2 September 2004, the High Court of Australia delivered judgment in Electrolux Home Products Pty Limited v The Australian Workers’ Union [2004] HCA 40 (2004) 221 CLR 309. The High Court held that certain provisions in an agreement negotiated between a corporation and a union did not pertain to the relationship between the corporation as employer and all persons employed in a single business or part of a single business of the employer, within the meaning of s 170LI of the Workplace Relations Act 1996 (Cth) (“the WR Act”) (as the WR Act then stood). As a result, it was held that the agreement could not have been certified validly pursuant to what was then s 170LT of the WR Act. The two sets of claims in this proceeding both have some relationship with the judgment in Electrolux.
2 The first claim is for breach of contract. The applicant, Australian and International Pilots Association (“AIPA”) claims that it entered into a binding contract with the respondent, Qantas Airways Limited (“Qantas”) in the course of negotiating a new certified agreement. Certain provisions, which had been part of the certified agreement between AIPA and Qantas at the time of the judgment in Electrolux, had not been included in the new certified agreement because it was thought that their presence might jeopardise the certification of that agreement. It was contended that those provisions had been placed in a separate agreement. There is a substantial issue as to whether any concluded agreement about those provisions ever came into existence. AIPA contended that, although there was no express agreement as to the duration (in terms of starting and finishing) of the obligations under the contract, the gap was filled by an implied term. If there was a concluded agreement, there is an issue as to whether it is enforceable, or is an agreement not intended to create legal relations, but binding in honour only. If there was a binding contract, there is no real dispute that Qantas was in breach of it. There are issues, however, as to what, if any, remedies should be granted. Such issues include whether AIPA suffered any loss it can claim as damages for breach of contract, what was the quantum of its loss if it did suffer such loss, and whether some form of order by way of specific performance can, or should, be made.
3 The second claim is that, in the last days of the operation of the certified agreement that was in force at the time of Electrolux, Qantas failed to comply with its obligations under that agreement. Claims are made for penalties for contraventions of various terms of that certified agreement and for consequential orders in relation to those penalties. The terms concerned are among the provisions that were identified as possibly falling outside s 170LI of the WR Act. Not surprisingly, Qantas relies on the unenforceability of those terms of the certified agreement as a result of Electrolux. Qantas also contests the proposition that it failed to comply with its obligations as expressed in those terms.
The legislation
4 It should be noted that the legislative provisions to which I refer in these reasons for judgment are those that were found in the WR Act as it stood at the times of events relevant to this proceeding. Subsequent major amendments to the WR Act have changed the numbering and wording of numerous provisions.
5 Division 2 of Pt VIB of the WR Act contained the following relevant provisions:
170LH What this Division covers
This Division sets out requirements that must be satisfied for applications to be made to the Commission to certify certain agreements between employers who are constitutional corporations or the Commonwealth and:
(a) organisations of employees; or
(b) employees.
170LI Nature of agreement
(1) For an application to be made to the Commission under this Division, there must be an agreement, in writing, about matters pertaining to the relationship between:
(a) an employer who is a constitutional corporation or the Commonwealth; and
(b) all persons who, at any time when the agreement is in
operation, are employed in a single business, or a
part of a single business, of the employer and whose
employment is subject to the agreement.
(2) The agreement must be made in accordance with section
170LJ, 170LK or 170LL.
170LJ Agreement with organisations of employees
(1) The employer may make the agreement with one or more
organisations of employees where, when the agreement is
made, each organisation:
(a) has at least one member employed in the single
business or part whose employment will be subject to the agreement; and
(b) is entitled to represent the industrial interests of the
member in relation to work that will be subject to the agreement.
(2) The agreement must be approved by a valid majority of the
persons employed at the time whose employment will be subject to the agreement.
(3) The employer must take reasonable steps to ensure that:
(a) at least 14 days before any approval is given, all the persons either have, or have ready access to, the
agreement, in writing; and
(b) before any approval is given, the terms of the
agreement are explained to all the persons.
…
170LM Making the application for certification
(1) The application for the Commission to certify the agreement must state that it is made under this Division.
(2) The application must be made no later than 21 days after:
(a) if it is made in accordance with section 170LJ—the day on which it is approved as mentioned in subsection
170LJ(2)
6 Section 170LT of the WR Act provided, so far as relevant to this proceeding:
(1) If an application is made to the Commission in accordance with
Division 2 or 3 to certify an agreement, the Commission must certify
the agreement if, and must not certify the agreement unless, it is
satisfied that the requirements of this section are met.
...
(5) If the agreement was made in accordance with section 170LJ or
Division 3, a valid majority of persons employed at the time whose
employment would be subject to the agreement must have genuinely
approved the agreement.
...
(10) The agreement must specify a date as the nominal expiry date of the
agreement, and that date cannot be more than 3 years after the date on
which the agreement will come into operation.
7 Section 170LX provided relevantly:
(1) A certified agreement comes into operation when it is certified and,
subject to this section, remains in operation at all times afterwards.
(2) The agreement ceases to be in operation if:
(a) its nominal expiry date has passed; and
(b) it is replaced by another certified agreement.
8 Section 170M(2) provided that if, in accordance with s 170LJ, one or more organisations of employees made the agreement with the employer, the agreement bound that organisation or those organisations.
9 Definitions relevant to the provisions I have quoted were found in both s 4(1) and s 170LB of the WR Act. In particular, “constitutional corporation” was defined in s 4(1) as meaning, among other things, “(c) a body corporate that is, for the purposes of paragraph 51(xx) of the Constitution, a trading corporation formed within the limits of the Commonwealth”. There is no dispute that Qantas is such a corporation. Section 170LB(1) relevantly defined “single business” as “(a) a business, project or undertaking that is carried on by an employer”. Section 170LB(3) provided:
For the purposes of this Part, a part of a single business includes, for example:
(a) a geographically distinct part of the single business; or
(b) a distinct operational or organisational unit within the single business.
10 Section 178 of the WR Act conferred on this Court power to impose a penalty on a person bound by a certified agreement who had breached a term in that agreement. Pursuant to s 178(4), the maximum penalty that can be recovered from a body corporate in respect of each breach at the relevant time is $33,000, unless the breach continued for more than one day, in which case an additional $16,500 can be imposed for each day on which it continues. Section 178(5A)(c) empowered an organisation bound by a certified agreement to sue for and recover a penalty for a breach of a term of that agreement. Section 178(6) empowered the Court to order an employer to pay to the employee the amount of any underpayment if the employee had not been paid an amount that the employer was required to pay under an agreement. Section 356 of the WR Act provided that a court that imposed a monetary penalty under the WR Act may order that the penalty, or part of it, be paid either into the Consolidated Revenue Fund or to a particular organisation or person.
The parties
11 AIPA is an organisation, registered pursuant to the WR Act. Its membership is open to pilots, and a number of pilots employed by Qantas are members of AIPA.
12 Qantas is a constitutional corporation for the purposes of the WR Act, by virtue of being a trading corporation formed within the limits of the Commonwealth of Australia. Qantas conducts an airline. For this purpose, it employs a number of pilots. Qantas operates flights to and from a number of places in countries other than Australia. These flights are referred to as “long haul” flights, and some of Qantas’s employee pilots are engaged wholly or mainly in flying aircraft on long haul flights. Both parties accept that the employment of pilots to conduct long haul flights is a single business, or a part of a single business, of Qantas.
The Association Business Provisions and related provisions
13 In September 2004, when the Electrolux judgment was delivered, AIPA and Qantas were parties to the Qantas Airways Limited Flight Crew (Long Haul) Certified Agreement 2003-2004. This was the sixth collective agreement between AIPA and Qantas since provisions relating to enterprise bargaining had been introduced into the Industrial Relations Act 1988 (Cth), which was renamed as the WR Act in 1996. Because the agreement was the sixth in a series, it was known colloquially as “EBA6”, and it is convenient to refer to it by this title in these reasons for judgment. EBA6 was certified by the Australian Industrial Relations Commission on 4 July 2003. Its nominal expiry date, inserted pursuant to the requirement found in s 170LT(10) of the WR Act, was 30 June 2004, but it remained in force in September 2004, pursuant to s 170LX, because it had not yet been replaced by another certified agreement. Indeed, negotiations for the agreement that replaced EBA6, the Qantas Airways Limited Flight Crew (Long Haul) Certified Agreement 2005-2006 (“EBA7”) had not yet begun.
14 Part 11 of EBA6 was headed “Association Business”. It contained the following provisions:
45. RELIEF FROM FLYING FOR ASSOCIATION BUSINESS
The following arrangements apply to enable Association members to be reliably available to attend to Association duties and responsibilities.
45.1 Association President
The Association President (“the President”) is entitled to relief from
flying under clause 46.4.1 and a pre-allocation of flying under clauses
27.6.1 and 46.4.2.
45.2 President’s designates
Associated with the office of the President, the President’s designates
are entitled to relief from flying equivalent to the credited hours
allocated to the President for flying or leave, and a pre-allocation of
flying under clause 27.6.1.
45.3 How relief from flying is achieved using Hours Banks
45.3.1 At the request of the President (or designate) and subject to
demonstrable operational requirements, the Company will do
one or more of the following:
(a) release members from Company duties;
(b) block days on a member’s bid line; or
(c) pre-allocate patterns of flying onto a member’s bid line
to enable Association members to attend to Association duties and responsibilities.
45.3.2 A request may be refused by the Company where it would incur
unreasonable cost, but any refusal will first be discussed with
the President with a view to resolving the matter to both
parties’ satisfaction.
45.3.3 The President (or designate) will endeavour to give Aircrew
Operations as much notice as possible of any requirement for
displacement under this Agreement.
45.4 Hours Banks
45.4.1 Time Bank
(a) The Company will provide up to 175 credited hours on
day one of each bid period to a “Time Bank”.
(b) In any bid period, if fewer than 175 hours are utilised
by Association members, the balance will be carried
forward.
(c) A maximum of 350 hours may accumulate in the “Time
Bank”.
45.4.2 Leave Bank
(a) Pursuant to clause 28.28, a leave bank is established
and maintained.
(b) The value of a “Leave Bank” day will be the value of
the applicable bid period divisor divided by 38.
45.4.3 Additional flying hours re-credited to hours banks
If an Association member flies additional credited hours during
the bid period in which he or she has been released from
Company duties for the purpose of carrying out Association
duties or obligations, those additional credited hours will first
be “re-credited” to the respective bank, less any hours
calculated at the rate of the applicable bid period divisor
divided by 38 for each day spent on Association business,
before any payment for additional credited hours is made to
the member.
45.5 Using the hours banks for Association business
45.5.1 An Association member who is required by the President (or
designate) to attend to Association business:
(a) may access the provisions of the Time Bank;
(b) may access the provisions of the Leave Bank; or
(c) may be removed from a pattern or patterns, in which
case the member:
(i) will be pattern protected for the credited hours
value of the pattern or patterns, less the credited
hours value of any Time Bank of Leave Bank
days spent on Association business;
(ii) will be available for offsets in accordance with
clause 27.16.5(i);
(iii) May be awarded or assigned an offset against
the pattern protected hours in accordance with
clause 27.16.5(g) with any remaining pattern
protected hours becoming fixed; and
(iv) If not awarded or assigned an offset against the
pattern protection, will have the pattern
protected hours offset by an equivalent
deduction from the Time Bank or Leave Bank.
45.5.2 When a member is required to attend to Association business
during a period of annual or long service leave, credited hours
may be debited from the Time Bank or Leave Bank so that the
infringed day(s) of leave are re-credited to the member.
45.5.3 At the request of the President, days may be blocked on a
member’s bid line with a “nil credited hours value”.
45.5.4 Where a member is a BLH or RLH in a bid period and he or
she is required to carry out Association duties, the member will
receive credited hours calculated at the rate of the applicable
bid period divisor, divided by 38, for each day that those duties
are required to be undertaken and those credited hours will be
deducted from the Time Bank or Leave Bank.
45.6 Joint Company/AIPA Business
When a member is required by the President to attend a meeting with the Company, or attend to joint Association/Company business, he or she:
45.6.1 will be pattern protected for any credited hours involved, less
any hours calculated by dividing the pattern value by the
number of calendar days of the pattern, for each day spent
attending to such business;
45.6.2 may be required to offset any or all of such pattern protection
during the remainder of the bid period and, in good faith, will
attempt to offset such hours but will not be required to be
available for offsets/assignments during the normal hours of
availability for pattern protected crew members;
45.6.3 may, with the approval of the President (or designate), have
the hours debited from the Time Bank or Leave Bank and not
be pattern protected under clause 45.6.1.
46. ASSOCIATION PRESIDENT
46.1 General
The provisions of this clause apply to a pilot during his or her tenure of office as President of the Association (“the President”). To the extent of any inconsistency between the provisions of this clause and any other provisions in this Employment Contract, the provisions in this clause will prevail.
46.2 Pay
The President will be paid a salary (calculated in accordance with clause 24.2) appropriate to the aircraft type on which he or she is flying.
46.3 Method of payment
The President will be paid in pay periods 1, 2, 3 and 4 of each bid period an amount calculated on the basis of one 26th of the prescribed pay and the appropriate allowance provided in clause 46.2.
46.4 Scheduling
46.4.1.The President is entitled to relief from flying equal to the bid
period divisor for his or her category.
46.4.2.Notwithstanding clause 46.4.1, the President is entitled to a
pre-allocation of not less than 80 credited hours of known
flying for each bid period, after consultation with the Company
to select flying before it is made available before bidding
(under clause 27.6.1).
46.4.3.Any flying allocated to the President for which he or she is not
available will be re-allocated at the Company’s discretion
either in accordance with the provisions of clause 17 (in which
case the quota provisions of clause 17.4.3 will not apply), or in
accordance with the provisions of clause 27.21.
46.4.4.Open time will be allocated in accordance with the provisions
of clause 27.21 (Allocating open time flying) except that the
Company may displace the President from any allocated
pattern.
46.4.5.The President may trade patterns with a pattern line holder or
with a supervisory crew member in accordance with clause
17.4.6 or with open time in accordance with the provisions of
clauses 27.21 and 27.22.
46.4.6.The Company may require the President to fly or exceed his or
her allocation of credited hours.
46.4.7.The President may consult with the Company about the
scheduling of designated duty free days. For the purpose of
clause 27.17 (Duty free time at a crew member’s base), the
President will be deemed a pattern line holder.
46.5 Annual leave
The President’s annual leave will be planned and taken as mutually
arranged except that the Company may assign leave when his or her
annual leave is in excess of the standard prescribed in clause 28.14.
46.6 Changeover of President
46.6.1.When the Association elects a new President, the provisions of
this clause 46 (with the exception of scheduling) will apply to
the new President on and from the date of his appointment as
President and will cease to apply to the outgoing President on
and from that date.
46.6.2.Any scheduling issues arising from the change-over of
Presidents will be discussed among the Company, the outgoing
President and the new President with a view to making
arrangements that are acceptable to all three parties.
15 Some other provisions of EBA6 were relevant to the operation of the provisions in Pt 11. There are numerous references to cl 27, a very long and complex clause relating to scheduling and hours of work, the details of which it is unnecessary to set out for present purposes. Clause 28.28, to which there is a reference in cl 45.4.2(a), provides:
Notwithstanding clause 28.1, for the purpose of establishing and maintaining a leave bank, the quantum of annual leave prescribed in that clause may be reduced by one (1) day in each 5 year period and will be transferred to a leave bank in accordance with rules and procedures agreed in writing between the Company and the Association.
16 Clause 46.2 also refers to cl 24.2 of EBA6, which prescribed the rate of pay for a crew member appointed by Qantas to an administrative supervisory appointment. The rate consisted of various components, for which provision was made elsewhere in EBA6, added together.
17 These provisions in cll 45 and 46, and the other provisions to which I have referred that operated in conjunction with those clauses, had first entered a collective agreement between AIPA and Qantas in the agreement that immediately preceded EBA6 (“EBA5”). The expression “Association Business Provisions” was sometimes used to refer to some or all of these provisions, although it is not always clear whether it was used in reference to cl 45 alone, cll 45 and 46, or those two clauses and the other provisions of EBA6 that related to them.
The negotiations for EBA7
18 In September 2004, the implications of the Electrolux judgment were obvious. In the first place, existing certified agreements might turn out to be wholly invalid because they contained provisions about matters that did not pertain to the relationship between employers and their relevant employees (“non-pertaining provisions”), and the Commission had therefore lacked power to certify them. The second implication was that, if future agreements were to be negotiated, care would have to be taken to avoid including non-pertaining provisions, which would lead to the Commission refusing to certify the agreement altogether.
19 At least the second of these implications was not lost on AIPA. It was preparing to enter into negotiations with Qantas for EBA7. On 29 September 2004, the day on which the first meeting of those negotiations was due to be held, Alana Starke, General Counsel of AIPA, wrote a letter to Sue Bussell, Group General Manager Industrial Relations of Qantas, with a copy to Captain Chris Manning, Head of Flight Operations and Chief Pilot, in the following terms:
I refer to our telephone discussion on 28 September 2004.
Please confirm that any provisions in Certified Agreements, Safety Net Awards or other industrial agreements between the Company and AIPA which may be affected by the recent High Court’s decision in Electrolux impacting upon any decisions by the Australian Industrial Relations Commission, will be transferred, without negotiation, into side agreements between us.
20 It should be noted that, although written at the outset of negotiations in respect of EBA7, this letter did not refer only to those negotiations. It was expressed to cover three classes of documents: certified agreements; safety net awards; or other industrial agreements. At the time, in addition to EBA6, which related to long haul flying, AIPA and Qantas were parties to a certified agreement that related to short haul flying, which was due to reach its nominal expiry date in September 2005. The evidence suggests that there may have been other documents caught by the description in the letter of 29 September 2004. One was an award dealing with the integration of two separate awards relating to domestic and international flying respectively, which had been made to accompany the merger of Australian Airlines and Qantas in the mid 1990s. Another suggestion was an agreement relating to the seniority of pilots as between Qantas and its subsidiary that operated an airline called Jetstar.
21 Negotiations for EBA7 opened with a meeting on 29 September 2004. The negotiators on behalf of AIPA were Alana Starke, Captain Bryan Welch, Andrew Marshall and Ely Nejadiran (whose surname changed during the course of negotiations to Jensen). Ms Starke was employed by AIPA with the title General Counsel. Under her contract of employment, her responsibilities were such that she was effectively AIPA’s Chief Executive. Captain Welch was an elected Vice-President of AIPA, who was given principal responsibility for the negotiations for EBA7. Qantas was represented by Julian Hailes (Manager, Industrial Relations), Vanessa Webber, Peter Broschofsky, Captain Peter Wilson, Darren Ziegenfusz and Mark Wagner (or Wagener). Initially, Captain Manning as Qantas’s Chief Pilot, and Captain Robin Holt as President of AIPA, each addressed the meeting. These addresses were regarded as opening the negotiations formally, and setting their tone. What then happened in the meeting is the subject of varying accounts given in evidence by Captain Welch, Ms Starke and Mr Hailes, and found in notes taken at the time by Ms Nejadiran/Jensen, Mr Hailes and Ms Webber. It is clear that there was some discussion about Electrolux. Ms Starke appears to have raised the issue, although Captain Welch’s recollection is that he raised it first. Ms Starke also appears to have referred to her telephone conversation with, and letter to, Ms Bussell, although Ms Starke did not recall having made any such reference. The meeting was certainly aware of a proposal to remove any non-pertaining provisions before the terms of EBA7 were finalised, and to put those provisions into a separate document. The Qantas management team did not reject this idea. In his evidence, Mr Hailes said that he had not considered the issue previously. It also appears that, at the meeting on 29 September 2004, Qantas tabled its log of claims, a document setting out the changes it sought to make to the terms of EBA6 so that EBA6, as modified, could become EBA7.
22 A further meeting occurred on the following day, 30 September 2004, at which the same persons (other than Captain Manning and Captain Holt) attended. At this meeting, the AIPA log of claims was tabled, setting out the changes AIPA sought to have reflected in the new agreement. This document consisted of a cover sheet, three pages containing proposed clauses and a page headed “ANCILLARY MATTERS TO BE RESOLVED”. There were seven items listed. Number seven was in the following terms:
Administrative matter: Confirmation that provisions in industrial agreements between QAL and AIPA which may be affected by Electrolux decision of the High Court (impacting upon AIRC decisions) will be transferred, without negotiation, into side documents between the parties.
23 Towards the end of the meeting, there was a brief discussion about this item. Again, the accounts of Captain Welch, Ms Starke and Mr Hailes differ about what was said, as do the records found in the notes of Ms Nejadiran/Jensen, Mr Hailes and Ms Webber. Speaking broadly, the evidence led on behalf of AIPA is to the effect that agreement was secured to the transfer of non-pertaining provisions to side agreements. Ms Nejadiran’s note and Captain Welch’s recollection (perhaps prompted by the note) is of Mr Hailes saying “That should be okay.” Mr Hailes and Ms Webber do not support such a firm agreement. I infer that, at that time, there was at least a recognition by both parties that it was in their interests to facilitate the removal of provisions that might jeopardise the certification of EBA7, and that transferring such provisions to some other form, not involving submission for certification, would be an option. In addition, Captain Welch was keen to make the point that any provisions transferred should not be altered. He did not want either party taking advantage of the post-Electrolux environment by seeking to renegotiate what had been agreed for EBA6 but could not be transferred to EBA7. Captain Welch expressed this view. Mr Hailes understood that AIPA did not want changes made to any transferred provisions. He wrote in his notes “AIPA wouldn’t see change”.
24 At a minimum, after the meetings of 29 and 30 September 2004, Qantas understood that AIPA wished to have removed from EBA7 any provisions that might put at risk the certification of EBA7, by being found to be non-pertaining provisions. Qantas also understood that AIPA wished to have these provisions expressed, without change, in some other instrument. Qantas did not reject this proposition. Indeed, it is clear that Qantas was quite prepared to entertain such an idea.
25 On 15 December 2004, the Workplace Relations Amendment (Agreement Validation) Act 2004 (Cth) commenced to operate. Its effect was to validate all provisions of existing certified agreements that were not non-pertaining provisions. Its operation was retrospective. Accordingly, from the point of view of AIPA and Qantas, EBA6 continued in operation except to the extent of any non-pertaining provisions that it contained. The first of the considerations referred to in [18] above was therefore no longer a consideration. Any invalidity would only extend to non-pertaining provisions in EBA6.
26 Negotiation of the terms of EBA7 continued over some 10 months following the meeting of 30 September 2004. Little or no mention was made during that time of the Electrolux issue. Mr Hailes did give evidence that, at some time during that period, he received a phone call from Ms Starke, apparently unprompted by any specific incident, in which Ms Starke raised the question of the kind of document into which possibly non-pertaining provisions would be transferred. She mentioned the possibility of a deed, and Mr Hailes rejected that. Ms Starke was not asked about any such conversation. It is not clear whether it took place during the period of negotiation of the terms of EBA7.
27 On 4 August 2005, a document entitled “EBA7 Terms of Settlement” was signed by Mr Hailes on behalf of Qantas and Captain Holt on behalf of AIPA. The document reflects the fact that EBA6 was regarded as the basis for negotiations, and records terms that the parties had agreed on by way of changes to what was in EBA6. Clause 4 contained provisions relating to superannuation, in which AIPA acknowledged that certain specified provisions would not form part of, or be included in, the new certified agreement, but that a designated letter of agreement would be voted on as part of the new agreement. Clause 12 was headed “Other Matters” and was in the following terms:
Administrative Issue: Non-pertaining matters
The parties agree to review provisions in existing industrial agreements between Qantas and AIPA to identify whether, pursuant to the Electrolux decision of the High Court of Australia, there are any non-pertaining provisions in those agreements. It is agreed that any provisions identified under this review as being non-pertaining will be transferred into side agreements between the parties.
28 On 14 September 2005, the election of a new Committee of Management of AIPA was finalised. Captain Ian Woods was elected to succeed Captain Holt as President. The change of regime involved a change of attitude to some issues affecting members of AIPA. Captain Woods had been a member of the AIPA Committee of Management. On 12 July 2005, when the Committee of Management had resolved to accept the EBA7 Terms of Settlement (subsequently signed on 4 August 2005), and to recommend acceptance by the members of AIPA, Captain Woods had spoken and voted against this proposal. He and the new officers also had views that there should be changes to the way in which AIPA was administered, which would involve more of the administration work being done by elected officers, rather than by employed personnel.
29 In the meantime, a joint working party was proceeding to convert the terms of settlement of 4 August 2005 into a document that could be put to a vote of the relevant employees of Qantas for their approval, as a step towards a certified agreement. On 19 September 2005, the working party dealt with the question of non-pertaining provisions. It was agreed that cll 45 and 46 of EBA6 should be removed from the new certified agreement. There was some discussion about the nature of the document into which those provisions ought to be placed. A note of the meeting of the working party, made by Mr Hailes, records that the provisions would “come out into MOU/Deed or similar”. The word “Deed” is then crossed out. Similar agreement was reached in relation to other provisions that related to cll 45 and 46, particularly cl 28.28 (the leave bank provisions) and various provisions of cl 27, particularly those that bore on pre-allocation of flying to the President and other officers of AIPA.
30 The process of drafting EBA7 was finalised on 28 September 2005. At the same time, Captain Holt and Mr Hailes signed a document entitled “EBA7 (2005-2006) Explanatory Note”, designed to be distributed to those employees entitled to vote in relation to the proposed EBA7. The Explanatory Note was divided into two parts. Part 1 was entitled “Matters included in the new Agreement”. Part 2 was described as “Additional matters agreed between the parties as part of EBA7 negotiations but which are NOT included in the new Agreement”. Part 2 included the superannuation provisions referred to in [27] above. It also included the following:
2. Administrative Issue: Matters not pertaining to the employment
relationship
2.1 The Electrolux case
During the course of EBA7 negotiations, as part of an administrative
exercise, the parties were obliged to comply with the AIRC’s directions
about the removal of provisions that do not relate to the employment
relationship and which have been held, pursuant to the decision of the
High Court of Australia in the Electrolux case, cannot be included in
Certified Agreement. These types of provisions are referred to as
“non-pertaining matters” and their inclusion would render an
Agreement incapable of certification.
2.2 AIPA’s claim in EBA7
AIPA’s log of claims included the following claim:
“The parties agree to review provisions in existing industrial agreements between Qantas and AIPA to identify whether, pursuant to the Electrolux decision of the High Court of Australia, there are any non-pertaining provisions in those agreements. It is agreed that any provisions identified under this review as being non-pertaining will be transferred into side agreements between the parties.”
The Company agreed to the claim.
2.3 Review of current Certified Agreement
After reaching agreement on AIPA’s claim, the parties have reviewed
the current Certified Agreement and independently concluded that
provisions dealing with leave bank and Association Business/
Association President meet the “non-pertaining matters” principle.
2.4 Transfer of provisions on leave bank and Association Business/
President into MOU
The parties have agreed to transfer into a Memorandum of
Understanding (MOU), without negotiation of any of the relevant
terms in the provisions, those matters that do not comply with the
AIRC’s requirements for certification. They include the leave bank
provision (previously clause 28.28) and the whole of part 11 including
clause 45 (Association Business) and clause 46 (Association
President).
2.5 Transfer of clauses which make reference to Association Business/
President into MOU
Additionally, the following clauses which either directly or indirectly
relate to, or contain references to, clause 45 (Association Business) or
clause 46 (Association President) have been transferred without
negotiation into the MOU:
| Clause No. | Heading/Subject matter |
| 17.1.5 | Trading Patterns (supervisory crew members may trade with AIPA’s President and the Vice-President Flight Engineers) |
| 26.18.8 | Supervisory flight crew, administration and training SIOs and the Association’s President (reference to the payment of the AIPA’s President in the context of that office being regarded as a supervisory appointment) |
| 27.6.1 | Pre-allocating flying for pilots (flying for AIPA’s President and designates will be pre-allocated) |
| 27.4.2(b)(ii) | Pattern line construction - Determining the number of pattern lines to be constructed for each category at a base station - Dividing total credited hours by the divisor (the number of pattern lines to be constructed for each category takes into account the allocation of flying to AIPA’s President and designates) |
| 27.6.2 | Pre-allocating flying for FEOs (flying for AIPA’s Vice-President Flight Engineers will be pre-allocated) |
| 27.21 (Explanatory note) | Allocating open time flying (reference to scheduling for AIPA’s President) |
| 27.21.5 | Order of priority for allocating open time flying (order of priority provides for AIPA’s President and Vice-President Flight Engineers to be considered the most senior pilot and flight engineer respectively) |
| Priority 10 of Open time table (Early Closure) | Priority 10 in Early Closure provides for any additional credited hours resulting from a trade offered or awarded to AIPA’s Vice-President Fight [sic] Engineers to be debited against the quota of flying for supervisory crew members as provided in clause 27.16 (pattern protection) |
| Priority 10 of Open time table (Normal Closure) | Priority 10 in Normal Closure provides for allocations to AIPA’s Vice-President Flight Engineers to be made without limiting the normal entitlement for the classifications. In Priority 10 |
| 27.22.2(l)(i) | Trading patterns with another crew member - Trades by crew members who are not pattern protected or assignable time available (provides for trades between pattern line holders who are not pattern protected or assignable time available, with AIPA’s President or Vice-President Flight Engineers) |
31 To the extent to which cl 2.5 suggested that a memorandum of understanding was in existence, it was inaccurate. No such document had been produced, even in draft form.
32 During October 2005, a copy of EBA7 and the Explanatory Note was provided to each employee of Qantas entitled to vote on the agreement. There was also a subsequent document entitled “Clarification Notice”, signed by Captain Holt and Mr Hailes, distributed to those employees. The voting period closed on 3 November 2005. A majority of those eligible to vote approved EBA7.
33 In the meantime, Ms Starke was giving attention to the question of certification of EBA7, in anticipation of a favourable vote. On 31 October 2005, Ms Starke emailed Ms Bussell about what would be required to make an application to the Commission for certification, and suggested that such an application could be filed on the morning of 4 November 2005. Ms Bussell replied that Qantas was working towards lodging an application on that morning. On 1 November 2005, Ms Starke responded, saying:
Of course, we need to agree on the MOU (Association Business and leave bank).
I’m travelling to LST today, and will send a document through to you or arrange for that to be done once it’s ready.
34 Ms Starke was travelling to Launceston on 1 November 2005 to assist in a legal proceeding in which two members of AIPA were involved. On the evening of 2 November 2005, after the first day of the hearing of that legal proceeding, Ms Starke produced the first draft of a memorandum of understanding. It was in the form of a legal document. Clause 1 listed the parties (Qantas and AIPA). Clause 2 dealt with interpretation and definitions. Clauses 3 and 4 were as follows:
3. COMMENCEMENT AND DURATION OF MOU
3.1 This MOU will come into effect upon certification by the AIRC of the
EBA7 Certified Agreement.
3.2 Notwithstanding the nominal expiry date in the EBA7 Certified
Agreement this MOU will continue to operate beyond that date and
can only be varied, replaced, rescinded or terminated by agreement
between the parties.
4. AGREEMENT FOR CONTINUATION OF BUSINESS
ARRANGEMENT PROVISIONS
4.1 As part of an administrative exercise during the course of EBA7
negotiations, the parties were obliged to comply with the AIRC’s
directions about the removal of provisions that have been held,
pursuant to the decision of the High Court of Australia in the
Electrolux case, cannot be included in the Certified Agreement.
4.2 The parties acknowledge that various provisions contained in EBA6
dealing with Leave Bank and Association Business/Association
President (“the business arrangement provisions”) meet the
“non-pertaining matters” principle in the Electrolux case and cannot
be included in the EBA7 Certified Agreement.
4.3 Notwithstanding clauses 4.1 and 4.2, by entering into this MOU the
parties affirm:
4.3.1 the business arrangement provisions; and
4.3.2 the parties’ agreement reached as part of EBA7 negotiations to
transfer into this MOU, without negotiation of any of the
relevant terms in the provisions, the business arrangement
provisions in order to ensure their continued operation.
35 There were four remaining clauses and four schedules. Each clause referred to a schedule. Clause 28.28 of EBA6 was referred to in cl 5, and found in Sch 1. Clause 45 of EBA6 was referred to in cl 6 and found in Sch 2, cl 46 in cl 7 and Sch 3, and various provisions of cl 27 in cl 8 and Sch 4. This draft was forwarded to Ms Bussell and Mr Hailes by an AIPA staff member on Ms Starke’s instructions on the morning of 3 November 2005. A second draft, containing some corrections, was forwarded to Mr Hailes late in the afternoon of the same day. Clause 3 of the second draft was as follows:
3. COMMENCEMENT AND DURATION OF MOU
3.1 This MOU will come into effect upon certification by the AIRC of the
EBA7 Certified Agreement.
3.2 Notwithstanding the nominal expiry date in the EBA7 Certified
Agreement this MOU will continue to operate beyond that date and
can only be varied, replaced, rescinded or terminated by agreement
between the parties.
36 On 4 November 2005, Qantas forwarded to AIPA a revised draft of the memorandum of understanding, labelled Draft 3, in which cl 3 provided as follows:
3. COMMENCEMENT AND DURATION OF MOU
3.1 This MOU will come into effect upon certification by the AIRC of the
EBA7 Certified Agreement (EBA 7) and will continue in force until the
expiry of the nominal expiry date of EBA 7.
3.2 Notwithstanding clause 3.1 this MOU can be varied, replaced,
rescinded or terminated by agreement between the parties.
37 In this Draft 3, Qantas introduced a new clause in the following terms:
8. ACKNOWLEDGMENTS BY AIPA
8.1 AIPA acknowledges that in agreeing to this MOU, Qantas is assuming
the risk of legal action from employees covered by EBA 7 who may be
detrimentally affected by the application of the MOU.
8.2 AIPA agrees that:
(a) it will not support any legal action by an AIPA member in
relation to the application of the MOU, in particular, alleging
a breach of EBA 7 by virtue of the application of this MOU;
(b) in the event that legal action is taken against Qantas by virtue
of the application of this MOU, AIPA and Qantas will
renegotiate this MOU to address the alleged breach and to
prevent further legal action being taken; and
(c) in the event that an employee is successful in any legal action
against Qantas in relation to the application of this MOU,
AIPA will bear 50% of the amount awarded against Qantas.
38 This clause was the subject of negotiation in subsequent drafts, particularly modifications recognising that AIPA might also be sued by an employee, and making the obligation to contribute 50% of the amount awarded in any such proceeding a reciprocal obligation. Neither party appears to have taken objection to the presence of such a clause in the memorandum of understanding.
39 On the morning of 10 November 2005, AIPA forwarded to Qantas its Draft 4 of the memorandum of understanding, in which the relevant clause was represented as follows:
4. COMMENCEMENT AND DURATION OF MOU
3.14.1 This MOU will come into effect upon certification by the AIRC of the
EBA7 Certified Agreement (EBA 7) and will continue in force at least
until the expiry of the nominal expiry date of EBA-7, subject to clause
4.2.
4.2 Notwithstanding the passing of the nominal expiry date of EBA7, if the
parties have commenced negotiations for a new Agreement, this MOU
will continue in force until the new Agreement is certified.
4.3 Notwithstanding clauses 4.1 and 4.2, this MOU can be varied,
replaced, rescinded or terminated by agreement between the parties.
3.2Notwithstanding clause 3.1 this MOU can be varied, replaced, rescinded or terminated by agreement between the parties.
40 This was followed by a Draft 5 from Qantas on the same day, in which the relevant clause was expressed as follows:
4. COMMENCEMENT AND DURATION OF MOU
4.1 This MOU will come into effect upon certification by the Australian
Industrial Relations Commission of EBA7 and will continue in force
at least until the nominal expiry date of EBA7 at which time the MOU
ceases to apply, subject to clause 4.2.
4.2 Notwithstanding the passing of the nominal expiry date of EBA7, if the
parties have commenced negotiations for a new Agreement, this MOU
will continue in force until the new Agreement is certified.
4.3 Notwithstanding clauses 4.1 and 4.2, this MOU can be varied,
replaced, rescinded, extended or terminated by agreement between the
parties.
41 This draft formed the basis of discussions at a meeting between representatives of AIPA and Qantas on the afternoon of 10 November 2005. In the meantime, Captain Woods took office formally as President of AIPA on 4 November 2005. On the following Monday, 7 November 2005, AIPA’s annual general meeting was held. Captain Holt handed over the presidency to Captain Woods at that meeting. The practicalities of the change of leadership led to an adjournment of the proposed hearing in the Commission, with respect to the certification of EBA7, from 7 November until 16 November 2005.
42 By letter dated 15 November 2005, Captain Woods sought Ms Bussell’s agreement to a further postponement of the hearing. The letter advised that AIPA had received legal advice that questioned the validity of the ballot in which EBA7 had been approved. Qantas refused to consent to any postponement, with the result that the hearing took place on 16 November 2005.
43 Representing AIPA at the Commission hearing were Ms Starke, Captain Woods and Ms Jensen. At the outset, Ms Starke on behalf of AIPA applied for an adjournment of the hearing. In doing so, she referred to:
a number of inadvertent administrative errors that have been identified in the new agreement and, more importantly, the emergence of an issue between the parties concerning a memorandum of understanding that has not yet been finalised.
44 Ms Starke then said that “the issue relating to the memorandum of understanding remains in contention”. She referred to agreement during the negotiations to review the certified agreement with a view to removing provisions not pertaining to the employment relationship and to transfer them into other agreements between the parties. She informed the Commission that the substance of the non-pertaining provisions was not in issue between the parties and said:
However, the document, or vehicle, containing the provisions, the memorandum of understanding that I’ve referred to already, has not yet been settled between the parties. In particular the application of the memorandum of understanding in terms of its duration and in effect its continued operation past the nominal expiry date in EBA7 has not been agreed.
45 Ms Starke repeated “the MOU remains unsettled” and informed the Commission of the meeting of 10 November and of the five drafts that had been exchanged between the parties. She told the Commission that AIPA had drafted a clause that provided that the MOU would come into effect on certification of EBA7 and would continue in force at least until the nominal expiry date of EBA7. She said that there was also a clause that, if the parties had commenced negotiations for a new agreement, then the MOU would continue in force until the new agreement was certified. She told the Commission that “Qantas has in fact rejected the provision that the MOU would continue in force while the parties are in negotiations for a new agreement, until the new agreement is certified.” She informed the Commission that Qantas had agreed to provide for the MOU to be extended by agreement. She referred to “AIPA’s understanding...that the MOU would continue to operate beyond the nominal expiry date until a new agreement is certified” and told the Commission that “At no stage during negotiations did Qantas disclose or even suggest to AIPA that the period of operation of the MOU would be anything less than what would occur under a certified agreement”, or that the MOU would not have the same de facto operation beyond the nominal expiry date. She said that Qantas’s position on this aspect came as a surprise to AIPA during the course of drafting the MOU. She said:
The position that is now ventured by Qantas was not the position ventured during negotiations. Had it been we would have been in discussions on it. It’s important to note, Commissioner, that the explanatory note accompanying the distribution of the new agreement did not disclose that limitation to employees.
46 At one point during the submissions about adjournment, the Commissioner said:
The difficulty we have Ms Starke is that the - what’s the guarantee that you’re going to reach agreement? You’ve had over a week now, with the new team, and Qantas. You haven’t reached agreement yet. What’s the chance of reaching agreement?
47 Subsequently, the Commissioner looked at the Explanatory Note that had been distributed to those who were to vote on the EBA7, and to the absence of any reference to a date, or to the life of the MOU. Ms Starke agreed that there was no such reference in the Explanatory Note, and also pointed out that there had been no discussion between the parties on the issue “now being proposed by Qantas.” The Commissioner said:
Or you. That’s what I’m saying. It doesn’t say how long that MOU would go for, and going from your comments that seems to be the difference. You said the MOU - you wanted a deed, they wanted an MOU. You agreed to an MOU. They then wanted until the certified agreement went to its normal date. Then you say no it could be longer than that. But none of that was a matter that went to members was it?
48 Ms Starke replied:
In discussions between the parties in the negotiations Qantas did not say that it will only go to the nominal expiry date. But we were asking for something that would have a long term operation, ie the deed.
49 Captain Woods then addressed the Commission, followed by the advocate appearing on behalf of Qantas, who opposed the request for an adjournment. Ms Starke replied, and the Commissioner then refused to grant an adjournment. The Commissioner proceeded to consider whether to certify EBA7, pursuant to s 170LT of the WR Act. On the same day, he decided to certify EBA7, thereby bringing it into effect on that day.
50 By letter dated 9 December 2005, AIPA advised the Commission that it was in dispute with Qantas, and sought a recommendation of the Commission that “Qantas honour its agreement” as reflected in cl 2.4 of the Explanatory Note distributed to those eligible to vote on EBA7. The letter advised the Commission that Qantas had asked that AIPA execute the memorandum of understanding by close of business on the day of the letter, in default of which Qantas would consider the memorandum of understanding to be withdrawn. On the same day, 9 December 2005, Captain Perry McNeil, the Secretary of AIPA, wrote to Ms Bussell in the following terms:
The Australian & International Pilots Association (AIPA) formally demands that Qantas Airways Limited (Qantas) acknowledge as in force and binding upon Qantas and AIPA the provisions of an agreement being the agreement referred to in the Explanatory Memorandum issued by Qantas for the purposes of a vote taken of members of AIPA on EBA7 and referred to therein as matters which “have been agreed between the parties as part of EBA7 negotiations but which, by agreement, have NOT been included in the new Agreement” (Introductory paragraphs of Explanatory Note, fourth sentence).
It is further formally demanded that Qantas retract its threat to withdraw or otherwise cease to be bound by the Agreement referred to in the Explanatory Memorandum unless AIPA agrees to accept that the term of the Agreement be taken to continue in force only until the nominal expiry date of EBA7 and will then cease to apply.
AIPA requires an assurance not later than 5.00 pm on Friday 9 December 2005 that the demands above referred to will be complied with in default of receipt of which AIPA will be in dispute with Qantas as to the matters above referred to.
51 Ms Bussell responded to this letter, and also to the letter to the Commission, by letter dated 12 December 2005. This letter referred to Draft 5 of the memorandum of understanding, which had been supplied to AIPA representatives at the meeting on 10 November 2005, and to subsequent discussions about that draft. It said that at no time had Qantas advised or threatened that it would withdraw the memorandum of understanding unless it was signed by AIPA by close of business on 9 December 2005. The letter also said that Qantas was still awaiting a response from AIPA in relation to Draft 5 of the memorandum of understanding.
52 On 13 December 2005, Captain McNeil wrote again to Ms Bussell. The letter contained the following passage:
The position is this:
(a) There is in existence a binding agreement between AIPA and Qantas
the content of which can be ascertained from the relevant paragraphs
of the Explanatory Note;
(b) Qantas is not entitled to “withdraw” an agreement, on the faith of
which AIPA members voted to approve EBA7 (2005 - 2006);
(c) The effective operation of the agreement is the same as the effective
operation of EBA7 (2005 - 2006), not the nominal expiry date of
EBA7.
(d) If there was any doubt about that (AIPA says there isn’t) there can be
no doubt that the agreement is in force now and Qantas is not entitled
to threaten to not observe its agreement to force AIPA to accept a
narrower view of its term of operation.
Please advise whether Qantas Airways Limited considers that the Agreement referred to in the Explanatory Note is in force and will be honored [sic].
53 The letter then set out the five versions of the commencement and duration clause that had appeared in the five successive drafts of the memorandum of understanding. The letter then proceeded:
Versions 1 and 2 were acceptable to AIPA and also were acceptable to Qantas Airways Ltd until a date on or shortly after 3 November 2005.
If the provisions of the Agreement referred to in the Explanatory Memorandum were agreed as between AIPA and Qantas Airways Ltd and were lifted from EBA6 and agreed “without negotiation” why and when and by whom did Qantas Airways Ltd decide that it wished a shorter term of operation for the Agreement than EBA7?
My suggestion is, that we submit the dispute, which exists to conciliation by the Australian Industrial Relations Commission. Our submission to the AIRC, consonant with what the Commission said when certifying EBA7, is that the Agreement, be accepted by Qantas Airways Ltd and AIPA as binding in its terms.
The Australian & International Pilots Association is being disadvantaged by the recent and continuing refusal of Qantas to give effect to the Agreement referred to in the Explanatory Memorandum.
Both the President and I made application for leave to attend to urgent AIPA business. Both applications were refused. That seems to convey to AIPA that Qantas now does not regard the Agreement as binding upon it. I will be very pleased to hear to the contrary and await your urgent advice.
54 On 16 December 2005, Ms Bussell wrote to Captain McNeil. The letter referred to cl 2.4 of the Explanatory Memorandum and continued:
In accordance with the agreement, all these provisions have been transferred into a draft MOU without negotiation (except the provision relating to the leave bank which has been preliminarily agreed between the parties to be an “opt in” scheme).
The parties have been in discussions since 3 November in relation to various machinery issues such as definitions, acknowledgments, commencement and duration. Once these matters have been agreed the MOU will be referred to senior management. In the Company’s view, this is not inconsistent with the Explanatory Memorandum. At this stage, no agreement on the MOU has been reached as the Company is awaiting a response from AIPA in relation to Draft 5 of the MOU.
We note the Company did not agree to the duration clause in Draft 1 and 2 of the MOU as suggested in your letter. Draft 1 of the MOU was sent to the Company on 3 November 2005 at 11:45am. A further version was emailed to the Company at 5:03pm which contained administrative changes. The Company provided its amendments to AIPA in relation to Drafts 1 and 2 on 4 November 2005 which included an amended duration clause.
The Company does not believe the Australian Industrial Relations Commission (AIRC) has jurisdiction to deal with this matter and accordingly, reserves its right to raise any jurisdictional concerns should the matter be referred to the AIRC.
We await your response to Draft 5 of the MOU so that the matter may be referred to senior management.
55 On the same day, AIPA’s Industrial Officer, Richard Jennings, wrote to Ms Bussell in reply to her letter. His letter included the following paragraph:
The position of AIPA with regard to the duration of a Memorandum of Understanding is that it should have the same currency as EBA7. AIPA is quite prepared to have that said.
56 On 12 January 2006, Captain Perry McNeil, the Secretary of AIPA, wrote to John Borghetti, Qantas’s Executive General Manager. The letter included the following:
At present the office holders in AIPA are under what seems to us to be the unnecessary inconvenience resulting from applications made on behalf of the President and myself to be released from flying duties to attend to AIPA business being refused. The reason given is that while the Protocol governing such release is agreed and accepted, AIPA must agree to any such arrangement ending on the nominal expiry date of EBA7.
Our concern is that without some understanding that the Protocol (which is long established) will continue beyond the nominal expiry date of EBA7, negotiations directed to a mutually acceptable EBA8 will take place in circumstances where the office holders of AIPA are not free to attend to them.
We have sought the good offices of the AIRC to suggest a formula to overcome this problem.
You will appreciate that under present conditions, office holders must utilise their personal holiday or long service leave to carry out the duties which they were elected to perform. This itself limits opportunities for dialogue and constructive discussion and has led to a measure of exasperation which is not helpful to the Company or to AIPA members.
We would certainly appreciate your good offices and those of Mr. Geoff Dixon in overcoming this situation even on an interim and without prejudice basis that involves no concession by Qantas.
57 On 17 January 2006, Captain Woods also wrote to Mr Borghetti, concerning relief from flying duties for AIPA business. The letter referred to the fact that “these conditions were agreed to be transferred to a Memorandum of Understanding (MOU) in conjunction with the certification of EBA7.”
58 The following day, 18 January 2006, Ms Bussell wrote to Mr Jennings, expressing Qantas’s willingness to meet with AIPA directly in relation to the memorandum of understanding, and proposing that a meeting be held on “Friday 20 January 2005”. This was obviously intended to be a reference to 20 January 2006. Such a meeting apparently took place. On 23 January 2006, Phoebe Emery on behalf of Qantas forwarded by email to Mr Jennings and Ms Jensen Draft 6 of the memorandum of understanding. The email informed Mr Jennings and Ms Jensen that “Once we have agreement from you on Draft 6 of the MOU we will forward the document to senior management for consideration.” Draft 6 contained the following clause:
4. COMMENCEMENT AND DURATION OF MOU
4.1 This MOU will come into effect upon an agreement in principle being
reached between the parties and will expire on 31 December 2006.
4.2 Notwithstanding clause 4.1, this MOU can be varied, replaced,
rescinded, extended or terminated by agreement between the parties.
4.3 Negotiations for such variation, replacement, rescission, extension or
termination by agreement between the parties shall commence no later
than 30 June 2006 and shall be sought to be concluded no later than
30 September 2006.
59 Even before that Draft 6 was forwarded by email, Mr Jennings had written to Ms Bussell on 20 January 2006, referring to the meeting of that day and saying:
We advise that under protest AIPA accepts the revised wording of new clause 4.3, the substitution of 31 December 2006 for the words ‘nominal expiry date’ in clause 4.1 and the Qantas insistence that the operation of the MOU be taken to commence with AIPA’s advices to Qantas to the effect of the foregoing.
We note the MOU as amended will be taken as operative as of today’s date.
60 On 21 February 2006, Captain Woods wrote to Geoff Dixon, Managing Director and Chief Executive Officer of Qantas, referring to a meeting on 10 February 2006, at which Mr Dixon had apparently stated that Qantas’s lawyers were looking at the memorandum of understanding, and asking whether Mr Dixon was in receipt of the lawyers’ advice and was in a position to sign off on the memorandum of understanding. On 14 March 2006, Mr Dixon replied in the following terms:
Further to our discussion on 10 February concerning Qantas financial support to AIPA and your subsequent facsimile of 21 February.
As you are aware, Qantas has had concerns and reservations about this arrangement for some time. These concerns are shared by others. After careful consideration, we believe the arrangement should not continue and Qantas will not be signing the MOU outlining financial support for AIPA.
The alleged contraventions of EBA6
61 Notwithstanding that cll 45 and 46 of EBA6 were among the provisions identified as being likely non-pertaining provisions, and therefore as being potentially invalid in EBA6, AIPA alleges in this proceeding contraventions of those provisions, occurring in the last days of EBA6, prior to its replacement by EBA7 on the certification of the latter.
62 By 23 September 2005, Captain Woods had become aware that he had sufficient support within the Committee of Management to be elected as the next President of AIPA. He was in fact declared elected on 4 November 2005, and took over from Captain Holt in the course of the AIPA annual general meeting on 7 November 2005. In the meantime, in anticipation of his election as President, Captain Woods sent to Nora Tu an email on 23 September 2005, in the following terms:
Nothwithstanding [sic] that I won’t take office as AIPA’s President until Monday Nov 7th, I believe it appropiate [sic] that I advice [sic] you of the flying that I would prefer to do in the next BP if at all possible.
As you would know, I expected to be on annual leave until the end of November, and on Long Service Leave from Dec 20th. Nevertheless, taking this leave will now, not be appropiate [sic] and also unnecessary.
Subject to Wayne’s confirmation, would you please cancel all lmy [sic] eave [sic] in the next BP, and preassign me the following trips:
* HH07.2
* SL34.5
* RJ02.8
63 As the email stated, Captain Woods had arranged to take annual leave at the time that he was to assume office as President. His reference to “the next BP” was a reference to a bid period, being a period in respect of which pilots were entitled to bid for particular schedules within the roster of pilots for that period.
64 On 7 November 2005, after the annual general meeting at which he had taken over as President, Captain Woods went to the office of Captain Manning, Qantas’s Chief Pilot. Present at the time were Captain Kearns, a Deputy Chief Pilot, and Mr Hailes. The purpose of the visit was to inform Qantas management that Captain Woods was now the President of AIPA, and to request that he be paid the appropriate rate of salary, calculated in accordance with cl 24.2 of EBA6, as required by cl 46.2, and that, in lieu of his annual leave, he be given the entitlement of the President to relief from flying, pursuant to cl 46.4.1. Captain Kearns responded to the request by saying that the entitlements were not available because they were already being utilised by Captain Holt, the outgoing President.
65 After this meeting, Captain Woods contacted Ms Bussell to complain that Qantas was not giving effect to cll 45 and 46 of EBA6 in relation to the provision of what he called “Presidential leave” and in respect of arrangements to pay him his salary entitlement. Ms Bussell responded that the memorandum of understanding had not been signed, and was therefore not in effect.
66 The failure of Qantas to change the nature of the leave taken by Captain Woods, to provide him with relief from flying in accordance with cl 46.4.1 of EBA6, to allow him pre-allocation of flying in accordance with cl 46.4.2 of EBA6, and to pay him a salary calculated in accordance with the provisions of cll 24.2 and 46.2 of EBA6 are the basis for the claims that Qantas contravened those provisions.
67 There are also allegations of contravention of cl 45.3.1(a) by refusing to release AIPA members from duty to enable them to attend to AIPA duties and responsibilities. On 28 October 2005, Captain Holt, as President of AIPA, signed a form applying for Captain Simon Tuma, a member of AIPA, to have 8 November 2005 blocked from duty, so that Captain Tuma could attend an AIPA Committee of Management meeting on that date. On 10 November 2005, Captain Woods, as AIPA President, signed two similar forms. One sought to have leave already granted to Captain McNeil re-credited, “due to AIPA duties.” The other sought to have Captain Ian Smith, also an AIPA member, released from a trip on 11 November 2005, “To attend to URGENT AIPA Scheduling duties.” Qantas did not accede to any of these requests. It is thereby alleged to have contravened cl 45.3.1 of EBA6 on three different occasions.
68 The relevant decision-maker in Qantas management was Drew Richardson, General Manager, Flight Operations, Business Support. Mr Richardson gave evidence that, up to the certification of EBA7, Qantas continued to apply the provisions of EBA6, including cll 45 and 46, as if they were valid. Past practice when there had been a change of President of AIPA had involved stopping the pay of the outgoing President immediately, but processing the additional salary for the incoming President during a later pay period. For some reason that is not clear, additional salary for Captain Woods was never processed in accordance with this practice, and there was never any back pay paid to him. In respect of the change in the character of leave for Captain Woods, Mr Richardson was aware of the request made by Captain Woods to Ms Tu. In consultation with Captain Wayne Coombes, a decision was made not to grant the request at that time.
69 In relation to Captain McNeil’s request, on 14 November 2005, Mr Richardson sent an email to Captain McNeil in the following terms:
I received your telephone message below and just tried to return your call but missed you. In terms of your request to have the 28 day period of annual leave between 9 November 2005 and 6 December 2005 removed from your roster and recredited, Wayne Kearns was looking at this issue. In Wayne’s absence my directions are that the leave cannot be removed from your roster and be recredited to you.
Wayne returns next Monday 21 November 2005 and no doubt will be in touch. Until then please work on the basis that the leave will not be removed from your roster.
70 Mr Richardson’s evidence was that no further decision was made about the request to re-credit Captain McNeil’s leave.
71 So far as the requests for leave for Captain Tuma and Captain Smith, Mr Richardson described them both as “challenging”. He gave evidence of the practical difficulties of rostering, so as to ensure that all scheduled flights had appropriate crewing arrangements. In fact, the rostering system adopted by Qantas made allowances for unexpected sick leave and potential disruptions to schedules, by rostering a greater number of pilots in any period than would actually be required to fly scheduled flights. It also had the capacity to offer additional flights to some pilots, subject to the requirements for sufficient rest periods between flights. Mr Richardson conceded in cross-examination that Captain Tuma’s request had been received prior to the commencement of the bid period on 31 October 2005, and that it would have been possible to roster someone else for the flights for which Captain Tuma was eventually rostered, so as to make him available to AIPA on 8 November. It would also have been possible to wait and see how the availability of pilots turned out, closer to 8 November, rather than rejecting Captain Tuma’s request immediately, as was done. From the available records of Qantas, it also appears that there was likely to have been at least one pilot available during the period of Captain Smith’s request.
The contract claim
72 AIPA’s case was that, by the time of the terms of settlement (dated 4 August 2005), or at the latest by the time of the Explanatory Note (dated 28 September 2005), there existed a binding agreement between AIPA and Qantas concerning non-pertaining provisions. The agreement was said to fall within the first class referred to in Masters v Cameron (1954) 91 CLR 353 at 360, or into the “fourth class”, said to be identified by McLelland J in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 at 628.
73 In Masters v Cameron at 360, the High Court said:
Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
At 360-361, the High Court went on to point out that, in each of the first two cases, there is a binding contract, but not in the third.
74 The “fourth class”, identified by McLelland J in the Baulkham Hills caseat 628 is there described using the words of Knox CJ, Rich and Dixon JJ in Sinclair, Scott & Co Ltd v Naughton (1929) 43 CLR 310 at 317:
one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.
75 There must be some doubt as to whether a case described in these terms falls within a fourth class, additional to those described in Masters v Cameron. Assuming the existence of a binding agreement, it is always open to the parties to that agreement to vary it by adding additional terms. Viewed in that light, the so-called fourth class appears not to differ from the first or second classes referred to in Masters v Cameron. Although the New South Wales Court of Appeal upheld McLelland J’s judgment, there is no reference in the judgment of McHugh JA, with whom Kirby P and Glass JA agreed, to Masters v Cameron, or to a “fourth class”. In G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 635-636, McHugh JA said:
If the parties agreed on additional terms, they would be added to the formal contract. If they did not, the formal contract would give effect only to the agreed terms and conditions of the correspondence. The case, therefore, is one where the parties were bound by the informal agreement but expected to make a further contract which by consent might contain additional terms: Sinclair, Scott & Co Ltd v Naughton.
76 In the present case, there is no indication that either AIPA or Qantas gave expression to the possibility that there would be any need for them to agree to extra terms. The question in the present case is whether the case falls within the first or third category in Masters v Cameron. The attempt to rely on a fourth class seems to have been prompted by the fact that, following the signing of the Explanatory Memorandum, AIPA and Qantas did negotiate upon and apparently agree to an additional term, relating to the sharing between them of any liability that might arise from the transfer of terms that were formally in EBA6 into a document other than EBA7.
77 The contention that the terms of settlement amounted to a final agreement between the parties is difficult to sustain. It was not until after the terms of settlement had been signed and the parties had engaged in the task of converting them into detailed documents that attention was given by either party to identifying the non-pertaining provisions that ought to be removed, to ensure the certification of EBA7. There had been a concern on the part of some people within AIPA that cll 45 and 46 of EBA6 and the other provisions relating to those clauses would probably fall into that category, but there is no evidence that any negotiation took place about the content of any alternative document until after the terms of settlement had been signed.
78 By 28 September 2005, when the Explanatory Memorandum was signed, the provisions that would be transferred into another document had been identified, and were listed in the Explanatory Memorandum itself. Indeed, cl 2.5 of that document uses the past perfect tense, so as to convey to the reader that the memorandum of understanding is already in existence. Little, if any, weight can be attached to this fact in determining whether there was a final agreement. Clause 2.5 is inconsistent with cl 2.4 of the Explanatory Memorandum, which records merely that the parties “have agreed to transfer” the non-pertaining provisions into “a” memorandum of understanding. The statement in cl 2.5 that, in relation to the additional provisions there listed, this had already been done, was incorrect as a matter of fact.
79 It is common ground between AIPA and Qantas that, as at the date of the Explanatory Memorandum, there had been no express agreement as to the starting date for the relevant side agreement, or as to its finishing date. It is also common ground that some provision fixing the duration of any agreement about those matters was an essential term, without which there could not be a binding agreement. The case for AIPA is that the absence of this essential term is cured by the implication of a term to the effect that the side agreement would be of the same duration as EBA7, ie that it would start to operate when EBA7 was certified and would continue in operation until EBA7 was replaced by a further certified agreement, or otherwise ceased to be binding. This term was said to satisfy the requirements for a term to be implied into a contract, laid down in B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283:
(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that “it goes without saying”; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.
80 Before considering whether the suggested implied term meets these criteria, it is necessary to deal with one argument. That argument is based on the proposition found in the judgment of Kaye J, with whom Marks and Teague JJ agreed, in Australian and New Zealand Banking Group Ltd v Frost Holdings Pty Ltd [1989] VR 695 at 702, that “the law does not permit a court to imply a term into a bargain between parties for the purposes of making their bargain an enforceable contract.” If this proposition is to be taken at face value, it is hard to see how most of the cases in which it has been held that there are implied terms in contracts could have been so decided. There have been numerous cases in which courts have held that implied terms that the performance of agreed obligations take place within a reasonable time, or that a party may bring about the termination of agreed obligations by giving reasonable notice, are available to ensure the binding nature of those agreed obligations. In the words of the Privy Council in the B.P. case, such implied terms are “necessary to give business efficacy” to the contracts of which they are found to be part. The danger of taking the proposition expressed by Kaye J at face value is obvious. Such a proposition could lead to arguments akin to those about whether the chicken came before the egg, or the egg before the chicken. Was there already an agreement, so that it can be supplemented by an implied term to give it efficacy, or was there no binding agreement because there was no express agreement about the subject matter of the implied term? In my view, Kaye J intended to mean no more than that the parties must have agreed to be bound by the obligations they have expressed in their negotiations, before the question whether a term can be implied to give that agreement efficacy can be addressed. It is on that basis that I approach the present case.
81 There can be little doubt that AIPA and Qantas had reached agreement by 28 September 2005 that the provisions of EBA6 referred to in cll 2.4 and 2.5 of the Explanatory Memorandum were not to appear in EBA7, but were to appear in a separate document. AIPA’s case depends upon the assumption that 28 September 2005 was the final point in negotiations between the parties about the issue, so that, but for the gap sought to be filled by the implied term, there was a complete agreement. The case for Qantas is that the production of the Explanatory Memorandum on 28 September 2005 was merely a stage in ongoing negotiations, as a result of which it became clear that there was no agreement between the parties.
82 Counsel for AIPA objected to evidence about negotiations between the parties after 28 September 2005, except to the extent that their content might cast light on the meaning of terms already expressed between the parties, as was suggested in Australian Broadcasting Corporation v XIVTH Commonwealth Games Ltd (1988) 18 NSWLR 540 at 550 per Gleeson CJ, with whom Hope JA and Mahoney JA agreed. In my view, what took place between AIPA and Qantas after 28 September 2005 is relevant in determining whether there remained matters unresolved between the parties. If one of those unresolved matters was the question of duration, then there was no concluded agreement, because an essential term was never agreed.
83 Before examining the relevant communications between the parties subsequent to 28 September 2005, it is worthwhile to apply the criteria in the B.P. case to the implied term advanced by AIPA on the pleadings. In this respect, it is clear that the alleged implied term cannot survive being tested against the third criterion, that the term must be so obvious that “it goes without saying”.
84 The parties were agreeing to transfer the non-pertaining provisions into a document separate from EBA7 on the assumption that, in the light of Electrolux, they were provisions that would not be acceptable to the Commission and would therefore prevent the certification of EBA7. It is true that there was no absolute recognition that the non-pertaining provisions fell outside the description in s 170LI(1), namely matters pertaining to the relationship between an employer and the relevant employees. As appears from my examination of the implications of Electrolux in [113]-[116] below, certainty about whether a particular provision did or did not fall within s 170LI(1) would have been extremely difficult to achieve. Nevertheless, it is clear that the parties, and particularly AIPA, contemplated that cll 45 and 46 and the related provisions, as they appeared in EBA6, might very well be unenforceable as a matter of law. If this had not been the case, there would have been no suggestion from either party that those provisions should be removed from EBA7. On this basis, it is legitimate to ask (as the mythical officious bystander might have asked) whether it was obvious that the starting points of the obligations would be the commencement of the operation of EBA7. If it be accepted that the parties were transferring the non-pertaining provisions into a separate document in order to ensure their continued operation as enforceable provisions, there would be every reason why such an agreement should operate as soon as it was reached, and not await the certification of EBA7. The circumstance that Qantas had continued to apply the Association Business Provisions in EBA6 does not diminish the force of this proposition. Objectively, it appears more likely that the parties would want any agreement to have been binding forthwith, rather than from a later date.
85 Similarly, the question of a date of termination of the obligations did not necessarily have a relationship with the duration of EBA7. In this respect, the parties could have chosen a termination date, or mechanism, from a range of possibilities. For instance, it might have been agreed that the side agreement should continue to operate until such time as one or other party terminated it by giving some agreed period of notice. A specific termination date might have been chosen, with or without the possibility of termination by notice. The existence of such a range of reasonable possibilities is fatal to the satisfaction of the third criterion in the B.P. case. It must be remembered that the criteria in the B.P. case must be satisfied by a particular term. It is not open to the Court to choose from a range of possible implied terms, for the purpose of making an agreement into a final one. The particular term advanced must be so obvious that it is unnecessary to express it, because both parties will recognise that it is present in their agreement. The implied term pleaded in the present case clearly does not satisfy that requirement.
86 The negotiations between the parties subsequent to 28 September 2005 confirm that, as at that date, the implied term pleaded was not at all obvious. In her first draft of the memorandum of understanding, Ms Starke chose a different term altogether. Her proposal was that the agreement would come into effect on certification of EBA7 and continue to operate forever, unless varied, replaced, rescinded or terminated by agreement between the parties. Qantas responded with a proposal that the side agreement expire on the nominal expiry date of EBA7. Only then did Ms Starke, on behalf of AIPA, propose something like what is now said to be the obvious term, in an attempt to ensure that the side agreement should continue in force if EBA7 endured beyond its expiry date, in accordance with s 170LX of the WR Act. In her submissions to the Commission on 16 November 2005, when she was seeking to have the application for certification of EBA7 adjourned, Ms Starke did not contend that there was a binding agreement containing an implied term that the memorandum of understanding would have the same duration as EBA7. She contended that there was no completed agreement. It may be true that her perception of the situation was not conclusive of the non-existence of a binding agreement. It is equally true that the term that AIPA now contends was so obvious as to go without saying was not obvious to Ms Starke, who had the principal responsibility for finalising the memorandum of understanding on behalf of AIPA.
87 At a very late stage in the trial of the proceeding, in submissions in reply, counsel for AIPA applied to amend the statement of claim, so as to allege in the alternative an implied term to the effect that the agreement containing the non-pertaining provisions would come into operation immediately and would continue until either party terminated it on reasonable notice. I reserved the question whether leave to amend at that stage ought to be granted. As I have said, the objective observer of the terms expressed in the Explanatory Memorandum of 28 September 2005 would have been more likely to have formed the view that the terms agreed on would come into effect immediately, and would continue until terminated by reasonable notice. Such a term is more obvious than the one originally pleaded in this case. The question remains, however, whether it is so obvious that it goes without saying. Given the existence of a range of possible provisions as to duration, it is impossible in my view to select any one as being the obvious provision, so that any expression of a term as to duration was unnecessary.
88 The subsequent negotiations of the parties about the wording of a duration clause are inconsistent with any proposition that they must be taken to have accepted that any particular term relating to duration was so obvious that its content did not require expression for the agreement to be binding. The reality is that the parties did not regard themselves as having reached a concluded agreement about the non-pertaining matters at 28 September 2005. What remained to be done was not a mere drafting exercise, but the negotiation of the terms of the agreement proposed. The correspondence between the parties about the content of the duration agreement is clear evidence of this. So also is the negotiation that took place about the sharing of any liability that might arise from the implementation of the proposed agreement. It is a reasonable inference that it was not until some time after 28 September 2005, and probably when they were exchanging drafts in November 2005, that the parties began to realise that there were potential legal difficulties confronting the proposal to transfer the non-pertaining provisions into another document. The principal difficulty was obvious. At the time when they were agreed, and were included in EBA5 and EBA6, on the assumption that the provisions were valid, there was no difficulty about the effect that they had in relation to the obligations of Qantas under EBA5 and EBA6. Once the provisions were removed, however, and the terms that they had qualified were left unqualified in EBA7, those terms would become enforceable under the WR Act in their unqualified form. It would have been possible for an inspector, or an employee whose employment was subject to EBA7, to institute a proceeding pursuant to s 178(1) of the WR Act (as it then stood), seeking to recover a penalty in respect of any breach of any term of EBA7 brought about by an attempt to modify the operation of the terms of EBA7 by applying any of the non-pertaining provisions. It seems that this realisation gave rise to Qantas’s proposal in relation to the sharing of liability. Far from refusing to countenance this proposal, on the basis that there was already a concluded agreement, AIPA proposed a modification of the clause that would provide equivalent protection to AIPA in the event of any liability. The course of these negotiations is evidence that the parties were still in negotiation about what would be the terms of any memorandum of understanding that might be entered into in consequence of what was said in cll 2.4 and 2.5 of the Explanatory Memorandum.
89 Counsel for AIPA relied on authorities in which it was held that agreements were subject to implied terms that their duration would match the duration of other agreements to which they were related. The specific cases areGibson Motor Sport Merchandise Pty Ltd v Forbes [2005] FCA 749 and Caltex Properties Ltd (in liq) v Love and Ors (unreported, Supreme Court of Western Australia, Parker J, 14 May 1995). These cases turn on their own facts. They do not establish the existence of any principle that, because two agreements can be said to be related, a term must be implied into the one lacking any express term about duration that its duration will match that of the other, the duration of which has been agreed expressly.
90 The positions adopted by the parties after 28 September 2005 do not suggest that they regarded themselves as having arrived at a concluded agreement. As I have said, the submissions that Ms Starke made to the Commission on 16 November 2005 did not involve any assertion that there was a concluded agreement between AIPA and Qantas. On the contrary, AIPA through Ms Starke clearly represented to the Commission, and to the Qantas representatives who were present, that there was an outstanding matter between the parties, namely the duration of the memorandum of understanding. It was not until 9 December 2005 that AIPA, through Captain McNeil, began to assert in correspondence to Qantas that there was a binding agreement. In his letter of that date to Ms Bussell, Captain McNeil demanded that Qantas “acknowledge as in force and binding” the agreement referred to in the Explanatory Memorandum. The letter referred indirectly to the question of duration, but contained no express assertion that there had been agreement as to any particular duration. This assertion did not come until Captain McNeil’s letter dated 13 December 2005 to Ms Bussell. In his letter dated 16 December 2005 to Ms Bussell, Mr Jennings was not quite so bold, suggesting only that the memorandum of understanding “should have the same currency as EBA7.” Nor did AIPA subsequently assert its claim that the duration of the memorandum of understanding had already been determined. Captain McNeil put the case for a longer duration than that proposed by Qantas in his letter to Mr Borghetti dated 12 January 2006. Captain Woods’s letter dated 17 January 2006 to Mr Borghetti also seeks to make the case for the continued operation of the Association Business Provisions, by way of persuading Qantas, rather than making a claim that Qantas was bound by a concluded agreement that included a provision as to duration. As the subsequent correspondence shows, there was further negotiation between the parties, leading to AIPA’s acceptance “under protest” of yet another formulation, proposed by Qantas, of the duration clause. By that time, the Qantas representatives had made it clear that any final agreement was dependent upon the approval of Qantas’s senior management. Negotiations came to an end when Mr Dixon made it clear in his letter of 14 March 2006 to Captain Woods that Qantas would not sign the memorandum of understanding.
91 Of course, what the parties thought their position was after 28 September 2005 is not conclusive as to whether an agreement had been reached at that date. What they represented to each other after that date does have significance, however, in the determination of that issue. It is significant (although again not conclusive) that, with the possible exception of Captain McNeil in December 2005, nobody on either side of the negotiations actually expressed the view that final agreement had been reached. All acted as though this had not occurred.
92 The demonstrated perceptions of the participants in the relevant events and the objective assessment of the evidence both lead to the same result. There was a course of negotiations that began in September 2004 and continued until March 2006, when they ended with disagreement about what the proposed agreement should provide as to its duration. That was a matter acknowledged by both AIPA and Qantas in this proceeding to be an essential term of any agreement between them. The case put by AIPA seeks to rule a line through that course of negotiations on 28 September 2005, and to contend that what was expressed in the Explanatory Memorandum amounts to a concluded agreement. The gap left by the absence of any agreement about duration is said to have been filled by an implied term. The implied term was first expressed in one form, and then, at a late stage and in the alternative, in another. It is not possible to say that there was an implied term in either form. Neither can be said to be so obvious that it goes without saying. Both are among a range of possible provisions that might equally well have been made for duration. None of the possibilities stands out from within the range as the obvious one. As a matter of fact, the continuation of negotiations makes it impossible to draw the line proposed by AIPA. The result is that no concluded agreement was ever reached. To the extent to which it is based on such an agreement, AIPA’s claim in this proceeding must be dismissed.
93 In deference to the full argument about other issues related to AIPA’s contract claim, and in case an appeal court should take a different view about the existence of a concluded agreement, I should state briefly my views about three other issues: whether the parties, if they did reach a concluded agreement, intended it to be legally binding; whether AIPA suffered loss and damage from Qantas’s failure to comply with the terms of the agreement; and whether any remedy other than damages should be granted in the event of a finding that there was breach.
94 As to whether the parties intended to create a legally binding agreement, or an agreement binding in honour only, there are factors pointing in both directions. The refusal of Qantas to enter into a deed, accepted by AIPA, and the choice of “memorandum of understanding” as the title of the document, again accepted by AIPA, suggests that there was no intention to create legal relations. The title is not conclusive, however. The course of negotiations, particularly the detailed attention given by both parties to the precise wording of the document, tends to suggest that they were looking towards the letter, rather than merely the spirit, of an agreement, and therefore towards enforceability. Again, this is not conclusive. Nor is the history of the provisions that were being transferred from EBA6 into the memorandum of understanding. When they were first negotiated as part of EBA5, and carried into EBA6, the non-pertaining provisions were assumed to be enforceable. Following Electrolux, the parties were of one mind that the non-pertaining provisions were, at least potentially, unenforceable at law. This potential unenforceability and its possible effect in jeopardising the certification of EBA7 constituted the motivation for placing the non-pertaining provisions in another document. In these circumstances, it is difficult to say that the history of the provisions gives a clue either way as to whether the parties were agreed that the provisions should be legally enforceable or binding in honour. What seems to me to be the decisive factor in favour of legal enforceability is the agreement about the clause relating to the sharing of legal liability. Once it was realised that Qantas’s compliance with the non-pertaining provisions, in a document outside EBA7, could place Qantas in a difficult position in the event of conflict between its obligations under EBA7 and its obligations under any separate agreement, the parties had a choice. They could have chosen expressly to make the memorandum of understanding binding in honour only, and liable to give way in the event that any actual conflict appeared. Alternatively, they could have done what they did, which was to assume that such conflict would occur and to make provision for the sharing of any liability flowing from it. This agreement suggests to the objective observer that both parties regarded the obligations under the transferred non-pertaining provisions as legally binding, so that provision needed to be made for the actuality of conflict between those provisions and the provisions of EBA7. For this reason, if it had been necessary to do so, I should have had little difficulty in finding that the agreement between AIPA and Qantas, to be expressed in the memorandum of understanding, was legally binding.
95 The question of damage flowing from Qantas’s non-observants of the agreement is more difficult. It is necessary to detail some further facts. The claim consists of two elements. One is the salary of Peter Somerville, who was engaged as the General Manager of AIPA from 24 April 2006. The second is a payment made by AIPA to Captain Woods, designed to compensate him for the failure of Qantas to pay his salary at the rate designated for the President by cl 46.2 of EBA6.
96 At the same time as Captain Woods became President of AIPA, on 7 November 2005, Captain McNeil became Secretary, Captain John Dowe Assistant Secretary and Captain Andrew Percival Treasurer. The new regime was determined to reform the manner in which AIPA was administered. At that time, Ms Starke was employed as Legal Counsel and Industrial Relations Manager. Attached to her written contract of employment, dated 17 May 2000, was a schedule of duties, setting out the following duties and responsibilities:
· Advise the President and COM generally on industrial issues
· Negotiate industrial and employment matters affecting technical aircrew
employed by Qantas Airways Limited and provide relevant documentation
· Assess, prioritise and coordinate all industrial relations matters as they arise
and develop
· Advise the President, Executive and COM on corporate governance and
organisational compliance issues, including reporting and accountability
issues, professional indemnity insurance
· Coordinate and prepare documents and returns required under the relevant
legislation for the Association and AIFEA
· Generally advise the Association’s members on industrial/employment law
issues
· Represent technical aircrew in grievances & disciplinary matters
· Represent the Association and provide advocacy in relevant jurisdictions
(including the AIRC, IRC (NSW) and the Federal Court of Australia)
· Supervise and appraise industrial relations staff
· Supervise and appraise administrative support staff
· Manage all human resource issues
· Assess need for outsourcing matters for professional opinions/assistance
· Assess and monitor ongoing educational and professional needs of industrial
relations staff and administrative support staff, including attendances at seminars/workshops/professional functions
· Monitor office expenditure
· Assess and monitor subscriptions to professional publications
97 As Ms Starke said in her evidence:
Essentially my role was one of a general management role for the office and staff and within that overarching management role I looked after a number of separate categories, legal and industrial relations matters, administrative matters, going to compliance, corporate governance matters, reporting to the board, reporting to the committee of management I should say which met every month.
By November 2005, Ms Starke’s salary package was $292,723.
98 It is apparent that Ms Starke’s responsibilities were substantially wider than the title of her position suggested. When Captain Woods and his team took office, they intended to make substantial changes to the way in which AIPA was administered. Those changes involved utilising cll 45 and 46 of EBA6 and the related provisions, so as to make best use of the AIPA elected officers in the day-to-day management of AIPA. According to Captain Woods’s calculation, cll 45 and 46 and the related provisions of EBA6 made available to AIPA the equivalent of the full-time services of two pilots, who would be paid by Qantas. It was intended to establish a secretariat in the office of AIPA. One of the full-time equivalent positions would be shared between Captain McNeil, Captain Dowe and Captain Percival, who would run the secretariat. The other full-time equivalent position would be shared between Captain Woods and a Vice-President. The intention was that the officers would be more directly involved in the affairs of AIPA. Captain Woods proposed that Ms Starke’s role should be recast as that of General Counsel, and that she would be engaged more than she had been in the representation of AIPA and its members in courts and tribunals. There appears to have been a disagreement between Captain Woods and Ms Starke about her reassignment. On 17 November 2005, the day after she had appeared for AIPA in the Commission to oppose the certification of EBA7, Ms Starke was dismissed from her employment.
99 On 18 November 2005, Captain McNeil sent a memorandum to all AIPA staff and Committee of Management members, detailing the nature of the restructure that was proposed. Mr Jennings was to head an industrial advocacy unit. One other person was named to be part of this unit as a consultant and the memorandum said that other experienced officers would be expected to join the unit in 2006. The legal unit was to remain in place “as a functional unit separate from, but reporting directly to, the Secretariat.” Four persons, including Ms Starke and Ms Jensen were named as working in the legal unit. Another named person was to be personal assistant to the President and the head of the secretariat. Two more were described as having modified roles within the new structure. The names of the Accounts Manager, the Communications Coordinator and the Administrative Assistant (Communications) were also given. It was made clear that “All administration management, tasking and coordination are now the responsibility of the A.I.P.A.’s Secretariat.” The legal and industrial advocacy units and the office administration were all to report to the secretariat.
100 Following the certification of EBA7, Qantas ceased to approve applications by pilots for relief from flying under the Association Business Provisions. Initially, both Captain McNeil and Captain Woods were on leave in November, and were able to devote their leave time to working in the AIPA office as planned. Thereafter, each had some sick leave. Captain Woods injured his knee and was on sick leave for approximately six months from some time in January 2006. In addition, each utilised rostered days off to perform work for AIPA. When Captain McNeil had to return to regular flying, he continued to provide as much assistance as he could until the end of March 2006, when he resigned as Secretary of AIPA. In his evidence, Captain Woods characterised Captain McNeil’s resignation as “for family reasons and for reasons that I appointed Mr Somerville as a general manager”. Captain Dowe also spent time in the office regularly and continued to do so until June 2007. So did Captain Percival, to the extent of approximately one day per week over the first 12 months, although it is not clear whether he continued to work in the AIPA office after that time.
101 Mr Somerville commenced work as General Manager of AIPA on 24 April 2006, although the terms of his contract of employment were not finalised until 7 July 2006, when a written contract was signed. From April until June or July 2006, he worked on a part-time basis. Thereafter, he worked full-time. Mr Somerville’s salary was calculated in accordance with a formula set out in the contract of employment, based on hourly rates payable “to B744 First Officers”. Mr Somerville’s salary was approximately $175,000 per annum. Attached to his contract of employment was a schedule containing the position description. The position was described as “General Manager & Industrial Relations Manager”. There was a list of duties and responsibilities as follows:
· Advise the President and COM generally on industrial and administrative
issues;
· Negotiate industrial and employment matters affecting technical aircrew
employed by Qantas Airways Limited and provide relevant documentation;
· Advising on Awards, Certified Agreements, industrial agreements and related
documents (including employment manuals, protocols, work practices and
policy manuals) governing the employment of the Association’s members;
· Assess, prioritise and coordinate all industrial relations matters as they arise
and develop;
· Advise the President, Corporate Governance Committee and Committee of
Management on corporate governance and organisational compliance issues,
including reporting and accountability issues, professional indemnity
insurance;
· Coordinate and prepare documents and returns required under the relevant
legalisation [sic] for the Association and AIPEA;
· Generally advise the Association’s members on industrial/employment law
issues;
· Represent technical aircrew in grievances & disciplinary matters;
· Represent the Association and provide advocacy in relevant jurisdictions
(including the AIRC, IRC (NSW) and the Federal Court of Australia);
· Supervise and appraise industrial relations staff;
· Supervise and appraise legal staff;
· Supervise and appraise administrative support staff;
· Manage all human resource issues;
· Access need for outsourcing matters for professional opinions/assistance;
· Access and monitor ongoing educational and professional needs of industrial
relations staff and administrative support staff, including attendances at
seminars/workshops/professional functions;
· Monitor office expenditure;
· Assess and monitor subscriptions to professional publications;
· Document drafting and professional database consolidation;
· Editorial functions associated with the Association’s communications to its
members;
· Assisting generally with organisational compliance matters; and
· Preparation of written reports on work in progress, as required.
102 It will be seen that the majority of these duties and responsibilities are identical or very similar to those found in the position description attached to Ms Starke’s contract of employment. The tenor of Captain Woods’s evidence was to minimise the range of duties Ms Starke performed and maximise those of Mr Somerville. He described the duties and responsibilities listed in Mr Somerville’s contract of employment as the minimum that Mr Somerville was required to perform. I take the summary of Ms Starke’s areas of responsibility, which I have set out in [96] above, and her evidence of what she did, as closer to the fact than Captain Woods’s account.
103 In effect, when Captain Woods and his team came to office, Ms Starke was the Chief Executive Officer of AIPA. From July 2007 Mr Somerville was the Chief Executive Officer of AIPA. His remuneration was significantly less than that of Ms Starke.
104 AIPA’s claim for damages equal to Mr Somerville’s salary is based on the proposition that his appointment was necessary because Qantas’s failure to give effect to the provisions formerly in cll 45 and 46 and the related provisions of EBA6 made it impossible for AIPA to operate according to its planned restructure, and therefore necessitated Mr Somerville’s engagement. I do not think that the evidence establishes this causal link. In his evidence-in-chief, Captain Woods was asked, in the context of the proposed restructure, whether any consideration was given to employing anyone in the role of General Manager or Chief Executive Officer. His answer was:
Look, there was some vague - the idea was floated. Had - if the association developed as was expected, then down the track, we believed that the workload on the secretariat and the office of the president would be such that we could justify the employment of a general manager.
105 Captain Woods was then asked if this option was taken up, what was intended for the President and the Secretary. He said “different work”. He then explained the nature of the different work contemplated. There was no evidence that the restructuring had not led to a situation in which there was a need, or a desire, to appoint a general manager by the time of Mr Somerville’s appointment. Although Captain McNeil’s memorandum of 18 November 2005 was quite specific as to the roles of a number of named people, there was no evidence as to who was employed in the AIPA office or what their duties and functions were by April or July 2006. Legal work had been outsourced to a law firm, and lawyers were no longer employed. There was no specific evidence of the work that Captain McNeil, Captain Dowe and Captain Percival had done in the AIPA office, and how this compared to the duties and functions of Mr Somerville. There is nothing that would enable a determination to be made of whether Mr Somerville’s range of duties extended beyond that of the elected officers when they worked in the office. Captain Woods delegated some of his functions to Mr Somerville.
106 In addition, to facilitate his own involvement in the administration of AIPA, despite the failure of Qantas to apply EBA6 provisions that were not included in EBA7, Captain Woods was able to negotiate with Captain Manning an arrangement under which Captain Woods would only apply for and be allocated two-thirds of the normal pilot’s allocation of duty. This gave him some time to attend to the business of AIPA. When Qantas threatened to revoke this arrangement in July 2007, Marshall J granted an interlocutory injunction to preserve the arrangement until the hearing and determination of this proceeding or further order. The question whether all or any of Mr Somerville’s salary can be regarded as loss by AIPA attributed to Qantas’s failure to give effect to the provisions remains open so far as the evidence goes.
107 The issue of the amount paid by AIPA to Captain Woods to make up for the refusal of Qantas to pay him at the rate of salary required for the President can be dealt with more easily. The payment was an entirely voluntary one by AIPA, which was under no obligation to reimburse Captain Woods for any loss of entitlement under the former cl 46 of EBA6. The letter, dated 3 August 2006, from Captain Dowe (as AIPA Secretary) to Captain Woods was phrased relevantly as follows:
As you are aware, AIPA is in litigation with Qantas regarding our claim that Qantas is obliged to support the cost of office of AIPA President. In its March 2006 meeting, the COM resolved that AIPA will bear this cost and seek reimbursement from Qantas as part of the litigation.
Until now the office of President has not been entitled to remuneration, but in view of the fact that Qantas has withdrawn its financial support for the office of President, AIPA is pleased to offer you an annual remuneration package as President in the amount of $4,500.00 payable in fortnightly instalments.
108 It is my view that the voluntary nature of the payment is sufficient to break any causal link between Qantas’s failure to give effect to the provisions concerning the salary of the President, even if enforceable, and the cost to AIPA of making up Captain Woods’s salary.
109 For these reasons, I am of the view that, even if a binding agreement existed between Qantas and AIPA with respect to the application of the removed provisions, AIPA has failed to prove that it suffered loss and damage as a result of any breach of that agreement or, if it has, has failed to prove the amount of that loss and damage.
110 There was also a claim for specific performance of the alleged contract. In the course of argument, it became clear that, in the exercise of the ordinary discretion attaching to the consideration of remedies in the nature of specific performance, the Court would be very unlikely to order that Qantas perform the terms of the supposed agreement containing cll 45 and 46 and the related provisions of EBA6. One issue is the difficulty of enforcing those provisions in the light of Qantas’s conflicting obligations under EBA7. It would be unlikely that the Court would order Qantas to allow the AIPA President priority in bidding for scheduled flights, when it had obligations to conduct its rostering process in accordance with EBA7. Similarly, it would be unlikely that the Court would impose on Qantas potential liability for contempt of court when making its decisions about operational requirements following the making of applications for relief from flying. In the course of submissions, AIPA refined its specific performance claim to one seeking an order that Qantas execute an agreement in the terms of the relevant clauses of the Explanatory Memorandum dated 28 September 2005, with the addition of an appropriate duration clause. As a matter of discretion, I would also have refused to make such an order. By the time of the trial of the proceeding, EBA7 had passed its nominal expiry date. I was told by counsel that the parties were engaged in prolonged negotiations for an agreement to replace EBA7. In the circumstances, it seemed unlikely that any agreement in terms of cll 45 and 46 and the related provisions of EBA6 would have a significant time to run, at least in terms of the duration clause primarily advanced by AIPA.
111 For all of the above reasons, AIPA’s amended application must be dismissed, so far as it seeks orders dependent upon the establishment of the existence of a binding contract between AIPA and Qantas.
The penalty issues
112 The first question is whether cll 45 and 46 and the related provisions of EBA6 were enforceable, ie whether they fell outside s 170LI(1) of the WR Act. The dispute between the parties is about whether those provisions pertained to the relationship between Qantas as employer and its employees who were long haul pilots. No issue was raised about whether those employees were employed in a single business, or a part of a single business.
113 The provisions that were agreed in Electrolux obliged the employer to deduct from wages to be paid to persons who might become employed by the employer in the future, and to pay to the Union, a fee, described as a “bargaining agent’s fee”. The provisions thus had three significant characteristics. First, they obliged the employer to deduct money from wages that would otherwise be paid to an employee, and to pay the money deducted to a party other than the employee. Second, the intended recipient of the money was the union that was party to the agreement with the employer. Third, the provisions bound the employer in relation to persons whom it might choose to employ in the future, and who chose not to belong to a relevant union.
114 In Electrolux, the High Court affirmed the line of authority consisting of R v Portus; Ex parte ANZ Banking Group Ltd (1972) 127 CLR 353 and Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96. Each of those cases involved claims made by unions which, if acceded to by employers, would have obliged the employers to deduct from wages earned by their employees amounts by way of union dues, and to pay those amounts to the relevant union. In each case, it was held that such claims did not pertain to the relationship between employers and employees in their capacity as such. In Alcan, the High Court was invited to overturn Portus, but declined to do so. The claims in question in Portus and Alcan had both the first and second characteristics of the provisions in question in Electrolux.
115 In Electrolux at [9]-[11], Gleeson CJ appears to have identified the first of those characteristics as the reason for holding that the provisions in question in that case did not pertain to the relationship between an employer and its employees. The approach of McHugh J at [82] was to analyse the employer’s obligation more closely, and to identify a number of factors that his Honour saw as taking the payments outside the relationship of employer and employees. His Honour said that the debt due by a future new employee to the union, about which the employer was obliged to inform the new employee, was not shown to be a debt relating to the employment relationship. In his Honour’s view, the provision related to the relationship between the union and non-members to be employed at the employer’s workplace. His Honour took the view that strengthening the position of unions at the workplace, “without more”, did not make the provision a matter pertaining to the requisite relationship. Finally, his Honour said that, because the fee was not deducted pursuant to any agreement or authorisation from the employee, there was no nexus between the obligation imposed on the employer and the requisite relationship. At [165], Gummow, Hayne and Heydon JJ approved the statement of Merkel J at first instance, which identified a number of features of the provisions in question in Electrolux. The employer was to act as the union’s agent in entering into a contract with new employees requiring the employees to employ the union as bargaining agent. The relationship between employer and employee was one of agency, requiring the employer to contract with its employees on behalf of the relevant union, as its agent. The agency was for the benefit of the union, rather than for the benefit of the employee upon whom the liability was to be imposed involuntarily. The provision could be characterised as a claim for payment for the union’s services in securing the new employee’s terms and conditions of employment, although the new employee would only have commenced employment after the date of the agreement. Kirby J dissented. At [239], Callinan J also preferred the approach of Merkel J to that of the Full Court. At [241], his Honour referred specifically to the first characteristic, with the added element of the involuntariness of the payment to the union on the part of an employee who was not a union member. His Honour described the relevant relationship between the employer and the non-unionist employee as an involuntary contract for the payment of an exaction sought to be made by a third party on the employee.
116 Clauses 45 and 46 and the related provisions of EBA6 are of a very different character from the provisions that were the subject of Electrolux. They involve none of the three significant characteristics of the provisions the subject of Electrolux. There is no obligation on Qantas to deduct money from wages or salary that would otherwise be paid to any of its employees, or to pay any amount so deducted to any party other than Qantas. AIPA is not the intended recipient of any money from Qantas. The provisions in question in this case bind Qantas in relation to its existing employees, particularly those who are already members of AIPA. The provisions bear no resemblance to those that were the subject of Portus or Alcan. Any debts created by cll 45 and 46 and the related provisions of EBA6 are debts due from Qantas to its own existing employees, and relate to the relationship between Qantas and its own employees. The provisions do more than simply strengthen the position of AIPA, although they are certainly intended to accomplish that. They accomplish it by regulating the hours of work of Qantas’s employees and the amounts of money to be paid to those employees. No question of deduction of any money from anything that would otherwise be paid to an employee arises. No agency relationship between AIPA and Qantas could possibly be created. There is no question of payment by any non-member to AIPA.
117 Clauses 45 and 46 and the related provisions of EBA6 have substantial similarities to some of the provisions with which French J was concerned in Wesfarmers Premier Coal Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (No 2) [2004] FCA 1737 (2004) 138 IR 362. At [73]-[79], his Honour analysed Electrolux, in an effort to distil the appropriate test for determining whether a matter pertains to the relationship of employers and employees. At [96]-[103], his Honour dealt with provisions of a log of claims setting out circumstances in which employees might be absent from their duties and yet still to be paid while they attended various kinds of union meetings, including board of management meetings, discussions between management and the union, and training and education courses organised by the union. At [96]-[97], his Honour said of those provisions:
They establish for the most part an entitlement to paid leave for employees who are performing certain functions with the relevant union. The hours of an employees’ [sic] availability for work and the conditions under which an employee may be absent from that work and whether or not he or she can be paid during that absence, in my opinion, lie at the heart of the employer-employee relationship. They affect employer and employee in their capacities as such.
It is no answer to that proposition to say that these provisions affect employees in their capacity as union members. So much may be correct, but if the provision in question also affects the employment relationship in a direct way that is neither consequential nor remote it pertains to the employer-employee relationship. Argument by reference to the multiple capacities of employees can lead into a morass of fine distinction. So maternity leave, leave to perform jury service and leave to train in the military reserve may all be said to attach to people in their capacities as parent, citizen, military reservist respectively. In my opinion, the provisions of such clauses pertain to the employment relationship.
118 At [100]-[103], his Honour reached the conclusion that one provision did not involve a matter pertaining to the employment relationship. That provision would have entitled employees not rostered for work to be paid for attendance at union meetings.
119 I respectfully adopt the approach of French J. Provisions requiring an employer to permit an employee to engage in activities that are not part of the normal employment duties of that person, during times when that person would normally be expected to be engaged in duties on behalf of the employer, clearly pertain to the relationship of employer and employee. Provisions that require the employer to continue to pay the employee, even when the employee is engaged in those activities, also pertain to the relationship of employer and employee. Clause 46 of EBA6 deals with the times when the President of AIPA, an employee of Qantas, and the designates of the President of AIPA, also employees of Qantas, are to be relieved from what would otherwise be their obligations to perform duties for Qantas. Those provisions deal with a form of leave. It is true that AIPA is intended to benefit from the leave taken by those employees, because the purpose of taking that leave is for those persons to attend to the business of AIPA. The fact that this is the intended purpose of the leave detracts not at all from the fact that the provisions are provisions relating to leave, and are therefore at the heart of the employment relationship. Clause 46 of EBA6 relates partly to the calculation of the salary to be paid to one of Qantas’s employees, who happens also to be the President of AIPA, and partly to the determination of the times during which that person will be required to perform duties on behalf of Qantas. Again, such provisions are at the heart of the employment relationship, and the fact that AIPA is a beneficiary of their application does not change the character of the provisions.
120 It follows that cll 45 and 46 and the related provisions of EBA6 fell within s 170LI(1) of the WR Act. EBA6 was properly certified, and AIPA and Qantas were bound by it, including by those provisions. In the event that Qantas is found to have been in breach of any of the terms of those provisions, Qantas is liable to penalties pursuant to s 178(1) of the WR Act. It is therefore necessary to turn to the question whether there were such breaches in the period leading up to 16 November 2005, when EBA7 was certified and EBA6 ceased to apply.
121 In the first place, Qantas was clearly in breach of cl 46.2, coupled with cl 46.6.1, of EBA6 in failing to pay Captain Woods at the rate of salary calculated in accordance with cl 24.2, in respect of the period from 7 November until 15 November 2005. With one exception, the evidence is to the effect that Qantas had adopted a practice of continuing to apply all provisions of EBA6 (including those that had been identified and agreed upon as possibly non-pertaining provisions) for as long as EBA6 remained in force. The exception is the evidence of what Ms Bussell said to Captain Woods on 7 November, when he complained to her that EBA6 was not being applied, after he had spoken with Captain Manning, Captain Kearns and Mr Hailes. Ms Bussell indicated that the non-pertaining provisions would not have force until the memorandum of understanding was signed. Even if there was a practice of applying EBA6 in its entirety, it is clear that it was not applied in one respect. The payment of additional salary to Captain Woods was never processed, as it would have been if Qantas had followed its usual practice of paying a newly elected President in arrears from the date of taking office. On the basis that cl 46 is an enforceable provision, Qantas offered no argument against the conclusion that it was in breach in this respect. Qantas and AIPA have agreed that the amount of the underpayment is $1,385.83. There will be an order that Qantas pay that sum to Captain Woods.
122 Questions of relief from flying, pursuant to cl 46.4.1, and pre-allocation of a flying roster in respect of a bid period, pursuant to cl 46.4.2, are more difficult. The only occasion on which Captain Woods sought pre-allocation of flying was by means of his email to Ms Tu on 23 September 2005. Although he regarded himself as certain to be the next President of AIPA, on 23 September 2005, Captain Woods was not yet the President. Nothing in cl 46 of EBA6 required Qantas to permit him to avail himself of the pre-allocation provision until after he became President. There was therefore no contravention of cl 46.4.2 as a result of the failure to accede to the request of 23 September 2005.
123 The issue of breach of cl 46.4.1 involves questions of construction. When he went to see Captain Manning, Captain Kearns and Mr Hailes on 7 November 2005, Captain Woods was unquestionably the President, and unquestionably entitled to relief from flying, subject to the operation of cl 46.6. He was at that stage on annual leave. Both by his email to Ms Tu on 23 September 2005, and by his request to Captain Manning and Captain Kearns, Captain Woods was seeking to defer what remained of his annual leave, and to avail himself of the President’s entitlement to relief from flying. Captain Woods’s description of this entitlement as “Presidential leave” was inaccurate. The only kind of leave to which cl 46.4.1 of EBA6 entitled the President of AIPA was relief from flying duties that would otherwise be required of the President, to the extent to which cl 46.4.1 provided for such relief. At no time between 7 November and 15 November 2005 was Captain Woods rostered to fly. Although theoretically he could have been asked to fly, even while on annual leave, he was not. There were no flying duties from which he could have been relieved.
124 The attempt by AIPA to construe cl 46 as entitling Captain Woods to change the nature of his leave must fail. By cl 46.5, the President’s annual leave is to be planned and taken “as mutually arranged”, except to the extent that Qantas was permitted to assign leave when the President’s annual leave exceeded the standard prescribed in cl 28.14 of EBA6. The requirement of mutuality makes it clear that Captain Woods could not insist unilaterally on the revocation of his existing entitlement to annual leave, and its substitution by an obligation to undertake duties, subject to relief from flying. Further, what cl 46.6.2 described as “scheduling issues arising from the change-over of Presidents” were required to be discussed between three parties (Qantas, the outgoing President and the new President) “with a view to making arrangements that are acceptable to all three parties.” These “scheduling issues” are expressed to be an exception to the provision in cl 46.6.1 that the provisions of cl 46 apply to a new President on and from the date of appointment and cease to apply to the outgoing President on and from that date. It is clear that the “scheduling issues” to which cl 46.6.2 refers are those found in cl 46.4 which is headed “Scheduling”, and which includes matters such as relief from flying and pre-allocation. It is probable that, on 7 November 2005, when Captain Woods went to Captain Manning’s office, Captain Kearns was attempting to refer to cl 46.6.2 when he said that the entitlement to relief from flying was not available because it was already being utilised by Captain Holt. In any event, it is clear that, before he became entitled to either relief from flying or pre-allocation, Captain Woods was obliged to engage in a discussion of the kind required by cl 46.6.2. No such discussion ever took place, so that Captain Woods did not become entitled to relief from flying or pre-allocation by 16 November 2005, when EBA6 ceased to have any operation.
125 For all of these reasons, the only breach of cl 46 in respect of Captain Woods was the failure by Qantas to pay Captain Woods his salary at the rate required by cl 46.2 in respect of the period from 7 to 15 November 2005.
126 So far as the request for Captain McNeil’s existing leave to be “recredited”, and to be substituted by relief from flying as a designate of the President, pursuant to cll 45.2 and 46.4.1 of EBA6, AIPA’s claim for a penalty must fail for the same reasons as the claim for reallocation of Captain Wood’s leave. Nothing in cll 45 and 46 entitled Captain McNeil to replace existing leave with duty time subject to relief from flying. Because he was on leave, Captain McNeil had not been allocated any flying in the period between 9 and 16 November 2005. Again, even if he could have been requested to undertake flying duties despite being on leave, there is no evidence that any such request was made. Nor could there have been any breach of cl 45.3.1(a) in respect of Captain McNeil. Because he was on leave, there were no duties from which Captain McNeil could be released.
127 Qantas did not take issue with the proposition that each of Captain Tuma and Captain Smith was a designate of the President in respect of the requests for release from duty referred to in [67] above. Each of those requests was made for the purpose of enabling Captain Tuma and Captain Smith to attend to AIPA duties and responsibilities. Subject to “demonstrable operational requirements”, cl 45.3.1(a) obliged Qantas to release Captain Tuma and Captain Smith from duties on the dates requested. The phrase “demonstrable operational requirements” has two significant elements. First, whatever scheduling constraints are relied on to exclude the obligation to release the President’s designates from duties must be “requirements”. Operational inconvenience is insufficient. Second, the operational requirements must be “demonstrable”. That is to say, the requirements must be capable of being demonstrated. It is Qantas that must produce evidence to demonstrate that those requirements existed, if it wishes to avoid findings that it is in breach of cl 45.3.1(a) in respect of Captain Tuma and Captain Smith. The state of Qantas’s records did not enable it to discharge this evidential onus. They did not enable the reconstruction of the flying rosters as they were at the relevant dates. To the extent to which Qantas was able to produce documentary records, those records tended to suggest that it would have been possible for Qantas to have substituted another pilot for Captain Tuma on 8 November 2005, and another pilot for Captain Smith on 11 November 2005. Mr Richardson’s evidence as to why the two requests were refused was not given in terms of operational requirements. He described the requests as “challenging”, and gave evidence of practical difficulties. The evidence led by Qantas did not demonstrate that operational requirements prevented the granting of the requests. In fact, the request of Captain Tuma was made before the commencement of a bid period on 31 October 2005, at a time when it would have been possible for Qantas to allocate to someone else the duties subsequently allocated to him. Even if that had not been done, it would have been possible for Mr Richardson to hold Captain Tuma’s request until he knew with greater accuracy how many spare pilots he had to cover any illness or other emergency on 8 November, and to make a judgment as to whether he could have acceded to the request. Instead, Mr Richardson simply refused Captain Tuma’s request at an early stage. Captain Smith’s request was made closer to the time when he sought to be relieved from duty, but Mr Richardson and his staff made no real attempt to ascertain whether operational requirements prevented the granting of the request.
128 It follows that Qantas was in breach of its obligations pursuant to cl 45.3.1(a) of EBA6 in refusing to release Captain Tuma from his allocated flying duties on 8 November 2005, and Captain Smith from his allocated flying duties on 11 November 2005. There was no breach in respect of the refusal to change the character of the leave already granted to Captain McNeil.
Conclusion
129 As a result of the conclusions I have reached in these reasons for judgment, it will be necessary to consider whether penalties should be imposed in respect of the breaches of cll 45.3.1(a) and 46.2 of EBA6. In relation to the breaches of cl 45.3.1(a), because they are two breaches of a single term of EBA6, there may be a question whether they arose out of a course of conduct by Qantas, and are therefore required by s 178(2) of the WR Act to be treated as a single breach. Questions of the quantum of any penalty need to be determined. If penalties are imposed, there will be a question pursuant to what was at the relevant time s 356 of the WR Act, as to whether the normal order should be made, that the penalty be paid to AIPA, or whether all or part of any penalty should be paid into the Consolidated Revenue Fund. In any event, an order pursuant to s 178(6) of the WR Act should be made in respect of the sum of $1,385.83 to which Captain Woods is entitled, and which has not been paid. There may be questions of the payment of interest on that sum. With the exception of orders relating to those matters, the application must be dismissed. In addition, counsel for Qantas foreshadowed that, in the event that AIPA’s claim based on the alleged contract were to fail, he would seek to argue that s 347 of the WR Act (as it then was) does not apply to the whole proceeding, and would seek an order that AIPA pay Qantas’s costs of so much of the proceeding as relates to the claim based on an alleged contract.
130 Because there are so many outstanding questions, it will be necessary to adjourn the proceeding for further hearing on a date to be fixed. In addition, the parties should be
required to bring in minutes of orders reflecting the conclusions I have reached in these reasons for judgment.
| I certify that the preceding one hundred and thirty (130) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. |
Associate:
Dated: 22 December 2008
| Counsel for the applicant: | Mr M Bromberg SC and Mr S Moore |
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| Solicitor for the applicant: | AJ Macken & Co |
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| Counsel for the respondent: | Mr R Kenzie QC and Mr S Meehan |
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| Solicitor for the respondent: | Blake Dawson |
| Date of Hearing: | 11, 17-19 March, 30 April, 1-2, 22-23 May 2008 |
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| Date of Judgment: | 23 December 2008 |
