FEDERAL COURT OF AUSTRALIA

Construction, Forestry, Mining & Energy Union v Mammoet Australia Pty Ltd

[2012] FCA 850

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the respondent’s costs, to be taxed if not agreed.

NOTE: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    If an employee engages in protected industrial action against an employer on a day, the employer is prohibited under s 470(1) of the Fair Work Act 2009 (Cth) (FW Act) from making a payment to an employee in relation to the total duration of the industrial action on that day.

2    This appeal concerns primarily whether the learned Federal Magistrate was correct in finding that provision of board and lodging (Accommodation) to certain of its employees constituted “payment” to them within s 470(1) and that accordingly the withholding of that accommodation was authorised under s 342(3) FW Act and therefore not adverse action for the purposes of s 342(1) FW Act. It will be important to understand in due course just what is meant by “providing” Accommodation.

Background

3    The Woodside Pluto Liquefied Natural Gas (LNG) Project (Project) involved the extraction and processing of gas from the Pluto and Xena gas fields located in the Carnarvon Basin, about 190 kilometres north-west of Karratha, Western Australia, into either LNG or condensate for export. Woodside Burrup Pty Ltd (Woodside) is the Project principal.

4    The Project included the construction of an offshore platform in 85 metres of water, connected to 5 subsea wells on the Pluto gas field. The gas is then piped in a 180 km trunkline, which is 36 inches in diameter, to the onshore facility on the Burrup Peninsula, Western Australia (approximately 25 kms from Karratha and 2.5 kms from the Port of Dampier).

5    The onshore facility is an LNG processing plant, and the plant and associated equipment covers approximately 80 hectares.

6    The offshore infrastructure included a single LNG processing train, with a forecast capacity of 4.3 million tonnes a year, with the overall cost of the project being approximately $12 billion. The LNG train was built in Thailand in a steel work frame, and then shipped to the Port of Dampier. From there, it was to be transported to the Project site and positioned for installation.

7    The respondent was awarded a contract from Woodside to perform the heavy lift and transportation of the pre-assembled LNG train modules. It commenced work on the Project in September 2008 and employed 34 employees on the Project to perform these works including 12 crane operators and forklift drivers, four of which are specifically the subject of the proceedings (the Relevant Employees). These operators/drivers were eligible to be members of the appellant, and had their terms and conditions of employment on the Project regulated by a workplace agreement made under the provisions of the Workplace Relations Act 1996 (Cth), called the Mammoet Australia Pty Ltd Pluto Project Greenfields Agreement 2008 (Agreement).

8    Relevantly, the employees under the Agreement were known as “Distant Workers”, and were on “fly in/fly out” arrangements in relation to the performance of their work on the Project. The respondent, at its expense, provided travel to the employees between the Project and their normal place of residence on each “rostered swing” and when working a rostered swing at the Project, the respondent was obliged under the Agreement to provide the employees with either suitable Accommodation, or if not, to pay to them a specified living away from home allowance (LAHA).

9    According to the amended statement of claim three of the Relevant Employees were provided with Accommodation at Searipple Village, Karratha and one was provided with Accommodation at the Gap Ridge Village in Karratha. I was informed by counsel for the appellants that the Accommodation was owned by “Woodside” and that the agreement was that the respondent paid Woodside to the extent that the respondent arranged for its employees to be in occupation. The accommodation at those locations was not exclusively for the respondent’s employees. There were other sub-contractors on the Project.

10    On 28 April 2010, a group of employees of the respondent (12 in total, including the Relevant Employees) commenced a 28 day period of protected industrial action within the meaning of s 408 of the FW Act. The protected industrial action was a complete cessation of work for 28 days from 28 April 2010 to 25 May 2010 (inclusive).

11    On 27 April 2010, the respondent told the Relevant Employees that if they engaged in the protected industrial action, the respondent would not provide them with Accommodation or pay LAHA during the period.

12    Upon the commencement of the protected industrial action on 28 April 2010, the respondent ceased providing the Accommodation to the Relevant Employees, and did not pay them LAHA.

13    Once the period of protected industrial action was finished, the respondent recommenced providing Accommodation or LAHA, as the case may be, to the Relevant Employees.

14    The appellant alleged before his Honour below that the removal of the Accommodation and LAHA was:

(a)    a contravention of cl 6 of App 7 of the Agreement; and

(b)    adverse action, within the meaning of s 342(1) of the FW Act, taken against the Relevant Employees because they exercised a workplace right by participating in protected industrial action, in contravention of s 340(1) of the FW Act.

15    In Construction, Forestry, Mining and Energy Union v Mammoet Australia Pty Ltd [2011] FMCA 802 his Honour concluded that the provision of the Accommodation and the payment of LAHA was “remuneration” paid to the Relevant Employees and thus amounted to “payment” within the meaning of s 470(1) of the FW Act.

16    Consequently, his Honour concluded that the respondent was prohibited from providing the Accommodation, and as such, the removal of the Accommodation was “authorised by or under” the FW Act within the meaning of s 342(3) of the FW Act. This prevented the removal of the Accommodation from amounting to “adverse action”. Further, his Honour concluded that the Agreement could not require that which the FW Act prohibited, namely, the provision of the Accommodation during the period of the protected industrial action. Accordingly the application was dismissed.

The court’s jurisdiction

17    The jurisdiction of the Court below derived from several sources, including s 566 of the FW Act, insofar as the alleged contraventions of s 340(1) of the FW Act were concerned, and item 25 of Sch 17 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (TPCA Act), insofar as the alleged contravention of the Agreement was concerned.

18    Jurisdiction is conferred upon this Court to hear and determine an appeal from the Federal Magistrates Court’s disposition of the application at least by virtue of s 24(1)(d) of the Federal Court of Australia Act 1976 (Cth). The appeal is conducted by way of a “rehearing”: Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 at [75] per Gleeson CJ and Gummow J, [128] per Kirby J and [176] per Hayne J; Zhang v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCAFC 30 at [17]. The Court, upon appeal, may only exercise its appellate powers once error has been identified: Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194 at [17]. Any errors of law or fact should be corrected, such that the appellate court gives the judgment “which in its opinion ought to have been given in the first instance” while observing the “natural limitations” that exist: Dearman v Dearman (1908) 7 CLR 549 at 561; Fox v Percy (2003) 214 CLR 118 at [23] per Gleeson CJ, Gummow and Kirby JJ.

Grounds of appeal

19    The following are the ground of appeal:

1.    The learned Federal Magistrate erred in law by failing to properly construe s 470 of the Fair Work Act 2009 (Cth). His Honour should have inter alia construed the term "payment" in s.470 so as to exclude the provision of accommodation to the relevant Distant Workers in the circumstances of the case.

2.    The learned Federal Magistrate erred in fact and in law by finding that “the provision of the Accommodation is a payment which [the Respondent] is prohibited from making to the [Distant Workers] by reason of s.470(1)” of the Fair Work Act 2009 (Cth). His Honour should have found that the removal of Distant Workers' accommodation as provided under Appendix 7 of the relevant certified agreement during the period of protected industrial action was capable of giving rise to a contravention of the adverse action provisions of the Fair Work Act 2009 (Cth) on the evidence.

3.    The learned Federal Magistrate erred in fact and in law by finding that:

(a)    "the provision of the Accommodation does not stand outside the remuneration arrangements for the Affected Employees"; and

(b)    the payment of the Living Away from Home Allowance under the relevant certified agreement "could not possibly be said to fall outside the concept of remuneration”.

4.    The learned Federal Magistrate erred in fact and in law in finding that the "claim for breach of the Greenfields Agreement must also therefore fail because [the Respondent] is not lawfully able to provide the Accommodation to the [Distant Workers] during their period of Protected Industrial Action". Having properly construed s.470 of the Fair Work Act 2009 (Cth), his Honour should have found that:

(a)    the provision of accommodation under Appendix 7 of the relevant certified agreement was not capable of being the subject of a “payment” for the purposes of clause 38(6) of the relevant certified agreement in the circumstances; and

(b)    the removal of Distant Workers' accommodation as provided under Appendix 7 of the certified agreement during a period of protected industrial action was capable of giving rise to a breach of the certified agreement on the evidence.

5.    His Honour erred in fact and in law by failing to apply the correct test on a no case submission, or alternatively by misapplying the test in the circumstances, including in relation to the drawing of proper inferences. To the extent that the matters were finely balanced, His Honour should have rejected the no case submissions.

Appeal Grounds 1-4 – Accommodation/LAHA as “payment” under s 470 of the FW Act

20    The resolution of each of these grounds of appeal turns upon the question whether the provision of the Accommodation, alternatively the LAHA, was a “payment” within the meaning of s 470 of the FW Act.

21    No point is taken by the appellant on the appeal regarding the period of the payment for the industrial action, the payment’s relation to the industrial action or that if s 470 of the FW Act applied, that the removal of the Accommodation was not “authorised” by the FW Act for the purposes of s 342(3) of the FW Act.

22    The appellant’s case below was that it was the “removal of the Accommodation” which constituted “adverse action” and the contravention of the Agreement.

23    His Honour concluded at [81] and [113]-[114] that the provision of Accommodation in the circumstances was “remuneration”, and therefore capable of being a “payment” prohibited by s 470 of the FW Act.

24    The respondent contended below and in the appeal that the act of ceasing to provide the Accommodation was not, and could not be, the operative act said to amount to either adverse action or a contravention of the Agreement.

25    Rather, the respondent submits that the relevant act which potentially injured or prejudicially altered the position of the Relevant Employees, or contravened the Agreement, was the act of failing to pay LAHA in default of providing Accommodation. That being so, it submits that the relevant question is whether the payment of LAHA is “payment” for the purposes of s 470 of the FW Act. His Honour adverted to this submission and distinction on several occasions, but did not appear to deal with it directly.

26    The contention of the respondent is that on a proper construction of the Agreement, a failure by the respondent to provide Accommodation to any particular employee is of no immediate consequence, as there is no absolute obligation in the Agreement to provide Accommodation to any Distant Worker, it being entirely at the respondent’s choice.

27    For this reason, the respondent submits, it cannot take adverse action against the Relevant Employees, or contravene the Agreement, by failing to provide or, as in this case, removing, Accommodation. It contends that it is only where the failure to provide Accommodation is accompanied by the failure to pay LAHA, that any adverse action or contravention of the Agreement potentially arises as it was open to the respondent to remove Accommodation and start paying LAHA at any time.

28    It then submits that the payment of LAHA is “payment” for the purposes of s 470 of the FW Act. In this respect, see cll 6 (paying), 7 (paid), 10 (paid) and 12 (payment) of App 7 of the Agreement in relation to LAHA

29    Its alternative submission is that if the correct characterisation of the question is whether or not the Accommodation was “payment” for the purposes of s 470 of the FW Act, then his Honour was correct to so find in any event.

30    The surest guides to the proper construction of any statutory provision are the text of the legislation considered in its context in its widest sense, as well as the general purpose and policy underlying the provision in question: Travelex Ltd v Commissioner of Taxation of the Commonwealth of Australia (2010) 241 CLR 510 at [82]; Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] and [78] per McHugh, Gummow, Kirby and Hayne JJ; CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408.

31    The meaning of the words “payment to an employee” in s 470(1) of the FW Act has to be considered in this way.

32    Section 470 of the FW Act, and its predecessors, have a long history in Federal industrial relations legislation. Section 187AA(1) of the pre-reform Workplace Relations Act 1996 (Cth) (WR Act) was one such provision. Whilst not in precisely the same terms as s 470(1) FW Act it is for present purposes to the same effect: “[a]n employer must not make a payment to an employee in relation to a period during which the employee engaged, or engages in industrial action ...”.

33    Section 187AA was considered by the Full Court in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543. Lander J at [83] described the purpose of Pt VIIIA of the WR Act in which, relevantly, s 187AA is to be found as follows:

[83]    The policy of the Act is to discourage industrial action as it is defined in s 4 of the Act. The purpose of Pt VIIIA of the Act, in which these provisions are contained, is to prevent an employer making a payment to the employer's employee in relation to any period during which the employee engages in industrial action. It is the intention of the Act to discourage employers and employees agreeing to the employer paying employees for that period of industrial action engaged in by the employee. To that end, s 187AA makes it a contravention for an employer to make a payment to an employee who has in relation to a period during which the employee engaged or engages in industrial action and at the same time makes it a contravention for the employee to accept a payment from an employer if by doing so the employer will contravene subs (1) by making that payment. The policy of the Act is that if an employee engages in industrial action then it must be at the employee's own expense…

[84]    Industrial action is discouraged by putting the cost of that industrial action upon the employee rather than the employer. No doubt it is thought that an employee will be less likely to take industrial action if the employee knows that it is a contravention for both the employer and the employee if the employer makes a payment for the period of industrial action.

34    Earlier Ryan J in Independent Education Union of Australia v Canonical Administrators (1998) 87 FCR 49 at 73-74 said this of the same provision:

I consider that s 187AA in the context of Pt VIIIA of the WR Act evinces a policy that collective bargaining should occur in an environment where employer and employee are to appreciate and accept the detrimental consequences for themselves of industrial action used as part of the negotiating armoury. For the employee those consequences are normally loss of remuneration in respect of the period of the industrial action and for the employer they are the loss of production attendant on a lockout. Consistently with that policy, s 187AA is framed to ensure that the loss of remuneration is not recouped after the bargaining is over and necessarily applies to protected action.

35    When considering s 507(1) of the post-reform WR Act, another provision to the same effect, Middleton J in O’Shea v Heinemann Electric Pty Ltd (2008) 172 FCR 475 adopted the policy descriptions of each of Lander J in Ponzio and Ryan J in Canonical. I will proceed on the same basis.

36    I do not accept the appellant’s submissions that there are “key differences” between s 470 FW Act on the one hand and s 187AA of the pre-reform WR Act as well as s 507 of the post-reform WR Act on the other hand.

37    I accept the respondent’s submission, which is a paraphrase of Lander J’s policy description in Ponzio, that if employees who engaged in industrial action did not suffer any loss of remuneration, employment entitlements or any “net loss” during that period, there would be no disincentive for them to engage in the action in the first place. This purpose is supported by s 470(1) of the FW Act which makes it a contravention for an employer to make such payments, and s 473(1) and (2) of the FW Act which makes it a contravention for employees or their union to ask for such payments.

38    Section 470 of the FW Act has to be read in this context. The same or substantially similar term is used in each of ss 470(1), 473(1) and 473(2): “make a payment”. I agree with the respondent’s submission that the appellant’s construction would enable the purpose and object of these provisions to be readily thwarted.

39    The appellant submits that the proper construction of the term “payment” in the provision is informed, inter alia, by the following matters:

(a)    S.323 of the FW Act provides that employees must be paid “in money”. This provision has its history in Truck Act legislation designed to protect employees from receiving payments in kind. Other than permissible deductions (s.324), ‘payments’ to employees must be in money and cannot be satisfied by the provision of accommodation where that value is not agreed upon by the parties: ss 324(1)(a); 332(3)

(b)    S.471 of the FW Act which provides that, in the case of partial work bans, ‘payments’ are able to be reduced by a proportion upon the giving of notice by the employer. The word ‘payment’ in s 471 could not take on a different meaning to the same term in s 470. On the respondent’s construction, a partial work ban would necessitate a proportionate reduction to be applied to the ‘payment of accommodation’ where s 471 is engaged.

(c)    The Explanatory Memorandum is consistent with the Appellant’s construction of s 470 of the FW Act, and is inconsistent with the respondent’s construction. RR 309-311 of the Explanatory Memorandum which accompanied the Fair Work Bill 2008 relevantly provide:

r.309. An employer will be required to issue a written notice accepting partial performance and specifying the proportion of the employee‘s wages to be deducted …

r.310. FWA will have the power to settle any dispute about the proportion of wages that should be deducted.

r.311. There will be no deduction from wages if an employee has not done anything except express an intention to not do something if asked, for example, work unrostered overtime or commence a task. (Emphasis added).

40    The appellant submits that these considerations support the conclusion that the term “payment” in s 470 is consistent with the notion of the payment of “wages”, which in accordance with s 323 of the FW Act involves payment in money. It follows on the appellant’s submission that this would exclude the provision of accommodation or payment of an LAHA from the concept of “payment” under s 470(1).

41    I will deal with these submissions in turn.

Payments in money

42    The analysis in the reasons of his Honour and the lengthy submissions put to this Court concerning authorities dealing with “earnings”, “wages”, “remuneration”, “pay”, “payment” and “income” against the backdrop of different legislation be it workers compensation, taxation or otherwise did not provide assistance in the resolution of the appeal. The proper construction is revealed by the text, context and the purpose underlying s 470 FWA.

43    I do not consider that the expression “payment to an employee” in s 470 should be construed narrowly. The words “payment” or “pay” are used variously in the FW Act in combination with other words which have a qualifying or confining effect: “payment of fees (s 30A(1))”; “the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work … (s 81(6))”; “the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work … (s 90(1))” and “payment of wages and other monetary entitlements (s 139(1)(f)(ii))”. If Parliament had intended that in s 470 the prohibition be solely to the payment of “wages” or an amount “payable to the employee in relation to the performance of work” as is found, for example, in s 323(1) then it could have employed that language or language to that effect. It did not do so. Moreover, s 323(1) does not provide, contrary to the appellant’s submission that “employees must be paid ‘in money’”. Rather, it provides relevantly, that an employer must pay an employee “amounts payable to the employee in relation to the performance of work … in money …”. The relevant payment is thus qualified, which as I have observed is not the case with s 470(1).

44    The method of “payment” is not confined in the text of s 470(1). This, in my opinion, would extend where relevant to payment in kind. The Oxford English Dictionary (3rd ed, online version, March 2012) defines “payment” as “a sum of money (or equivalent) paid or payable …”. The underlying policy that the cost of the industrial action should be at employees’ expense would be undermined if payment for the Accommodation for the Relevant Employees was not in contravention of s 470(1).

45    The appellant’s submission, if accepted, would mean, where the provision of accommodation to an employee formed part of his or her wages, that payment of wages by that means was prohibited by s 470. However, where the provision of accommodation did not form part of an employee’s wages, but was merely an entitlement, the payment for accommodation, whether to a third party or by way of reimbursement to the employee would not be prohibited. I find that a very unattractive result.

46    The physical accommodation was the property of Woodside. It is important to appreciate that the respondent “provided” the Accommodation by paying Woodside for the cost of the Accommodation used by the Relevant Employees. What actually happened on 28 April 2010 when the respondent ceased providing the Relevant Employees with the Accommodation at Searipple Village and Gap Ridge Village was that the respondent stopped making payments to Woodside for the Accommodation for the Relevant Employees. I infer that the respondent informed Woodside that it would not be responsible for paying for this Accommodation for the period of the industrial action in the same vein that it informed the Relevant Employees. The respondent did not prevent the Relevant Employees from staying at Searipple Village or Gap Ridge Village. The evidence was that the respondent, by letter dated 27 April 2010, informed those Relevant Employees living at Searipple Village that failure to vacate that Accommodation would render them liable for the costs of the Accommodation. However, those three Relevant Employees were also informed in the letter that they were at liberty to make their own arrangements with the management at Searipple Village. I was not taken to any similar letter concerning the fourth Relevant Employee, Mr Schwarz, who was living at Gap Ridge Village, Karratha. However, in Mr Schwarz’s affidavit sworn 27 September 2010, which was in evidence below, he deposed that on 27 April 2010, Mr Malcolm Robinson, the respondent’s Project Manager, at a meeting of all employees taking the protected industrial action gave him a letter which it seems was in the same terms as the letter I have described above albeit referring to Accommodation at Gap Ridge Village. Schwarz further deposed to an exchange which occurred between him and Robinson as follows:

Robinson was acting like he was surprised by the industrial action. The meeting proceeded with words to the effect:

Robinson:    “If you go on strike, your accommodation will be removed and you will have to find your own accommodation.”

Me:    “What about if we still want to stay in camp.”

Robinson:    “If you want you can talk to Foster Wheeler Worley about staying in the camp, that’s got nothing to do with us. But from Mammoet’s point of view, we’re not providing accommodation and you have to pack up and be out by 6.30am tomorrow.

47    That being so, there is no need to differentiate between the cessation of payment for the Accommodation and payment of an LAHA. Each constitutes the making of a payment for the purposes of s 470(1) of the FW Act. It is, for the same reason, unnecessary to characterise the “operative act”, as the respondent submits, as the non-payment of the LAHA as distinct from the removal of provision of the Accommodation.

48    It would be an extraordinary result if, by virtue of s 470(1) FW Act, an employer was prohibited from making payment to its employees of amounts described in the notes to s 323(1) of the FW Act, namely, incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates and leave payments but such prohibition did not extend to payments made for accommodation for those employees during the period of protected industrial action. The amounts described in the notes to s 323(1) reflect the meaning attributed to “full rate of pay” in s 18(1). The Accommodation was provided to enable the employees to be in a position to perform their employment and earn their pay, not for their use whilst on strike. If that was the result, then it would be the respondent and not the employees who carried that cost of the industrial action. As I said, this would serve only to undermine the policy of the provision.

49    I do not consider that the use of the word “payment” in s 471, which concerns partial work bans, assists the appellant’s construction. First, s 471 is neither mandatory nor prohibitory in character.

50    Relevantly, s 471(1) provides:

(1)     If:

(a)    an employee engaged, or engages, in protected industrial action against an employer on a day; and

(b)    the industrial action is a partial work ban; and

(c)    the employer gives to the employee a written notice stating that, because of the ban, the employee's payments will be reduced by a proportion specified in the notice;

then the employee's payments are reduced in accordance with subsection (2) in relation to the period (the industrial action period) referred to in subsection (5).

51    There is no obvious reason why reduced payments towards provision of accommodation or LAHA could not be made by an Employer. Moreover disputes as to the amount of any such reduction can be resolved by Fair Work Australia under the provisions of s 472 FWA.

The Explanatory Memorandum

52    The Explanatory Memorandum to the Fair Work Bill 2008 (Cth) is not of any particular assistance. The passages quoted relate to partial work bans. That reference is made to wages is in any event hardly determinative. As Ryan J correctly observed in Canonical the prohibition will generally concern the payment of wages. However, it is not, for reasons I have given, solely confined to the payment of wages.

53    Grounds 4-5, for all these reasons, fail.

Appeal Ground 5: no case to answer

54    The appellant accepted that if his first four grounds failed then there is no utility in this ground of appeal. Accordingly, given the failure of the first four grounds, there is no need to consider this ground.

Respondent’s Notice of Contention

55    As the respondent acknowledges, it is not necessary, were the appeal otherwise unsuccessful, to consider the notice of contention.

56    The appeal should be dismissed with costs.

Associate:

Dated:    14 August 2012