FEDERAL COURT OF AUSTRALIA

Australian Licensed Aircraft Engineers’ Association v Qantas Airways Limited [2019] FCA 989

ORDERS

THE COURT ORDERS THAT:

1.    The proceeding be dismissed.

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

REASONS FOR JUDGMENT

(Revised from the transcript)

RARES J:

1    Australian Licensed Aircraft Engineers’ Association claims that Qantas Airways Limited contravened cl 35.2 of the Licensed Aircraft Engineers (Qantas Airways Limited) Enterprise Agreement 10 that the Fair Work Commission approved under s 185 of the Fair Work Act 2009 (Cth) on 5 January 2015: Licensed Aircraft Engineers (Qantas Airways Limited) Enterprise Agreement 10 [2015] FWCA 11. Agreement 10 covers licensed aircraft maintenance engineers, also known as LAMEs. In particular, the Association seeks declarations that, first, cl 35.2 of Agreement 10 prohibited Qantas from recognising external training undertaken by any of its LAMEs, unless that training was undertaken within the engineer’s trade stream, and, secondly, Qantas had contravened s 50 of the Act because it had breached cl 35.2 by recognising external training undertaken by a LAME outside his or her trade stream.

Background

2    Agreement 10 is the tenth in a series of enterprise agreements, and their statutory analogical predecessors, providing for the regulation of the industrial relationship between Qantas and, relevantly, both its mechanical LAMEs as well as its avionic or electrical LAMEs.

3    The Civil Aviation Safety Authority, or CASA, was the licensing authority for the work that LAMEs undertook on aircraft. On 27 June 2011, CASA promulgated Pt 66 of its Manual of Standards (the Pt 66 manual). That dealt principally with the licensing of LAMEs, among others, for aspects of aircraft maintenance work that LAMEs could perform.

4    Historically, prior to the Pt 66 manual, there were two classifications for Qantas’ LAMEs. First, mechanical LAMEs undertook mechanical work. Stephen Purvinas, the Federal Secretary of the Association, explained that this classification meant that mechanical LAMEs whom CASA (or a predecessor regulator) licensed were qualified to work in the trade stream of an airframe or engine engineer. Mr Purvinas said that, broadly speaking, this involved them dealing with “things that are not connected by wires”. Secondly, avionic LAMEs that CASA (or a predecessor) licensed were qualified to work as electrical instrument or radio engineers. As Mr Purvinas explained, an avionic LAME worked in a trade stream involving “things that are connected by wires, such as on board computer systems and navigation control”.

5    The Pt 66 manual broadly maintained those two trade streams. However, it changed the nature of the work that could be performed by LAMEs by substituting in two new categories of licence. Importantly, the new B1 licence allowed a mechanical LAME to perform a limited amount of electrical work. The new categories for LAMEs under the Pt 66 manual were, first, a B1 licence, being a licence to undertake mechanical work, with some limited electronic work, and, secondly, a B2 licence, being a licence to undertake avionic work. The Pt 66 manual prescribed at least three categories of electrical work that a B1 licensee could undertake, namely, first, generator and or constant speed drive/IDG systems, secondly, electrical power supply systems including a ram air turbine, if electrical, and, thirdly, lighting.

6    In consequence of CASA’s new expansion of the capacity of mechanical LAMEs holding a B1 licence to undertake, in part, some electronic work, the Pt 66 manual provided transitional provisions that would allow B1 licences to be issued that were subject to a limitation of the work that the mechanical LAME could perform. CASA could issue the licence subject to a condition that the engineer did not perform those tasks. The limitation would apply if the mechanical LAME was not yet qualified to undertake electrical work of one or more of the kinds that a full, or unlimited, B1 licence otherwise would allow him or her to perform.

7    The provisions of cl 35 of Agreement 10 came about following negotiations between the Association and Qantas of what became an agreement that the then Australian Industrial Relations Commission approved on 8 October 1997 under s 170LS of the Workplace Relations Act 1996 (Cth) (the 1997 agreement).

8    Under the previously existing industrial relationship it appears that Qantas had been obliged to pay a LAME higher wages based simply on the LAME attaining better or additional qualifications whether or not Qantas had approved of its employee doing so. The context in which the parties agreed the terms of what is now cl 35 was that Qantas wished to guard itself against being under an obligation to pay higher wages to LAMEs who, independently of any approval of their employer, obtained better or additional qualifications.

9    In early August 1997, the Association had sought the inclusion of a transitional measure in the 1997 agreement enabling LAMEs who had already embarked on external training at their own expense to complete that training and be recognised as entitled to higher wages under the pre-existing regime. Such a transitional provision was included in the 1997 agreement, but no longer has any relevance. Importantly, in the course of the negotiations for the 1997 agreement, on 12 August 1997, in responding to a letter from the Association confirming the terms of what is now cl 35.1, Qantas added what became the wording of cl 35.2.

10    The Association and Qantas negotiated an outcome that has remained substantially in the terms of the present cl 35, which provides:

35.    LAME PAY STRUCTURE – TRAINING

35.1    The employees and the [Association] accept and are committed to the fact that all training provided by Qantas to LAMEs shall be dictated by the operational requirements and needs of the enterprise. Qantas shall set the training levels for Qantas operated aircraft types which shall be the only recognised training for the purposes of accruing points.

35.2    Future external training shall only be recognised on the following terms:

35.2.1    Prior approval (for pay recognition purposes) of the training by the relevant manager on the basis of future operational use in that area.

35.2.2    Training is within the LAMEs trade stream.

35.2.3    Training is undertaken at the LAME’s own expense and time.

(emphasis added)

11    Thus, cl 35.1 recorded that both the Association and Qantas accepted that Qantas would have the sole right to determine who should be paid at what level for holding particular qualifications to work on particular aircraft. But, the parties also recognised that LAMEs who undertook external training with Qantas’ approval should be protected in the way cl 35.2 seeks to do.

12    As this account indicates, the purpose of cl 35.2 was to ensure that Qantas had the ability to control what further training it would recognise and pay for in order to enable its employed licensed aircraft maintenance engineers to progress in terms of qualifications and pay. It was common ground that the parties understood the trade streams to which cl 35.2.2 refers were respectively, first, at the time of the 1997 agreement, those of mechanical and avionics engineers and, secondly, since the Pt 66 manual introduced the new licences, those of engineers with B1 or B2 licences. It was also common ground that there is nothing to prevent a LAME from holding both a B1 and B2 licence simultaneously.

13    As can be expected, the current enterprise agreement, Agreement 10, is a complex document that extends to over 100 pages in length. Essentially, it covers about 1100 LAMEs whom Qantas currently employs. It contains a dispute-settling procedure (cl 6), a productivity agreement (cl 12), a specification of the types of employment covered, relevantly for present purposes including full-time employment (cl 13), and in cl 16 a detailed set of provisions dealing with wage rates that tables 1 and 2 of appendix B to Agreement 10 further amplified. Clause 16.2 set out a graded pay structure. Clause 16.2.2 also provided that a LAME whom Qantas recruited externally would “translate” to a level in the wage structure that was commensurate with the engineer’s licensed qualifications.

14    Notably, part of the wage rates structure in cl 16 of Agreement 10 involved the award of points based on training and or experience as a Qantas LAME. The wage rates structure provided that points earned would relate to the number of years of a LAME’s experience. The points accrued from 16 August 1997. This obviously related back to the introduction of the points scale in the 1997 agreement. Clause 16 of Agreement 10 also provided quite detailed steps for an engineer’s wage entitlements to progress through its 17 levels of remuneration entitlements.

15    A LAME also had to attain particular qualifications to enable him or her to work on each particular type of aircraft. That is because each aircraft type has special features that require a LAME to be trained and certified specifically in order to perform functions on it under his or her licence for the purpose of air safety generally, as well as the Pt 66 manual and other regulatory requirements. Appendix J of Agreement 10 identified the various aircraft types in the Qantas fleet for the purposes of awarding points to “LAME Mechanical (Airframe and Engine) and LAME Avionic (Electrical, Instrument and Radio)”, as Appendix J described those, harking back to the former nomenclature of “work streams” (as opposed to referring to the engineer having a B1 or B2 licence). Thus, if a mechanical engineer was qualified to work on airframes for a particular aircraft type, he or she earned two points, and a further two points if or when he or she qualified to work on engines for that aircraft type. Similarly, if an avionic engineer was qualified to do electrical work for a particular aircraft type, he or she earned two points, and a further two points if or when he or she qualified to work on INS [scil: instruments and navigation systems] for that aircraft type.

16    Clause 34 dealt with the provision of training in circumstances where either Qantas or CASA required an employee to attend an examination that it, respectively, conducted. The clause regulated the LAME’s entitlements in the relevant circumstances. Clause 34.7 provided that Qantas could require a LAME to enter into a bond in order to complete training on a particular type of aircraft or to undertake training to have his or he licence converted into a full B1 licence; that is, a B1 licence not subject to any condition that limited the work that the LAME could perform under that licence. As noted above, a full B1 licence entitled a LAME, who previously was only mechanically qualified, to perform a range of electrical work. The bond had the commercial purpose of ensuring that the LAME, having been able to obtain additional qualifications with Qantas’ support, would remain in its service for the following three-year period.

17    Clause 44 is headed “Civil Aviation Regulations (CASR) Part 66 Licence Conversion”. Clearly enough, the parties added the provisions of cl 44 to what had been in predecessor versions of Agreement 10 in order to deal with the new regulatory environment that came about following the introduction of the Pt 66 manual and the expansion of the work that previously mechanical LAMEs could perform. Clause 44.1 provided definitions for a “full B1” and “full B2” licence, being in each case a licence that was not limited by any condition excluding any areas of work that the engineer could undertake. Clause 44.1 provided for three exclusions that were possible on a B1 licence and five on a B2 licence. Clause 44.2 provided for a special “conversion allowance” to be paid to LAMEs working on A380 aircraft in accordance with table 5 to Agreement 10. Table 5 contained four separate categories, being items (a) to (d), namely:

(a)    a B1-licensed LAME;

(b)    a B2-licensed LAME;

(c)    a B2/B1 limited licenced LAME; and

(d)    a B2/B1-licensed LAME.

18    Clause 44.2.1 preserved the conversion allowance payable under the previous enterprise agreement, commencing with the first full pay period after 23 January 2012. Clause 44.2.2.1 provided that payments under item (c) in table 5, being for a B2/B1 limited licensed LAME, applied only to employees who had already acted as a LAME or, in the terminology of the Pt 66 manual and Agreement 10, had “exercised these privileges in conjunction with an A380 licence”. Clause 44.2.2.2 provided that the more general “EASA Conversion Allowances” provided in cl 44.3, and the EASA recognition allowances in cl 44.4, would not apply to employees who already received an A380 conversion allowance under cl 44.2.

19    Clause 44.3 applied only to an engineer whom, after the date on which Agreement 10 commenced, Qantas nominated to convert to a full B1 licence. That clause made detailed provision in such a case for the LAME’s payment of remuneration for completing the training provided in table 6 in appendix B. That table had two future classifications: first, a “full B1 licensed LAME” and, secondly, a “full B2/B1”. Nonetheless, the balance of cl 44.3.2 provided that a licensee whom Qantas nominated to convert his or her licence into that person’s initial, or very first, B1 licence (i.e. his or her first full B1 licence for any type of aircraft in the Qantas fleet) was entitled to be remunerated in accordance with the allowances in table 6. Those allowances were identical for both future classifications, with the entitlement to payment commencing on the first pay period after the LAME exercised the privileges (that is, acted) under the new full B1 licence.

20    Clause 44.3.3 made clear that a conversion allowance would only be payable for the LAME’s first attainment of a full B1 licence for any type of aircraft and that no additional conversion allowance would be payable if the engineer later qualified to work on other types of aircraft. Clause 44.3.4 dealt solely with engineers who both qualified to work on an A380 aircraft and were already receiving an allowance under cl 44.2.

21    Clauses 44.3.4 and 44.3.5 are important and provided:

44.3.4    At the Company’s [viz: Qantas’] absolute discretion, a nominated Avionics LAME (B2) who is in receipt of an allowance under clause 44.2 may be required to obtain a full B2/B1 license on the same aircraft type. If this is the case, the Avionic Conversion will attract payment of the allowance specified in Table 5 reference item (d) in substitution of any other payment or allowance under clause 44.2, 44.3 or 44.4 This allowance is payable in respect of the first full B2/B1 licence only and will not be payable in connection with any additional type licences obtained by the LAME.

44.3.5    Where the Company does not nominate the conversion of a current LAME’s license [sic] into the initial full B1 CASR Part 66 [viz: a full B1 licence issued under the Pt 66 manual] and an employee of his/her own volition undertakes conversion training, the amounts identified in Table 6 of Appendix B:

44.3.5.1    will be payable from the first full pay period on or after the LAME is required, at the Company’s absolute discretion, to commence exercising the privileges and authorities under the full B1 licence;

44.3.5.2    will be paid as an “EASA Conversion Allowance” and be paid for all purposes; and

44.3.5.3    will only be payable in respect of one licence conversion per LAME. That is, the conversion of a LAME’s second licence or additional licences to full B1 will not attract an additional or accumulative EASA Conversion Allowance.

(emphasis added)

The alleged contravention

22    The current dispute arose after the Association became aware that one avionic LAME, Ross Richardson, who became the holder of a B2 licence from about 27 June 2011 on the introduction of the Pt 66 manual, subsequently had obtained a B1.1 licence. Mr Richardson had earned his qualifications for his B1.1 licence in external training. CASA recognised Mr Richardson’s new B1.1 licence on 28 March 2014. On about 3 September 2014, CASA recognised that Mr Richardson’s B1.1 licence permitted him to work on a Boeing 737-800 aircraft.

23    It was common ground that, at least, from 7 August 2015, Qantas’s internal records assigned a company authorisation number (or CAN) to Mr Richardson’s new B1.1 licence. That CAN qualified him to work on a Boeing 737-800 aircraft as a mechanical LAME as well as an avionic LAME under his (continuing) B2 licence.

The Association’s submissions

24    The Association claimed that by giving effect to the company authorisation number and recognising Mr Richardson's qualification and authority to act as an engineer in a new work stream, namely that covered by his new B1.1 licence, Qantas contravened the provisions of cl 35.2.2. That was because, the Association contended, Qantas recognised that Mr Richardson was qualified to work, and was able to accrue points under cl 16 of Agreement 10 based on the external training that he had received in a trade stream outside his pre-existing trade scheme as an avionic, or B2, LAME.

25    Thus the issue between the parties is whether, on the proper construction of Agreement 10, Qantas had the right to act as it did.

26    The Association argued that cl 35 was a straightforward provision that governed the resolution of the present controversy. It contended that cl 35.1 prescribed an objective or commitment of both parties that Qantas’ operational requirements and needs would govern all training that Qantas provided to LAMEs. It submitted that the second sentence of cl 35.1 provided that Qantas would be able to set the training levels necessary for each particular aircraft type that it operated and that those levels would be the only training recognised for the purposes of employees accruing points in accordance with the wage rates in cl 16 of Agreement 10. The Association argued that cl 35.1 indicated that Qantas would provide any internal training in accordance with its operational needs and would also set the minimum training levels that were necessary for a LAME to work on aircraft types in its fleet.

27    The Association contended that cl 35.2 dealt with a different subject matter, being external training that LAMEs might undertake outside Qantas and that the clause prescribed the only terms under Agreement 10 on which any such external training could, and would, be recognised.

28    Both parties agreed that cl 35.2 was mandatory, but they disagreed as to what its mandate was. The Association argued that cl 35.2 could only be read as meaning that the conditions in each subclause in cl 35.2 had to be met before any external training could, or would, be recognised by Qantas under Agreement 10 entitling a LAME to accrue points in the wage rates scale prescribed in cl 16. Accordingly, the Association submitted, Qantas could not “recognise” a person in Mr Richardson’s position, who had obtained external qualifications outside his trade stream, for the purposes of enabling such a LAME to accrue points using that qualification. The Association argued that the purpose of cl 35.2.2 was to ensure a real delineation for all purposes between the two trade streams within the Qantas workforce. Those work streams originally were mechanical and avionic licencees and, since the commencement of the Pt 66 manual, now were B1 and B2 licensees. It contended that no external training could entitle a LAME already qualified in one stream to obtain external qualifications to obtain a licence in the other stream that Qantas could recognise for the purposes of him or her accruing points under cl 16. The Association pointed to the consistent retention of a clause in the same terms as cl 35 in the industrial agreements defining the relationship between Qantas and its LAMEs since the parties made the 1997 agreement.

29    Last, the Association argued, more faintly, that there was a common understanding of the parties at the time that Agreement 10 was entered into that cl 35.2 would not permit recognition of external training of a LAME in Qantas’s employment outside of his or her existing or current trade stream.

Consideration

30    In Energy Australia Yallourn Pty Limited v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (known as the Australian Manufacturing Workers Union) (2018) 363 ALR 60 at 75-76 [56]-[58] (cited with approval in Treasury Wine Estates Vintners Limited v Pearson [2019] FCAFC 21 per Rares, Perry and Charlesworth JJ), Rares and Barker JJ summarised the principles of construction of industrial awards. They held (363 ALR 81-82 [85]):

Mason A-CJ, Murphy and Deane JJ explained the significance of the difference between the subjective and objective theories of contractual assent and why the latter was the law of Australia [151 CLR at 429], as Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ affirmed in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40], where they said (see too at 179-181 [41]-[45]):

It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction (Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22]). (emphasis added)

31    In my opinion, cl 35, in its context and in light of its industrial history, operates to ensure that Qantas maintains control over the recognition, for pay purposes, of LAMEs within its employ who have attained particular qualifications. Clause 35.2 sets out three mandatory criteria that a LAME, who has obtained an external qualification at his or her own expense, must satisfy if Qantas were to recognise that external qualification. Those criteria were, first, that a relevant Qantas manager gave the LAME prior approval, for pay recognition purposes, to undertake that training. Secondly, the training fell within that LAME’s existing trade stream (which both parties accepted could, in the case of a B1, or mechanical, LAME, now include the new electrical engineering qualifications that a holder of a full B1 licence could utilise since the Pt 66 manual commenced operation on 27 June 2011). Thirdly, the LAME undertook the training at his or own expense and time. Thus, a LAME who satisfied each of the three criteria could insist that Qantas treat the external training, and the obtaining of the qualifications consequent upon it, as equivalent to other training that Qantas conducted internally to qualify LAMEs for the purposes of receiving or accruing points under cl 16 of Agreement 10.

32    Importantly, cl 35.1 did not preclude Qantas, for example, forming the view that, for its operational requirements and the needs of its enterprise, it would provide internal training to one or more LAMEs to enable him or her to qualify in a different trade stream than the one in which the LAMEs already held a licence. Moreover, cl 44 expressly contemplated that LAMEs could hold, and study or train to hold, both a B1 and a B2 licence.

33    An agreement, including an enterprise agreement like Agreement 10, must be read as a whole having regard to the objective background, including its industrial context, and facts mutually known to the parties at the time it is entered into, and it must be construed as a reasonable person in the position of the parties would have understood it to mean when agreeing to its provisions (Energy Australia Yallourn 363 ALR at 81-82 [85]).

34    Here, it is necessary to read cl 35 together with cl 44 in the context of Agreement 10 as a whole. Importantly, cl 44.3.5 allows Qantas, at its absolute discretion, to require a LAME to exercise the privileges and authorities under his or her full B1 licence despite Qantas not having nominated that person to convert his or her existing licence to an initial full B1 licence in circumstances where the employee, of his or her own volition, had undertaken the conversion training to obtain that B1 licence. Moreover, as table 6, to which cl 44 related, made clear, Qantas would have to pay the LAME the amounts under table 6 if he or she had qualified to hold both B1 and B2 licences, but only if Qantas required that LAME, under cl 44.3.5, to exercise the privileges and authorities under his or her full B1 licence.

35    There could be no industrial purpose for having the future classification of “Full B1/B2” in table 6, if the Association’s argument were correct. That argument would require cl 44.3.5 to be read to mean both that an avionic, or B2, licensee, could never undertake at his or her own volition, conversion training to be able to perform the work of a full B1 licensee and that thereafter Qantas could never require him or her to exercise the privileges and authorities under that new licence, because to do so necessarily would contravene cl 35.2 in Agreement 10. That result is in the teeth of the express terms of cl 44.3.5 and cannot have been what the parties intended, since they included cl 44.3.5 to deal with the new industrial context: Treasury Wines [2019] FCAFC 21 at [75]-[77]. Likewise, in cl 44.3.4, the parties had already accepted that a LAME could become a dual licensee, that is, the holder of both a full B1 and B2 licence, for the same aircraft type and that, if this occurred, he or she would be remunerated by Qantas for that qualification if utilised.

36    Clause 44.3.5 operated on the basis that (otherwise than under, or despite, cl 35.2) a LAME will have obtained a qualification from external training that is outside his or her previous trade stream, namely by reason of his or her own volition to undertake conversion training. When that occurred, cl 44.3.5 required Qantas to pay that LAME a conversion allowance under table 6 if it required him or her to exercise the privileges and authorities under his or her full B1 licence.

37    In this context, it makes no sense that, if by requiring under cl 44.3.5 a LAME, such as Mr Richardson, to act under his new B1.1 licence, Agreement 10 operated to produce the result that Qantas would contravene cl 35.2. The very circumstance that the chapeau to cl 44.3.5 described, namely, that a LAME can undertake, of his or her own volition, conversion training, demonstrated that the parties turned their minds to a situation in which such an engineer would gain his or her new external qualification in a trade stream other than his or her existing trade stream. In a situation that cl 44.3.5 covered, cl 35.2 had no work to do.

38    Moreover, it was the common understanding of the parties that the LAME would not need Qantas’ permission to undertake the conversion training, because cl 44.3.5.1 provided that he or she would have no benefit, in terms of pay or otherwise unless Qantas later required the LAME to act under the new trade stream qualification. That is because, as table 6 made pellucid, he or she would not be paid in respect of that external training unless and until Qantas, in its absolute discretion, required the engineer to act under his or her newly gained full B1 licence in addition, or as opposed to, acting on the basis of a previously held B2 licence.

Conclusion

39    For these reasons, I am of opinion that the Association’s argument must be rejected. It follows that the proceeding should be dismissed.

Associate:

Dated:    24 June 2019