FEDERAL COURT OF AUSTRALIA

Australian Rail, Tram and Bus Industry Union v Qube Logistics (Rail) Pty Ltd [2020] FCA 1520

ORDERS

THE COURT ORDERS THAT:

1.    The parties are to bring in Short Minutes of Orders to give effect to these reasons within 14 days.

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

REASONS FOR JUDGMENT

FLICK J:

1    The Australian Rail, Tram and Bus Industry Union (the “Union”) contends that Qube Logistics (Rail) Pty Ltd (“Qube Rail”) has underpaid 31 current and former employees in the period from 1 April 2014 to 31 March 2016.

2    As from 17 June 2011 it was the Independent Railways of Australia Enterprise Agreement 2011 (the “Railways Agreement”) that applied to those employees. On 25 March 2016, the QUBE Logistics (Rail) Train Crew and RTBU NSW Enterprise Agreement 2015 (the “Qube Agreement”) came into operation. The Railways Agreement ceased to apply as from this date: Fair Work Act 2009 (Cth) (the “Fair Work Act”) ss 50 and 58.

3    Negotiations for a replacement for the Railways Agreement, it may be noted, commenced in about July 2013 and concluded some two years later. A second round of negotiations took place in late 2015. A third round commenced in about January 2016. Progress had been made as to the drafting of a new agreement and a draft agreement was voted on in February/March 2016.

4    In very summary form, the Union contends that after the nominal expiry date of the Railways Agreement the employees were nevertheless entitled to the “remuneration increase” referred to in cl 34 of that Agreement. Clause 5 of that Agreement provided (in part) that “[i]n the absence of re-negotiation, the last increase of pay detailed in Remuneration will be the agreed increase of pay for each anniversary such date thereafter”. No increased payments were made. The Union contends that “re-negotiation” in that context means the completed negotiation of a new agreement, and pending completion of the negotiation process, payments should have been increased pursuant to cll 5 and 34. Again in very summary form, Qube Rail contends that “re-negotiation” only requires negotiations between the parties and that negotiations had in fact commenced. If the Union’s contention be correct, Qube Rail has breached s 50 of the Fair Work Act by contravening a term of the enterprise agreement.

5    The Union seeks, on behalf of the employees, declarations of Qube Rail’s contraventions, the payment of compensation and interest for the underpayments and the imposition of a penalty.

6    It is concluded that:

    clause 5 of the Railways Agreement is to be construed such that the “re-negotiation” to which it refers is the completion of the “negotiation” process and not the mere commencement of the negotiation process;

    for the purposes of cl 5, the “anniversary … date … thereafter” is a reference to 1 April 2014 and 1 April 2015;

    the “increase of pay” to which cl 5 refers is an increase confined to an increase in “pay” and not also an increase in “superannuation”; and

    declaratory relief should be granted,

but that:

    no order should be made for the payment of compensation, but rather an order for the payment of monies owing, together with interest; and

    no order should be made for the payment of any penalty.

The Railways Agreement – its provisions & principles of construction

7    The Railways Agreement was approved by Fair Work Australia on 10 June 2011.

8    Clause 5 of the Railways Agreement, in its entirety, provided as follows:

5.    Term

This Agreement shall operate from the date of lodgement and shall have a nominal expiry date of 1st April 2014. In the absence of re-negotiation, the last increase of pay detailed in Remuneration will be the agreed increase of pay for each anniversary such date thereafter.

“Remuneration”, in turn, was addressed in cl 34 which provided as follows:

34.    Remuneration

Remuneration Increase

The Remuneration outlined in this agreement will be increased in the following manner:

Operative Date Percentage Increase

From the beginning of the first pay period or after lodgement of this Agreement

•    1st April 2012 – 3% plus an extra 1% added to Superannuation – rounded up to the nearest cent.

•    1st April 2013 – 3% plus an extra 1% added to Superannuation – rounded up to the nearest cent.

9    Clause 2 to Pt B to the Railways Agreement provided (in part) as follows:

2. Wages

The current Rates of pay for each classification, which will increase with the remuneration package.

…

There was thereafter set forth hourly, fortnightly, annual and casual rates of pay for six classifications and for the periods referred to as “1st April 11”, “1st April 12”, and “1st April 13”. The “Hourly Rate” was there further addressed as follows:

Hourly Rate – A base rate for each Classification of employee on a 76 hour fortnight of Ordinary Hours; which is inclusive of:-

•    Annual leave Loading - The Annual Leave Loading of 20% on base rate for five weeks annual leave.

•    Flexibility Premium - A 25% loading of the base rate to forego weekend penalties, shift and other applicable allowances.

•    3 Person Push Pull Allowance - A loading will apply to the base rate to forgo the push pull allowance.

•    4 Person Push Pull Allowance - A loading will apply to the base rate to forgo the push pull allowance.

10    In accordance with well-accepted and well-traversed principle, it is common ground that an enterprise agreement or an award is to be construed in a practical manner and within the industrial environment in which it was drafted: Kucks v CSR Ltd (1996) 66 IR 182 at 184. In an oft-cited passage, Madgwick J there summarised the approach to be pursued as follows:

Legal principles

It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.

But the task remains one of interpreting a document produced by another or others. A court is not free to give effect to some anteriorly derived notion of what would be fair or just, regardless of what has been written into the award. Deciding what an existing award means is a process quite different from deciding, as an arbitral body does, what might fairly be put into an award. So, for example, ordinary or well-understood words are in general to be accorded their ordinary or usual meaning.

For instances in which this passage has been cited, see: Amcor Limited v Construction, Forestry, Mining and Energy Union [2005] HCA 10 at [96], (2005) 222 CLR 241 at 270-271 per Kirby J; Transport Workers’ Union of Australia v Linfox Australia Pty Ltd [2014] FCA 829 at [30], (2014) 318 ALR 54 at 58 per Tracey J; Qantas Airways Ltd v Australian Licensed Aircraft Engineer’s Association (No 2) [2020] FCA 951 at [16] per Flick J.

11    Provisions in an award or an enterprise agreement are, accordingly, not to be construed in a “vacuum divorced from industrial realities” and are to be construed in recognition of the fact that those who drafted such provisions were more likely to have a “practical bent of mind” rather than a mind focussed upon legal niceties: WorkPac Pty Ltd v Skene [2018] FCAFC 131 at [197], (2018) 264 FCR 536 at 580 per Tracey, Bromberg and Rangiah JJ. As expressed by French J (as his Honour then was) in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union [2006] FCA 813 at [53]; (2006) 153 IR 426 at 438 to 439 (“City of Wanneroo”):

The construction of an award, like that of a statute, begins with a consideration of the ordinary meaning of its words. As with the task of statutory construction regard must be paid to the context and purpose of the provision or expression being construed. Context may appear from the text of the instrument taken as a whole, its arrangement and the place in it of the provision under construction. It is not confined to the words of the relevant Act or instrument surrounding the expression to be construed. It may extend to “… the entire document of which it is a part or to other documents with which there is an association”. It may also include “… ideas that gave rise to an expression in a document from which it has been taken”…

See also: James Cook University v Ridd [2020] FCAFC 123 at [65], (2020) 382 ALR 8 at 21 per Griffiths and SC Derrington JJ.

12    These are the principles to be applied to the interpretation of the Railways Agreement and, in particular, cll 5 and 34 of that Agreement.

In the absence of re-negotiation

13    That which divides the parties to the present dispute is the correct construction and application of the phrase “[i]n the absence of re-negotiation…” as that phrase appeared in cl 5 of the Railways Agreement.

14    In very summary form, negotiations for the terms of a replacement agreement had commenced prior to the expiration of the Railways Agreement and concluded some two years after the “nominal expiry date”.

15    Obviously enough, cl 5 contemplates the potential continuation of an entitlement to increased remuneration after the Railways Agreement had come to an end. Equally obvious is the fact that the Railways Agreement did not contemplate the continuation of that entitlement indefinitely. The entitlement would only continue “[i]n the absence of re-negotiation…”.

16    On the approach of Qube Rail, the trigger for any entitlement to future increases was not enlivened – on its approach, negotiations had already commenced about a year prior to the “nominal expiry date”. If the Union be correct, cl 5 conferred an entitlement to an “increase of pay” until that point of time when the Qube Agreement came into effect. That increase was to occur on “each anniversary date” after 1 April.

17    Although cl 5 and the phrase “[i]n the absence of re-negotiation…” are to be construed in the context of the Railways Agreement as a whole and, more specifically, the phrase is to be construed within the context of cl 5 itself, any process of construction starts with the ordinary meaning of the words employed: City of Wanneroo at [53] per French J.

18    Divorced from its context, a starting point is the following definition of the solitary word “negotiation” as set forth in the New Shorter Oxford English Dictionary (4th ed., 1993):

Negotiation n.

1    An act of dealing with another person;

a    private or business transaction.

b    trading, commerce.

2    A process or act of conferring with another or others to arrange some matter by mutual agreement, a discussion with a view to some compromise or settlement, orig. esp. in an affair of State.

3    The action or process of negotiating with another or others, discussion with a view to settlement or compromise.

4    The action of crossing or getting over, round, or through some obstacle.

19    The Macquarie Dictionary ( 3rd ed., 2002) offers the following definition:

Negotiated verb (negotiated, negotiating)

–verb (i)

1.    to treat with another or others, as in the preparation of a treaty, or in preliminaries to a business deal.

–verb (t)

2.    to arrange for or bring about by discussion and settlement of terms: to negotiate a loan.

3.    to conduct (an affair, etc.).

4.    to clear or pass (an obstacle, etc.): …

5.    to transfer (a bill of exchange, etc.) by assignment, endorsement, or delivery.

6.    to dispose of by sale or transfer: to negotiate securities.

Emphasis, not surprisingly, is placed by the Union upon the definition that “to negotiate” means the “bringing about by discussion and settlement of terms”. If that be correct, the employees are entitled to the pay increase until a new agreement is negotiated. Qube Rail emphasises the definition which simply calls for “preparation of” or “preliminaries to a business deal”, thereby bringing to an end the entitlement to the pay increase upon the commencement of bona fide negotiations.

20    Although neither party places exclusive reliance upon potentially competing dictionary definitions, it would be – with respect – a mistake to try and construe cl 5 simply by reference to any one particular definition.

21    It is the context in which cl 5 appears which fixes its meaning. That context is simply one in which the parties to the Railway Agreement had agreed upon the “term” during which it was to operate, and the potential continuation of an entitlement to a “remuneration increase” after the nominal expiry date of the Agreement. The term “re-negotiated” being, on this approach, simply a recognition of an agreement that the Railways Agreement may come to an end and an agreement of the parties that until a new and replacement enterprise agreement was agreed upon, the employees were to receive a “remuneration increase”. Such a construction promotes at least some degree certainty of entitlement which, it may safely be assumed, was a matter of importance to both parties. Certainty as to any “remuneration increase” would be denied if, as Qube Rail would have it, the employees were not entitled to any “remuneration increase” whilst negotiations were ongoing, and potentially ongoing for some period of time. The “re-negotiation”, it is respectfully concluded, thus refers to the completion of the “negotiation” process and the successful “re-negotiation” of an agreement replacing the existing Railways Agreement.

22    Such a construction may confer what has been characterised by Counsel for the Union in oral submissions as a “good deal for employees”. Even if that be so, that is the agreement reached and as recorded in cl 5. It is a “deal” which proceeds from an assumption that there would be ongoing bona fide negotiations.

23    In opposing this construction, Qube Rail rely upon four propositions. But none of these propositions, with respect, should prevail.

24    First, rejected is Qube Rail’s proposition that the construction advanced on behalf of the Union departs from the ordinary meaning of the word “re-negotiate”. The proposition advanced by Qube Rail is that “the words ‘In the absence of renegotiation’ in clause 5 of the IRA Agreement mean in the absence of the parties to that agreement negotiating with each other…”. On this approach, the “remuneration increase” ceases upon the parties entering into the process of negotiation – that being a process obviously in advance of a successful negotiation and a new agreement being entered into.

25    The difficulty with this proposition is that the dictionary definitions of the term “negotiate” themselves contemplate that the term may have different meanings dependent upon the context in which the word is used. That context in respect to cl 5 being the contemplation of the parties to the Railway Agreement that there may be an interim period between the expiry of one agreement and the coming into operation of a new agreement, during which the “remuneration increase” is to continue to apply. Rejected is any construction of cl 5 which denies to the employees an entitlement to the “remuneration increase” during that period of time, be it a short or long period, when negotiations may be proceeding. The object and purpose of cl 5, it is thus concluded, was to guarantee to the employees an increase in remuneration during that interim period.

26    Second, rejected is Qube Rail’s proposition that the construction advanced on behalf of the Union involves reading into cl 5 additional words such that on the Union’s approach it reads: “In the absence of a new or replacement Agreement being finalised or approved…”. If the term “negotiate” – or “re-negotiate” – has the ordinary meaning of “preliminaries to a business deal” or preliminary discussions with a view to entering into a deal, on the approach of Qube Rail, there are no cl 5 words which are not there. Expressed differently, Qube Rail contends that the approach of the Union involves construing the term “renegotiation” as meaning “replacement”.

27    This second proposition is, in substance, but a variant of the first – both propositions depending upon the natural and ordinary meaning of the term “re-negotiate” or the phrase “[i]n the absence of re-negotiation” having the meaning ascribed by Qube Rail. But that interpretation has been rejected by reason, primarily, of the context in which cl 5 appears. In any event, and as submitted on behalf of the Union, even the approach of Qube Rail itself potentially involves “reading into” cl 5 words such as “[i]n the absence of the parties beginning the process of bargaining for a replacement enterprise agreement…”.

28    Third, Qube Rail contends that the “context is more consistent with the fact that Qube Rail was agreeing by the clause to be committed to a process of re-negotiating the IRA Agreement and that if it did not attend to the task of re-negotiation, it would be met with the obligation to provide increased rates of pay”. The contrary approach, so Qube Rail contends, would lead to a “series of unreasonable or clearly obviously unintended outcomes”, including (by way of example):

(a)    irrespective of economic conditions or the state of business, employees could simply refuse to enter negotiations or simply not agree to Qube Rail’s offers and be guaranteed wage increases of 3% (and, on the Union’s case, superannuation increases) in perpetuity …; and

(b)    it could potentially leave Qube Rail exposed to cost increases totally beyond its control if there were delays in the Fair Work Commission in approving the agreement…

It is this proposition, with respect, which is most persuasive in favour of the construction being advanced by Qube Rail.

29    But the proposition is rejected. Whatever may be the construction of the term “re-negotiation”, be that construction the one advanced by the Union or by Qube Rail, cl 5 proceeds on an assumption that the parties will “negotiate” in good faith and that negotiation will be on-going. The entitlement to the increase in remuneration, upon such an approach, would only continue so long as there were on-going negotiations in good faith. The entitlement conferred, upon such an approach, expresses an agreement that employees would receive an increase in pay in the interim between the end of the existing Railways Agreement and a new agreement. No construction of the clause would be open, with respect, which would confer any entitlement in “perpetuity” or any obligation on the part of Qube Rail to pay if (in the example provided) the Union ceased to negotiate in good faith. If negotiations were to break down and a conclusion reached that there was no prospect of any future “replacement” agreement, the entitlement to the “remuneration increase” in cl 5 would come to an end. Clause 5 does not confer any entitlement to any “increase of pay” in the absence of negotiation in good faith. Irrespective of when “re-negotiation” may start, be it either before or after the “nominal expiry date” of the Railways Agreement, the “re-negotiation” being referred to is bona fide negotiation or re-negotiation being carried on in good faith. Clause 5 is thus silent, does not address and certainly confers no entitlement to any “increase of pay” in the absence of bona fide negotiation or re-negotiation. Time taken on the part of the Commission to approve any new agreement, it may be further assumed, was envisaged by the parties when the terms of cl 5 were agreed.

30    Fourth, it is contended that “the evidence of how the parties to this litigation have historically conducted themselves also supports the interpretation advanced by Qube Rail”. According to Qube Rail, that “history” includes the following:

(a)    that the Union initially agitated for back-pay to be included in the Qube Rail Agreement and, in lieu of this, Qube Rail agreed to provide a one-off cash payment to employees in recognition of that claim. The Union’s claim for back-pay could not seriously arise if the Union’s position was that the employees were already entitled to assured pay increases under clause 5 until a new agreement was made;

(b)    that the Union, despite being well aware of clause 5 (and indeed being the party who sought its inclusion in the IRA Agreement), did not at any point during the relevant period make claims on behalf of employees for Qube Rail to pass on increases to wages or superannuation;

(c)    that the Union agitated for superannuation to be included in the Qube Rail Agreement at the level it reached on 1 April 2013 (and not higher amount that would have applied had the clause operated as they contend following further increases of 1 percent on each of 1 April 2014 and 1 April 2015). At no point during the bargaining to replace the IRA Agreement did the Union agitate that the superannuation position should be increased to 15 or 16 percent, in accordance with the claim they now make; and

(d)    that a representative of the Union, Kevin Pryor, who was also the long-standing union representative representing the Employees, expressly agreed that the interpretation adopted by Qube Rail was consistent with his views.

An initial difficulty confronting this final basis upon which Qube Rail relies is a question as to the admissibility of the evidence sought to be relied upon. Both Qube Rail and the Union accepted that in general “it is not legitimate to use as an aid in the construction of [a] contract anything which the parties said or did after it was made”: cf. Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57 at [35], (2008) 238 CLR 570 at 582 per Gummow, Hayne and Kiefel JJ. There remain, however, some “recognised exceptions to that general rule”: Spunwill Pty Ltd v BAB Pty Ltd (1994) 36 NSWLR 290 at 312 per Santow J (“Spunwill”).

31    One source of evidence relied upon by Qube Rail can be raised at the outset – only to be rejected. According to Mr Daniel Coulton, Qube Rail’s General Manager of Industrial Relations, he had a conversation with an Organiser of the Union, Mr Kevin Pryor in mid-2014 to the following effect:

Mr Pryor:    Some of the ex-IRA crew have raised whether they get a pay increase under clause 5.

[Mr Coulton]:    That’s not my interpretation. The clause talks about pay rises in the absence of re-negotiation. We’re re-negotiating.

Mr Pryor:    Some of the men think it guarantees an increase till replaced.

[Mr Coulton]:    That’s not what it says and that can’t be right. That would blow up the negotiations – we’d be negotiating for nothing because they just wouldn’t agree. You surely can’t be saying it means that.

Mr Pryor:    I am not saying it. I think it means what you think. While we’re negotiating it doesn’t apply.

If accepted, the conversation would go some way towards establishing the fact that the Union itself embraced the construction of cl 5 now being advanced on behalf of Qube Rail. But the conversation was denied by Mr Pryor and it cannot be concluded with any degree of confidence that the conversation in fact took place or was to the effect as asserted by Mr Coulton. The evidence of Mr Pryor’s understanding of the clause is, in any event, of questionable value.

32    Similarly, there is disagreement as to the circumstances in which a one-off payment of $2,000 was made by Qube Rail to employees in February 2016. On Mr Coulton’s account, the one-off payment occurred in circumstances where there were negotiations on foot for remuneration increases and back pay. On the case for Qube Rail, the “Union’s claim for back-pay could not seriously arise if the Union’s position was that the employees were already entitled to assured pay increases under clause 5 until a new agreement was made”. But again, this account was denied by Mr Pryor. He maintained that the one-off payment was simply “an incentive to employees” put forward by Qube Rail “in an effort to get the agreement across the line”. An earlier vote on a proposed agreement in August 2015, it may be noted, was unsuccessful. No finding can be made that the one-off payment was made for the reasons advanced by Mr Coulton.

33    Evidence of a more objective nature, and evidence not the subject of any dispute, however, was also relied upon by Qube Rail. Albeit subsequent to the 2011 Agreement having been made, but during the course of negotiations for the new Agreement, those further events include:

    the fact that Qube Rail did not pass on any wage or superannuation increase on 1 April 2014 or (more importantly) 1 April 2015 and the Union did not make any demand for payment; and

    the fact that the Union did not, during negotiations, make any demands for pay increases or superannuation increases under cl 5 of the 2011 Agreement.

Whilst accepting the generally expressed rule as to post-contractual conduct not being admissible, Qube Rail nevertheless contends that these two events are admissible by reason of “exceptions to that general rule”: Spunwill (1994) 36 NSWLR at 312. When addressing these “exceptions”, Santow J had earlier observed (at 310):

Thus evidence of a mutual subjective intention is admissible as part of the surrounding circumstances, as an objective fact that illuminates the meaning a reasonable person in the position of the parties would attach to a provision. Mutual subjective intention is a factor to be taken into account in determining presumed intention, without necessarily being determinative. …

If extrinsic evidence of common intention is admissible as part of the factual matrix where that evidence arises prior to the contract, should subsequent evidence of a common intention as to what the contract originally meant also be admissible? Where the parties, in the words of Kirby P in Hide & Skin Trading, by clear and mutual conduct evidence what they originally intended, and thus clothe ambiguous words with a sensible operation by the way they behave in apparent pursuit of their agreement, admission of such extrinsic evidence will be of equal or greater assistance in the process of determining presumed intention than is evidence of a common intention arising from pre-contractual conduct. It should be clear that what both the prior and subsequent evidence is seeking to illuminate is a common intention held at the time of contracting. The question thus arises as to whether a distinction should be drawn between pre-contractual and post-contractual evidence of a common intention. It is thus worth briefly considering the concerns which have been raised in relation to a general admission of subsequent conduct, to determine if such a distinction is required.

His Honour addressed these “concerns” and concluded as follows (at 312):

… Though the relevance of subsequent conduct as an aid to construction is as evidence of a party's subjective belief as to what the contract meant when it was made, use of such conduct will be legitimate under the objective theory of the contract in the limited circumstances where conduct evidences a clear and mutual subjective intention as to what the contract originally meant. There appears to be no justification in principle for excluding such evidence of a mutual subjective intention at the time of contracting merely because the evidence itself arises subsequent to the making of the contract.

One exception to the general rule is thus where the post-contractual “conduct evidences a clear and mutual subjective intention as to what the contract originally meant”; another exception is that post-agreement conduct may be admissible “as part of the surrounding circumstances” if it provides evidence of “mutual subjective intention”.

34    But neither of the two more objective events relied upon by Qube Rail, with respect, fall within either exception – neither the failure to pass on any wage or superannuation increase, nor the absence of any demand by the Union that Qube Rail should do so necessarily evidence any “mutual subjective intention” or evidence “the surrounding circumstances”. The most that may be concluded is that both matters are consistent with the construction of cl 5 being urged on behalf of Qube Rail. But that does not necessarily dictate that that construction of cl 5 was one being adopted by the Union during negotiations.

35    Viewed more generally, cl 5 evidences the contemplation of the parties that they would each sit down at some stage and “re-negotiate” a further agreement to replace the existing Railways Agreement. That process could start before or after the expiry date of that Agreement. And any replacement agreement could potentially itself commence immediately upon the expiration of the Railways Agreement, or at some future point of time. Within that factual context, that which can be discounted as a possible interpretation of cl 5 is that the employees should be entitled to “the agreed increase of pay” in perpetuity, in the event that there were to be no replacement agreement. Such an interpretation would be neither commercially nor industrially sensible nor an interpretation which would sit comfortably with the qualification that the increase was subject to the condition as to the absence of re-negotiation. Leaving aside what is embraced by the phrase “[i]n the absence of re-negotiation”, cl 5 at its very minimum contemplates an “agreed increase of pay” after the expiry of the Railways Agreement. Irrespective of any possible future agreed clause specifically addressing any such increase that may be included in any replacement agreement, it is respectfully concluded that the construction of cl 5 which has been settled upon best ensures that employees are to receive an “increase of pay”.

36    The second sentence to cl 5, being that provision directed to the “agreed increase of pay”, evidences an agreement. Whether that contemplation could be elevated to an implied obligation to commence the process of “re-negotiation” may, perhaps, be left to one side.

Pay increases on each anniversary date after 1 April

37    In the event that – and as has been concluded – the Union’s construction of cl 5 prevails, further questions arise as to the phrases:

    “… increases of pay detailed in Remuneration”; and

    “for each anniversary such date thereafter…”.

38    Qube Rail contend that:

    any increases “of pay” are confined to increases “of pay” and not “superannuation” – cl 34 providing for a 3% increase in pay and an increase of “1% added to Superannuation”; and

    “each anniversary date” being a reference to 1 April of each year.

39    The former contention is accepted. The term “Remuneration” as employed in cl 34 has two components – one being “pay” and the other being “superannuation”. Clause 5 itself employs both the language of “pay” and “Remuneration”. Had the agreement in cl 5 been intended to embrace an ongoing entitlement to increases in “remuneration” it could readily have so provided. It did not. The increases were confined to “pay detailed in Remuneration”. Any increase in “Superannuation” is thus not the subject matter of cl 5.

40    The reference to “each anniversary date” is also construed as meaning a reference to the only date mentioned in cl 5, namely “1st April”. The phrase “the last increase of pay detailed in Remuneration will be the agreed increase of pay for each anniversary such date thereafter” is grammatically inelegant. But the reference to “the last increase of pay detailed in Remuneration” is a reference to the “last increase” mentioned in cl 34, namely “1st April 2013”. And the reference to the “agreed increase of pay for each anniversary such date thereafter” is a reference to the anniversary date after 1 April 2013, those dates being 1 April 2014 and 1 April 2015. The employees are thus entitled to an “increase of pay” on both 1 April 2014 and 2015.

The date of approval – s 54

41    To the extent that there remains a dispute as to when the Qube Agreement was “approved” by the Fair Work Commission, and it is understood that there remains no extant dispute, it is concluded that that date is 18 March 2016. The reasons for decision of the Commission published on 29 March 2016 state as follows:

[5]    Having heard the applicant’s submissions and upon reviewing the terms of the preapproval process documentation and the Agreement itself, I am satisfied that all of the requirements of the Act, in particular ss 180, 186, 187 and 188, in so far as relevant to this application, have been met. While I note that the Agreement’s title clause erroneously refers to the Agreement as the QUBE Train Crew and RTBU Enterprise Agreement 2014, Mr Coulton has confirmed that the Agreement’s correct title is, in fact, the QUBE Logistics (Rail) Train Crew and RTBU NSW Enterprise Agreement 2015. I shall correct that inadvertent error. Accordingly, I approve a single enterprise agreement known as the QUBE Logistics (Rail) Train Crew and RTBU NSW Enterprise Agreement 2015. Pursuant to s 54 of the Act, the Agreement shall operate from 25 March 2016 and have a nominal expiry date of 25 March 2019.

Section 54 of the Fair Work Act, to which reference is made in these reasons, provides as follows:

When an enterprise agreement is in operation

(1)    An enterprise agreement approved by the FWC operates from:

(a)    7 days after the agreement is approved; or

(b)    if a later day is specified in the agreement – that later day.

(2)    An enterprise agreement ceases to operate on the earlier of the following days:

(a)    the day on which a termination of the agreement comes into operation under section 224 or 227;

(b)    the day on which section 58 first has the effect that there is no employee to whom the agreement applies.

…

42    Given the specification in the reasons for decision of the Commission that the Qube Agreement is to “operate from 25 March 2016” and the terms of s 54(1)(a) that an agreement operates “7 days after the agreement is approved”, it is concluded that the Qube Agreement was “approved” seven (7) days prior to 25 March 2016, namely 18 March 2016.

Penalties & other orders

43    In the event that the construction of cl 5 prevailed, the Union sought further orders as to:

    the payment of compensation to employees pursuant to s 545 of the Fair Work Act;

    the payment of interest pursuant to s 547; and

    the payment of penalties pursuant to s 546.

Although each of these provisions may be well-known, the terms of each provision (in relevant part) should be set forth.

44    Section 545 provides (in relevant part) as follows:

Orders that can be made by particular courts

Federal Court …

(1)    The Federal Court … may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.

…

(2)    Without limiting subsection (1), orders the Federal Court … may make include the following:

…

(b)    an order awarding compensation for loss that a person has suffered because of the contravention;

…

When orders may be made

(4)    A court may make an order under this section:

(a)    on its own initiative, during proceedings before the court; or

(b)    on application.

Time limit for orders in relation to underpayments

(5)    A court must not make an order under this section in relation to an underpayment that relates to a period that is more than 6 years before the proceedings concerned commenced.

45    Section 546 provides (in relevant part) as follows:

Pecuniary penalty orders

(1)    The Federal Court… may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.

…

Payment of penalty

(3)    The court may order that the pecuniary penalty, or a part of the penalty, be paid to:

(a)    the Commonwealth; or

(b)    a particular organisation; or

(c)    a particular person.

Recovery of penalty

(4)    The pecuniary penalty may be recovered as a debt due to the person to whom the penalty is payable.

No limitation on orders

(5)    To avoid doubt, a court may make a pecuniary penalty order in addition to one or more orders under section 545.

46    Section 547 provides (in relevant part) as follows:

Interest up to judgment

(1)    This section applies to an order (other than a pecuniary penalty order) under this Division in relation to an amount that a person was required to pay to, or on behalf of, another person under this Act …

(2)    In making the order the court must, on application, include an amount of interest in the sum ordered, unless good cause is shown to the contrary.

(3)    Without limiting subsection (2), in determining the amount of interest, the court must take into account the period between the day the relevant cause of action arose and the day the order is made.

47    Section 50 of the Fair Work Act provides that a “person must not contravene a term of an enterprise agreement”. In the present case the conclusion has been reached that Qube Rail has contravened cl 5 of the Railways Agreement and thereby contravened “an enterprise agreement”. Each of the discretionary powers conferred by ss 545 and 546 is thus enlivened.

48    On the facts of the present case it is concluded that:

    no order should be made pursuant to s 545(2)(b) for the payment of “compensation” to any of the employees; and

    no order should be made pursuant to s 546(1) for the payment of any pecuniary penalty;

but that:

    an order should be made for the payment of monies outstanding to employees pursuant to s 545(1) and that those monies should attract interest, as provided for in s 547.

49    Whether an order for the payment of the “agreed increase of pay” provided for in cl 5 which was wrongfully not paid should be characterised as “compensation” or not, the employees should be paid the monies to which they are entitled. The Amended Statement of Claim does not plead any fact other than the non-payment of remuneration. There is thus no basis to make any order in the nature of “compensation” in respect of (for example) any distress or any loss occasioned by the non-payment. Nor is there any basis (for example) to award compensation in respect to “loss of enjoyment” occasioned by the non-payment: e.g., United Voice v MDBR123 Pty Ltd (No 2) [2015] FCA 76 at [7] per Rangiah J. Subject to s 547(2), those monies nevertheless attract interest in accordance with s 547(1). Section 547(2) contemplates the making of an order for the payment of interest on application “unless good cause is shown to the contrary”. “Good cause” may, for example, be demonstrated where a claimant has already received “early payment of part of the arrears, together with the practical difficulties of calculation”: National Tertiary Education Union v Royal Melbourne Institute of Technology [2013] FCA 451 at [154], (2013) 234 IR 139 at 188-189 per Gray J. On the facts of the present case, however, Qube Rail has not pointed to any reason not to award interest in accordance with s 547(1). And, for the purposes of s 547(3), the “the relevant cause of action arose” when payments were not made as required. That is a date which precedes the date of this judgment. Yet the first demand for payment of increases to wages was not made until some years thereafter. Notwithstanding the argument advanced on behalf of Qube Rail that “good cause … to the contrary” is exposed, it is concluded that interest should be awarded as from the date upon which the cause of action arose and not some date thereafter.

50    But no order should be made for the imposition of any penalty. The competing constructions of cl 5 have not proved easy of resolution. The Union has advanced no submission nor adduced any evidence to suggest that Qube Rail pursued the course which it did without a genuine and bona fide belief that it was entitled to do so. In those cases, such as the present, where no question arises as to the need for general deterrence, let alone specific deterrence, an imposition of a penalty is not always required: cf. PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15 at [55], (2020) 292 IR 317 at 332 per Rangiah and Charlesworth JJ. The contraventions that did occur in the present case, as their Honours observed in that case, were “not deliberate, but result[ed] from an arguable but erroneous misconstruction of an industrial instrument…”.

CONCLUSIONS

51    It follows that:

    clause 5 of the Railways Agreement is to be construed such that the “re-negotiation” to which it refers is the completion of the “negotiation” process and not the mere commencement of the negotiation process;

    for the purposes of cl 5, the “anniversary … date … thereafter” is a reference to 1 April 2014 and 1 April 2015;

    the “increase of pay” to which cl 5 refers is an increase confined to an increase in “pay” and not also an increase in “superannuation”.

52    It also follows that:

    there has been a contravention of s 50 of the Fair Work Act; and

    an order should be made for the payment of those amounts of monies referable to the increases that have not been paid to employees, together with interest,

but that:

    no order should be made for the payment of any penalty in respect to the contraventions.

53    Declaratory relief should be granted as to the manner in which cll 5 and 34 are to be interpreted and applied.

THE ORDERS OF THE COURT ARE:

  1.    The parties are to bring in Short Minutes of Orders to give effect to these reasons within 14 days.

Associate:    

Dated:    22 October 2020