[2013] FWCFB 5216

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FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.604 - Appeal of decisions

Australian and International Pilots Association
v
Network Aviation Pty Limited
(C2013/4277)

VICE PRESIDENT HATCHER
JUSTICE BOULTON, SENIOR DEPUTY PRESIDENT
COMMISSIONER CARGILL

 

SYDNEY, 14 AUGUST 2013

Appeal against decision [2013] FWC 2359 of Vice President Watson at Sydney on 17 April 2013 in matter number B2013/763.

Introduction

[1] The recent rapid growth in the development of mining operations and infrastructure in remote areas of Western Australia has required an expansion of charter flight operations to meet the demand for aerial transportation of a substantially “fly-in fly-out” workforce. Network Aviation Pty Ltd (Network) has been a significant participant in this expanding market. It operates a regional charter airline from Perth Airport, and its customer base largely consists of companies in the minerals and resources sector in Western Australia which require their workers to be flown to and from their places of work.

[2] In 2011 Qantas Airways Limited (Qantas), having spied a growth opportunity, purchased the shares in Network, so that Network became a wholly-owned subsidiary of Qantas. The absorption of Network into the Qantas group of companies (Qantas Group) prompted the Australian and International Pilots Association (AIPA), a union the membership of which is concentrated in the Qantas Group, to begin recruiting as members pilots employed by Network. By 2013 it had enrolled about 36 Network pilots which, the AIPA estimates, constitutes over half of Network’s pilot workforce.

[3] At the time of the purchase of Network by Qantas, the industrial instrument which applied to Network pilots was the Network Aviation Australia Collective Workplace Agreement for Pilots. That agreement had a nominal expiry date of 28 March 2013. On 22 February 2013, Network signified an intention to commence bargaining for a replacement enterprise agreement by issuing its pilots with a Notice of Representational Rights pursuant to s.173 of the Fair Work Act 2009 (the Act). An accompanying letter indicated that Network was in the process of arranging a first meeting about a new enterprise agreement with the AIPA as well as another pilots’ union, the Australian Federation of Air Pilots (AFAP). However Network soon after formed the view, which was set out in a letter to the AIPA dated 22 March 2013, that the AIPA’s eligibility rule did not permit it to enrol as members pilots employed by Network, with the result that it could not act as a bargaining representative for Network pilots. On that basis, Network declined to participate in any further meetings with the AIPA concerning negotiations for a new enterprise agreement.

[4] Faced with that position, the AIPA on 5 April 2013 applied to the Fair Work Commission for a bargaining order under s.229 of the Act. Under s.229(1) an application for a bargaining order can only be made by a bargaining representative for the proposed enterprise agreement. When the application came before the Commission, constituted by Vice President Watson, for hearing, Network contended that the application was incompetent and that the Commission had no jurisdiction to deal with it because the AIPA’s lack of entitlement under its rules to represent the industrial interests of Network pilots meant that under s.176(3) it could not be a bargaining representative for Network pilots.

[5] On 17 April 2013 Vice President Watson issued a decision 1 (Decision) in which he found that Network pilots were not eligible to join the AIPA, and accordingly that the AIPA could not be a bargaining representative for those pilots and could not therefore make a valid application under s.229. His Honour dismissed the AIPA’s application on that basis.2

[6] This is an appeal by the AIPA from the Decision, for which permission to appeal is required, under s.604 of the Act. It contends, in short, that the conclusion by Vice President Watson that the AIPA was not entitled to represent the industrial interests of Network pilots was incorrect, and that on that basis the Decision should be quashed and the AIPA’s application for a bargaining order be determined by this Full Bench. Network contends that the relevant conclusion by Vice President Watson was correct, and therefore that the appeal must fail.

[7] There was no dispute between the parties to the appeal that the question of whether the AIPA was capable of being a bargaining agent for Network pilots (by virtue of having eligibility to enrol them as members under its rules) was, in respect of the AIPA’s application for a bargaining order, one of jurisdictional fact. In this appeal therefore we must consider whether the conclusion reached by Vice President Watson was the correct conclusion or otherwise. 3

[8] The AIPA’s eligibility rule provides:

Facts not in contest

[9] In the Decision, Vice President Watson made a number of findings of fact about the nature of Network’s operations and its relationship with Qantas. In this appeal there is no challenge to the correctness of those findings, although the AIPA points to other facts which it says complete the factual picture and require a different result to pertain. We will come to those matters shortly, but in the circumstances we think we may proceed on the basis that the facts as found in the Decision are not for the purpose of the appeal in contest. They were as follows:

AIPA submissions

[10] The AIPA contended that it had coverage of Network pilots by virtue of the following words in the second paragraph of its eligibility rule: “... all persons who are normally employed on airline services within ... the Commonwealth of Australia operated in whole or part and under any name by ... Qantas Airways Limited”. In summary, its case on appeal was that the evidence demonstrated that the Network airline was operated in part by Qantas. It submitted that a broad approach should be taken to the interpretation of the word “operated” in applying the part of the rule it relied on, and referred to the Federal Court Full Court decision in ASP Ship Management Pty Limited v Administrative Appeals Tribunal 4 in support of the proposition that “operated” referred to the physical operation of the airline service and elements relating to its commercial operation.

[11] In addition to the facts as found by Vice President Watson, the AIPA relied upon the following facts to demonstrate that Qantas at least in part operated the Network airline:

Network submissions

[12] Network’s primary submission was that earlier decisions of this tribunal, including two Full Bench decisions, had determined that:

[13] Network submitted that having regard to the earlier decisions concerning the AIPA rule, the fact that Qantas exercised a degree of control over Network, primarily in relation to high level strategic direction and broad policies, did not mean that Qantas “operated” the airline service of Network; the evidence was that Network ran its own operations.

Origin of the current AIPA eligibility rule

[14] As was adverted to in Network’s submissions, previous decisions of this tribunal from which the AIPA eligibility rule in its current form emanated have dealt with the proper construction of that rule, and require consideration. The current rule had its origins in an application made by the AIPA for the consent of a designated Presidential Member under s.158 of Schedule 1 of the then Workplace Relations Act 1996 (WR Act) to a variation to that rule on 17 May 2006. The rule change for which it sought approval was as follows (with the alterations to the existing rule underlined or in strike-out) 5:

[15] The AIPA’s application was initially determined by Kaufman SDP in Australian and International Pilots Association v Australian Federation of Air Pilots. 6 In that decision, Kaufman SDP began by giving a summary of the structure and operations of the Qantas group of companies, including but not limited to the subsidiary companies identified in the second paragraph of the proposed amended rule. His Honour’s analysis included the following statements concerning three subsidiaries, Airlink Pty Limited, Eastern Australia Airlines Pty Limited (Eastern) and Sunstate Airlines (Qld) Pty Limited (Sunstate) (underlining added):

[16] In his decision, Kaufman SDP then stated what he considered to be the effect of the proposed new second paragraph of the AIPA’s rule alteration:

[17] Kaufman SDP went on to describe the class of persons who would become eligible to join the AIPA because of the rule alteration, to which the statutory criteria for consent in s.158(4) would have to be applied, in the following terms:

[18] In the course of the proceedings, the AIPA contended that the rule alteration for which consent was sought did not affect pilots employed in Qantas subsidiaries (principally Jetstar, Eastern and Sunstate) because they were already eligible to join the AIPA. This was put on the basis that Jetstar, Eastern and Sunstate were airlines operated by Qantas Airways Ltd (Qantas being “an Australian airline principally engaged in providing international regular public transport airline services” under the terms of the existing eligibility rule). Kaufman SDP rejected this argument in the following terms (underlining added):

[19] The submissions which Kaufman SDP accepted in the above passage included the following:

[20] After applying the statutory criteria for consent to the AIPA’s proposed altered eligibility rule, Kaufman SDP determined to refuse consent to the variation to the existing first paragraph of the rule, but to grant consent to the new second paragraph with the exception of the references to Jetstar Asia Holdings Pty Limited and Jetconnect Ltd. His Honour gave specific consideration to those subparagraphs (numbered (ix) and (x) in the rule as applied for set out above) which concerned successors, transmittees or assignees, and subsidiaries, related bodies corporate or associated entities respectively, saying (underlining added):

[21] Qantas, Jetstar, Eastern and Sunstate, as well as the AFAP, appealed against Kaufman SDP’s decision. In Re Australian and International Pilots Association 8, the Full Bench determined that Kaufman SDP had erred in his identification of the class of employees who would become eligible to join the AIPA because of the proposed alteration to its eligibility rule. The Full Bench said:

[22] The Full Bench proceeded to quash Kaufman SDP’s decision and order, and to consider itself whether to consent to the second paragraph of the proposed alteration to the AIPA’s eligibility rule. In doing so, it was necessarily required to itself identify the class of person who would become eligible to join the AIPA because of its proposed rule alteration for the purpose of the consideration of the s.158(4) criteria. The Full Bench’s conclusions in this respect were as follows:

[23] It does not appear on the face of the Full Bench’s decision that the AIPA re-agitated the submission it had made before Kaufman SDP, and which had been rejected, namely that pilots in the airlines of Qantas subsidiaries including Qantas Limited, Jetstar, Eastern and Sunstate, were already eligible to join the AIPA under the existing rule because those airlines were actually operated by Qantas. In any event, it is clear that the Full Bench’s conclusions set out above were necessarily inconsistent with any such submission and consistent with Kaufman SDP’s conclusion.

[24] We consider that the following propositions relevant to the proper construction of the AIPA’s eligibility rule may be gleaned from the decisions of Kaufman SDP and the Full Bench:

We observe at this point that it is the above part of the eligibility rule which the AIPA relies on here for coverage of Network pilots.

The Jetconnect Decision

[25] The construction and application of the AIPA eligibility rule, as altered as a result of Re Australian and International Pilots Association, was considered in Australian and International Pilots Association v Qantas Airways Ltd. 9 In that case, the AIPA applied for a variation to a transitional award, the Qantas Shorthaul Pilots’ Award 2000, to add Jetconnect Limited as a respondent and to clarify that the award covered Jetconnect’s operations carried out as part of Qantas’ shorthaul operations. The matter was referred to a Full Bench which, by majority, dismissed the application. One of the issues which arose in the proceedings was whether the AIPA as applicant for the award variation was entitled under its eligibility rule to represent Jetconnect pilots such as to satisfy the requirement in s.559(6)(b) of the WR Act. The AIPA contended that it had the requisite representational right, including on the basis that under the second paragraph of its eligibility rule it could enrol as members persons “normally employed as pilots on airline services within or extending beyond the Commonwealth of Australia operated in whole or in part and under any name by ... Qantas Airways Limited”.10 However, the majority concluded that Jetconnect pilots were not entitled to become members of the AIPA:

[26] The effect of the above reasoning is that the part of the eligibility rule relied upon by the AIPA could not be construed and applied in a way which made Jetconnect pilots eligible to join the AIPA in circumstances where the Full Bench in Re Australian and International Pilots Association had specifically rejected an extension of the AIPA’s coverage to Jetconnect pilots.

Approach to the construction and application of the AIPA eligibility rule

[27] In the Decision, Vice President Watson identified the principles of interpretation of the eligibility rules of industrial organisations in the following way:

[28] It was not suggested by the AIPA that Vice President Watson had erred in interpreting its eligibility rule by reference to the principles stated in the quoted passages of the two judgments as set out above. Indeed the AIPA embraced the proposition stated in Electrical Trades Union of Australia v Waterside Workers’ Federation of Australia (No. 2) (and elsewhere) that the eligibility rules of industrial organisations should be construed liberally. Network did not take any different view in its submissions.

[29] However, this appeal does raise a distinct issue of principle concerning the construction and application of eligibility rules by this Commission. As the AIPA recognised in its oral submissions, the outcome it contends for in these proceedings is contrary to the basis upon which the part-alteration to its eligibility rule was consented to in Re Australian and International Pilots Association. As earlier stated, the Full Bench consented in part to the AIPA’s proposed rule change on the basis that the approved extension of coverage would only affect pilots of Qantas Limited, Jetstar, Eastern and Sunstate, and declined to consent to those parts of the rule change which would extend the AIPA’s coverage to any other Qantas subsidiary not capable of specific identification. The AIPA submission in response to this difficulty was as follows:

[30] We cannot accept that in this appeal we should approach the construction and application of the second paragraph of the AIPA’s eligibility rule entirely afresh and unencumbered by the conclusions expressed by the Full Bench in Re Australian and International Pilots Association. There are two reasons for this. The first is that the normal operative principle in this jurisdiction is that, although the doctrine of stare decisis is not applicable, earlier Full Bench decisions will be followed unless there are cogent reasons for not doing so. 12

[31] The second reason is that it has long been the case that the interpretation of the eligibility rules of industrial organisations is affected by considerations of “industrial usage”. The reference in the passage from R v Williams; Ex parte Australian Building, Construction Employees’ and Builders’ Labourers Federation quoted in the decision by Vice President Watson and set out above to the “common understanding furnished by the previous use of the words in the relevant organization’s rules and in statutory provisions, decisions, determinations, awards, reports and other papers concerned with the relevant industry or industries” adverts to the significant role of industrial usage in the interpretation process. This concept was elaborated upon in an article written by the late Hon. J W Shaw QC, Interpreting Trade Union Constitution Rules 13, as follows:

[32] In our view the decision of the Full Bench in Re Australian and International Pilots Association is to be regarded as constituting the foundation of industrial usage concerning the AIPA’s eligibility rule to which significant weight must be given. The AIPA obtained the consent of the predecessor to this tribunal to a significant part of its proposed changed eligibility rule under the governing statute as it then was on the basis of the Full Bench’s identification of the extension of coverage that would be effected as a result. Industrial parties in the airline industry were accordingly entitled to conduct their affairs on the basis that the AIPA’s coverage had been extended only to the extent identified by the Full Bench. The coverage of the AIPA in relation to Jetconnect was determined in Australian and International Pilots Association v Qantas Airways Ltd on that basis. There is no evidence that there has been any industrial acceptation of AIPA coverage beyond the extent identified in Re Australian and International Pilots Association.

[33] None of this is to be taken as suggesting that the appeal can be determined by reference to industrial usage alone; “the question of the meaning of the words used remains a legal question”. 14 However, in construing the language of the relevant part of the AIPA’s eligibility rule, it would lead us to prefer an available construction which is harmonious with the approach taken in Re Australian and International Pilots Association over one that is not.

“Airline services ... operated in whole or part”

[34] The application of the second paragraph of the AIPA’s eligibility rule to the facts here calls for a two step process of analysis: firstly, the characterisation of the airline service in question, and secondly, the identification of the entity or entities operating that airline service. However, before that analysis can be undertaken, it is necessary to consider as a question of interpretation what the words and expressions “airline services” and “operated” in the rule mean.

[35] The AIPA submitted that “airline service” meant the “commercial enterprise that conducts the airline”. We do not accept that submission. It does not accord with the ordinary meaning of the words used in the expression, and in particular it does not place appropriate significance on the use of the word “service” in the expression. While the relevant meaning of “airline” in isolation is “a system furnishing scheduled air transport between specified points” 15, its use in a composite expression with “service” is apt to describe that which an airline actually supplies to the public or its customers - that is, the provision of maintained and crewed aircraft arranged to fly between given locations at given times. There might be an argument at the margins as to whether an “airline service” includes the provision of ancillary services such as check-in staff and baggage handling, but that still goes nowhere near as far as the AIPA would like and would not affect the outcome here.

[36] The context in which the expression appears supports the approach we prefer. The second paragraph of the AIPA’s rule refers to persons who are normally employed as pilots “on” airline services. The use of the preposition “on” is suitable to describe the employment of a pilot in relation to an aircraft flying on a route, but not in relation to a commercial enterprise.

[37] The relevant ordinary meaning of the word “operate” is “to keep (a machine, apparatus, factory, industrial system, etc.) working or in operation”. 16 Read in relation to the expression “airline service”, we consider that “operate” connotes direct and day-to-day control over the airline service - that is, direct and day-to-day control over the provision, maintenance, crewing and flying of aircraft on particular routes. That approach is consistent with that taken by Kaufman SDP in Australian and International Pilots Association v Australian Federation of Air Pilots, who as earlier stated regarded the provision of cabin and flight crew and the maintenance and operation of aircraft as constituting the operation of flights. It is also an approach which is likely to produce outcomes consistent with the conclusions of the Full Bench in Re Australian and International Pilots Association to which we have earlier referred. The AIPA’s approach on the other hand, whereby the operation of airline services encompasses all aspects of the physical and commercial operation of a commercial enterprise, is likely to lead to the result that any airline service run by any Qantas subsidiary is under the AIPA’s eligibility rule to be taken as operated in whole or in part by Qantas itself due to the normal degree of commercial control which any parent company may exercise over a subsidiary. Such a result would be in direct contradiction to the Full Bench’s decision in Re Australian and International Pilots Association to refuse to consent to an extension of the AIPA’s coverage to Qantas subsidiaries generally, and constitutes a strong reason to reject the AIPA’s submissions in this respect.

[38] The decision of the Full Court of the Federal Court in ASP Ship Management Pty Limited v Administrative Appeals Tribunal 17, cited by the AIPA in support of its case, must be approached cautiously, since it was (relevantly) concerned with the interpretation of the word “operated” in the expression “a ship which is operated by a person, firm or company” in the particular context of s.10 of the Navigation Act 1912 (Cth). However, with that qualification in mind, we consider that the decision does not assist the AIPA. The court’s conclusion in ASP Ship Management concerning the meaning of “operated” in the context referred to was expressed as follows (underlining added):

[39] The above passage tends to confirm the approach we prefer, namely that the “operation” of an airline service requires direct management and control of the airline service (in the sense earlier discussed). The mere capacity to exercise ultimate legal or commercial control, as a parent company normally has in respect of a subsidiary, is not sufficient.

[40] For completeness, we deal with Network’s submission concerning the significance of the identity of the AOC holder in respect of the interpretation and application of the AIPA’s eligibility rule. We do not consider that the word “operated” is used in the second paragraph of the rule as a term of art referring to the AOC regime established under Part III Division 2 Subdivision D of the Civil Aviation Act 1988. If the AIPA, which is an occupational union specialising in the representation of pilots, had wished its eligibility rule to operate by reference to the Civil Aviation Act regime, it no doubt would have said so in express terms. The identity of the holder of an AOC in relation to a particular airline service will not therefore be determinative of the question of who operates an airline service for the purpose of the rule.

[41] That being said, the identity of the AOC holder will be a fact of considerable significance in any consideration of the application of the AIPA eligibility rule. It is clear from s.28 of the Civil Aviation Act that the issue of an AOC by CASA is contingent upon satisfaction that the “organisation” of an applicant for an AOC meets specified criteria concerning the safe conduct of an airline. The nature of those criteria is such that the entity which either wholly or mainly “operates” the airline service in the sense discussed above - that is, the entity which directly manages and controls day-to-day the provision, maintenance, crewing and flying of aircraft on particular routes - is almost certainly going to be the entity which holds the airline’s AOC by reason of its capacity to satisfy those criteria. The possibility that another entity in addition to the AOC holder may in part operate an airline service cannot however wholly be excluded.

Conclusions

[42] The application of the second paragraph of the AIPA’s eligibility rule, properly construed in the manner which we have identified, to the facts of this case is comparatively straightforward. The Network airline service consists of charter services primarily provided to employers in the minerals and resources sector in Western Australia. Those services are provided by maintained and crewed Fokker and Embraer aircraft operating from Perth airport. The evidence plainly demonstrates that the Network company wholly operates the airline service so described:

[43] The matters relied upon by the AIPA demonstrate that Qantas as the parent company in the Qantas Group has the capacity to exercise ultimate legal and commercial control over its subsidiary Network, and does so in respect of a limited range of matters. However, the evidence does not demonstrate that any such control amounts to the operation in whole or part of Network’s airline service. In particular:

[44] We therefore consider that Vice President Watson’s conclusion that the AIPA could not be a bargaining representative for Network pilots because it was not entitled under its eligibility rule to represent their industrial interests was correct. It follows that his Honour’s decision to dismiss the AIPA’s application for bargaining orders under s.229 of the Act was also correct.

[45] Because the AIPA’s appeal raises issues of importance concerning the interpretation of the rules of industrial organisations and coverage of pilots in the airline industry, we grant permission to appeal. However, for the reasons we have stated, we dismiss the appeal.

VICE PRESIDENT

Appearances:

S. Crawshaw SC with D. Taylor for the Australian and International Pilots Association

F. Parry SC with R. Dalton of counsel and A. Allegretto for Network Aviation Pty Limited

Hearing details:

2013.

Sydney:

23, July.

 1   [2013] FWC 2359

 2   At [34]

 3   Pawel v Australian Industrial Relations Commission [1999] FCA 1660, (1999) 97 IR 392 at 395 [14] per Branson and Marshall JJ; Ian McKewin and Others v Lend Lease Project Management & Construction (Australia) Pty Ltd [2013] FWCFB 2568 at [29].

 4   (2006) 149 FCR 261

 5   As set out in Australian and International Pilots Association v Australian Federation of Air Pilots [2007] AIRC 420, 163 IR 152 at [4]

 6   Ibid

 7   Acronym for “regular public transport airline services”.

 8   [2007] AIRCFB 796, 170 IR 121

 9   [2011] FWAFB 3706, 211 IR 220

 10   At [99]

 11   PN543

 12   Cetin v Ripon Pty Ltd (2003) 127 IR 205 at [48]-[49]

 13   (1988) 62 ALJ 690 at 692-694; cited in, e.g. Brown v Health Services Union [2012] FCA 644 at [81];

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Racing NSW [2008] AIRC 609

 14   R v Aird; ex parte Australian Workers’ Union (1973) 129 CLR 654 at 659 per Barwick CJ.

 15   Macquarie Online Dictionary, meaning 1.

 16   Macquaire Online Dictionary, meaning 10

 17   (2006) 149 FCR 261

 18   Civil Aviation Safety Regulations 1998, reg. 202.222

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